Calif. Antitrust Complaint Against Uber and Lyft Shifts to Federal Court

On Thursday, Uber removed a class action complaint brought by aggrieved California drivers to federal court. The plaintiffs are Uber Technologies Inc. and Lyft Inc. drivers who opted out of their arbitration agreements and allege that the companies maintain an illegal duopoly through vertical price fixing and various non-price restraints.

The suit details how the defendants do this by labeling their drivers independent contractors, a status reinforced by voter-passed referendum Proposition 22. By doing so, the complaint says that the defendants avoid paying a “broad range of benefits for workers and taxes to the government, including unemployment insurance premiums, minimum wage, and payroll taxes.” 

Simultaneously, the companies deprive their drivers of economic independence by fixing the prices charged to customers for rides, the complaint says. In support, the filing points to a 2019 decision where an American Arbitration Association arbitrator found that Uber maintains a vertical relationship with its drivers and controls the amount they earn through resale price maintenance. 

Further, the plaintiffs aver that driver compensation is so low on a per-ride basis that “drivers have no choice but to participate in game-like compensation packages that offer drivers a premium payment if, for example, they can complete a certain number of trips within a short period of time (such as a weekend).” In addition, Uber and Lyft purportedly retain the contractual right to adjust the passenger fare and dock driver pay if they determine the driver took an inefficient route. 

The suit seeks numerous injunctive relief measures, including the end of: price fixing for rideshare services, withholding fare and destination data from drivers when presenting them with rides, imposing other non-price restraints on drivers, such as minimum acceptance rates, and utilizing “non-linear compensation systems based on hidden algorithms rather than transparent per-mile, per-minute, or per-trip pay.”

The plaintiffs also request treble damages on part of themselves and all California Uber drivers who have worked for either company in the last four years and also opted out of the applicable arbitration agreement.

As far as removal, Uber Technologies argues that the plaintiffs’ right to relief depends upon the resolution of “substantial, disputed questions of federal antitrust law,” ostensibly a recognized basis for federal question removal. This is so despite the fact that the complaint states three claims for relief under California antitrust and consumer protection laws.

The plaintiff and putative class are represented by Towards Justice and Edelson PC. Uber is represented by Paul Weiss LLP.