Judge Blocks Seattle Law Allowing Uber and Lyft Drivers to Unionize

  • U.S. Chamber of Commerce wins challenge to local ordinance
  • City argued that collective bargaining would improve industry

How Uber's Controversial CEO Built an Empire

Seattle’s first-in-the-nation law allowing drivers-for-hire to unionize was blocked by a federal judge, giving a boost to ride-hailing companies such as Uber Technologies Inc. and Lyft Inc.

U.S. District Judge Robert Lasnik in Seattle on Tuesday granted a request by the U.S. Chamber of Commerce to put the city’s ordinance on hold before it goes into effect. The organization argued the law improperly treats independent contractor drivers as employees because it allows them to unionize and collude through collective bargaining over their fares. Uber and Lyft are members of the chamber.

The fight over whether Uber and Lyft drivers can unionize is part of a larger conflict over how Internet-based-services companies treat their workforce. Uber’s business model is under attack worldwide by the taxi industry, local governments and drivers.

Charlotte Garden, an associate law professor at Seattle University, said the ruling could mean the union drive in Seattle “loses some of its momentum, if drivers start to think collective-bargaining rights are a lost cause.”

The judge emphasized that his ruling is temporary, and not a sure sign that the Chamber of Commerce will ultimately prevail.

‘Irreparable Ways’

Saying the city’s ordinance would likely disrupt the ride-hailing companies’ businesses in “fundamental and irreparable ways," Lasnik ruled that it should be blocked while the case is decided.

“There can be no doubt that ride-share companies such as Uber and Lyft have, at a truly startling rate, created havoc in this industry using a business model that simply did not exist before its recent technological development.” Lasnik wrote. The judge said it was uncertain, though, whether state law allows the city’s ordinance.

The Seattle city attorney’s office will continue fighting to “defeat this legal challenge to its effort to improve the safety and reliability of for-hire transportation in the city,” spokeswoman Kimberly Mills said in a statement.

“The city is also encouraged that the court did not find merit in the challenges to the ordinance under federal labor law,” she said.

Adrian Durbin, a Lyft spokesman, called the ordinance “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.”

‘Imminent Risk’

Brooke Steger, general manager for Uber in the Pacific Northwest, said the ruling “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.”

In March, Seattle’s law survived an attack by Uber after a Washington state judge rejected the company’s arguments that there are flaws in the local collective-bargaining process.

The chamber argued that Seattle’s law “turns labor law on its head, treating independent businesses as employees, and flouts antitrust law, allowing independent economic actors to fix prices.”

The business group pursued the court order with urgency, arguing that the Teamsters union has demanded that it turn over a confidential list of contracted drivers for Uber, Lyft and the dispatch service Eastside for Hire Inc. to unionize them. Turning over the list will cause "irreparable harm," the chamber argues, because it’ll be forced to turn over personal identifying information of drivers and incur costs and expenses not completely covered by money damages.

Seattle argued the lists contain information that is already publicly available. The city said Lasnik should deny the chamber’s request because its labor and antitrust claims are likely to fail.

The case is Chamber of Commerce v. Seattle, 17-cv-00370, U.S. District Court, Western District of Washington (Seattle).

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