RAZAK et al v. UBER TECHNOLOGIES, INC. et al
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE MICHAEL M. BAYLSON ON 4/11/18. 4/11/18 ENTERED AND COPIES EMAILED.(rf, )
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 1 of 38
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
ALI RAZAK, KENAN SABANI, and
UBER TECHNOLOGIES, INC., and
April 11, 2018
MEMORANDUM RE: DEFENDANTS’ MOTION
FOR SUMMARY JUDGMENT
This case is the first to grant summary judgment on the question of whether drivers for
UberBLACK are employees or independent contractors within the meaning of the Fair Labor
Standards Act (“FLSA”) and similar Pennsylvania state laws.
More specifically, 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 Uber Technologies, Inc. and its whollyowned subsidiary Gegen, LLC (“Gegen,” and collectively, “Uber”) for violations of the federal
minimum wage and overtime requirements under the FLSA, 29 U.S.C. § 201 et seq., the
Pennsylvania Minimum Wage Act (“PMWA”), and the Pennsylvania Wage Payment and
Collection Law (“WPCL”). Before the Court is Uber’s Motion for Summary Judgment (ECF
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 2 of 38
144, “Uber Mot.”) on the question of whether Plaintiffs, drivers for UberBLACK, qualify as
“employees” of Uber under the FLSA and PMWA. 1
In general, under the FLSA, employers must pay employees the applicable minimum
wage for each hour worked, and, if an employee works more than forty hours in a given week,
the employer must pay one and one half (1½) times the regular rate for each hour subsequently
worked. 29 U.S.C. §§ 206-07. Thus, among other things, Plaintiffs seek back pay for their work
driving passengers using the Uber app.
For the following reasons, Uber’s Motion for Summary Judgment will be GRANTED.
As a matter of law, Plaintiffs have not met their burden to show that they are employees and that
Uber is their employer.
Plaintiffs 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.).
A. Prior Motion Practice
On 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
Unlike the FLSA and PMWA, “[t]he WPCL does not create a right to compensation . . . rather it
provides a statutory remedy when the employer breaches a contractual obligation to pay earned wages.”
De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 309 (3d Cir. 2003).
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motions. (ECF 37); Razak v. Uber Techs., Inc., No. 16-cv-573, 2016 WL 3960556, at *1 (E.D.
Pa. July 21, 2016).
On 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, “AC”).
On 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., 2016 WL 7241795, at *6 (E.D. Pa. Dec. 14,
2016)). Specifically, the Court found that Plaintiffs’ allegations that they were “Online” 2 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.
However, 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.
Throughout this opinion, the capitalized term, “Online,” refers to drivers who are logged into the Uber
App and eligible to receive trip requests from prospective UberBLACK riders.
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After 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 moved “on the limited question of
whether—assuming, for purposes of [that] 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 PWMA.”
On September 6, 2017, the Court held Oral Argument. (See Transcript of 9/6 Oral
Argument (“Tr.”) ECF 91). The Court ultimately denied the Motion for Partial Summary
Judgment, focusing especially on four undisputed factual issues which indicated that the time
drivers spent logged into the Uber App could be considered “‘predominantly’ for the benefit of
the employer rather than the employee”:
(1) Drivers have at most 15 seconds to accept a trip request from a
rider which, if not accepted, will be deemed rejected.
(2) If a driver does not accept three trip requests in a row, the Uber
App automatically switches the driver from Online to offline.
While offline, drivers are not eligible to accept ride requests.
(3) The rider's destination is not disclosed to the driver until the
rider's trip begins. Thus, in considering whether to accept a
request, the driver has no knowledge whether it will be a short ride
or very long—which affects driver compensation and may also
restrict personal activities.
(4) Drivers may only advance in the queue at the Airport or 30th
Street Train Station if within a certain zone, and may only accept
trip requests at the Airport if inside the west parking lot.
Razak v. Uber Techs., Inc., No. 16-cv-573, 2017 WL 4052417 (E.D. Pa. Sept. 13,
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The Court also surmised that “the compensability question” at issue in that motion “may
be inextricably intertwined with the threshold employee versus independent contractor question.”
Id., at *15. Therefore, the Court’s denial of partial summary judgment was without prejudice to
refile at the completion of discovery. See id., at *16.
The Present Motion for Summary Judgment
After additional discovery, Uber filed its Motion for Summary Judgment on the present
question of whether Plaintiffs are employees or independent contractors (ECF 114), to which it
attached a statement of undisputed facts. (ECF 114-3, “Uber SOF”). Plaintiffs filed a Response
on February 26, 2018 (ECF 117), together with a statement of facts (ECF 117-3, “SOF
Response”). Uber then filed a Reply on March 12, 2018 (ECF 118), together with a “Reply to
Statement of Facts” (ECF 118-3). Plaintiffs were previously granted leave to file a sur-reply
(ECF 110), which they filed on March 19, 2018 (ECF 119).
Plaintiffs then filed a Motion to Strike the Defendants’ Reply to Plaintiffs’ Statement of
Facts, on March 19, 2018 (ECF 120), asserting that the Plaintiffs’ Reply Statement of Facts
violated this Court’s practice and procedural order. The Court granted the Motion to Strike (ECF
121) and Defendants’ filed an amended Reply to Statement of Facts on April 4, 2018. (ECF 123,
STATEMENT OF FACTS
The 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 in Support of Defendants’ Motion for
Summary Judgment (Uber SOF, ECF 114-3), and not genuinely disputed by Plaintiffs.
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How UberBLACK Works
Plaintiffs 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.” (ECF 47,
AC ¶ 106). Plaintiffs are certified limousine drivers who provide services as drivers through a
mobile smartphone application (the “Uber App”) furnished by Uber. (Id. ¶¶ 2, 22, 63). The
Uber App “provid[es] on-demand car services to the general public,” including through the
UberBLACK 3 platform. (Id.).
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”) 4 to operate a
limousine company. (Uber SOF ¶ 41).
Because transportation companies and individual
transportation providers who wish to provide Black car services in Philadelphia are required to
hold a PPA certificate of public convenience (or associate with an entity that holds such a
certificate) (Id. ¶ 42), some UberBLACK transportation providers operate under the PPA
certificate held by Gegen.
(Id. ¶ 45).
Approximately 75% of drivers also use Gegen’s
automobile insurance. (Id. ¶ 96) Plaintiffs each own and operate transportation companies Luxe
This case only pertains to UberBLACK drivers, and therefore, the Court uses the term “Uber driver”
only to mean “UberBLACK driver.” UberBLACK is one of several services (or what Uber calls
“platforms”) that Uber provides through the UberApp. Drivers for UberBLACK provide “Black car”
service, meaning that they exclusively drive vehicles approved by Philadelphia for limousine livery
services. (Reply SOF, ¶ 248).
A certificate of public convenience permits a “common carrier operating a luxury limousine service” to
“transport persons on an exclusive basis between points as authorized by the certificate, if the order for
service is received in advance of the actual rendering of service and not by street hail.” 52 Pa. Code §
1053.22(a). Only three categories of individuals may provide limousine services under Gegen’s
certificate of public convenience: “(1) The owner, if the owner is a limousine driver[,] (2) An employee
of the certificate holder who is a limousine driver[, and] (3) A limousine driver who leases the limousine
directly from the certificate holder.” See 52 Pa. Code § 1051.8(a).
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Limousine Services, Inc. (“Luxe”), Freemo Limo, LLC (“Freemo”), and Milano Limo, Inc.
(“Milano”). (Id. ¶ 1).
To access the Uber App, drivers open the App on their mobile device and log in using
their usernames and passwords. (SOF ¶ 156). After logging on, to be eligible to receive a trip
request from a prospective rider, drivers must tap a button , at which point the driver is online
(Id. ¶ 157). If a driver chooses to accept a trip request, the driver taps “accept.”
(Uber SOF to Motion for Partial SJ, ECF 66-3 ¶ 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. (Id. ¶ 26, 28).
