Latest Case: Razak v. Uber Technologies Inc (Business Law)

An Important Second Circuit Ruling on Sanctuary Jurisdictions May Have Reached the Right Result, but En Route it Misread the Momentous Sebelius Supreme Court Ruling on Conditional Federal Funding to States

VIKRAM DAVID AMAR

Illinois Law dean and professor Vikram David Amar comments on a recent decision by the U.S. Court of Appeals for the Second Circuit regarding so-called “sanctuary” jurisdictions. Amar argues that while the Second Circuit may have arrived at the correct conclusion of law, it also misunderstood the Supreme Court’s decision in NFIB v. Sebelius, in which the Court struck down the “Medicare expansion” provision of the Affordable Care Act as unconstitutionally coercive. Amar points out that in Sebelius, the Court found the fact that the Medicare expansion provision of the ACA vitiated the terms of a preexisting deal was sufficient to hold that provision coercive.

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Razak v. Uber Technologies Inc

Docket: 18-1944

Opinion Date: March 3, 2020

Judge: Greenaway

Areas of Law: Business Law, Labor & Employment Law

Plaintiffs, drivers who use Uber’s mobile phone application to provide limousine services (UberBLACK) in Philadelphia, claimed violations of the Fair Labor Standards Act (FLSA), 29 U.S.C. 201, and Pennsylvania laws. Plaintiffs each own and operate independent transportation companies (ITCs) as required to drive for UberBLACK. Each ITC’s agreement with Uber includes a Software License and outlines the relationships between ITCs, Uber riders, Uber, and Uber drivers. It describes driver requirements, vehicle requirements, financial terms, and contains an arbitration clause. A mandatory agreement between the ITC and the for-hire driver allows a driver to receive services through Uber’s app and outlines driver requirements, insurance requirements, dispute resolution. Some UberBLACK providers operate under Uber’s Philadelphia certificate of convenience; others hold their own certificates; approximately 75% of UberBLACK drivers use Uber’s automobile insurance. Plaintiffs claim that they are employees and allege that time spent online on the Uber App qualifies as FLSA compensable time. Uber argued that Plaintiffs are not restricted from working for other companies, pay their own expenses, can engage workers for their own ITCs, can use UberBLACK as little or as much as they want, and have no restrictions on personal activities while online. The Third Circuit vacated summary judgment. A reasonable fact-finder could rule in favor of Plaintiffs. Disputed facts include whether Plaintiffs are operating within Uber’s system and under Uber’s rules; whether Plaintiffs or their corporations contracted directly with Uber; and whether Uber exercises control over drivers.