Jericho Nicolas v. Uber Technologies, Inc.

Background

This putative wage-and-hour class action concerned drivers using Uber’s mobile application. Plaintiffs alleged that Uber treated them as independent contractors rather than employees after the California Supreme Court’s decision in Dynamex and the enactment of Assembly Bill 5. Based on the alleged misclassification, the third amended complaint asserted six remaining categories of claims:

Uber moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts and a valid legal theory to state a claim. Uber argued both that the drivers were not employees under current California law or the FLSA and that the complaint still did not adequately allege the claimed violations.

Employee Status and Abatement Argument

The court did not decide Uber’s argument that California Proposition 22 made the drivers independent contractors or extinguished state-law claims based on inconsistent labor statutes. Instead, it assumed for purposes of the order that plaintiffs qualified as employees. The court concluded that the claims failed even under that assumption.

Minimum-Wage Claims

The court had previously instructed plaintiffs to explain how they calculated their work hours, identify the legal basis for treating waiting time between rides as compensable, and allege facts supporting that position. Plaintiffs added allegations about time spent with the Uber application turned on, their paid and unpaid hours, their earnings, and Uber’s control over ride notifications.

The court nevertheless held that plaintiffs did not plausibly allege that waiting for ride requests was compensable under either of California’s relevant standards. Under California’s “subject to control” standard, plaintiffs did not allege that Uber required them to wait, because they could turn the application on or off, use a destination filter, and conduct personal activities. They also did not allege disciplinary measures for turning off the application or rejecting requests, or facts showing that Uber benefited more from the waiting time than the drivers did.

Under California’s “suffered or permitted to work” standard, plaintiffs did not explain how waiting for a ride request was a task or exertion that a manager would recognize as work. The court also concluded that the allegations did not show that the waiting time was compensable under the FLSA’s similar standard for determining whether waiting time is controlled or required by the employer and primarily benefits the employer.

Because plaintiffs appeared to rely on the waiting time to bring their average effective pay below the state or federal minimum wage, the court dismissed the state and federal minimum-wage claims.

Overtime Claim

The court applied the Ninth Circuit’s pleading requirements for an FLSA overtime claim. A plaintiff must allege that they worked more than 40 hours in a particular workweek without receiving overtime compensation, although an exact total of overtime hours is not required.

Glinoga and Neely identified workweeks before March 1, 2019, which were outside the claims allowed to proceed in this case. Gonzalez identified four later workweeks with more than 40 hours of “online” application time, but only 35 to 39 hours of “active” time. Because the court had found that waiting for requests was not compensable, Gonzalez could not rely on the online time to reach more than 40 compensable hours. The court dismissed the overtime claim.

Failure to Pay Wages on Time

Plaintiffs alleged that they stopped working for Uber around March 2020. The court held that this did not establish whether Uber discharged them or they quit, as required for the California statutes governing final wages. Plaintiffs also repeated an allegation, made on information and belief, that Uber willfully failed to pay wages. The court found that allegation insufficient to support willfulness and declined to consider it because plaintiffs would know whether they had demanded payment. The court dismissed the claim.

Wage-Statement Claim

Plaintiffs amended their allegations to state that they never received any wage statement. They also alleged that Uber was on notice that its conduct violated California labor law. The court accepted the reasoning of another Northern District of California decision that an employer’s good-faith belief that it complied with California Labor Code section 226 precludes liability under that statute. The court inferred from plaintiffs’ own allegations that Uber had a good-faith belief that the drivers were not employees. It dismissed the wage-statement claim.

Unfair-Business-Practices Claim

Plaintiffs agreed that their California Business and Professions Code section 17200 claim depended on the underlying state and federal labor claims. Because the court dismissed those predicate claims, it also dismissed the section 17200 claim.

Disposition and Arbitration Status

The court found that the third amended complaint was the fourth version of the pleading and that plaintiffs had repeatedly failed to correct deficiencies identified in earlier orders, despite receiving specific instructions. The court therefore found that further amendment would be futile and dismissed all remaining claims with prejudice. It granted Uber’s motion to dismiss.

The court stated that its prior stay remained in effect for the California Private Attorneys General Act (PAGA) claims of the 45 plaintiffs whose claims had been compelled to individual arbitration. Those arbitrations were still ongoing. The parties were ordered to file a joint status report within 14 days after all those arbitrations ended, proposing how to adjudicate the remaining PAGA claims. The court stated that it would enter judgment for all 48 plaintiffs after adjudicating those claims.