United States District Court, E.D. Pennsylvania
MEMORANDUM RE: DEFENDANTS' MOTION FOR PARTIAL
be the food of the future, log on!
apologies to Shakespeare--the opening line of Twelfth
Night, “If music be the food of love, play
on” providing inspiration--app based ride-sharing is a
disruptive business model in search of a legal
theory. The courts that have dealt with litigation
arising out of ride-sharing technology have struggled to find
an appropriate legal doctrine to fit these novel commercial
relationships. For this case, one challenge is determining
what type of activity includes a driver being “on
call” for an assignment, and whether this status is
“compensable.” Plaintiffs Ali Razak
(“Razak”), Kenan Sabani (“Sabani”),
and Khaldoun Cherdoud (“Cherdoud” and, together
with Razak and Sabani, “Plaintiffs”) have brought
individual and representative claims against Gegen, LLC and
its sole member, Uber Technologies, Inc. (collectively,
“Uber”) for violations of the federal minimum
wage and overtime requirements under the Fair Labor Standards
Act, 29 § U.S.C. 201 et seq.
(“FLSA”), and parallel Pennsylvania state wage
and labor laws. Before the Court is Uber's Motion for
Partial Summary Judgment (ECF 66, “Uber Mot.”) on
the limited question of whether-assuming, for purposes of
this Motion only, that Plaintiffs qualify as
“employees” and Uber as an “employer”
under the FLSA-the time they spent Online the Uber App is
compensable work time under the FLSA, and by extension, the
Court has noted throughout this case, Plaintiffs' claims
advocate for a novel application of the FLSA, particularly
its requirements with respect to time spent “on
call.” Critically, while the FLSA's extension to
“on call” time has heretofore been applied only
to traditional, scheduled shift work, Plaintiffs here ask for
its application in the context of the new “gig economy,
” as Plaintiffs refer to it, where individuals, such as
Plaintiffs, work in accordance with their own personal
schedules. As explained more fully below, the Court decided
to resolve this issue as a threshold matter, the subject of
Uber's motion for partial summary judgment.
following reasons, Uber's Motion for Partial Summary
Judgment will be DENIED, without prejudice, and with leave to
refile at the completion of discovery.
commenced this action on January 6, 2016, by filing a
Complaint in the Court of Common Pleas of Philadelphia
County. (ECF 1, Ex. A). On February 4, 2016, Defendants
removed the action to this court, citing federal question and
diversity jurisdiction. (Id.)
Prior Motion Practice
March 22, 2016, Uber moved for the first time to dismiss this
case and compel arbitration, and, in a separate motion, to
stay this action. (See ECF 15, 18). In those
motions, Uber argued that an order issued by Judge Chen in
the Northern District of California in related cases had
“nullified” the arbitration provision in
Uber's Service Agreement, thereby raising a
“threshold question of arbitrability” that had to
be decided by an arbitrator. Finding that Judge Chen's
order had no such effect, this court concluded that
Plaintiffs had complied with the arbitration opt-out
procedures allowed by the Service Agreement. The Court denied
both motions. (ECF 37); Razak v. Uber Techs., Inc.,
No. 16-cv-573, 2016 WL 3960556, at *1 (E.D. Pa. July 21,
August 19, 2016, Uber moved for Judgment on the Pleadings,
(ECF 38), which, on October 7, 2016, this Court granted in
part, and denied in part. See Razak, 2016 WL
5874822, at *1. Importantly, the Court found that Plaintiffs
had alleged sufficient facts that they qualified as
“employees” rather than “independent
contractors, ” under the “economic
realities” test, such that judgment on the pleadings
was not warranted. Id. at *4-5. Accordingly, the
Court permitted Plaintiffs' minimum wage claims to
proceed as pled. The Court dismissed Plaintiffs' breach
of fiduciary duty claim with prejudice, but Plaintiffs'
FLSA and PMWA overtime claims without prejudice, and with
leave to file an amended complaint. Plaintiffs then filed an
Amended Complaint on October 13, 2016. (ECF 47,
October 31, 2016, Uber moved to dismiss Plaintiffs'
Amended Complaint in its entirety, as well as to strike
certain portions of it (ECF 48). The Court denied the motion
to dismiss. (ECF 54; Razak v. Uber Techs., Inc., No.
