Ali Razak v. Uber Technologies Inc ( 2020 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______________
No. 18-1944
______________
ALI RAZAK; KENAN SABANI; KHALDOUN
CHERDOUD, INDIVIDUALLY AND ON BEHALF OF
ALL OTHERS SIMILARLY SITUATED,
Appellants
v.
UBER TECHNOLOGIES, INC.; GEGEN, LLC
______________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil No. 2-16-cv-00573)
District Judge: Hon. Michael M. Baylson
______________
Argued January 15, 2019
______________
Before: SMITH, Chief Judge, GREENAWAY, JR., and
PORTER, Circuit Judges.
(Opinion Filed: March 3, 2020)
Jeremy E. Abay
John K. Weston
Sacks Weston Diamond
1845 Walnut Street
Suite 1600
Philadelphia, PA 19103
Ashley Keller [ARGUED]
Seth A. Meyer
Keller Lenkner
150 North Riverside Plaza
Suite 2570
Chicago, IL 60654
Counsel for Appellants
Sharon M. Dietrich
Community Legal Services
1424 Chestnut Street
Philadelphia, PA 19102
Amicus Appellants
Sophia Behnia
Littler Mendelson
333 Bush Street
34th Floor
San Francisco, CA 94104
Wendy S. Buckingham
Paul C. Lantis
Littler Mendelson
1601 Cherry Street
Suite 1400, Three Parkway
2
Philadelphia, PA 19102
Robert W. Pritchard [ARGUED]
Joshua Vaughn
Littler Mendelson
625 Liberty Avenue
EQT Plaza, 26th Floor
Pittsburgh, PA 15222
Andrew M. Spurchise
Littler Mendelson
900 Third Avenue
8th Floor
New York, NY 10022
Counsel for Appellees
Gabriel K. Gillett
Jenner & Block
353 North Clark Street
Suite 4500
Chicago, IL 60654
Adam G. Unikowsky
Jenner & Block
1099 New York Avenue
Suite 900
Washington, DC 20001
Amicus Appellees
______________
OPINION
______________
3
GREENAWAY, JR., Circuit Judge.
This case is an appeal from a grant of summary judgment on
the question of whether drivers for UberBLACK are
employees or independent contractors within the meaning of
the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201–
219, and similar Pennsylvania state laws. For the following
reasons, we will vacate the District Court’s grant of summary
judgment and remand for further proceedings.
I. Facts 1
Plaintiffs Ali Razak, Kenan Sabani, and Khaldoun Cherdoud 2
(collectively, “Plaintiffs”) are Pennsylvania drivers who utilize
Defendant Uber Technologies’ ride-sharing mobile phone
application (“Driver App”). Plaintiffs bring this action on
behalf of a putative class of all persons who provide limousine
1
The facts recited in this section are undisputed except as
otherwise noted.
2
Plaintiffs argue that each Plaintiff should be viewed as an
individual for FLSA analysis purposes. However, the FLSA
analysis would remain the same regardless of whether
Plaintiffs are treated collectively or individually. See United
States v. Cook, 795 F.2d 987 (Fed. Cir. 1986). Additionally,
Plaintiffs do not present significantly distinguishable facts, as
all are self-incorporated drivers and have made similar choices
regarding business opportunities within the UberBLACK
platform.
4
services, now known as UberBLACK, through Defendant’s
Driver App in Philadelphia, Pennsylvania. 3 Plaintiffs bring
individual and representative claims against Uber
Technologies, Inc. and its wholly-owned subsidiary, Gegen,
LLC, (“Gegen,” and collectively, “Uber”) for violations of the
federal minimum wage and overtime requirements under the
FLSA, the Pennsylvania Minimum Wage Act (“PMWA”), and
the Pennsylvania Wage Payment and Collection Law
(“WPCL”).
Plaintiffs Razak, Sabani, and Cherdoud each own and operate
independent transportation companies (“ITCs”) 4 Luxe
Limousine Services, Inc. (“Luxe”), Freemo Limo, LLC
(“Freemo”), and Milano Limo, Inc. (“Milano”), respectively.