Drivers are free to reject trip requests for any reason, aside from unlawful discrimination.
(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. (Id. ¶ 29). Uber refers to this as a system integrity measure since, as
described above, a trip request is sent to only one UberBLACK 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).
Uber also has regulations under which it logs off drivers for a period of six hours if the
driver reaches Uber’s 12-hour driving limit. (See Uber Drowsy Driving Policy, ECF 117-31).
The driver exclusively determines when to go “Online” to seek trip requests, and Uber permits drivers to
stay offline for as long as they want. (SOF ¶ 161 (undisputed)).
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Uber also has regulations under which it reserves the right to deactivate drivers for
“accepting trips without the intention to complete, including provoking riders to cancel.”
(Uber’s Driver Deactivation Policy, ECF 68-6).
Drivers' Physical Location
Trip requests via the Uber App are generally sent to the driver closest to the requesting
rider. (Uber SOF to Motion for Partial SJ, ECF 66-3 ¶ 35). Drivers have no way of knowing
from the Uber App, what the “demand” is at any given time; namely, whether, or how many,
other drivers are Online. (Id. at 6). Uber may, from time to time, send drivers information about
rider demand that may be of interest to them (e.g., a concert at the Wells Fargo Center, etc.),
specifically dates or times of high rider demand. (Uber SOF to Motion for Partial SJ, ECF 66-3
¶¶ 57, 58). However, ultimately drivers independently decide where to go to offer rides while
Online. (Id. ¶¶ 34, 59, 60).
One exception to drivers’ ability to accept trip requests from anywhere, so long as they
are Online, is at Philadelphia's major transportation hubs, namely 30th Street Train Station and
Philadelphia International Airport (the “Airport”). There is a “queue” system at both locations
that routes trips to the next driver in the queue, (id. ¶ 36), and a driver can only enter, or advance
in, the queue while inside a designated zone. (Id. ¶ 37). Additionally, at the Airport, drivers can
only receive trip requests if located inside the “west parking lot.” Drivers, including Plaintiffs,
sometimes try to evade this requirement by, for instance, leaving their phones inside the
designated zone at the Airport (but outside the west parking lot), such that they can advance in
the queue without having to be physically with their phone. (Id. ¶¶ 55-56).
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Drivers' Activities While Online
Uber places no restrictions on drivers' ability to engage in personal activities while
Online, and Plaintiffs here, in fact, engaged in a range of personal activities while Online. The
undisputed facts in the record reflect that, while Online, Plaintiffs, inter alia, accepted rides from
private clients, slept, did personal errands, smoked cigarettes, took personal phone calls, rejected
trips because they were tired, and conducted business for their independent transportation
companies. (Uber SOF ¶ 181). Drivers also sometimes forget to go offline, such that they
remain in the Online mode on the Uber App despite having no intention of completing trips.
(Uber SOF to Motion for Partial SJ ¶ 46). Drivers are allowed to use software applications other
than the Uber App and to provide transportation services to others “outside of” the Uber App.
(Uber SOF ¶¶ 123, 141-143).
The Court accepts, for purposes of this motion, Plaintiffs’ assertion that (1) Razak spent
an average of 7 hours and 17 minutes Online each day, receiving an average of over 10 fare
requests each day and completing more than 6 trips; (2) Sabani spent an average of 12 hours
Online each day, receiving an average of more than 5 requests per day and completing 4 trips;
and (3) Cherdoud spent an average of 9 hours, 16 minutes Online each day, receiving over 7 ride
requests and completing over 5 trips. (Plaintiffs’ Response SOF to Motion for Partial SJ, ECF 68
¶ 68 (citing ECF 68-10, 11, 12)). These figures reveal that Plaintiffs spent a large portion of their
time Online not actually completing trips, and engaged, for at least some of the time, in these
various personal activities.
Written Agreements Among the Relevant Parties
Independent transportation companies (“ITC’s”) who wish to provide transportation
services using the UberBLACK platform must first enter into a Software License and Online
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Services Agreement, or similar agreement such as a Technology Services Agreement. (Uber
SOF ¶ 19). 6 Then, drivers engaged by ITC’s who have entered into such agreements may also
use the Uber App, once they agree to the terms of the Driver Addendum to the Services
Agreement. (Uber SOF ¶ 23). 7
The Services Agreement setting forth the relationship between Uber and companies using
the Uber App states, among other things:
“Customer [defined by the agreement as “an independent company in the business of
providing transportation services”] acknowledges and agrees that Uber is a technology
services provider that does not provide transportation services, function as a
transportation carrier, nor operate as a broker for the transportation of passengers.”
“Customer shall provide all necessary equipment, tools and other materials, at
Customer’s own expense, necessary to perform Transportation Services.”
“Uber does not, and shall not be deemed to, direct or control Customer or its Drivers
generally or in their performance under this Agreement specifically, including in
connection with the operation of Customer’s business, the provision of Transportation
Services, the acts or omissions of Drivers, or the operation and maintenance of any
“Customer and its Drivers retain the sole right to determine when, where, and for how
long each of them will utilize the Driver App or the Uber Services.”
“With the exception of any signage required by local law or permit/license requirements,
Uber shall have no right to require Customer or any Driver to: (a) display Uber’s or any
of its Affiliates’ names, logos or colors on any Vehicle(s); or (b) wear a uniform or any
other clothing displaying Uber’s or any of its Affiliates’ names, logos or colors. . . .”
“In consideration of Uber’s provision of the Driver App and the Uber Services for the use
and benefit of Customer and its Drivers hereunder, Customer agrees to pay Uber a
service fee on a per Transportation Services transaction basis.”
Plaintiffs dispute this paragraph on the grounds that it runs contrary to two previously-filed items in this
case: the sworn declaration of Michael Coleman (ECF 15-1) and Uber’s Brief in Support of its Motion to
Dismiss (ECF 15). Neither of the two filings contradicts paragraph 19 of Uber’s Statement of Undisputed
Facts, as neither states that individuals may gain access to UberBLACK without an ITC first entering into
an agreement with Uber.
Plaintiffs also claim this paragraph is disputed, on the same grounds as above. Again, neither of the
filings cited by Plaintiffs contradicts Uber’s Statement of Undisputed Facts and thus, there is no genuine
dispute as to this sentence. Wherever this Opinion references a “fact” that Plaintiffs contended in their
submissions was “disputed,” the Court found that such dispute was either not “genuine,” or not
“material,” or both.
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“Customer agrees to maintain during the term of this Agreement workers’ compensation
insurance for itself and any of its subcontractors as required by all applicable laws in the
“Except as otherwise expressly provided herein with respect to Uber acting as the limited
payment collection agent solely for the purpose of collecting payment from Users on
behalf of Customer, the relationship between the parties under this Agreement is solely
that of independent contracting parties.”
“The parties expressly agree that: (a) this Agreement is not an employment agreement,
nor does it create an employment relationship, between Uber and Customer or Uber and
any Driver; and (b) no joint venture, partnership, or agency relationship exists between
Uber and Customer or Uber and any Driver.”
(Id. ¶ 22).
The Driver Addendum setting forth the relationship between a transportation company
and a driver engaged by the transportation company (and required by Uber before Uber will
permit the driver to drive using the UberBLACK product) states, among other things:
“This Driver Addendum to Technology Services Agreement  constitutes a legal
agreement between an independent company in the business of providing transportation
services (“Transportation Company”) and an independent, for-hire transportation
provider (“Driver” ). Driver maintains a contractual or employment arrangement with
Transportation Company to perform passenger carriage services for the Transportation
“Uber does not, and shall not be deemed to, direct or control Driver generally or in
Driver’s performance of Transportation Services or maintenance of any Vehicles.”
“Driver acknowledges that Uber does not control, or purport to control: (a) when, where,
or for how long Driver will utilize the Driver App or the Uber Services; or (b) Driver’s
decision, via the Driver App, to attempt to accept or to decline or ignore a User’s request
for Transportation Services, or to cancel an accepted request for Transportation Services,
via the Driver App, subject to Uber’s then-current cancellation policies.”