16-cv-573, 2016 WL 7241795, at *6 (E.D. Pa. Dec. 14, 2016)).
Specifically, the Court found that Plaintiffs'
allegations that they were Online the Uber App for more than
40 hours in a given week was sufficient-at the pleading
stage-to state a claim for overtime pay under the FLSA.
the Court further found that the question of whether
Plaintiffs' time spent Online the Uber App was actually
compensable work time, within the meaning of the FLSA, was
“an important, potentially dispositive one in this
case.” Id. Accordingly, “notwithstanding
the Court's conclusion that Plaintiffs ha[d] sufficiently
alleged FLSA overtime violations, ” the Court
designated the issue of compensability of Plaintiffs'
Online time for expedited discovery. Id.
Uber's Instant Motion for Partial Summary
substantial discovery, including depositions of Plaintiffs
and certain third parties, as well as other filings, Uber
filed its Motion for Partial Summary Judgment on the limited
issue of the compensability of Plaintiffs' Online time.
While maintaining its position that Plaintiffs are
independent contractors rather than employees, Uber moves on
the basis that even assuming that Plaintiffs did qualify as
“employees” under the FLSA, Plaintiffs' time
spent Online the Uber App, during which they are not actually
transporting riders, is not compensable time under the FLSA.
filed a memorandum in opposition to Uber's Motion (ECF
68, “Pls.' Opp'n), to which they attached a
statement of disputed facts (ECF 68-1). However,
Plaintiffs' submission failed to comply with F.R.C.P.
56(c), as well as this Court's practice order, in that it
failed to provide record citations to support many of their
contentions about disputed facts. Accordingly, the Court
entered an Order requiring Plaintiffs to supplement their
prior filings to comport with the Federal Rules and this
Court's practices. (ECF 79). In Plaintiffs'
supplemental submission (ECF 80, “PSOF2”), they
did include record citations which Plaintiffs claim support
their contentions regarding disputed facts; however a close
look at the underlying documents cited reveals that many of
them do not create a genuine dispute of fact. For instance,
Plaintiffs rely significantly on Uber's written
regulations, without any evidence that Plaintiffs themselves
suffered any loss of compensation or other detriment on
account of these regulations. Plaintiffs assert the following
(1) Whether the Uber App limits Plaintiffs' ability to
ignore, reject, and cancel UberBLACK requests (see
PSOF2 ¶ 13).
Plaintiffs cite Uber regulations in support, which state, in
pertinent part, Uber “reserves the right to immediately
deactivate” drivers' access to the software and
service in the event that they “refus[e] to fully
complete a trip after acceptance of a trip request, as
described in the Software License and Online Service
Agreement, without waiver by the Uber or Uber.” (ECF
68-13, “Driver Addendum”).
(2) Whether too many rejected trips affect a driver's
“acceptance rate, ” which, at a certain
impermissibly low level, subjects drivers to termination or
deactivation. (PSOF2 ¶¶ 41-44).
Plaintiffs cite Uber regulations in support, which state, in
pertinent part, “[h]igh acceptance rates are a critical
part of reliable, high quality service, but not accepting
trip requests does not lead to permanent loss of your
account. . . But not accepting dispatches causes delays and
degrades the reliability of the system. If you don't want
to accept trips, just log off. If you consistently decline
trip requests, we will assume you do not want to accept more
trips and you may be logged out of the app.” (ECF 68-6,
“Uber Community Guidelines”).
(3) Whether drivers can immediately go back Online if they
decline three consecutive trips and are automatically
switched offline. (PSOF2 ¶¶ 16, 29).