In order for drivers to contract to drive for UberBLACK, they
must form ITCs. Each ITC, in turn, enters into a Technology
Services Agreement with Uber. The Technology Services
Agreement includes a Software License and Online Services
Agreement that allows UberBLACK drivers to utilize the
3
This case only pertains to UberBLACK drivers, and not
drivers for other Uber platforms, such as UberX or UberPool.
All references to “Uber drivers” only pertain to “UberBLACK
drivers” in Philadelphia.
4
ITCs are independent companies “in the business of
providing transportation services.” App. 385. Some ITCs are
self-incorporated solo drivers, while others, like Plaintiffs’
ITCs, are larger companies that work with additional drivers
who utilize the Uber Driver App. Uber directly contracts with
an ITC via their Technology Services Agreement.
5
technology service Uber provides to generate leads, as well as
outlines the relationship between ITCs and Uber riders, ITCs
and Uber, and ITCs and their drivers. Additionally, it describes
driver requirements, vehicle requirements, financial terms, and
contains an arbitration clause for dispute resolution between
ITCs and Uber.
Uber also requires that drivers sign a Driver Addendum, 5
which is a legal agreement between the ITC and the for-hire
driver, before a driver can utilize the Driver App. The Driver
Addendum allows a driver to receive “lead generation and
related services” through Uber’s Driver App. App. 409. The
Addendum also outlines driver requirements (such as
maintaining a valid driver’s license), insurance requirements,
dispute resolution, and the “Driver’s Relationship with Uber,”
in which Uber uses clear language to attempt to establish the
parameters of the Driver’s working relationship with Uber. 6
App. 411.
5
The Driver Addendum states, “[i]n order to use the Uber
Services, Driver and Transportation Company must agree to
the terms and conditions that are set forth below. Upon
Driver’s execution (electronic or otherwise) of this Addendum,
Driver and Transportation Company shall be bound by the
terms and conditions set forth herein.” App. 409.
6
Boilerplate language in the Driver Addendum to the
Technology Services Agreement sets forth, among other
things, that ITCs “acknowledge[] and agree[] that Uber is a
technology services provider” that “does not provide
transportation services, function as a transportation carrier, nor
6
For UberBLACK, Uber holds a certificate of public
convenience from, and is licensed by, the Philadelphia Parking
Authority (“PPA”) to operate a limousine company.
Transportation companies and individual transportation
providers who provide Black car services in Philadelphia are
required to hold a PPA certificate of public convenience or
associate with an entity that holds such a certificate. Some
UberBLACK transportation providers operate under the PPA
certificate held by Uber. Luxe, an ITC owned by Razak,
operates under its own PPA certificate. Additionally,
approximately 75% of UberBLACK drivers use Uber’s
automobile insurance.
Plaintiffs claim that they are employees, and sue Uber for
violations of minimum wage and overtime requirements under
federal and state laws. Under the FLSA, employers must pay
employees the applicable minimum wage for each hour
worked, and, if an employee works more than forty hours in a
given week, the employer must pay one and a half (1 ½) times
operate[s] as a broker for transportation of passengers . . . .”
App. 13. “ITCs shall provide all necessary equipment; Uber
does not direct or control ITCs or their drivers generally or in
their performance.” Id. “ITCs and their drivers retain the sole
right to determine when, where, and for how long each of them
will utilize the Driver App or the Uber Service, and ITCs agree
to pay Uber a service fee on a per transportation services
transaction basis.” Id. ITCs must also “maintain during the
term of this Agreement workers’ compensation insurance for
itself and any of its subcontractors . . . .” Id. The Driver
Addendum also sets forth and requires that the relationship
between the ITCs and their drivers is “contractual or [an]
employment arrangement.” Id.7
the regular rate for each hour subsequently worked. 29 U.S.C.
