Employment Law Daily Seattle ordinance allowing Uber drivers to unionize survives court challenge (for now)
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Friday, August 12, 2016

Seattle ordinance allowing Uber drivers to unionize survives court challenge (for now)

By Lisa Milam-Perez, J.D. and Pamela Wolf, J.D. The U.S. Chamber of Commerce lacked standing to challenge a recently enacted Seattle ordinance granting "on demand" drivers the right to bargain collectively. A federal court in Washington granted the city’s motion to dismiss the lawsuit, at least for now, finding that the Chamber’s two member "driver coordinator" companies had suffered no harm (yet) and thus, the trade group lacked standing to pursue the claims, even though the member companies face the eventual prospect of a union organizing drive (U.S. Chamber of Commerce v. City of Seattle, August 9, 2016, Lasnik, R.). The ordinance. Seattle’s ordinance, CB 118499—the first of its kind in the nation—was passed by the city council in December 2015, and took effect on January 22, 2016 (after the mayor refused to sign and sent it back to the legislature). It establishes a process that permits a union to request recognition as a "qualified driver representative" (QDR) to meet with a driver coordinator, such as Uber (as well as for-hire companies and taxi companies), to negotiate pay rates and conditions of employment. If recognition is granted, the QDR contacts the company whose drivers it seeks to represent in order to obtain contact information for all qualifying drivers to solicit their interest in union representation. If a majority of drivers express an interest, the city will certify the QDR as the exclusive driver representative (EDR) for all drivers associated with that driver coordinator. If the EDR is certified, the driver coordinator must meet and negotiate with it regarding topics such as vehicle equipment standards, safe driving practices, the nature and amount of payments to drivers, and hours and conditions of work. (If no EDR is certified, the driver coordinator wont’ be subjected to another representation drive for at least 12 months.) The Chamber’s claims. The Seattle ordinance "would restrict the market freedom relied upon for all for-hire drivers who are part of independent-contractor arrangements," according to the Chamber, in a complaint filed in March. "Under the guise of regulating public safety, [the ordinance] would, for the first time anywhere in the United States, insert a third-party labor union into the relationship between independent contractors and companies, and require agreements that would fix wages and prices in violation of the nation’s antitrust and labor laws." As the Chamber sees it, "the ordinance explicitly requires for-hire drivers and their partners to reach anticompetitive agreements by engaging in collective bargaining that federal law does not permit." Specifically, the trade group contends that the ordinance is preempted by the NLRA and constitutes Section 1983 civil rights violations of rights conferred under the NLRA; that the ordinance is preempted (and violates) the Sherman Antitrust Act; is a horizontal price-fixing violation of Washington’s Consumer Protection Act, an unauthorized action regulating for-hire vehicles under state law, and a violation of the state’s Public Records Act by requiring disclosure of trade secrets that include drivers’ contact information. The Chamber sought declaratory relief, a permanent injunction barring enforcement of the ordinance, and attorneys’ fees and costs. Future injury? According to the trade group, as a result of the ordinance, Uber Technologies, Inc. and Eastside for Hire, Inc., two of its member companies, would likely face "a substantial risk of future injury." The production of driver lists would cost them time and money, the Chamber argued, and the disclosure of the lists would destroy the value of the companies’ trade secrets, and also impinge on their drivers’ privacy. However, neither Uber nor Eastside had been called upon yet to produce driver lists or engage in collective bargaining, the court observed. Consequently, whether they suffered an "actual or imminent" injury for Article III standing purposes turned on whether they faced "‘a realistic danger of sustaining a direct injury as a result of the statute’s operation or enforcement.’" And as the city noted, it was "far from certain" that the two companies would even be the initial targets of a union organizing drive. Although Teamsters Local 117 appeared to be lurking, the union apparently had not expressly set its sights on these driver coordinators yet. Any future injury to Uber or Eastside was wholly contingent on the union’s choice of target, and it was purely speculative to presume that either would be the first to face an organizing effort. It was possible that a QDR would seek to represent Uber or Eastside drivers once the ordinance’s representational mechanisms commence, but it was "just as likely," according to the court’s speculation, that a union would first attempt to organize a driver coordinator that "has not made its antipathy toward collective action so well-known and/or is not primed to file suit immediately." Ultimately, the court said, this theory of standing relied on "a speculative chain of events controlled entirely by the choices of third parties not currently before the Court." Unwilling to find standing based on mere "guesswork." Present harm? Uber and Eastside were currently suffering present harm, the Chamber argued further in its attempt to show standing. Indeed, the companies were incurring actual, ongoing injuries, including the "coerced compliance" with the anti-retaliation provisions of the ordinance, and expenses incurred in ramping up for the ordinance’s implementation. (Cited costs included "educating drivers about the impacts of unionization, participating in rulemaking, and hiring consultants and attorneys for assistance with union organizing and the collective-bargaining process.") For its part, Eastside told the court in May that it "immediately wishes" to amend its current driver contracts to expressly preclude drivers from providing statements of interest to any QDR hoping to gain recognition as an EDR under the ordinance. However, the ordinance bars the company from "providing or offering anything of value to drivers for the purpose of encouraging or discouraging them from exercising the right to participate in the representative process." Yet the anti-retaliation provision did not take effect until 150 days after the ordinance was enacted, the court noted, and the company made no effort in the interim to amend its contracts accordingly. It would have been entitled to do so in May; since the anti-retaliation provision only became enforceable at the end of June. "The fact that Eastside refrained from amending its driver contracts shows that it either did not want to make the change," the court reasoned, "or that its decision not to amend was unrelated to the Ordinance." As for the costs of responding to the ordinance, these were purely voluntary. It might be "eminently reasonable" to incur them, in an effort to prevent or mitigate the potential harm of a union organizing effort, but the companies "‘cannot manufacture standing merely by inflicting harm on themselves based on their fears of hypothetical future harm that is not certainly impending,’" wrote the court, finding that any ongoing injuries they might suffer "are not fairly traceable" to the ordinance itself. Accordingly, the court dismissed the Chamber’s complaint without prejudice.

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