Plaintiffs cite Uber regulations in support, which state, in
pertinent part, “[w]hat lead to deactivation? We will
deactivate any account or accounts (including permanently)
associated with fraudulent activity, which may include . . .
accepting trips without intention to complete.”). (ECF
68-8 at 9, “Driver Deactivation Policy”).
(4) Whether cancelling a ride after accepting it subjects
drivers to deactivation. (PSOF2 ¶ 19).
Plaintiffs again cite portions of Uber's Driver Addendum
and Driver Deactivation Policy in support.
(5) Whether drivers' accounts may be suspended or
terminated if their “cancellation rate” gets
above a certain acceptable level. (PSOF2 ¶ 19).
Plaintiffs cite Uber's Driver Deactivation Policy in
support, which states, in pertinent part, “[e]ach city
has a maximum cancellation rate, based on the average
cancellation rate of the drivers in that area. We will alert
you multiple times if your cancellation rate is much higher
than other drivers in your city, after which you may not be
able to go online for a short period of time. If your
cancellation rate continues to exceed the maximum limit, you
may be deactivated.” (ECF 68-8 at 7-8).
Plaintiffs failed to show that any of these issues affected
them, the Court cannot accept these as “genuine”
or as “material” to this case. In addition to the
above examples in which Plaintiffs fail to cite record
evidence that creates genuine disputes of fact, Uber more
fully documented other deficiencies in its response to
Plaintiffs' supplemental submission (ECF 85).
September 6, 2017, the Court held Oral Argument on Uber's
partial motion for summary judgment, at which the Court posed
a number of questions to counsel regarding the compensability
issue, to determine which facts in the record truly are or
are not disputed. (See Transcript of 9/6 Oral
Argument “Tr.”). The Court will set forth below a
summary of the undisputed facts in the record and developed
further at Oral Argument, as they are relevant both to the
issue of compensability, and to the issue of whether
Plaintiffs are employees or independent contractors, which
will be decided promptly after a short extension for any
following is a fair account of the factual assertions at
issue in this case, as taken from, inter alia,
Uber's Statement of Undisputed Facts (ECF 66-3), and not
genuinely disputed by Plaintiffs.
Functionality of UberBLACK Platform
are Pennsylvania drivers participating in the Uber
ride-sharing service who bring this action on behalf of a
putative class of “[a]ll persons who provided limousine
services, now known as UberBLACK, through Defendants' App
in Philadelphia, Pennsylvania.” (Compl. ¶ 106).
Uber furnishes a mobile smartphone application (the
“Uber App”) “providing on-demand car
services to the general public.” (Id. ¶
22). Gegen is a wholly-owned subsidiary of Uber that holds a
certificate of public convenience from (and is licensed by)
the Philadelphia Parking Authority (“PPA”) to
operate a limousine company. (ECF 66-3 Uber's Statement
of Undisputed Facts (“SOF”) ¶ 3; ECF 68-1,
Plaintiffs' Statement of Disputed or Undisputed Facts
(“PSOF”) ¶ 3). Plaintiffs are certified
limousine drivers who provide services as drivers through the
Uber App's UberBLACK platform. (Compl. ¶¶ 2,
59). To access the Uber App, drivers open the App on their
mobile device and log in using their usernames and passwords.
(SOF ¶ 14). While being logged on permits drivers to,
inter alia, check their account status, drivers are
not eligible to receive trip requests from UberBLACK riders
(“riders”) simply by virtue of being logged on.
Many drivers, in fact, remain logged on 24 hours per day.
(Tr. at 5).
logging on, to be eligible to receive a trip request from a
prospective rider, drivers must tap a button to go online
(“Online”). (Id. ¶ 15). Absent
connectivity issues, there is nothing else drivers need to
do, other than go Online, to receive trip requests.
(Id. ¶ 16). When a trip request comes in,
absent connectivity issues, the driver's phone will beep
and the screen will flash. (Id. ¶ 20). When a
trip request appears on the driver's mobile device, the
rider's (1) name, (2) star rating, and (3) pickup
location will appear, along with (4) any surge fare in
effect, (5) the time that the rider requested UberBLACK,
UberX (a lower cost Uber “product”), or any other
Uber product, providing the ride, and (6) the estimated
amount of time for the driver to reach the rider.