(Id. ¶ 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. (AC ¶ 34). Upon completion of the ride, charges the rider’s credit card
for the fare. (Id.). The money then (eventually) goes into the transportation company’s Uber
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account, with a commission taken out by Uber. (Response SOF ¶ 63). The transportation
company may then distribute the proceeds, and, for example, in the case of Luxe, such money is
distributed to the driver who provided the ride. (Id.).
Although some expenses are borne by Uber, the transportation companies who contract
with Uber incur many expenses in supplying and maintaining vehicles, including finance
payments, insurance, oil changes and repairs, towing expenses, maintenance and car washes.
(Id. ¶¶ 76, 92-93, 103, 121-122). Plaintiffs’ companies often went beyond these expenses to pay
for advertising seeking private clients outside of the Uber App. (See, e.g., id. ¶¶ 84, 89-90).
Stated briefly, Uber’s principal contention on its motion for summary judgment is that
Plaintiffs are not employees as a matter of law, and therefore their putative class action on behalf
of all UberBLACK drivers must be dismissed. In Uber’s briefs, Plaintiffs are portrayed as
entrepreneurial business-owners who use UberBLACK as a means of acquiring trip requests,
with their primary competition coming from other limousine-for-hire companies. Uber contends
that Plaintiffs are not employees of Uber because Plaintiffs are not restricted from working for
other companies, pay their own expenses (which are substantial), invest in their own companies,
advertise and market for their own companies, engage workers for their own companies, work
using UberBLACK as much or as little as they want, reject work from UberBLACK as much as
they want, and use business acumen to attain their own profits (and losses). In Uber’s view,
UberBLACK is simply a source of “lead generation,” like a “modern-day Yellow Pages,” rather
than an “employer” under the FLSA.
In opposition to the motion, Plaintiffs contend that they are “employees” under the
FLSA, and therefore entitled to overtime pay and other benefits, because they are extensively
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controlled by Uber when they are online, they exercise stamina rather than managerial skill to
determine profit or loss, they must provide certain types and colors of car to drive for Uber, 8 they
do not have special skills requiring long training or apprenticeship, they have driven for Uber for
years and for many hours per week, and they perform an integral role for Uber’s business.
DISCUSSION OF LEGAL FRAMEWORK
A. Determining Employee Versus Independent Contractor Status of Workers
FLSA and PMWA Statutory Language
The minimum wage, regular payday, payday notification, and overtime wage provisions
at issue in this case all require that Plaintiffs prove they are “employees.” See 29 U.S.C. §§ 203,
206-07; 43 P.S. § 333.104.
On this, the parties wisely agree.
See, e.g., Tourscher v.
McCullough, 184 F.3d 236, 242 (3d Cir. 1999) (The relevant portions “of the FLSA
 apply only to workers who are ‘employees’ within the meaning of the Act.”); Crump v. HF3
Constr., Inc., 14-cv-4671, 2016 WL 6962532, at *2 (E.D. Pa. Nov. 29, 2016 (“Each of these
claims depends on the determination that Plaintiffs were employees of Defendants: as Plaintiffs
implicitly acknowledge, Defendants could not have violated the law if Plaintiffs were not their
Although Plaintiffs’ claims go beyond the FLSA to include the PMWA, “Pennsylvania
courts have looked to federal law regarding the FLSA for guidance in applying the PMWA.”
Itterly v. Family Dollar Stores, Inc., 606 F. App'x 643, 645 n. 4 (3d Cir. 2015); see also
Mackereth v. Kooma, Inc., No. 14-cv-4824, 2015 WL 2337273, at *8 (E.D. Pa. May 14, 2015).
Relevant to the present motion, “Pennsylvania courts look to federal case law and the tests
This particular contention—that drivers are restricted to certain vehicle makes and models—will not be
addressed in any detail, because the PPA sets the list of vehicles that limousine drivers may use in the
City of Philadelphia, and Uber only restricts transportation providers from using a single model otherwise
approved by the PPA (Toyota Avalon). (Reply SOF, ¶ 248).
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employed by the federal courts to determine if a defendant is an employer under the PMWA.”
Dep't of Labor & Industry v. Stuber, 822 A.2d 870, 873 (Pa. Commw. Ct. 2003) aff'd 580 Pa. 66,
859 A.2d 1253 (Pa. 2004).
The FLSA itself is circular in its definitions of “employers” and “employees.”
“Employer” is defined as “includ[ing] any person acting directly or indirectly in the interest of an
employer in relation to an employee,” and an “employee” is defined as “any individual employed
by an employer.” 29 U.S.C. § 203(d), (e)(1). Thus, courts have been left to fashion standards
for determining whether an individual is an employee.
Third Circuit Guidance in Donovan
The seminal case in this Circuit for determining whether a worker is an employee under
the FLSA is Donovan v. DialAmerica Marketing, Inc., 757 F.2d 1376 (3d Cir. 1985). Donovan
makes clear that “Congress and the courts have both recognized that, of all the acts of social
legislation, the Fair Labor Standards Act has the broadest definition of ‘employee.’” Id. at 1382
(citing 81 Cong. Rec. 7657 (remarks of Senator Hugo L. Black) and E.E.O.C. v. Zippo Mfg. Co.,
713 F.2d 32, 37 (3d Cir. 1983)).
The Donovan court also set forth six factors for determining whether a worker is an
(1) the degree of the alleged employer's right to control the manner in which the work
is to be performed;
(2) the alleged employee's opportunity for profit or loss depending upon his
(3) the alleged employee's investment in equipment or materials required for his task,
or his employment of helpers;
(4) whether the service rendered requires a special skill;
(5) the degree of permanence of the working relationship; and
(6) whether the service rendered is an integral part of the alleged employer's business.
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Consistent with the Supreme Court’s guidance in Rutherford Food Corp. v. McComb,
331 U.S. 722 (1947) (determining “employee” status under the FSLA), the Donovan court
instructed that “neither the presence nor absence of any particular factor is dispositive,” and thus,
“courts should examine the circumstances of the whole activity” with a consideration, “as a
matter of economic reality,” of whether “the individuals are dependent upon the business to
which they render service.” Id. at 1382-83 (citations omitted). This “economic-dependence
aspect” “examines whether the workers are dependent on a particular business or organization
for their continued employment.” Id. at 1385; see also Bartels v. Birmingham, 332 U.S. 126,
Applying its standard, the Third Circuit considered two groups (the “home researchers,”
and the “distributors”) of alleged employees working for the defendant, a telephone marking
firm. A “major aspect” of the firm’s business was the “sale of magazine renewal subscriptions
by telephone to persons whose subscriptions have expired or are near expiration.” Donovan, 757
F.2d at 1379. To locate subscribers’ phone numbers, the marketing firm used at least three
methods: (1) a computerized telephone-number search operation; (2) in-house researchers; and
(3) a home research program. Id. The third method, at issue in Donovan, accounted for 4%-5%
of all numbers sought, whereas the first two methods combined for a total of 70% of all numbers
sought. Id. Roughly 25% of the numbers were never sought. Id.
The defendant sought researchers for the home research program through advertising in
Prospective “home researchers” then contacted the defendant, and those who
remained interested in the work met with an officer of the defendant to learn how to properly do
the required work, Also during that meeting, the researchers were asked to sign a document
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labeled an “Independent Contractor’s Agreement.”
From that point forward, each home
researcher was given 500 or more phone numbers to research, with periodic appointments at
defendant’s office to deliver their research results and retrieve more phone numbers to research.
The defendant paid five cents for each successfully researched phone number.
