Seattle Driver-for-Hire Union Law Hits Bump in Road

From labor disputes cases to labor and employment publications, for your research, you’ll find solutions on Bloomberg Law®. Protect your clients by developing strategies based on Litigation...

By Jon Steingart

Seattle’s first-in-the-nation law that lets ride-hail drivers join labor unions was dealt a setback April 4 when a federal judge in Washington delayed a requirement that Uber and Lyft give driver information to the Teamsters ( Chamber of Commerce of the U.S. v. City of Seattle , W.D. Wash., No. 2:17-cv-00370, motion for preliminary injunction granted 4/4/17 ).

Compelling the companies to disclose driver information the union could use for an organizing drive is likely to harm their status relative to their competitors, Judge Robert S. Lasnik of the U.S. District Court for the Western District of Washington said. The injunction will cause no harm other than delaying implementation of the ordinance, he said.

“The public will be well-served by maintaining the status quo while the issues are given careful judicial consideration as to whether the City’s well-meaning Ordinance can survive the scrutiny our laws require,” Lasnik said.

The U.S. Chamber of Commerce moved to block the ordinance, contending a drivers union would violate federal antitrust law by authorizing members to collude on prices. It also said the city lacks authority to create a system for workers classified as independent contractors to form unions. The fact that the National Labor Relations Act excludes independent contractors and preempts local jurisdictions from enacting labor union laws means drivers, which ride-hail companies consider small business operators rather than employees, can’t join unions.

The motion was part of a lawsuit the Chamber filed against the city on behalf of its members, Uber Technologies Inc. and Lyft Inc., plus a third company called East Side for Hire Co.

Blow to Teamsters

The ruling is a blow to the International Brotherhood of Teamsters, which may attempt to organize drivers after winning recognition as a “qualified driver representative” under the ordinance. “The Teamsters can only do so much in terms of organizing without the driver lists,” Charlotte Garden, a professor who teaches labor law at Seattle University School of Law, told Bloomberg BNA. The companies faced an April 3 deadline to provide information about their drivers to IBT Local 117.

“We’re pleased that Judge Lasnik acknowledged that Seattle’s unprecedented attempt to permit independent contractors to unionize raises serious legal questions,” Lily Fu Claffee, executive vice president of the U.S. Chamber’s Litigation Center, said in a statement April 4. “The judge underscored the case’s public importance and its potential impact beyond for-hire transportation to other sectors of the economy that rely on independent contractors. In stopping the clock, the judge has given the Chamber the opportunity to fully demonstrate that Seattle’s ill-founded ordinance violates federal law.”

During a March 30 hearing on the Chamber’s motion, a Seattle attorney said the city wouldn’t enforce the deadline before Lasnik issued his ruling. A Chamber lawyer responded that this wouldn’t be satisfactory because the ordinance gives the Teamsters the right to sue the companies for alleged violations.

“A private right of action against a $70 billion company?” Leonard Smith, director of organizing and strategic campaigns for Local 117, told Bloomberg BNA with a laugh April 3. “I don’t know, we haven’t looked at that.”

The ruling is a setback, but it won’t stop the Teamsters from fighting to give drivers a voice, Smith told Bloomberg BNA April 4. “Collective bargaining is a way to get that but this is not going to stop them from trying to fight to get justice at work,” Smith said.

“It just delays their collective bargaining,” Smith said. “In the meantime the workers are wondering how they’re going to pay the rent.”

Ordinance Has Safeguards, City Attorney Says

Uber and Lyft consider information about drivers’ names, contact details and license numbers a “trade secret,” the companies said in declarations filed with the court. The ordinance prohibits qualified driver representatives from using it for any purpose other than organizing.

“It’s not like the Teamsters could take this list and go put it online,” Michael Ryan, an assistant city attorney, told Bloomberg BNA.

The case remains ongoing following Lasnik’s preliminary ruling, Kimberly Mills, communications director for city attorney Peter Holmes, said in an April 4 statement. “The City has a motion to dismiss pending, and will move forward with efforts to defeat this legal challenge to its effort to improve the safety and reliability of for-hire transportation in the City,” Mills said. “The City is also encouraged that the court did not find merit in the challenges to the ordinance under federal labor law.”

Spokespeople for Lyft and Uber acknowledged the ruling’s preliminary nature while saying they were happy with the decision.

“We are pleased the Court has ruled that Seattle’s experimental law should not be implemented until the serious issues raised by drivers are heard,” Lyft said in a statement. “The ordinance is a poorly drafted law that could undermine the flexibility of drivers to choose when, where and for how long they drive--the very things that make Lyft so attractive to drivers and useful for passengers.”

Brooke Steger, general manager for Uber in the Pacific Northwest, had a similar sentiment. “The court recognized the complexity of the issues and the imminent risk to drivers, transportation companies, and the people of Seattle if the ordinance were allowed to proceed without careful legal review,” she said in a statement. “We look forward to the court’s full consideration of the many serious legal questions about this ordinance as the lawsuit moves forward.”

Assistant city attorneys Michael Ryan, Gregory Narver, Sara O’Connor-Kriss and Josh Johnson represented Seattle. Stephen Berzon, Stacey Leyton and P. Casey Pitts with Alshuler Berzon LLP in San Francisco also represent the city.

Lily Fu Claffee, Kate Comerford Todd and Warren Postman with the U.S. Chamber Litigation Center in Washington, D.C., represent the Chamber. Timothy O’Connell with Stoel Rives LLP and Michael Carvin, Jacqueline Holmes, Christian Vergonis and Robert Sander with Jones Day in Washington, D.C., also represent the Chamber.

To contact the reporter on this story: Jon Steingart in Washington at jsteingart@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.