SAN FRANCISCO — Uber Technologies Inc. scored a major legal victory last year when a federal appeals court ruled that drivers who sued over background checks were bound by arbitration agreements they signed. On Wednesday, the company will try to hang on to that win.
On one side of the fight at the U.S. Court of Appeals for the Ninth Circuit is the lawyer representing drivers in a set of worker misclassification class actions, Shannon Liss-Riordan, and the National Labor Relations Board. They argue that notwithstanding last year’s ruling, Uber’s agreements are still unenforceable because they contain illegal collective action waivers.
Uber, represented by Theodore Boutrous Jr. of Gibson, Dunn & Crutcher, will be trying to smash the class actions once and for all. The company and its legal team have appealed every significant adverse ruling in those driver suits in district court, and Wednesday will be their chance to explain to the court why those decisions should all be rejected.
Here are some of the key things to know heading into the hearing:
1. This is the same panel that heard the case last year, and the judges have already given clues as to how they feel.
The panel hearing arguments Wednesday is made up of the same group of judges that ruled in favor of Uber’s arbitration clauses last year: Circuit Judges Richard Tallman, Sandra Ikuta and Richard Clifton. That case, Mohamed v. Uber, focused on whether Uber’s arbitration clauses were “unconscionable” under California law because they were forced upon drivers. The panel found that was not the case because the agreement allowed drivers to opt-out.
In the previous go-round, lawyers representing the drivers raised in passing the argument that the agreements still are unenforceable because of the collective action waivers, which they alleged violate the National Labor Relations Act (NLRA). That’s the same argument that Liss-Riordan and National Labor Relations Board attorney Jeffrey Burritt will make on Wednesday afternoon.
In the original, unanimous opinion for the panel in Mohamed, Clifton wrote in a footnote that the argument was untimely, but that even if it had been properly made, it would not have succeeded because Uber’s agreements gave drivers the choice to opt out. (In a decision denying en banc review, that sentence was subsequently deleted.)
2. The Supreme Court essentially could make this whole issue moot—and soon.
Boiled down to it’s simplest level, the argument made by Liss-Riordan and the National Labor Relations Board is that collective action waivers are illegal, and that opt-out clauses do not rescue agreements that contain such waivers. But the U.S. Supreme Court on Oct. 2 will be weighing the first part of the equation—whether the waivers are illegal at all.
The Ninth Circuit, in Morris v. Ernst & Young, ruled that collective action waivers do violate the NLRA. That case involved a mandatory arbitration clause, without an opt-out provision. (Notably, Ikuta dissented from that opinion.) If the Supreme Court reverses that decision and finds that collective action waivers are permissible even in mandatory arbitration contracts, then the whole opt-out issue in the Uber case becomes moot.
It’s worth noting that Uber says the NLRA doesn’t even apply to drivers, because they are independent contractors and have not been proven to be employees. That’s the issue at the root of the class actions against Uber that have now made their way up to the Ninth Circuit.
3. There are a lot of different legs to Uber’s appeals. But they’re all pretty much tied up in arbitration.
The arguments on Wednesday ostensibly deal with 11 different interlocutory appeals—a tangled mess that led the panel to hold a rare hearing earlier this year just to sort everything out. But more or less, they all tie into the arbitration issue.
Apart from the NLRA arguments, Uber’s lawyers have appealed the order by U.S. District Judge Edward Chen of the Northern District of California certifying a class of some 240,000 Uber drivers in California. Uber argues that because the bulk of drivers signed individual arbitration agreements, they cannot move forward in a class action. But Uber also argues that whether an Uber driver is an “employee” is a highly fact-specific issue that can’t be adjudicated en masse. (Getting the Ninth Circuit to agree with Uber on those grounds would help Uber fight any class-action on behalf of the several thousand drivers who opted out of arbitration.)
The other bucket of appeals deal with orders Chen issued requiring Uber to modify its arbitration contracts to make them more visible and making it easier for drivers to opt-out of arbitration. In theory, those rulings could still hamper Uber’s enforcement of its arbitration clauses even if it wins the NLRA argument.