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 Three drivers sued Uber in a federal court in San Francisco,
contending they are employees and entitled to reimbursement for
expenses, including gas and vehicle maintenance. The drivers
currently pay those costs themselves.
The results of Uber's legal battle could reshape the sharing
economy, which is built around Internet companies that serve as
marketplaces matching people who provide a service with others
looking to pay for it.
In the ruling on Tuesday, U.S. District Judge Edward Chen in San
Francisco said California drivers could sue as a group on the
question of whether they are employees or contractors, and over
their demand for payment of tips that were not passed on to them.
Drivers' attorneys must submit more evidence to sue as a group for
reimbursement of other expenses.
Chen also said Uber drivers who have worked for the service since
May 2014 must specifically opt out of an arbitration agreement in
order to sue the company.
 Class action status generally gives plaintiffs more leverage to
negotiate a settlement. In a statement, Uber said it will appeal,
but that the arbitration portion of Chen's ruling means a "tiny
fraction" of a potential 160,000 California drivers are eligible to
be class members. Additionally, one of the three drivers who sued is
no longer eligible to represent the class, Uber said.
Shannon Liss-Riordan, a lawyer who represents drivers in the case,
said Uber's characterization of the size of the class is "not
correct," and that "many thousands" will be part of the lawsuit.
"This decision is a major victory for Uber drivers," Liss-Riordan
said.
Uber had argued that the drivers should not be allowed to sue as a
group because they have little in common and relate to the company
in different ways.
However, Chen wrote that there is an "inherent tension" in Uber's
argument.
"On one hand, Uber argues that it has properly classified every
single driver as an independent contractor," Chen wrote.
On the other, Chen wrote, Uber argues that individual drivers are so
unique that the court, "unlike, apparently, Uber itself," cannot
make its own determination.
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Uber and other companies, including Lyft and Handy, say the
contractor model allows for flexibility that many see as important
to their success.
An ultimate finding that drivers are employees could raise Uber's
costs beyond the lawsuit's scope and force it to pay Social
Security, workers' compensation, and unemployment insurance.
In June, a California labor commissioner ruled that an Uber driver
was an employee, not a contractor. Uber has appealed that decision.
The debate has spilled into U.S. presidential politics, with
Democratic presidential contender Hillary Clinton in July saying
on-demand companies raise "hard questions" about workplace
protection and what a good job will look like in the future.
In arguing against class action status, Uber had submitted sworn
statements from hundreds of drivers supporting the company. However,
Chen rejected this evidence because the statements could have been
the product of biased questions.
There is simply "no basis," Chen wrote, to support Uber's claim
"that some innumerable legion of drivers prefer to remain
independent contractors rather than become employees."
The case is Douglas O'Connor et al v. Uber Technologies Inc, U.S.
District Court, Northern District of California, No. 13-3826.
(Reporting by Dan Levine; Editing by Tom Brown)
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