The U.S. Chamber of Commerce and the City of Seattle faced off in court again Monday over the city's landmark law allowing Uber and Lyft drivers to unionize. The question that occupied most of the time in the courtroom: Does the city have the right to allow "price fixing" in the name of safety?
The city's law, passed in 2015, would allow drivers for app-based ride hailing services to form a union. Uber and Lyft consider their drivers independent contractors instead of employees. While the National Labor Relations Act (NLRA) gives most workers the right to organize unions, it excludes independent contractors. Seattle's law is an unprecedented effort to change that.
The U.S. Chamber of Commerce has sued to try to stop the law, arguing that it violates federal labor and anti-trust laws. In August, U.S. District Court Judge Robert Lasnik rejected the Chamber's suit. Soon after, Lansik also rejected a similar but separate case from 11 drivers who said the union ordinance would violate their First Amendment rights. The Chamber appealed its case.
In the 9th Circuit of the Court of Appeals on Monday, three federal judges questioned lawyers for the Chamber, the Federal Trade Commission, and the City of Seattle primarily about the anti-trust question.
In other court cases, Uber has repeatedly argued its drivers are not its employees. But the Chamber's argument in this case allows for either possibility: Even if drivers are employees, the Chamber says the NLRA preempts local rules. If they're independent contractors, bargaining together would amount to price-fixing in violation of federal anti-trust law, an argument supported by the U.S. Department of Justice and Federal Trade Commission.
The city has attempted to fight the anti-trust argument by linking driver pay (which may be negotiated in a union contract) with safety. State law allows cities to create some safety-related regulations for for-hire ride services. According to lawyers for Seattle, low pay creates a safety hazard and therefore they can grant unionization rights to allow drivers to bargain for better pay. Chamber attorney Michael Carvin argued that state laws passed in the 1980s and ‘90s allowing cities like Seattle to regulate transportation companies didn’t foresee technologies like Uber and Lyft.
In its initial response to the lawsuit, city lawyers argued that the city council "determined, based on outcomes in other industries," that allowing drivers to negotiate with companies like Uber and Lyft would improve safety by "reducing turnover, increasing driver commitment and experience, and alleviating the pressure drivers face to provide transportation services in an unsafe manner (such as by working too many hours, operating vehicles at unsafe speeds, or ignoring necessary maintenance)."
Lawyers for the city reiterated those claims today, but the judges were skeptical.
As Assistant City Attorney Michael Ryan argued that the union law is about "safety and reliability," Circuit Judge Milan Smith cut him off. "Counsel, this is a court. You don’t have to shield it," Smith said. "We’re talking about compensation. That’s the elephant in the room."
Cities can regulate driver issues like requiring them to maintain their cars, Smith said. "That’s all cool but that has nothing to do with fixing rates. That’s what I’m struggling with."
"With respect," Smith told Ryan later, "that argument just doesn’t fly."
City lawyers struggled to respond to the judge's outward skepticism beyond repeating their case.
“The compensation of these drivers is low enough that it is very much threatening safety and reliability,” Stacey Leyton, a private lawyer arguing on behalf of the city, told the judges.
Workers' rights groups like the National Employment Law Project have filed amicus briefs in support of the city in the case. In an interview Friday, NELP attorney Ceilidh Gao called the Chamber’s arguments “radical.” If the Chamber succeeds, “it would really throw up a roadblock to cities who are trying to make innovative policy like Seattle,” Gao said.
Among those watching the arguments in the courtroom Monday were Seattle City Attorney Pete Holmes and Washington State Solicitor General Noah Purcell. After the arguments, Holmes said judges were "conflating rates with compensation." While the city could set the rates Uber charges per mile, other factors like how many drivers are on the road affect how much drivers make.
"Paying starvation wages to drivers, there's an impact on public safety," Holmes said. Uber has disputed characterizations that its drivers make low wages, saying Seattle drivers make $19 to $21 an hour before expenses. In debate over the unionization ordinance, some drivers have said they make just $4 or $5 an hour. Others have said they easily make the city's $15 minimum wage or more.
In a statement after the arguments Monday, an Uber spokesperson said, "We feel we put our best case forward."
After the 9th Circuit Court of Appeals decision, either side could appeal for review from the U.S. Supreme Court.
"This case is going to SCOTUS regardless," Holmes said. "We've thought that from the beginning."