Photograph by Andrew Harrer — Bloomberg via Getty Images
By Kia Kokalitcheva
August 7, 2015

A potentially devastating lawsuit against ride-hailing company Uber over its classification of drivers as contractors instead of employees is entering an important phase: determining whether drivers can sue together through a class action.

On Thursday in Federal district court in San Francisco, Uber and the drivers presented their arguments before Judge Edward Chen. The big question is whether Uber’s drivers as a whole are similar enough to each other to merit being lumped together into a class-action lawsuit.

Naturally, Uber believes that no, they aren’t. In its view, the company is merely a “technology platform” that connects drivers and passengers and, since each driver gets to set their own hours and even choose which other companies they work for, they drivers are all unique and individual. In an earlier court filing, Uber provided testimonials for more than 400 drivers who expressed how much they enjoy and count on the flexibility they have as Uber drivers. Ted Boutrous, Jr., of Gibson, Dunn & Crutcher, represented the company in court.

On the other side, attorney Shannon Liss-Riordan, who’s been spearheading not only this lawsuit, but also a similar one against rival Lyft and others filed against on-demand startups like Instacart and Postmates, argued that despite some differences, all of Uber’s California drivers are fundamentally similar in their employment with Uber. While the case is expected to be appealed by either losing side, it will nevertheless have implications for the emerging class of on-demand services.

Much of the back-and-forth focused on a few key areas.

First is whether the plaintiffs — or the 400 “happy” drivers Uber corralled — are a fair representation of all Uber drivers. Uber’s claim is that, while Liss-Riordan’s clients may want employee status, at least 400 fellow drivers do not and therefore, they shouldn’t be treated as a class. But to Judge Chen, the math still wasn’t adding up as he pointed out that 400 drivers is still only 0.0025% of all 160,000 drivers in California who have ever worked for Uber.

Liss-Riordan argued that, “this isn’t a popularity contest, this isn’t about what people want.” Rather, the decision should be about policy and the best decision.

How much control Uber has been exerting over its drivers is another key question. California labor law provides a legal test, derived from a 1989 state Supreme Court case, to determine whether someone is an independent contractor or an employee, and the company’s control is at the crux of it. Liss-Riordan attempted to show the judge that it met seven of the nine points of the test, and told journalists after the hearing that she hopes he sees that the scales tip on that side.

Another issue that surfaced in Thursday’s hearing is the nature of Uber’s contracts with drivers: are they simply licensing agreements (as Uber claims) or employment contracts? Though Judge Chen didn’t appear to fully buy into the argument, it does stay in line with Uber’s long-standing claims that it’s not a taxi company, merely a “technology platform” enabling drivers and passengers to connect.

Though Thursday’s hearing wasn’t about the lawsuit itself, whether Judge Chen allows the drivers to proceed as a class could dramatically alter its course. A class action status would increase the drivers’ leverage to demand a settlement, which is what happens in many cases when a court certifies class status. The parties also explored whether Judge Chen might create a variety of sub-classes of drivers.

Liss-Riordan also suggested that the settlement focus on reimbursement of mileage expenses, which can be calculated from Uber and IRS records, without getting into messy calculations around variable expenses such as water bottles some drivers choose to offer to passengers, and so on.

Judged Chen is expected to make a decision in the following weeks.

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