Also as part of the home research program, the defendant hired six or seven “distributors”
to pick up and deliver phone number cards of other home researchers. In some cases, the
distributors also recruited new home researchers and trained them. By the end of the program,
defendant paid distributors a flat fee per phone number, with distributors independently
negotiating the payment per phone number for the home researchers to which they distributed
The Third Circuit initially noted that the trial court had correctly assessed three of the six
factors as weighing in favor of “employee” status of the home researchers when it found “that,
for the most part, the investment of these workers was not great, the opportunity for profit and
loss was small and the skills required were few.” Id. at 1383. As for the “right-to-control”
factor, the Third Circuit found that the trial court had misapplied and overemphasized the factor,
because working from home inherently involves some freedom from, among other things, direct
supervision and strict working hours. Lastly, the appellate court noted that the district court had
not applied the remaining two factors, i.e., the degree of permanence of the working relationship
and whether the service rendered is an integral part of the alleged employer’s business. Both of
these also weighed in favor of employee status, according to the Third Circuit, because (1) “[t]he
working relationship between the home researchers and [defendant] was, for the most part, not a
transitory one,” and (2) “the home researchers were engaged in the location of phone numbers[,]
an integral part of the defendant’s business” in light of the fact that “the primary work of the
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 17 of 38
defendant is locating phone numbers of various people and calling them to sell particular
products.” Id. at 1385. Therefore, because the factors on the whole weighed in favor of
“employee” status, the Third Circuit reversed the district court and found that the home
researchers were “employees” of the defendant under the FLSA.
As for the distributors, the Third Circuit agreed with the district court’s holding that they
were not employees for purposes of the FLSA because: (1) “the defendant exercised little control
over the distributors’ delivery of cards,” and they “were permitted to recruit their own
distributees,” (2) “the distributors risked financial loss if they did not manage their distribution
network properly,” as they “were responsible for paying all of their expenses” and “had the
authority to set the rate at which its distributes would be paid,” (3) “had to make an investment in
their business” and “used paid advertising in an effort to gain more distributes,” (4) “needed to
possess some degree of managerial skill to ensure that their revenues exceeded expenses,” and,
(5) merely delivered telephone-number search cards, which is “incident to defendant’s business
[of locating and calling numbers to sell products], rather than an integral part of it.” Id. at 138687. Notably, despite all of the above factors weighing in favor of “independent contractor”
status, the Third Circuit stated that they were providing “appropriate deference” to the district
court’s fact-finding in deciding the question, which they described as “admittedly close.” Id. at
In applying the six-factor test, and parsing the differences between the employment status
of the “home researchers” and the “distributors” under the FLSA, the Third Circuit provided
substantial guidance to aid this Court’s determination as to the employment status of Plaintiffs.
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 18 of 38
Relevant Cases in Other Circuits
a. Cases Involving Non-Uber Drivers For Hire
Although the test applied in other circuits differs somewhat from the Donovan test
described above, a number of circuit courts have considered the employment status of Black car
and other drivers under the FLSA. Although these cases have not addressed the fact-specific
circumstances applicable to the present dispute regarding Plaintiff UberBLACK drivers, their
analysis is clearly relevant.
In Saleem v. Corp. Transportation Grp., Ltd., 854 F.3d 131 (2d Cir. 2017), the closest
analog to the present motion before this Court, the Second Circuit applied its five-factor FLSA
test in concluding that the trial court had not erred in granting summary judgment for the
defendants (“CTG”) because the plaintiffs could not be considered “employees.”
Livingston, writing for a unanimous panel, stated:
“the record here does not permit the conclusion that Plaintiffs were
employees, but instead establishes that they were in business for
themselves [because] Plaintiffs independently determined (1) the
manner and extent of their affiliation with CTG; (2) whether to
work exclusively for CTG accounts or provide rides for CTG’s
rivals’ clients and/or develop business of their own; (3) the degree
to which they would invest in their driving businesses; and (4)
when, where, and how regularly to provide rides for CTG clients.
Id. at 140.
In the opinion’s conclusion, Judge Livingston pointed to the “narrow compass” of the
decision, finding that “[i]n a different case, and with a different record, an entity that exercised
similar control over clients, fees, and rules enforcement in ways analogous to the Defendants
here” might be an “employer” under the FLSA. Id. at 149. Indeed, the panel found it relevant,
although insufficient to raise a material issue, that “the Defendants provided Plaintiffs with a
client base, that Defendants charged fees when Plaintiffs utilized Defendants’ referral system,
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 19 of 38
[and] that Defendants had some involvement  in rule enforcement.” Id. Nonetheless, the Court
affirmed the trial court’s grant of summary judgment and found the plaintiffs “to be independent
contractors as a matter of law.” Id.
Although somewhat less analogous to the present motion, in Chao v. Mid-Atlantic
Installation Servs., Inc., 16 Fed. App’x. 104 (4th Cir. 2001), the Fourth Circuit considered a
lawsuit brought by the U.S. Department of Labor (“DOL”) against M/A Telecommunications
(“MAT”), alleging that MAT, a broker providing cable installment services for Comcast,
improperly characterized cable installer drivers (“Installers”) as “independent contractors” under
the FLSA. Again, the trial court had found that as a matter of law, the workers in question were
independent contractors not covered by the FLSA, and the appellate court affirmed the finding.
In Chao, however, the Fourth Circuit utilized the same six-factor test that courts in the Third
Circuit use post-Donovan, finding that:
(1) defendants did “not exercise the type of control over the
manner in which the work is to be performed necessary to
characterize the relationship  as one of employee/employer,”
(2) the Installers had “an opportunity for profit or loss that is
indicative of independent contractor status.”
(3) “the Installers’ “investment in equipment and their right to
employ workers weigh strongly in favor of concluding that
they are independent contractors,”
(4) “the degree of skill required to install and repair cable
equipment favors independent contractor status.”
(5) “establish[ing] a long-term relationship , implying
employment  is not necessarily the norm, nor is it required,”
such that the permanence of relationship “factor is neutral,”
(6) “because MAT is in the business of brokering cable installation
to cable providers, the Installers are integral to MAT’s
business,” but “this factor, standing alone, does not create an
Id. at 106-107 (internal citations and quotation marks omitted).
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 20 of 38
Thus, although the sixth factor weighed in favor of employee status for the Installers, the
Court concluded that, in light of the “totality of the circumstances” and the fact “that no single
factor in the ‘economic reality’ test is dispositive,” the Installers were independent contractors
under the FLSA. Id.
In Herman v. Express Sixty-Minutes Delivery Servs., Inc., 161 F.3d 299 (5th Cir. 1998),
the Fifth Circuit considered a DOL lawsuit against a courier delivery service company alleging
that the defendant (“Express”) had improperly characterized the courier delivery drivers as
“independent contractors” under the FLSA.
As with the two other circuit court opinions
discussed above, in Herman, the appellate court affirmed the trial court’s conclusion that the
workers in question were independent contractors. 9 In reaching its conclusion, the Fifth Circuit
compared the courier driver plaintiffs to a group of four employee drivers who worked for
Express and who, unlike the plaintiffs:
(1) Report for work at a specified time;
(2) Are paid by the hour;
(3) Work a set number of hours that are determined by Express;
(4) Are required to wear a uniform;
(5) Are provided with a company vehicle and all of the necessary tools
of the trade;
(6) Are reimbursed for expenses;
(7) Are not allowed to turn down deliveries; and
(8) Are under the control and supervision of Express.
Id. at 302.
Ultimately the Court concluded that Express “had minimal control over its drivers,” the
drivers’ “profit or loss [was] determined largely on his or her skill, initiative, ability to cut costs,
and understanding of the courier business,” “the majority of drivers work for Express for a short
Like the Second Circuit, the Fifth Circuit also uses a five-factor test.
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 21 of 38
period of time,” and “the Drivers are able to work for other courier delivery companies,” which
considered all together, demonstrated that the courier drivers were independent contractors rather
b. Other Relevant Cases
In addition to “driver” cases, federal courts have also considered employment status of
workers in other, closely-related fact patterns.