§§ 206–207. Plaintiffs contend that time spent online on the
Uber Driver App qualifies as compensable time under the
FLSA. Principal among Plaintiffs’ arguments is that Uber
controls the access and use of the Driver App.
To access Uber services, drivers open the Driver App on a
mobile device, log in, and tap a button to be online. Once
online, a driver can choose to accept a trip, but if the driver
does not accept the trip within fifteen seconds of the trip
request, it is deemed rejected by the driver. The Driver App
will automatically route the trip request to the next closest
driver, and if no other driver accepts the trip, the trip request
goes unfulfilled, as Uber cannot require any driver to accept a
trip. UberBLACK drivers are free to reject trips for any reason,
aside from unlawful discrimination. However, if a driver
ignores three trip requests in a row, the Uber Driver App will
automatically move the driver from online to offline, such that
he cannot accept additional trip requests.
Uber sets the financial terms of all UberBLACK fares, and
riders pay by having their credit cards linked to the App. After
a ride is completed, Uber charges the rider’s credit card for the
fare. Uber then deposits the money into the transportation
company’s Uber account with a commission taken out by
Uber. The transportation company then distributes the
payment to the driver who provided the ride.
Uber also has regulations under which it logs off drivers for a
period of six hours if the driver reaches Uber’s twelve-hour
driving limit. Trip requests are generally sent to the driver
closest in proximity to the requesting rider, and drivers have no
way of knowing from the Uber Driver App what the demand
for drivers is at any given time (and thus, how much their
8
earnings will be based on that demand). Drivers also do not
know where a rider’s final destination is prior to accepting the
ride.
There is one exception affecting a driver’s ability to accept trip
requests from anywhere in Philadelphia. If a driver is at one of
Philadelphia’s major transportation hubs: 30th Street Train
Station or Philadelphia International Airport, he must utilize a
“queue” system that routes trips to the next driver in the queue,
and the driver can only enter, or advance in, the queue while
physically located inside a designated zone.
On appeal, Uber reasserts that Plaintiffs are not employees as
a matter of law, and therefore, their putative class action should
be subject to summary judgment. To support this contention,
Uber portrays UberBLACK drivers as entrepreneurs who
utilize Uber as a software platform to acquire trip requests.
Uber asserts that Plaintiffs are not restricted from working for
other companies, pay their own expenses, and on some
occasions, engage workers for their own ITCs. They can use
UberBLACK as little or as much as they want or choose not to
work for UberBLACK and instead work for competitors such
as Blacklane and Lyft.
Uber asserts that it places no restrictions on drivers’ ability to
engage in personal activities while online. Plaintiffs in this
matter engaged in a range of personal activities, including
accepting rides from private clients, accepting rides from other
rideshare programs, sleeping, running personal errands,
smoking cigarettes, taking personal phone calls, rejecting
UberBLACK trips because they were tired, and conducting
personal business.
9
Alternatively, Plaintiffs claim that they are “employees” under
the FLSA because they are controlled by Uber when they are
online and perform an integral role for Uber’s business. The
District Court agreed with Uber’s position, and granted Uber’s
Motion for Summary Judgment on the question of whether
Plaintiffs qualify as “employees” of Uber under the FLSA and
PMWA. Plaintiffs now appeal from the summary judgment
order.
II. Procedural History
Plaintiffs commenced this action in the Court of Common
Pleas of Philadelphia County on January 6, 2016. Defendants
successfully removed the action to the United States District
Court for the Eastern District of Pennsylvania asserting federal
question and diversity jurisdiction. Uber moved to dismiss the
case and compel arbitration. Alternatively, as a separate matter,
Uber moved to stay this action. The District Court denied both
motions, concluding that Plaintiffs had complied with the
arbitration opt-out procedures allowed by the Technology
Services Agreement. Uber then moved for judgment on the
pleadings, which the District Court granted in part and denied
in part. The District Court found that Plaintiffs alleged
sufficient facts to support that they were “employees” instead
of “independent contractors,” such that judgment on the
pleadings was not appropriate.
