In September 2018, yet another lawsuit was filed against Uber, the ride-hailing company that has had several lawsuits filed against it, many about the classification issue of whether Uber drivers are employees or independent contractors. Uber has found some effective legal defenses in these lawsuits against it, so now a unique kind of lawsuit has been added to the lineup of lawsuits against Uber.
Diva Limousine, a California employee-based limo company, sued Uber in Federal court in September 2018. Diva argued that Uber has an unfair competitive advantage in the ride-hailing marketplace (including limos and taxis) by improperly classifying its drivers as independent contractors and not employees, as Diva does.
In its novel lawsuit, Diva Limousine is seeking certification as a "class," an injunction against Uber barring Uber from pricing rides below cost, and treble damages against Uber, its competitor.
ALLEGATIONS AGAINST UBER: As a direct competitor of Uber, Diva Limousine is claiming that Uber (in its alleged below cost and anticompetitive pricing) unfairly avoids paying minimum wage and overtime (which Uber would have to do by law if Uber properly classified the drivers as employees). Also, by improperly classifying the drivers as independent contractors, Uber unfairly avoids providing health insurance, workers' comp, and reimbursing its drivers for gas and repairs on the drivers' cars.
In its lawsuit, Diva Limousine claims that Uber unfairly saves about a half billion dollars each year by classifying its drivers as independent contractors and not as employees. Diva Limousine argues that it has lost substantial business properly classifying its drivers as employees since Uber dominated the scene with its unfair independent contractor model. Diva points out that the customers of Diva Limousine regularly ask Diva why Diva Limousine can't be as cheap as Uber's prices.
NEW THEORY: One of Diva's attorneys, Michael Geibelson, is quoted in the press as saying "To my knowledge, no other competitor case has argued that Uber's failure to comply with labor law results in artificial profit margins and unfair competition. This is a new theory that we think is well grounded in California law." So...Diva is attacking Uber with this new legal angle.
THERE IS NO ARBITRATION AGREEMENT: Diva's lawsuit is promising from a legal perspective in that it is being brought by a competitor who does not have an arbitration agreement with Uber that would bar a court case.
MAY SEE MORE LEGAL CHALLENGES LIKE THIS: Many observers are hopeful that Diva could force Uber to finally start classifying its drivers as employees. Diva's case is a legal development that bears watching. If Diva's lawsuit against Uber is successful using the anti-competitive and unfair competition charges, then we can expect to see more legal challenges by businesses (of all kinds) that don't use independent contractors accusing other businesses that do use independent contractors of violating state unfair competition laws.
Questions?: For further information on employment law and/or independent contractor status and various strategy steps to evaluate and strengthen independent contractor status, please contact Attorney Nancy Joerg at Wessels Sherman's St. Charles, Illinois office: 630-377-1554 or email her at [email protected].