In Karlson v. Action Process Serv. & Private Investigations, LLC, 860 F.3d 1089 (8th
Cir. 2017), a process server sued the company for which he worked under the FLSA, and the
case proceeded to a jury verdict that plaintiff was an independent contractor. On appeal, the
Eight Circuit affirmed the decision, finding that the evidence at trial supported the jury finding,
because Plaintiff: (1) decided which assignments to accept; (2) was paid a flat rate per job
completed; (3) used his own car, phone, and computer to complete service of process; (4) did not
report for work, punch a time clock, or otherwise report his hours to the alleged employer; (5)
was not told when to work; (6) left for vacation without permission; and (7) accepted
assignments from other companies. Id. at 1094-95.
In Lawson v. GrubHub, Inc., 15-cv-05128, 2018 WL 776354 (N.D. Cal. Feb. 8, 2018),
the plaintiff restaurant delivery driver alleged that he was improperly classified by Grubhub as an
independent contractor under California employment laws. Following a bench trial, the district
court applied California’s common law test (called the Borello 10 test) to find that the defendant,
“an internet food ordering service that connects diners to local restaurants,” could not be
considered an employee. Id. at *2. Unlike the present case, the California common law test
places the burden on the defendant to prove that the plaintiff is an independent contractor rather
than an employee. Id. at *10. Also unlike the present case, California’s test has a “principal”
See S.G. Borello & Sons, Inc. v. Dep't of Indus. Relations, 48 Cal.3d 341 (1989)
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 22 of 38
factor—“whether the person to whom service is rendered has the right to control the manner and
means of accomplishing the result desired”—as well as “secondary factors.” 11 Id. at *11. The
court ultimately found that while:
some secondary factors favor an employee/employer
relationship[,] . . . [t]he other factors  favor a finding that Mr.
Lawson was an independent contractor. Of primary significance,
Grubhub did not control the manner or means of Mr. Lawson’s
work, including whether he worked at all or for how long or how
often, or even whether he performed deliveries for Grubhub’s
competitors at the same time he had agreed to deliver for
Grubhub. 12 Grubhub also did not provide Mr. Lawson with any of
the tools for his work (other than a downloadable mobile app) and
neither Grubhub nor Mr. Lawson contemplated the work to be long
term or regular, but rather episodic at Mr. Lawson’s sole
Id. at *18.
Thus, even with the burden on the defendant (as opposed to the present case where the
burden is on the plaintiff) (see supra), the court found after trial that Grubhub had met that
burden and demonstrated that the plaintiff was an independent contractor, as opposed to an
In O'Connor v. Uber Techs., Inc., 82 F. Supp. 3d 1133 (N.D. Cal. 2015), another case
decided under California’s Borello test, the court stated that, “because a number of facts material
to the employee/independent contractor determination in this case remain in dispute, the Court
The secondary factors are: (1) whether the one performing services is engaged in a distinct occupation
or business; (2) the kind of occupation, with reference to whether, in the locality, the work is usually done
under the direction of the principal or by a specialist without supervision; (3) the skill required in the
particular occupation; 4) whether the principal or the worker supplies the instrumentalities, tools, and the
place of work for the person doing the work; (5) the length of time for which the services are to be
performed; (f) the method of payment, whether by the time or by the job; (6) whether or not the work is a
part of the regular business of the principal; and (7) whether or not the parties believe they are creating
the relationship of employer-employee. Lawson v. Grubhub, Inc., No. 15-cv-05128, 2018 WL 776354, at
*11 (N.D. Cal. Feb. 8, 2018).
According to the court’s final opinion, “Mr. Lawson worked for other so-called ‘gig economy’
companies” prior to performing Grubhub deliveries, “including Lyft, Uber, Postmates, and Caviar,”
because “these companies, including Grubhub, [had] flexible scheduling [that] allowed him to pursue his
acting career.” Id. at *2.
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 23 of 38
denied Uber’s summary judgment motion.” Id. at 1135. The court began by analyzing the
“principal” factor under the Borello test, i.e., “whether the person to whom service is rendered
has the right to control the manner and means of accomplishing the result desired.” Id. at 1149.13
The court found that this “critical fact” remained “in dispute” because Uber and the plaintiffs,
drivers for UberX, 14 disputed, among other things, the extent to which: (1) Uber can fire drivers
at will; (2) drivers not accepting trips is considered a “performance issue”; and (3) drivers must
dress professionally, send text messages to riders, play certain types of music during trips, and
otherwise conform to Uber’s quality control “suggestions.” 15
A district court should grant a motion for summary judgment if the movant can show
“that there is no genuine dispute as to any material fact and the movant is entitled to judgment as
a matter of law.” Fed. R. Civ. P. 56(a). A dispute is “genuine” if “the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). A factual dispute is “material” if it “might affect the outcome of
the suit under the governing law.” Id.
Unlike the present case, the question of whether a worker is an employee or independent contractor
under California law is a mixed question of law and fact and thus a question “for the jury.” Hana Fin.,
Inc. v. Hana Bank, 135 S. Ct. 907, 910 (2015); compare Borello, 48 Cal. 3d at 349, with Verma, 2014
WL 2957453, at *5, and Martin v. Selker Bros., 949 F.2d 1286, 1292 (3d Cir. 1991) (Stating that, in the
Third Circuit, “[t]he employment status of the station operators is a legal conclusion.”).
UberX is a separate service from UberBLACK, which requires all drivers to be associated with a
corporation in order to gain access to the Uber App. (SOF Response, ECF 117-3, ¶ 1; Plaintiffs’
Response to Motion for Summary Judgment, at 11).
Two last cases bear at least a brief mention.
On November 10, 2017, the United Kingdom’s Employment Appeal Tribunal issued a judgment
affirming that, under English law, Uber drivers are employees. See Nov. 10, 2017 U.K. Employment
Appeal Tribunal J. (Appeal No. UKEAT/0056/17/DA) (ECF 117-51). However, the case was decided
under four U.K. statutes, and the decision does not even mention UberBLACK drivers. Instead, it
discusses drivers for UberX, UberXL, UberEXEC, UberLUX, UberTAXI, and UberWAV.
Although not specifically relevant to the present case, less than two weeks ago, the Supreme
Court decided a case regarding the “car dealership exemption” to the overtime provisions of the FLSA.
Encino Motorcars, LLC v. Navarro, 138 S.Ct. 1134 (2018).
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 24 of 38
A party seeking summary judgment always bears the initial responsibility for informing
the district court of the basis for its motion and identifying those portions of the record that it
believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett,
477 U.S. 317, 322 (1986). Where the non-moving party bears the burden of proof on a particular
issue at trial, the moving party’s initial burden can be met simply by “pointing out to the district
court . . . that there is an absence of evidence to support the nonmoving party's case.” Id. at 325.
After the moving party has met its initial burden, the adverse party's response must, “by citing to
particular parts of materials in the record” set out specific facts showing a genuine issue for trial.
Fed. R. Civ. P. 56(c)(1)(A). “Speculation and conclusory allegations do not satisfy [the nonmoving party’s] duty.” Ridgewood Bd. of Educ. V. N.E. ex rel. M.E., 172 F.3d 238, 252 (3d
Cir. 1999) (superseded by statute on other grounds as recognized by P.P. v. West Chester Area
Sch. Dist., 585 F.3d 727, 730 (3d Cir. 2009)). Summary judgment is appropriate if the nonmoving party fails to rebut by making a factual showing “that a genuine issue of material fact
exists and that a reasonable factfinder could rule in its favor.” Id. Under Rule 56, the Court
must view the evidence presented on the motion in the light most favorable to the opposing
party. Anderson, 477 U.S. at 255. 16
The Court notes, before approaching the legal distinction between employees and
independent contractors, that these two categories are not the only two types of business
relationship that exist under law, even if they may be the only relationships relevant to the
Transportation network companies (“TNCs”), such as Uber and its most
“The determination of ‘employee’ status under the FLSA is a question of law, although it depends on
subsidiary factual determinations. Employee status can be determined by the district court on a motion
for summary judgment where there are no genuine disputes of material fact.” Verma v. 3001 Castor, Inc.,
No. 13-cv-3034, 2014 WL 2957453, at *5 (E.D. Pa. June 30, 2014) (citing Thompson v. Linda And A.,
Inc., 779 F.Supp.2d 139, 147 (D.D.C. 2011)).
