Third Circuit Court of Appeals Reverses Summary Judgment in UberBLACK Lawsuit

On Tuesday, March 3, 2020, the United States Court of Appeals for the Third Circuit vacated a district court’s grant of summary judgment in Razak v. Uber Technologies, Inc. The lawsuit involves plaintiff drivers who used Uber’s ride-sharing app to provide limousine services in Philadelphia via UberBLACK. Plaintiffs brought claims under the federal minimum wage and overtime requirements under the Fair Labor Standards Act, the Pennsylvania Minimum Wage Act, and the Pennsylvania Wage Payment and Collection Law.

The main issue in the lawsuit concerns whether plaintiffs are employees or independent contractors. Uber moved for summary judgment on this issue at the district court level, which was granted. “As a matter of law, the District Court found that Plaintiffs did not meet their burden to show that they are employees of Uber.” In reviewing the district court’s grant of summary judgment, the Third Circuit utilized the six factor test in Donovan v. DialAmerica Marketing, Inc., 757 F.2d 1376 (3d Cir. 1985), to determine whether a worker is an employee under the Fair Labor Standards Act. “DialAmerica teaches that where there are questions of fact that need resolution, these questions must go to a fact-finder. This case presents such genuine disputes of material fact.” At the district court level, the plaintiffs responded to Uber’s Statement of Undisputed Material Facts with almost a hundred pages of disputes. Because the disputed facts “go to the core of the DialAmerica factors and present a genuine dispute of material facts,” the Third Circuit found that summary judgment was inappropriate.

The Third Circuit first analyzed the “right to control” factor of the DialAmerica test. The court found factual disputes existed between plaintiffs and Uber over who maintains the right to control: “Although both parties argue that there are no genuine disputes regarding control, the facts adduced show otherwise.” Then, the Third Circuit examined the “opportunity for profit or loss depending on managerial skill” factor under DialAmerica.”Plaintiffs can drive for competitors, but Uber may attempt to frustrate those who try, and most of the factors that determine an UberBLACK driver’s Uber-profit. . . are also controlled by Uber.” Because a reasonable fact-finder could rule in favor of the plaintiffs, the Third Circuit found summary judgment inappropriate. The Third Circuit then analyzed the fifth factor (degree of permanence of the working relationship) and fourth factor (whether the service rendered requires a special skill) of the DialAmerica test, commenting that the fifth factor presents genuine disputes of material fact, unlike the fourth factor. The Third Circuit remanded the case for further proceedings in the district court.

This is the first lawsuit at the Federal appellate level involving Uber concerning employee and independent contractor misclassification. Previous lawsuits were compelled to arbitration.

Additional Reading

Razak v. Uber Technologies Inc., No. 18-1944 (3d Cir. 2020)

UberBlack Drivers’ Classification Case Revived by 3rd Cir. (4), Bloomberg Law (March 3, 2020)

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