Thursday, September 12, 2019

Third Circuit on the Federal Arbitration Act and Uber drivers

Do you love the arcane scope language of the Federal Arbitration Act (FAA)? Do you also love the convoluted mess of employee-independent contractor classification analysis? Who doesn't!? The Third Circuit just issued a precedential opinion in Singh v. Uber Technologies, Inc.

The plaintiff brought this putative class action on behalf of himself and other similarly situated Uber drivers in New Jersey. He claimed that Uber misclassified them as independent contractors, and that Uber owes them money for overtime and business expenses that they would be entitled to if they had been properly classified as employees. Classification of Uber drivers (and "gig" workers generally) is a hot topic these days.

But wait . . . before we get to that hot topic . . . the plaintiff driver had an arbitration agreement. So, Uber moved to compel arbitration. But double wait . . . the FAA excludes transportation workers that are engaged in interstate commerce. So, can Uber compel arbitration or not?

Standard of Review
Not official use. 

The first interesting issue in this case is the standard of review on a motion to compel arbitration. The Supreme Court recently held in New Prime Inc. v. Oliveira that the Court decides whether the FAA exemption applies (also relevant to this case, SCOTUS held that the exemption applies to both employees and independent contractors). But what standard of review applies? The Court has some options, including the motion to dismiss
standard (a low bar) and the summary judgment standard (a relatively high bar). Orrr, how about a hybrid?
[T]he motion to dismiss standard applies if the complaint and incorporated documents provide a sufficient factual basis for deciding the issue. But where those documents do not, or the plaintiff responds to the motion with additional facts that place the issue in dispute, the parties should be entitled to discovery on the question of arbitrability before a court entertains further briefing with an application of the summary judgment standard to follow.
(internal citations and quotations omitted).

Does the FAA exemption apply to Uber drivers? 

Here, the Third Circuit identified two issues regarding the coverage of the FAA:
(1) if § 1 [the exemption] only applies to transportation workers who transport goods, or also those who transport passengers, and  
(2) whether Singh belongs to a class of workers that are engaged in interstate commerce.
Cutting to the chase - the Third Circuit held that the FAA exemption applies to transportation workers regardless of whether they are transporting goods or people. Therefore, it would apply to Uber drivers "engaged in interstate commerce."

The Court's analysis stops there. The Court remanded the case back to the district court to allow the parties to engage in discovery to explore the issue of whether the driver was engaged in interstate commerce. 

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