Plaintiffs filed an Amended Complaint on October 13, 2016,
and Uber moved to dismiss Plaintiffs’ Amended Complaint in
its entirety, as well as moved to strike certain portions of the
Amended Complaint in the alternative. The District Court
denied the motion to dismiss. The Court found that Plaintiffs’
allegations that they were logged into the Uber Driver App and
eligible to receive trip requests from prospective UberBLACK
10
riders (“Online”) for more than 40 hours was sufficient to state
a claim at the pleading stage under the FLSA. However, the
District Court found that the question of whether Plaintiffs’
time spent online was actually compensable work time within
the meaning of the FLSA was a dispositive issue, and
designated the issue of compensability of Plaintiffs’ online
time for expedited discovery.
After substantial discovery, Uber moved for partial summary
judgment on the limited issue of whether, assuming that
Plaintiffs qualify as “employees” and Uber as an “employer”
under the FLSA for purposes of the motion only, the time they
spent online on the Uber Driver App is compensable work time
under the FLSA, and by extension, the PMWA. The Court
ultimately denied the motion for partial summary judgment,
determining that the compensability question at issue in the
motion “may be inextricably intertwined with the threshold
employee versus independent contractor question.” App. 8.
After discovery was fully complete, Uber filed its motion for
summary judgment on the dispositive question of whether
Plaintiffs are employees or independent contractors. The
District Court granted Uber’s motion for summary judgment
determining that Plaintiffs do not qualify as “employees” of
Uber under the FLSA and PMWA. As a matter of law, the
District Court found that Plaintiffs did not meet their burden to
show that they are employees of Uber. Plaintiffs timely
appealed from the summary judgment order.
III. Applicable Law: Donovan v. DialAmerica Marketing,
Inc.
The minimum wage and overtime wage provisions at issue all
require that Plaintiffs prove that they are “employees.” 29
11
U.S.C. §§ 203, 206–207. Although Plaintiffs’ case includes
claims under the PMWA, Pennsylvania state courts have
looked to federal law regarding the FLSA for guidance in
applying the PMWA. See Dep’t of Labor & Indus. v. Stuber,
822 A.2d 870, 873 (Pa. Commw. Ct. 2003), aff’d, 859 A.2d
1253 (Pa. 2004). The FLSA defines “employer” as
“includ[ing] any person acting directly or indirectly in the
interest of an employer in relation to an employee,” and
“employee” as “any individual employed by an employer.” 29
U.S.C. §§ 203(d), (e)(1). Given the circularity of the
definitions, federal courts, with guidance from the Department
of Labor, have established standards to determine how to
define employee and employer.
The Third Circuit utilizes the test outlined in Donovan v.
DialAmerica Marketing, Inc., 757 F.2d 1376 (3d Cir. 1985), to
determine employee status under the FLSA. This seminal case
acknowledges that when Congress promulgated the FLSA, it
intended it to have the “broadest definition of ‘employee.’”
See id. at 1382 (citing 81 Cong. Rec. 7657 (remarks of Senator
Hugo L. Black)). In DialAmerica, we used six factors—and
indeed adopted the Ninth Circuit’s test—to determine whether
a worker is an employee under the FLSA:
1) the degree of the alleged employer’s right to
control the manner in which the work is to be
performed; 2) the alleged employee’s
opportunity for profit or loss depending upon his
managerial skill; 3) the alleged employee’s
investment in equipment or materials required
for his task, or his employment of helpers; 4)
whether the service rendered required a special
skill; 5) the degree of permanence of the
working relationship; [and] 6) whether the
12
service rendered is an integral part of the alleged
employer’s business.
Id. (quoting Donovan v. Sureway Cleaners, 656 F.2d 1368(9th Cir. 1981)).
Our decision in DialAmerica is consistent with the Supreme
Court’s general guidance in Rutherford Food Corp. v.