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 25 of 38
frequent U.S. competitor, Lyft, present a novel form of business that did not exist at all ten years
ago, available through the use of “apps” installed on smart phones. With time, these businesses
may give rise to new conceptions of employment status. 17
Relatedly, the undersigned has recently adjudicated a dispute by several hundred
Philadelphia taxicab companies against the Philadelphia Parking Authority (“PPA”), asserting
that the taxicab companies were entitled to damages because the PPA, which is authorized under
Pennsylvania law to license and regulate taxicabs and TNCs, failed to regulate TNCs for a
substantial period of time, to the economic detriment of taxicabs. Checker Cab Philadelphia v.
Philadelphia Parking Auth., No. 16-cv-4669, 2018 WL 587298 (E.D. Pa. Jan. 29, 2018).
Although the opinion does not specifically concern limousine services or UberBLACK, it
extensively discusses the differences between taxicabs and TNCs. Moreover, in the opinion, the
Court had occasion to discuss the methodology by which TNCs operate, which can be briefly
summarized as follows:
TNCs are a business model through which customers must use a
smartphone app to arrange transportation from a driver, who picks
up and transports a passenger, usually in the driver’s personal
vehicle. Compensation is handled by requiring the customer to
“register” a credit card with the TNC’s website, which then makes
a charge for the ride on the customer’s credit card. No cash is
In considering what business model Uber has presented, which has proven greatly popular with
consumers, the Court notes that it shares some characteristics in common with a joint venture: Uber has
provided the technology by which passengers can receive transportation, and drivers (or more precisely,
the companies for which they work) can earn money from providing rides. For example, the Pennsylvania
Supreme Court stated in McRoberts v. Phelps, 391 Pa. 591 (1958):
To constitute a joint venture certain factors are essential:
(1) each party to the venture must make a contribution, not necessarily of capital, but by
way of services, skill, knowledge, materials or money;
(2) profits must be shared among the parties;
(3) there must be a ‘joint proprietary interest and right of mutual control over the subject
matter’ of the enterprise;
(4) usually, there is a single business transaction rather than a general and continuous
Id. at 599.
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accepted unless the customer voluntarily gives the driver a
Id. at *10.
In this case, we start with the fundamental proposition that, notwithstanding Plaintiffs’
argument based on New Jersey and California state law, the burden lies with Plaintiffs to prove
that they are employees. See, e.g., Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 686–87
(1946) (A plaintiff “who brings suit under the [FLSA] has the burden of proving that he
performed work for which he was not properly compensated.”); Schaffer v. Weast, 546 U.S. 49,
56 (2005) (“[T]he ordinary default rule [is] that plaintiffs bear the risk of failing to prove their
claims.” (citing C. Mueller & L. Kirkpatrick, Evidence § 3.1, p. 104 (3d ed. 2003) (“Perhaps the
broadest and most accepted idea is that the person who seeks court action should justify the
request, which means that the plaintiffs bear the burdens on the elements in their claims.”)).
As mentioned above, the Donovan factors drive this Court’s analysis. Therefore, each of
the six Donovan factors is addressed in detail below.
A. Employer Control – Factor #1
The first Donovan factor is “the degree of the alleged employer's right to control the
manner in which the work is to be performed.”
At the outset, the Court notes that the written agreements entered into by the Plaintiffs
and their transportation companies point to a lack of control by Uber. 18 For example, the
Services Agreement states, “Uber does not, and shall not be deemed to, direct or control
Customer or its Drivers generally or in their performance under this Agreement.” (Uber SOF ¶
These agreements are not determinative, but they are clearly relevant. “Though an employer’s selfserving label of workers as independent contractors is not controlling, such a designation in the franchise
agreement is pertinent to the parties’ beliefs about the nature of the relationship.” Saleem, 854 F.3d at
141 (citations and parentheses omitted).
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 27 of 38
22). These agreements, however, go beyond merely characterizing the extent to which Uber can
control drivers. They also specifically detail the many ways that Uber is not entitled to control
UberBLACK drivers. (See, e.g., id. (“Customer and its Drivers retain the sole right to determine
when, where, and for how long each of them will utilize the Driver App or the Uber Services”;
“Uber shall have no right to require Customer or any Driver to  display Uber’s or any of its
Affiliates’ names, logos or colors on any Vehicle(s)[,] or  wear a uniform or any other clothing
displaying Uber’s or any of its Affiliates’ names, logos or colors.”)). As Plaintiffs themselves
point out, “[a]ctual control of the manner of work is not essential; rather it is the right to control
which is determinative.”
(ECF 117, “Response to MSJ,” at 16).
See Drexel v. Union
Prescription Ctrs., 582 F.2d 781, 785 (3d Cir. 1978); Williams v. Jani-King of Phila. Inc., 837
F.3d 314, 321 (3d Cir. 2016) (“It is the existence of the right to control that is significant,
irrespective of whether the control is actually exercised.”).
Nonetheless, Plaintiffs contend that, although the above-referenced agreements disclaim
Uber’s control, “Uber exercises extensive control over UberBLACK drivers when they are
online with the Uber app.” (Plaintiffs’ Response, at 12). Specifically, Plaintiffs assert, among
other things, that Uber has the right to exercise substantial control over drivers because Uber can,
pursuant to its contracts: terminate a driver’s access to the Uber App, 19 deactivate a driver for
canceling trips, 20 “block” drivers manipulating lines at major transportation hubs, 21 deactivate
This refers to the Services Agreement, at section 12 (see Def. MSJ, Ex. 11), which allows both parties
to the contract (the transportation company and Uber – not any driver) to terminate the agreement with
seven days’ prior notice without cause, or without notice if there is, (1) material breach by the other party,
(2) bankruptcy, insolvency, or suspension of payment, or (3) if the transportation company or its driver
no longer qualifies under applicable law or the standards and policies of Uber to provide transportation
services (e.g., if the driver could not pass Uber’s background check or if the driver’s license is suspended
as a result of a serious moving violation or crime).
Uber does not dispute that it reserves such a right. (See Uber Reply SOF ¶¶ 249, 251-52).
For support, Plaintiffs reference an email from Uber to Plaintiff Cherdoud on February 18, 2016 (see
ECF 117-32), which states that Mr. Cherdoud would be “blocked from airport pickups for one week”
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 28 of 38
drivers for failing its background check policy, 22 deactivate drivers who fall short of the required
4.7-star driver rating, 23 make deductions against a driver’s earnings, 24 deactivate drivers who
solicit payments outside of the Uber App, 25 and limit the number of consecutive hours that a
driver may work. 26
On the other hand, there are significant indications in this case that Uber does not
exercise substantial control over Plaintiffs.
For example, as business owners, Plaintiffs are permitted to hire sub-contractors or other
“helpers” to drive for UberBLACK using their vehicles, and it is Plaintiffs’ businesses that are
paid as a result, not the “helpers.” (See, e.g., Response SOF ¶ 63 (“The money, pursuant to
Uber’s rules, goes into Luxe’s Uber account, and then is distributed to the individual who
performed the fare.”). See Chao, 16 F. App'x at 107 (affirming independent contractor status for
cable television installers in part based on the fact that it was the “Installer's decision whether to
hire his own employees or to work alone,” to try to increase profits);
Additionally, Plaintiffs and their helpers are permitted to work for competing companies.
This is well-established as a leading indicator that a worker is an independent contractor. See
Saleem, 854 F.3d at 141 (“The fact that Plaintiffs could (and did) work for  business rivals and
because he violated Uber’s “empty sleeper” policy, which states: “Partners are not permitted to leave their
phones in the airport zone overnight if they are not present with their own phone.”
