Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Business group challenges City of Seattle collective bargaining law for for-hire drivers, (Mar 7, 2016)

By Linda O’Brien, J.D., LL.M.

An ordinance enacted by the City of Seattle that authorizes independent contractor for-hire drivers in the transportation industry to engage in collective bargaining with their coordinating companies is horizontal price fixing and has the anticompetitive effect of shielding drivers from competition, according to a complaint filed in the federal district court in Seattle, Washington (Chamber of Commerce of the United States of America v. City of Seattle, March 3, 2016).

The Chamber of Commerce is a nonprofit federation of business and associations, representing 300,000 members. Some of the Chamber’s members operate taxicab, transportation network, and for-hire vehicle businesses in the City of Seattle.

The complaint states that many drivers in the for-hire transportation industry have traditionally operated as independent contractors. The advent of smartphones and tablets has expanded the flexibility of working as an independent contractor, and companies, such as Uber and Lyft, have developed ride-referral applications that match potential riders with available drivers.

In December 2015, the Seattle City Council passed an ordinance relating to taxicab, transportation network companies, and for-hire vehicle drivers. The ordinance establishes a collective bargaining scheme through which for-hire drivers collectively negotiate the terms of their contractual arrangements with driver coordinators, and applies only to independent contractors, the complaint alleges.

The plaintiff alleges that the Chamber’s members have incurred and will continue to incur substantial costs as a direct result of the ordinance. Since members principally work with independent contractors, they have little or no experience with labor relations matters and have had to hire labor relations experts to prepare for the potential organizing and bargaining activity that the ordinance contemplates.

According to the complaint, the City’s ordinance would restrict market freedom relied upon by all for-hire drivers, who are independent contractors with a transportation app company, traditional taxicab company, or limousine service. Under the guise of public safety, the ordinance allegedly would insert a third party labor union between independent contractors and companies, and require agreements that would fix wages. If the City is permitted to enforce its ordinance, other municipalities may attempt to adopt similar ordinances, inflicting significant costs on the for-hire transportation sector, the plaintiff claimed.

The plaintiff asserts claims for violations of Section 1 of the Sherman Act, National Labor Relations Act, Washington Consumer Protection Act, and Washington Public Records Act. The action seeks declaratory and injunctive relief, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 2:16-cv-00322.

Attorneys: Timothy J. O’Connell (Stoel Rives LLP) and Lily Fu Claffee (U.S. Chamber Litigation Center) for Chamber of Commerce of the United States of America.

Companies: Chamber of Commerce of the United States of America

News: Antitrust ConsumerProtection WashingtonNews