McComb, 331 U.S. 722 (1947). In Rutherford, the Supreme
Court first determined “employee” status under the FLSA. Id.at 728–30. And in DialAmerica, we agreed with Sureway
Cleaners that “neither the presence nor absence of any
particular factor is dispositive.” 757 F.2d at 1382. Therefore,
“courts should examine the circumstances of the whole
activity,” determining whether, “as a matter of economic
reality, the individuals are dependent upon the business to
which they render service.” Id. (internal citations and
quotation marks omitted). The burden lies with Plaintiffs to
prove that they are employees. See, e.g., Anderson v. Mt.
Clemens Pottery Co., 328 U.S. 680, 686–87 (1946) (a plaintiff
who brings suit under the FLSA “has the burden of proving
that he performed work for which he was not properly
compensated”) (internal citations omitted).
IV. The District Court Opinion
The District Court granted summary judgment to Uber ruling
that drivers for UberBLACK are independent contractors
within the meaning of the FLSA and similar Pennsylvania
laws. The District Court, in applying the six factors, relied
heavily on the analysis in DialAmerica and other cases that had
examined the use of internet or app-based programs for
acquiring work.
13
The District Court applied all six factors in DialAmerica, and
on balance, found that Plaintiffs were independent contractors.
There were four factors the Court applied that were interpreted
in favor of independent contractor status. The District Court
analyzed the employer’s right to control the manner in which
the work is to be performed and noted that the written
agreements entered into by the Plaintiffs and their
transportation companies, in addition to the ability of Plaintiffs
to hire sub-contractors and work for competing companies,
point to a lack of control by Uber. Next, the District Court
analyzed the alleged employees’ opportunity for profit or loss
and found that this also supports independent contractor status.
The District Court found that Plaintiffs can work as much or as
little as they would like and choose not to accept trip requests
where the opportunity for profit was greater to work for
themselves or competitors. Because the “profit-loss” factor
does not require that Plaintiffs be solely in control of their
profits or losses, Plaintiffs were unsuccessful in convincing the
District Court that they were employees despite the fact that
Uber retains the right to determine how much to charge
passengers and which driver receives which trip request.
UberBLACK drivers must purchase or lease their own
expensive vehicle to drive for UberBLACK, demonstrating
independent status as well. And the “relationship permanence”
can be as long or non-existent as the driver desires, again
illustrating the impermanent working relationships often found
with independent contractors.
The District Court determined that only two factors militated
in Plaintiffs’ favor. As limousine drivers, the service they
render does not really require a special skill. Second, the
limousine driving service rendered to Uber by UberBLACK
drivers is an essential part of Uber’s business as a
14
transportation company. The District Court held that the
movant demonstrated that there was no genuine dispute as to
any material fact, and that a majority of the DialAmerica
factors leaned against employment status. The District Court
granted Uber’s motion for summary judgment and determined
that Plaintiffs were independent contractors.
V. Jurisdiction and Standard of Review
The District Court had subject matter jurisdiction over the
Plaintiffs’ FLSA claims under 28 U.S.C. § 1331. The District
Court had and executed supplemental jurisdiction over the
Plaintiffs’ state law claims under 28 U.S.C. § 1367. This Court
has appellate jurisdiction under 28 U.S.C. § 1291 because the
District Court’s order granting summary judgment is a final
order.
This Court exercises plenary review over a District Court’s
grant of summary judgment. Aruajo v. N.J. Transit Rail
Operations, Inc., 708 F.3d 152, 156 (3d Cir. 2013). This Court
can affirm a grant of summary judgment only if “there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
A factual dispute is “genuine” if the “evidence is such that a
reasonable jury could return a verdict for the nonmoving
party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). A factual dispute is “material” if it “might affect the
outcome of the suit under the governing law.” Id. The Court
must view the facts and evidence presented on the motion in
the light most favorable to the nonmoving party. Id. at 255. In
attempting to defeat summary judgment, “[s]peculation and
conclusory allegations do not satisfy [the nonmoving party’s]
duty.” Ridgewood Bd. of Educ. v. N.E. ex rel. M.E., 172 F.3d
238, 252 (3d Cir. 1999).