Uber does not dispute that Uber “deactivated” Plaintiff Razak pursuant to Uber’s background policy.
According to Plaintiffs, Plaintiff Razak was convicted of a “DWI” in New Jersey on February 26, 2008.
Uber does not dispute that Uber “deactivated” Plaintiff Sabani because of a low rider rating. (Uber
Reply SOF ¶ 258).
Uber makes deductions from checks issued to transportation providers for various items, including
insurance costs associated with Gegen, vehicle payments associated with financing arrangements, and
PPA dues. (ECF 117-14).
“[S]oliciting payment of fares outside the Uber system” can lead to deactivation. (See Uber’s Driver
Deactivation Policy, ECF 68-6).
Pursuant to Uber’s Drowsy Driving Policy, drivers who drive for Uber for twelve straight hours are
automatically switched from Online to Offline for six straight hours, after which they may go Online
again to receive trip requests. (ECF 117-31)
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 29 of 38
transport personal clients while simultaneously maintaining their franchises without consequence
suggests . . . that [Defendant] exercised minimal control over Plaintiffs.”); Keller v. Miri
Microsystems LLC, 781 F.3d 799, 807 (6th Cir. 2015) (“If a worker has multiple jobs for
different companies, then that weighs in favor of finding that the worker is an independent
contractor.”); Herman v. Express Sixty-Minutes Delivery Serv., Inc., 161 F.3d 299, 303 (5th Cir.
1998) (noting fact that “[t]he drivers can work for other courier delivery systems” supported
independent contractor status); Kirsch v. Fleet Street, Ltd., 148 F.3d 149, 171 (2d Cir.
1998) (affirming finding of independent contractor status when, inter alia, the worker “was
allowed to sell merchandise on behalf of other companies”).
Defendants also point out that Plaintiffs are basically completely free to determine their
working hours. (Uber SOF ¶ 186). Plaintiffs do not have to report to work at specific places, at
specific times, or on specific days to “punch the clock.” (Id. ¶ 185) They are permitted to go
Online as little or as much as they want, subject to some limitations for drivers who fail to meet
quality or safety standards, who may be “blocked” or deactivated.
limitations only apply while Plaintiffs are Online. Plus, the limitations are generally geared
towards ensuring safety and quality control, such as forcing a break upon drivers who have been
driving without any rest for twelve straight hours. (See Uber Drowsy Driving Policy, ECF 11731). See, e.g., Jacobson v. Comcast Corp., 740 F.Supp.2d 683, 690 (D. Md. 2010) (“[D]etailed
instructions and a strict quality control mechanism will not, on their own, indicate an
employment relationship.”); Lepkowski v. Telatron Mktg. Grp., Inc., 766 F. Supp. 2d 572, 579–
80 (W.D. Pa. 2011) (“[T]hese measures reflect precisely the type of quality control and customer
service supervision that courts have consistently held to be ‘qualitatively different’ from the
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control exercised by an employer over an employee.”) (citing, among other cases, Zheng v.
Liberty Apparel Co. Inc., 355 F.3d 61 (9th Cir. 2003).
Moreover, Uber’s decision to deactivate Plaintiff Razak as a result of his conviction for
Driving While Intoxicated does not suggest “control” but rather, a sense of responsibility for the
safety of passengers who use the Uber App, even if Mr. Razak were remained legally allowed to
drive under state law. See, e.g., Moreau v. Air France, 356 F.3d 942, 951 (9th Cir. 2004) (“Any
airline that is concerned about its passengers' safety would be remiss to simply delegate a task to
another party and not double-check to verify that the task was done properly.”); Jacobson, 740
F.Supp.2d at 391 (“It is  significant that the control Comcast does exercise is in part designed
to protect Comcast customers.”). 27
Given the unique business model which TNCs, such as Uber, have created, and their
applicability to Uber BLACK drivers, the fact that Uber does exercise some control when
UberBLACK drivers are Online does not convert UberBLACK drivers into employees. The
Court likens this situation to a carpenter, or a plumber, who is engaged to complete a renovation
project for a homeowner. Very often, the exact date and time that the plumber/carpenter will
come to the home is negotiated, but if the contractor is late or cancels, there is little the
homeowner can do.
The homeowner may impose certain requirements while the
carpenter/plumber is in the house, such as not permitting certain fumes, footwear, music, or other
conditions — but all of these conditions apply only while the carpenter/plumber is in the home –
– and they certainly do not suffice to conclude that the carpenter/plumber is an employee.
Several of the cases in this paragraph arise under the question of “joint employment,” to which courts
apply a distinct but heavily related inquiry. Such cases are particularly relevant here, because
UberBLACK’s written agreements are entered into by corporations for which individual drivers then
work, which is precisely the relationship involved in each of the “joint employment” cases cited above.
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 31 of 38
Thus, the Court concludes that, on the whole, the first Donovan factor –– “the degree of
the alleged employer's right to control the manner in which the work is to be performed” —
weighs heavily in favor of “independent contractor” status.
B. Employee Opportunity for Profit or Loss – Factor #2
The second Donovan factor is “the alleged employee's opportunity for profit or loss
depending upon his managerial skill.”
It is undisputed that UberBLACK drivers are permitted to work as much or as little as
they would like, subject to certain limitations, discussed earlier. (Uber SOF ¶ 186 (“Uber does
not require drivers to be online on the Uber App at any time.”). They are also permitted to work
during whichever hours they choose, and to drive (within territorial limits) wherever they
choose. They can concentrate their efforts around certain “high times” of the day, week, month,
or year, in order to capitalize on “surge” pricing. (See, e.g., ECF 117-26 (“Surge Pricing
Article”) (In “cases of very high demand, fares may increase to help ensure those who need a
ride can get one,” thereby increasing the rates that drivers receive for each ride.)). UberBLACK
drivers can also—and indeed actually do—choose to work for competitors when they believe the
opportunity for profit is greater by doing do. (Reply SOF ¶ 181 (“While online, Plaintiffs 
accepted rides from private clients.”); ¶ 179 (“While online, transportation providers are free to
run a personal transportation company and distributed trips to other drivers.”).
In fact, Plaintiffs themselves have taken advantage of such opportunities through their
own respective companies, named Luxe, Freemo, and Milano. (Reply SOF ¶ 1; see id. ¶ 147
(“Freemo advertised . . . and that advertising generated phone calls for trip requests,”) ¶ 82
(“Luxe advertised [and] developed an internet presence . . . so that its drivers could receive trip
requests,” ¶ 181 (“While online, Plaintiffs, inter alia, accepted rides from private clients [and]
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 32 of 38
conducted business for their independent transportation companies.”)). In other words, where
the opportunity for profit was greater by choosing not to accept trip requests, Plaintiffs were free
to make money elsewhere (even while actively remaining Online the Uber app to assess whether,
for example, there was any “surge” pricing). These facts strongly indicate that Plaintiffs are
independent contractors pursing their own entrepreneurial opportunities in search of profit. See
Saleem, 854 F.3d at 144 (“By toggling back and forth between different car companies and
personal clients, and by deciding how best to obtain business from [Defendant]’s clients, drivers’
profits increased through their initiative, judgment, or foresight—all attributes of the typical
independent contractor.”) (citations and quotation marks omitted); Donovan v. DialAmerica
Mktg., Inc., 757 F.2d at 1387 (finding independent contractor status where workers exercised
“managerial skill to ensure that their revenues exceeded expenses”); Brock v. Mr. W. Fireworks,
Inc., 814 F.2d 1042, 1047 (5th Cir. 1987) (Under the economic reality test, “it is not what
[Plaintiffs] could have done that counts, but as a matter of economic reality what they actually do
that is dispositive.”).
