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In May 2020, foreshadowing this appeal, the Attorney General of California, joined by city attorneys of the cities of Los Angeles, San Diego, and San Francisco, brought a civil action on behalf of the People of the State of California that alleged Uber and Lyft violated the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) (UCL) by misclassifying their California ride-share and delivery drivers as independent contractors rather than employees, thus depriving them of wages and benefits associated with employee status.

The People sought, and the trial court entered, a preliminary injunction prohibiting Uber and Lyft from misclassifying their drivers as independent contractors in violation of Assembly Bill 5. The Court of Appeal affirmed in an October 2020 opinion (People v. Uber Technologies, Inc., 56 Cal.App.5th 266) .

Following the passage of Proposition 22, which altered the standards for determining whether app-based drivers are independent contractors (Bus. & Prof. Code, § 7451), the People and Uber and Lyft stipulated to dissolve the preliminary injunction, which had been stayed since it was entered. The People’s operative first amended and supplemental complaint clarifies that the People seek injunctive relief to the extent Proposition 22 is unconstitutional or otherwise invalid.

In August 2020, the Labor Commissioner filed separate actions against Uber and Lyft, pursuant to her enforcement authority under the Labor Code. (E.g., Lab. Code, §§ 61, 90.5, 95, 98.3, subd. (b).) The Labor Commissioner alleges Uber and Lyft have misclassified drivers as independent contractors and have thus violated certain Labor Code provisions and wage orders. The Labor Commissioner seeks injunctive relief, civil penalties payable to the state, and unpaid wages and other amounts alleged to be due to Uber’s and Lyft’s drivers, such as unreimbursed business expenses.

The People’s action and the Labor Commissioner’s actions were coordinated (along with other cases not involved in this appeal) as part of Uber Technologies Wage and Hour Cases.

Uber and Lyft filed motions to compel arbitration in the People’s action; and filed similar motions in the Labor Commissioner’s actions, to the extent they seek remedies that Uber and Lyft characterize as “driver-specific” or “individualized” relief, such as restitution under the UCL and unpaid wages under the Labor Code. In their motions, Uber and Lyft relied on arbitration agreements they entered into with drivers.

The trial court denied the motion, and the Court of Appeal affirmed in the published case of In re Uber Technologies Wage and Hour Cases -A166355 (October 2023).

Uber and Lyft contend the arbitration agreements they entered into with their drivers require that portions of the civil enforcement actions brought by the People and the Labor Commissioner be compelled to arbitration.

The trial court correctly concluded there is no basis to compel arbitration here because the People and the Labor Commissioner are not parties to the arbitration agreements Uber and Lyft entered into with their drivers. Uber and Lyft contend arbitration nevertheless should be compelled on the basis of either (1) federal preemption or (2) equitable estoppel.

The Court of Appeal disagreed. The United States Supreme Court has emphasized that, while the FAA embodies a strong federal policy in favor of enforcing parties’ agreements to arbitrate, that policy is founded on the parties’ consent, and there is no policy in favor of requiring arbitration of disputes the parties have not agreed to arbitrate. (Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. __, __  [142 S.Ct. 1906, 1918].

We reject Uber’s and Lyft’s suggestion that the People and the Labor Commissioner should be bound because they allegedly are mere proxies for Uber’s and Lyft’s drivers.” … “The relevant statutory schemes expressly authorize the People and the Labor Commissioner to bring the claims (and seek the relief) at issue here. (Bus. & Prof. Code, §§ 17203, 17204, 17206).

“The order denying Uber’s and Lyft’s motions to compel arbitration of, and to stay, the People’s and the Labor Commissioner’s actions is affirmed.”