Photographer: Angel Navarrete/Bloomberg

Uber Wants Court Stamp on Arbitration Win as Hint to Drivers

  • Winning court sign-off may sway other arbitrators, judges
  • Driver lost bid for employee rights under California law

Uber Technologies Inc. is asking a California judge to grant a stamp of approval on what it says is the first decision by an arbitrator denying a driver’s bid to be treated as an employee instead of an independent contractor.

It could be the first of many such rulings after a federal appeals court’s decision last year that most Uber drivers can be forced by the company to resolve disputes through binding arbitration.

The arbitration win comes amid Uber’s legal war in its home state and elsewhere to defend its contractor-based business model and avoid at least some of the restrictions that apply to competitors.

Uber isn’t required to seek confirmation of an arbitration award by a state judge, especially if there isn’t a financial component, said Candace Bertoldi, a labor and employment lawyer with Seyfarth Shaw LLP in Los Angeles. The ride-hailing company may have chosen to do so as a strategic move to influence other cases and deter future litigation, said Bertoldi, who isn’t involved in the case.

“It’s an important step that Uber is taking this public," she said.

Although arbitration awards aren’t binding legal precedents, the great care taken to examine all the facts and analyze them appropriately under the law means others will take notice of the 48-page decision by the arbitrator, retired judge Michael Marcus in Los Angeles, according to Bertoldi.

Click here for more on the life of an Uber driver

Uber hailed Marcus’s “well-reasoned” decision as a defense of its business model.

“It’s clear he understands the Uber model, and we have long argued that drivers using the Uber app are correctly classified as independent contractors,” San Francisco-based Uber said in a statement.

Last year the U.S. Court of Appeals in San Francisco ruled that Uber could require most drivers to go to arbitration instead of court. That gave the company the upper hand in a hard-fought lawsuit brought on behalf of 385,000 current and former drivers in California and Massachusetts over claims they should have the rights and benefits of employees rather than independent contractors.

For more on Uber’s legal battles over drivers, click here

It also gave Uber leverage with drivers suing to upend its gig-economy workforce model in other states, where labor laws tend to give companies more leeway than in California. The company also faces lawsuits over its pricing and business practices, as well as efforts by local regulators to force it to comply with laws covering taxis.

Arbitration awards in California generally get confirmed unless there’s evidence of some egregious misconduct, said Nicholas Rozansky, a lawyer with Brutzkus Gubner Rozansky Seror Weber LLP in Woodland Hills, California. Any appeals court review wouldn’t go beyond procedural challenges, he said.

"This is a highly regarded, fair and reasonable arbitrator, and Uber will likely hold up this decision in other cases," Rozansky said.

California Superior Court Judge Michael Stern on Monday postponed the hearing on Uber’s request to confirm the award until next month because the name of the driver involved wasn’t disclosed on the petition.

"This is just the ruling of one arbitrator, which carries no precedential value," Shannon Liss-Riordan, a lawyer for the drivers in the class-action case in San Francisco federal court, said in a statement. "In arbitration, you win some and you lose some, depending on what arbitrator you get in front of. The fact that one driver lost his case before one arbitrator will have no impact on other drivers’ claims, regardless of whether Uber seeks to confirm the award in court."

The case is Uber Technologies Inc. v. Y.E., BS166561, Los Angeles County Superior Court.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE