Drivers’ lawsuit claims Uber and Lyft broke antitrust laws

A group of drivers claimed on Tuesday that Uber and Lyft engaged in anti-competitive practices by fixing the prices paid by customers and limiting the ability of drivers to choose which rides they accepted without penalty.

The drivers, backed by advocacy group Rideshare Drivers United, presented the new legal argument in a state lawsuit that targets the long-running debate over the employment status of gig economy workers.

For years, Uber and Lyft have argued that their drivers should be considered independent contractors rather than employees under labor law, meaning they would be responsible for their own expenses and would generally not qualify. unemployment insurance or health benefits. In return, the companies say, drivers could set their own hours and retain more independence than if they were employees.

But in their lawsuit, which has been filed in San Francisco Superior Court and seeks class-action status, three drivers claim that Uber and Lyft, while treating them as independent contractors, didn’t really give them the independence and attempt to avoid giving drivers the benefits and protections of employment status while setting restrictions on how they work.

“They make up the rules as they go along. They don’t treat me as a freelancer, they don’t treat me as an employee,” said one of the plaintiffs, Taje Gill, a Lyft and Uber driver in Orange County, California. “You’re somewhere in no man’s land,” he added.

In 2020, Uber and Lyft campaigned for drivers and voters to support a California ballot measure that would lock in independent contractor status for drivers. The companies said such a move would help drivers by giving them flexibility, and Uber also began allowing drivers in California to set their own fares after the state passed a law requiring companies to process contract workers as employees. Drivers believed the new flexibility was a sign of what life would be like if voters approved the ballot measure, Proposition 22.

Drivers also benefited from increased visibility into where passengers wanted to travel before they had to accept the ride. The ballot measure was passed, before a judge overturned it.

The following year, the new driver options were cancelled. Drivers said they had lost the ability to set their own fares and now had to meet requirements – such as accepting five out of 10 rides – to see details of rides before accepting them.

The drivers said they no longer had both the benefits of being an employee and those of being an independent contractor. “I couldn’t see that as fair and reasonable,” Mr Gill said.

The inability to see a passenger’s destination before accepting the ride is particularly onerous, drivers said. This sometimes leads to unplanned overnight trips to distant airports or remote destinations that are unprofitable.

“Millions of people choose to earn on platforms like Uber because of the unique independence and flexibility they offer,” Noah Edwardsen, a spokesperson for Uber, said in a statement. “This complaint misinterprets both the facts and the applicable law, and we intend to defend ourselves accordingly.”

Lyft spokeswoman Jodi Seth said in a statement, “California voters have overwhelmingly supported a ballot measure that provides what drivers want and can’t get through traditional employment: flexibility and independence. ” She added, “Lyft’s platform provides drivers in California and across the country with valuable opportunities to earn when and how they want.

In the lawsuit, the drivers ask that Uber and Lyft be prevented from “setting prices for ride-sharing services” and from “withholding fare and destination data from drivers when presenting rides to them” and be required to give drivers “transparent by the mile, by the minute or by the ride” rather than using “hidden algorithms” to determine compensation.

The drivers are suing on antitrust grounds, arguing that if they are classified as independent contractors, then Uber and Lyft are interfering with an open market by limiting how they operate and how much their riders are charged.

“Uber and Lyft are either responsible employers to their employees under labor standards laws, or they are bound by laws that prohibit powerful companies from using their market power to fix prices and engage in misuse. ‘other conduct that restricts fair competition,’ the lawsuit states.

Experts said the suit would be a long way off in federal court, where judges typically use a “rule of reason” to weigh antitrust claims against consumer welfare. Federal courts often authorize potentially anti-competitive practices that arguably benefit consumers.

For example, Uber and Lyft could argue that apparent restrictions on competition help reduce wait times for customers by ensuring an adequate supply of drivers. The lawsuit argues that allowing drivers to set their own prices would likely result in lower fares for customers, since Uber and Lyft keep a substantial portion of fares, and what customers pay generally bears little relation to what drivers earn. drivers.

Either way, California courts may be more sympathetic to at least some of the claims in the suit, the experts said.

“If you apply certain laws mechanically, that’s very favorable to the plaintiff in state court and under California law in particular,” said San Francisco Bay Area office manager Josh P. Davis. from Berger Montague.

“You might have a judge who says, ‘This is not federal law. It is state law. And if you apply it in a simple way, reduce all the complexities of gig economics and look at this thing, we have a law that says you can’t do that,” Davis said.

Peter Carstensen, a law professor emeritus at the University of Wisconsin, said he was skeptical that drivers would gain ground with their claims that Uber and Lyft illegally set the price drivers could charge.

But Mr. Carstensen said a state judge could rule in favor of plaintiffs on other so-called vertical restraints, such as inducements that help tie drivers to one of the platforms by guaranteeing them , for example, at least $1,000 if they complete 70 rides from Monday to Friday. A judge could conclude that these incentives exist largely to reduce competition between Uber and Lyft, he said, because they make drivers less likely to switch platforms and make it harder for a new platform. gigs to hire conductors.

“You make it extremely difficult for a third party to get in,” Mr Carstensen said.

David Seligman, an attorney for the plaintiffs, said the lawsuit could benefit from a thorough review of the anticompetitive practices.

“We believe policymakers, advocates and courts across the country are paying more attention and looking more closely at the ways in which corporations and dominant corporations abuse their power in the labor market,” Ms. Seligman.

Drivers say the pushback from options such as setting their own prices has made it harder to earn a living as a gig worker, particularly in recent months as petrol prices have soared and that competition among drivers has begun to return to pre-pandemic levels.

“It’s getting harder and harder to make money,” said another complainant, Ben Valdez, a driver in Los Angeles. “Enough is enough. There is so much a person can endure.

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