15
VI. Analysis
A. Genuine Disputes of Material Fact Exist
For summary judgment to have been appropriate, there must
have been no genuine disputes as to any material facts on the
record, entitling Uber to judgment as a matter of law. See Fed.
R. Civ. P. 56(a). As such, if there is a genuine dispute of
material fact, the question of which DialAmerica factors favor
employee status is a question of fact that should go to a fact-
finder. Here, the ultimate question of law is whether Plaintiffs
are employees or independent contractors, which is for a judge
to decide. But, if a court finds that there are any issues of fact
that remain in dispute, it must resolve those disputes prior to
granting summary judgment. See DialAmerica, 757 F.2d at
1381. In DialAmerica, the parties stipulated to some facts and
reserved the right to present testimony on any remaining
disputed issues. Then, the district court held an evidentiary
hearing on the remaining disputed issues of fact:
(1) the extent to which home researchers and
distributors were dependent on DialAmerica;
(2) the extent to which they had an
opportunity for profit or loss;
(3) the extent to which they exercised
initiative, business judgment, or foresight in their
activities;
(4) the extent of any financial investment in
conjunction with their work for DialAmerica;
and
(5) the extent to which the services provided
by the home researchers and distributors were an
integral part of DialAmerica’s business.
16
Id.These factual issues refer directly to the factors which
determine whether someone is an employee or independent
contractor. The district court resolved these disputes and
granted DialAmerica’s motion for summary judgment. We
reviewed the district court’s decision in DialAmerica and
determined that summary judgment was a mischaracterization,
but the proper outcome, as all the factual disputes were
resolved prior to adjudication on the merits. 7 Id. at 1381, 1388.
DialAmerica teaches that where there are questions of fact that
need resolution, these questions must go to a fact-finder. 8 This
7
In DialAmerica, Judge Becker noted that, because the district
court held a two-day hearing to find relevant facts, this Court
would “simply treat the [district] court’s letter opinions as the
findings of facts and conclusions of law required by Fed. R.
Civ. P. 52, and its orders as judgments entered after trial
pursuant to Fed. R. Civ. P. 58.” 757 F.2d at 1381–82. Here,
that avenue is not available to us, as no evidentiary hearing was
held to find relevant facts to determine if summary judgment
was appropriate.
8
An important distinction exists between a factual dispute, and
a factual dispute that is material. Summary judgment is
correctly granted in many situations where the parties
genuinely dispute facts but where the dispute is not material to
the adjudication of the case. See, e.g., Verma v. 3001 Castor,
Inc., 937 F.3d 221, 229 (3d Cir. 2019) (granting summary
judgment on the question of employee versus independent
contractor status, but noting that “[i]n some cases, one or more
17
case presents such genuine disputes of material facts. Uber
submitted a Statement of Undisputed Material Facts to which
Plaintiffs responded with almost a hundred pages of disputes.
For example, disputed facts include whether Plaintiffs are
operating within Uber’s system and under Uber’s rules, and
whether Plaintiffs or their corporations contracted directly with
Uber. Although the District Court states that its decision
derived from undisputed facts, the disputes presented by the
parties go to the core of the DialAmerica factors and present a
genuine dispute of material facts. Accordingly, we will
remand to the District Court as summary judgment was
inappropriate.
B. The “Right to Control” Factor
To illustrate that there are genuine disputes remaining, we look
to the first DialAmerica factor: “the degree of the alleged
employer’s right to control the manner in which the work is to
be performed.” DialAmerica, 757 F.2d at 1382 (citation
omitted). While not dispositive, this factor is highly relevant
to the FLSA analysis. The District Court in this case held that
the first factor supported a finding of independent contractor
status. Actual control of the manner of work is not essential;
genuine issues of fact concerning the relevant economic
relations may preclude a trial court from drawing a conclusion
as a matter of law on the . . . issue[,]” and addressing that it
would be appropriate for those cases to go to trial so that the
genuine disputes of material fact be resolved by the jury).