(Id. ¶ 21).
rider's destination, however, is not provided until the
driver indicates that the trip has begun (which could be
before the rider actually enters the driver's vehicle).
(PSOF ¶ 21; Tr. at 23, 29). According to Uber's
regulations, the rider's destination is not provided
until that time to prevent any potential discrimination by a
driver who, for instance, may not want to travel to certain
neighborhoods. (Tr. at 24)
How UberBLACK Drivers get Paid
Uber sets the financial terms of all UberBLACK fares, and
riders have their credit cards linked to the Uber App, the
payment structure is such that riders pay an independent
transportation carrier-either a limousine company or
individual driver-licensed by the PPA. After the ride is
completed, the carrier pays Uber a fee. The carrier then pays
the driver his compensation. The driver's compensation is
calculated based on some combination of factors, including,
but not limited to, the time spent driving, the distance
traveled, and the rider demand at the time of the trip. (Tr.
Accepting or Rejecting Trips
driver chooses to accept a trip request, the driver taps
“accept.” (SOF ¶ 25). If a driver does not
press the “accept” button within 15 seconds of
the trip request, it will be deemed rejected by the driver by
default. The Uber App will then automatically route the trip
request to the next closest driver, until a driver accepts
the request. If, however, no other driver accepts the trip,
the trip request goes unfulfilled, as Uber cannot require any
driver to accept a trip. (SOF ¶ 26; 28).
are free to reject trip requests for any reason.
(Id. ¶¶ 22, 24, 50-51). If a driver
ignores three trip requests in a row, however, the Uber App
will automatically move the driver from Online to offline,
such that he will not be eligible at that time to accept trip
requests. (SOF ¶ 29). Uber refers to this as a system
integrity measure since, as described above, a trip request
is sent to only one Uber driver at any given time, and having
drivers who do not intend to give rides Online slows down the
process of connecting riders and drivers, and leads to a
poorer user experience for riders. Drivers who have been
automatically transitioned offline, however, may go back
Online at any point, including immediately after going
offline, if they wish to do so. (Id. 30).
also has regulations under which it reserves the right to
penalize drivers for not accepting rides. As one example, the
driver may have an “acceptance rate” that is
deemed unsatisfactory. However, there is no dispute that
Plaintiffs have not personally been penalized for their
respective acceptance rates, or for failing to accept rides.
This court has not been presented with evidence that, in
practice, Uber imposed any consequences for drivers'
are free to cancel trips even after they have accepted them,
which Plaintiffs testified they have done on numerous
occasions. (SOF ¶ 41). A driver may cancel a trip after
he has accepted it but before the rider enters the vehicle
if, for instance, the driver calls the rider and asks the
rider's destination, and the driver decides he does not
want to travel there. Additionally, if the driver indicates
on the Uber App that the trip has begun prematurely, he will
see the rider's destination on the Uber App, and may
choose to cancel it at that time.
has regulations under which it reserves the right to penalize
drivers for cancelling trips, including if they have a
“cancellation rate” that is deemed
unsatisfactory. (SOF ¶ 43). However, there is no dispute
that Plaintiffs never suffered any consequences for
cancelling trips. This court has not been presented with any
evidence that, in practice, Uber imposed any consequences for
drivers' cancellation rates.
Drivers' Physical Location
requests via the Uber App are automatically sent to the
driver closest to the requesting rider. (SOF ¶ 35). For
drivers registered with UberBLACK in Philadelphia, the
requesting rider must be located within Philadelphia. (Tr. at
9). The driver, however, may be anywhere he chooses. If he is
far away, and there are other available drivers in closer
proximity to a given rider, however, the driver will be
unlikely to receive trip requests. (Id. at 10).
Drivers have no way of knowing, ...