The Teamster campaign to unionize Uber and Lyft in Seattle hasn’t gone well lately. But with City Hall in its corner, the union may achieve its goal of a labor monopoly anyway. On April 4, U.S. District Judge Robert Lasnik issued a temporary injunction barring the City of Seattle from enforcing a law authorizing a Teamster local to extract driver contact information. “Although there is no trade secret protections or confidentiality attached to this basic identifying information,” he wrote, “the Court finds that forcing the driver coordinators to disclose their most active and productive drivers is likely to cause competitive injury that cannot be repaired once the lists are released.” The action buys some extra time for a thorough review of the ordinance, the product of an unprecedented collusion of local government and labor officials.
Union Corruption Update has addressed this controversy before. Back in December 2015 the Seattle city council, by an 8-0 margin, passed an ordinance requiring Uber Technologies Inc., Lyft Inc. and other local ride-sharing operators to negotiate with a union of the city’s choosing if a majority of drivers vote for representation. The union would have the authority to set fare and compensation levels. Mayor Ed Murray, though sympathetic, did not sign the bill because he felt it might not withstand a court challenge. And a challenge came soon enough. In March of last year, the U.S. Chamber of Commerce, which represents about three million businesses (including Uber and Lyft), went to federal court to declare the ordinance an illegal restraint of trade. Judge Lasnik dismissed the suit five months later. He concluded that because the ordinance had not yet gone into effect, the chamber had no standing to sue.
This merely was the opening round. On March 3 of this year, the City of Seattle chose International Brotherhood of Teamsters Local 117 to represent any and all bargaining units under the ordinance. Fred Podesta, director of the city’s Department of Finance and Administrative Services, wrote in a letter to union business representative Dawn Gearhart:
With its QDR (Qualified Driver Representative) designation confirmed, Teamsters Local 117 may now communicate an intent to represent drivers for a particular driver coordinator. Such communication must be made within 14 calendar days of the date of this letter and must be reasonably calculated to ensure that it reaches the driver coordinator. By April 3, 2017 (i.e., 75 calendar days after the commencement date of January 17, 2017), a driver coordinator receiving such communication from a QDR must provide the QDR with a list of qualifying drivers per Director’s Rule FHDR-1, Qualifying Driver and Lists of Qualifying Drivers.
Voting eligibility would be limited to drivers who had handled at least 52 rides in a given three-month period over the 12 months preceding January 17, 2017. This was a uniquely alarming partnership: A local government now had the power to decide whether a union can represent a whole class of private-sector workers. Uber promptly filed suit in Washington state court to block enforcement. The company argued that the law discriminates against drivers who work part-time and/or who started on or after January 17. The collective bargaining process, Uber insisted, was rigged. But in March, a judge rejected this argument and ruled on behalf of the city.
Meanwhile, on March 9, the U.S. Chamber of Commerce refiled its suit in federal court to block the measure. Representing Uber, Lyft and a Seattle-based dispatcher, Eastside for Hire, the chamber charged that the city lacked the authority to enforce the ordinance. The ordinance, the chamber said, contravened the National Labor Relations Act, which explicitly bars unions from representing workers classified as contractors rather than as employees. Additionally, the ordinance was an “illegal conspiracy in restraint of competition.” As affected drivers are competitors, not co-workers, unionization would amount to “forming a cartel…and engaging in horizontal fixing of prices.” The lawsuit read: “Unions such as the Teamsters will seek to reduce the prices paid to app-based companies for the use of their ride referral services. Those companies also will incur additional costs of doing business with the conspirators, such as reimbursement of driver’s expenses or payment of other benefits.”
The April 3 launch date of the ordinance now was approaching. The Chamber of Commerce, knowing that no decision would occur prior to then, filed a request for a temporary restraining order against enforcement. The chamber argued that by requiring Uber and Lyft to give the Teamsters a list of driver names, addresses, email addresses and driver’s license numbers, the City had violated federal privacy laws. While such a practice is common in traditional workplace settings, plaintiffs’ attorneys argued, ridesharing companies are not traditional. Driver-contractors tend to work in a sporadic and transitory manner, and often for more than one company. The City of Seattle countered that the lists contain information already publicly available. Allowing rideshare drivers to collectively bargain is “a means to create a safer, more reliable for-hire industry….Stopping this first-of-a-kind law in its tracks, based on speculative and nonexistent harms is not in the public interest.”
Judge Robert Lasnik issued a ruling on April 4. And this time, the rideshare industry had the upper hand. The Seattle law, he wrote, “turns labor law on its head, treating independent economic actors to fix prices” and should be blocked while the case is being decided. “Although there is no trade secret protections or confidentiality attached to this basic identifying information,” Lasnik wrote, “the Court finds that forcing the driver coordinators to disclose their most active and productive drivers is likely to cause competitive injury that cannot be repaired once the lists are released.” He added: “There can be no doubt that ride-share companies such as Uber and Lyft have, at a truly startling rate, created havoc in this industry using a business model that simply did not exist before its recent technological development.”
Uber and Lyft officials are feeling good right now. Brooke Steger, general manager for Uber in the Pacific Northwest, explained things this way: “The court recognized the complexity of the issues and the imminent risk to drivers, transportation companies, and the people of Seattle if the ordinance were allowed to proceed without careful legal review. We look forward to the court’s full consideration of the many serious legal questions about this ordinance as the lawsuit moves forward.” Lyft issued this statement: “We are pleased the Court has ruled that Seattle’s experimental law should not be implemented until the serious issues raised by drivers are heard. The ordinance is a poorly drafted law that could undermine the flexibility of drivers to choose when, where and how long they drive – the very things that make Lyft so attractive to drivers and useful for passengers.”
The Teamsters understandably aren’t feeling good. Yet they remained as determined as ever. “Collective bargaining is a way to get workers a voice, but this (decision) is not going to stop them from trying to fight to get justice at work,” said Local 117 organizing director Leonard Smith. Seattle officials also are confident that the ordinance will be upheld. Kimberly Mills, communications director for City Attorney Peter Holmes, remarked: “The City has a motion to dismiss pending, and will move with efforts to defeat this legal challenge to its effort to improve the safety and reliability of for-hire transportation in the City. The City is also encouraged that the court did not find merit in the challenges to the ordinance under federal labor law.”
One hopes they do not succeed. The City of Seattle, by acting as enforcer for Teamsters Local 117, is facilitating monopoly power. While a union has a right to organize and negotiate, it does not have a right to realize a desired set of outcomes. Yet in passing this law back in December 2015, the Seattle city council effectively endorsed this latter “right” as a means of suppressing market entry. If upheld, the Seattle law will serve as a license for union price-fixing of fares and medallions across the nation. As it is, a medallion typically costs an entry-level cabbie hundreds of thousands of dollars – and that’s lower than several years ago when Uber and Lyft were startups. Ridesharing is a threat to local transportation monopolies, offering flexibility in pricing and scheduling unavailable from the taxi industry. Uber and Lyft are not taxi companies. But by subjecting them to taxi company rules, monopolists would be making them into taxi companies all but in name.