Here, genuine disputes of material fact exist because certain
facts bear on how the DialAmerica factors will be resolved.
18
rather, it is the right to control which is determinative. Drexel
v. Union Prescription Ctrs., 582 F.2d 781, 785 (3d Cir. 1978).
The parties contest whether Uber exercises control over
drivers. While Uber categorizes drivers as using the Uber App
to “connect with riders using the UberBLACK product,” App.
486, which may imply that drivers independently contract with
riders through the platform, Plaintiffs contend that this is not
so. Uber also contends that drivers can drive for other services
while driving for Uber, however Plaintiffs contend that while
“online” for Uber, they cannot also accept rides through other
platforms. Plaintiffs reference Uber’s Driver Deactivation
Policy that establishes that “soliciting payment of fares outside
the Uber system leads to deactivation” and “activities
conducted outside of Uber’s system—like anonymous
pickups—are prohibited.” App. 487.
Uber also asserts that it does not control the “schedule start or
stop times” for drivers or “require them to work for a set
number of hours.” App. 536. Again, Plaintiffs dispute this,
stating that the Uber Owner/Operator Agreement states, “[the]
frequency with which [Uber] offers Requests to [the driver]
under this Agreement shall be in the sole discretion of the
Company” and “the number of trip requests available to
Plaintiffs is largely driven by Uber.” Id.The above factual disputes all go to whether Uber retains the
right to control the Plaintiffs’ work. The District Court in its
analysis acknowledged what the Plaintiffs asserted, but
assigned little value to their assertions in light of Uber’s
contractual agreement with Plaintiffs, Uber’s assertion that
Plaintiffs are permitted to hire sub-contractors, and that
“plaintiffs and their helpers are permitted to work for
competing companies.” App. 31. However, whether Plaintiffs
19
are considered to “work” for a competing company while being
“online” on the Uber Driver App is also a disputed factual
issue. This illustrates why summary judgment was
inappropriate at this stage.
Further, these and other disputed facts regarding control
demonstrate why this case was not ripe for summary judgment.
For example, Plaintiffs assert that “Uber does punish drivers
for cancelling trips,” App. 539, and “Uber coerces
UberBLACK drivers to go online and accept trips by making
automatic weekly deductions against their account.” App. 538.
Plaintiffs additionally assert that they derived all of their
income for their respective businesses from Uber in certain
years, which Uber disputes.
Although both parties argue that there are no genuine disputes
regarding control, the facts adduced show otherwise. While
Uber determines what drivers are paid and directs drivers
where to drop off passengers, it lacks the right to control when
drivers must drive. UberBLACK drivers exercise a high level
of control, as they can drive as little or as much as they desire,
without losing their ability to drive for UberBLACK.
However, Uber deactivates drivers who fall short of the 4.7-
star UberBLACK driver rating and limits the number of
consecutive hours that a driver may work.
C. Opportunity for Profit or Loss Depending on
Managerial Skill
As with the right to control, the District Court held that there
was no genuine dispute as to another factor—the opportunity
for profit or loss depending on managerial skill. Again, we
disagree with the District Court’s conclusion. The District
Court, in this case, ruled that this factor strongly favored
20
independent contractor status because drivers could be
strategic in determining when, where, and how to utilize the
Driver App to obtain more lucrative trip requests and to
generate more profits. Plaintiffs could also work for
competitors and transport private clients. 9
However, other material facts reveal that there was and still is
a genuine dispute. For example, Uber decides (1) the fare; (2)
which driver receives a trip request; (3) whether to refund or
9
Indeed, the District Court stressed Plaintiffs’ ability “to make
money elsewhere[.]” App. 35. Yet, based on our precedent, it
is unclear whether this factor looks only toward opportunity for
profit or loss within the alleged employment relationship or
whether it also contemplates one’s ability to make money
elsewhere—as such, external factors, such as the ability to earn
outside revenue without terminating the Uber-driver
relationship, may be irrelevant to the analysis. See Martin v.
Selker Bros., Inc., 949 F.2d 1286, 1294 (3d Cir. 1991) (noting
that “station operators had no meaningful opportunities for
profit nor . . . loss, because the volume of business depended
upon the location of each station rather than upon the
managerial skills of the operators” but not discussing whether
station operators had other jobs elsewhere); see also Saleem v.
Corp. Transp. Grp., Ltd., 854 F.3d 131, 141–42 (2d Cir. 2017)
(considering a worker’s ability to earn income from
competitors and other sources, but emphasizing that “it is not
what Plaintiffs could have done that counts, but as a matter of
economic reality what they actually do that is dispositive.”
(internal citation, alteration, and quotation marks omitted)). As
this argument was not able to be developed by the parties, this,
along with other material factual disputes, is ripe to be
developed at trial.
21
cancel a passenger’s fare; and (4) a driver’s territory, which is
subject to change without notice. Moreover, 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, like advertising and price
setting, are also controlled by Uber. 10 Under the
circumstances, we believe that a reasonable fact-finder could
rule in favor of Plaintiffs. 11 Thus, summary judgment was
inappropriate.
10
The District Court also considered “Plaintiffs investments in
their own companies” as “relevant to the ‘profit and loss’
factor,” as weighing “heavily in favor of ‘independent
contractor’ status.” App. 36. But, as stated earlier, parties
frame this issue differently and assert different facts—again
showing that summary judgment was inappropriate. For
example, Uber asserts that Plaintiff Razak’s ITC Luxe
Limousine Services, Inc. invested in up to sixteen vehicles and
had as many as fourteen to seventeen drivers. And while
Plaintiffs do not deny that they invested in their personal
vehicles, which they use to provide UberBLACK rides, as
discussed already, there is an inherent dispute regarding
whether drivers are allowed to exercise judgment and select the
farthest rides for the largest payment, as Uber determines
which driver is given which rider.
11
We also note that the District Court did not interpret whether
Plaintiffs could in actuality exercise any managerial skill while
being “online” to increase their profits, only that they could
22
D. Remaining DialAmerica Factor Analysis
Of the remaining factors, some do not require further
factfinding, while others still do. The fifth factor, degree of
permanence of the working relationship, has genuine disputes
of material fact. On one hand, Uber can take drivers offline,
and on the other hand, Plaintiffs can drive whenever they
choose to turn on the Driver App, with no minimum amount of
driving time required.
Alternatively, the fourth factor, whether the service rendered
requires a special skill, is clearer. It is generally accepted that
“driving” is not itself a “special skill.” Alexander v. FedEx
Ground Package Sys., Inc., 765 F.3d 981, 995 (9th Cir. 2014).
Although there may be a distinction between “driving” and
“replicat[ing] the limousine experience,” as noted by the
District Court, it is not enough to overcome the presumption
that driving is not a special skill. App. 38. This fourth factor
certainly weighs in favor of finding that Plaintiffs are
employees. 12
potentially choose to perform other jobs to make a greater
profit.
12
Lastly, the District Court found that the work UberBLACK
drivers provide is integral to the service Uber renders under the
sixth DialAmerica factor. Simply put by the District Court, “it
seems beyond dispute that if Uber could not find drivers, Uber
would not be able to function.” App. 40. We acknowledge
that Uber strenuously disputes this finding, insisting instead
that it is a technology company that supports drivers’
transportation businesses, and not a transportation company
23
VII. Conclusion
In reviewing the District Court decision de novo, we determine
summary judgment was inappropriate because genuine
disputes of material facts remained. We do not opine on
whether the disputed facts should be resolved by a jury or the
District Court through a Rule 52 proceeding, as was the case in
DialAmerica. However, these material factual disputes must
be resolved. For the foregoing reasons, we will remand the
matter for further proceedings.
that employs drivers. We also believe this could be a disputed
material fact that should be resolved by a fact-finder.
24