Plaintiffs contend that there remain disputed issues of material fact with respect to this
“profit and loss” factor because, for example, Uber’s app determines whether each driver
receives any given trip request (based on proximity, among other factors), and because Uber
retains the right to determine how much to charge passengers. However, these assertions do not
create any material dispute, because the “profit and loss” factor does not require that Plaintiffs be
“solely in control of their profits or losses.” Chao, 16 F. App'x at 107 (holding that cable
installers were “no less in control of their net profits . . . than typical independent contractors,”
where the installers contended they could not “unilaterally determine how many Comcast
customers they will service on a given day or the rate at which they are paid for each job.”).
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 33 of 38
The Court discussed some of the above issues in its opinion dated September 13, 2017
(ECF 93) denying summary judgment on the issue of compensability.
However, it bears
emphasis that, unless the UberBLACK driver is Online, he or she will not be earning any money.
It is only once the driver goes Online, which is completely in control of the driver, that the
opportunity to earn profits begins. See, e.g., Chao, 16 F. App'x at 107 (affirming the district
court’s holding, which held that cable television installers can control their own profits “by
agreeing to work more or fewer hours”); Herman, 161 F.3d at 304 (affirming independent
contractor status for courier drivers because, “[a]lthough [plaintiff] maintains that [defendant]
controls customer volume and the amount charged to customers, the drivers had the ability to
choose how much they wanted to work.”).
In sum, this factor strongly favors a conclusion that Uber BLACK drivers are not
C. Employee Investment – Factor #3
The third Donovan factor is “the alleged employee's investment in equipment or
materials required for his task, or his employment of helpers.”
The major investment here is that UberBLACK drivers must purchase (or lease) their
own expensive vehicles. Plaintiffs basically concede that this factor is strong evidence that they
are not employees, instead stating that the “control” factor “moots” this factor. (see Response to
MSJ, ECF 117-1, at 20 (“At first glance this is arguably the only Donovan factor favoring
independent contractor status . . . [but] the legal significance of the Plaintiffs’ investments is
mooted by Uber’s control over those investments.”)). Although Plaintiffs are correct insofar as
Although the extent of Plaintiffs’ investments in their own companies will be discussed infra, Plaintiffs’
capital investments are also relevant to the “profit and loss” factor, and weigh heavily in favor of
“independent contractor” status. Herman, 161 F.3d at 308 (“If the workers have sizeable capital
investments at stake, they are more akin to independent entrepreneurs seeking a return on their risky
capital investments, than to employees.”) (citations omitted).
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 34 of 38
they acknowledge that the Court is tasked with a holistic assessment of the “economic realities”
of the alleged employment relationship, it remains unclear how Plaintiffs’ extensive personal
investments are “mooted” by the “control” factor.
For example, Plaintiffs contend—and Uber concedes—that “Uber deducts money” from
Plaintiffs for “vehicle finance payments.” (Reply SOF, ¶ 95). What Plaintiffs do not emphasize
is that Plaintiffs have chosen to undertake this financing arrangement, which is not required of
drivers for UberBLACK. (Id.) The fact that Uber presents this option, as well as insurance and
incorporation referrals, (Id. ¶ 244), does not convert Uber into an employer under the FLSA. 29
Furthermore, the fact that Plaintiffs receive financing for some of their companies’ vehicles does
not somehow minimize that it was Plaintiffs, rather than Uber, that made significant capital
investments which remain in their possession even if they choose to work for another company
or individual. See United States v. Silk, 331 U.S. 704, 719 (1947) (“where the arrangements
leave the driver-owners so much responsibility for investment and management as here, they
must be held to be independent contractors”); Saleem, 854 F.3d at 144-46 (“large capital
expenditures—as opposed to ‘negligible items, or labor itself’—are highly” indicative of
independent contractor status); Freund v. Hi-Tech Satellite, Inc., 185 F. App’x 782, 784-85 (11th
Cir. 2006) (cable installer “drove his own vehicle and provided his own tools and supplies”);
Browning v. CEVA Freight, LLC, 885 F. Supp. 2d 590, 608 (E.D.N.Y. 2012) (“Plaintiffs made
substantial investments in their businesses. They utilized their own vehicles and . . . were
responsible for the costs and expenses associated with the vehicle, [which] weighs in favor of
independent contractor status.”).
This factor strongly favors independent contractor status.
Whether Uber’s participation in such financing arrangements requires it to comply with other statutory
or regulatory law is beyond the scope of the present case.
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 35 of 38
D. Special Skills – Factor #4
The fourth Donovan factor is “whether the service rendered requires a special skill.”
It is generally accepted that “driving” is not itself a “special skill.” See, e.g., Alexander
v. FedEx Ground Package Sys., Inc., 765 F.3d 981, 995 (9th Cir. 2014). However, this case does
not involve solely the ability to drive. UberBLACK drivers replicate the limousine experience,
and drivers are expected to maintain a high level of customer service.
In fact, Plaintiffs
themselves extensively emphasize the fact that drivers are subject to a number of “requirements”
and “limitations” that they must navigate to start driving for UberBLACK as well as find success
while doing so. (See, e.g., Response to MSJ, at 13 (“Uber requires all drivers to maintain a
‘driver rating’ of at least 4.7 out of 5 stars.”) Thus, although perhaps not strictly rising to the
level of “special skills,” UberBLACK drivers are not comparable to, for example, the delivery
driver in Grubhub. 2018 WL 776354, at *16 (“[A]nyone with a means of delivery can contract
to deliver for Grubhub—no special skills are needed.”). Instead, UberBLACK drivers bolster
their earnings by managing when, where, and how to perform their task of transporting
passengers. (See, e.g., ECF 117-26 (In “cases of very high demand, fares may increase to help
ensure those who need a ride can get one,” thereby increasing the rates that drivers receive for
Thus, while this factor weighs in favor of finding that Plaintiffs are “employees,” it does
not carry much weight in establishing Plaintiffs’ burden.
E. Relationship Permanence – Factor #5
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 36 of 38
The fifth Donovan factor is “the degree of permanence of the working relationship”
between the worker and the alleged employer.
Generally, independent contractors have variable or impermanent working relationships
with the principal company because they “often have fixed employment periods and transfer
from place to place as particular work is offered to them, whereas ‘employees’ usually work for
only one employer and such relationship is continuous and indefinite in duration.” Baker v. Flint
Eng'g & Constr. Co., 137 F.3d 1436, 1442 (10th Cir.1998) (internal quotation marks omitted);
see also Keller v. Miri Microsystems LLC, 781 F.3d 799, 807 (6th Cir. 2015) (same). This
factor, once again, relates to the fact that UberBLACK drivers have basically complete freedom
regarding how long they wish to serve in this capacity and the hours in which they serve. In
other words, there is no permanence of the working relationship whatsoever, unless the driver
Plaintiffs contend that, because Plaintiffs have driven for Uber for years, and for “many
hours per week” (Response to MSJ, at 21), there is “relationship permanence.” Although
facially persuasive, this “fact” reflects Plaintiffs’ choices rather than Uber’s necessity. It is also
simply untrue. (Uber SOF ¶ 184 (“Plaintiff Razak testified that he left on vacation for two
months in 2017, but did not have to ask permission from Uber to go offline for that long.”)).
Plaintiffs sought profits as they saw fit, during hours and on days that they chose with no
advance notice as to when, where, or for how long they would work. In other words, just as in
the case of the black-car drivers in Saleem, Plaintiffs used this freedom to, at times, work many
hours per week, but this does not weigh in favor of “employee” status:
[T]his case resembles those in which we and other Circuits have
recognized independent contractor status. In Kirsch v. Fleet Street,
for example, [the Second Circuit] upheld a jury finding that the
plaintiff was an independent contractor when, inter alia, he “was
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 37 of 38
not required to spend time in the company’s offices [and] was free
to set his own schedule and take vacations when he wished.” 148
F.3d at 171. Likewise, in Herman v. Express Sixty-Minutes
Delivery Service, Inc., the Fifth Circuit concluded that a courier
service “had minimal control over its drivers” such that they were
independent contractors because, inter alia, “[t]he drivers set their
own hours and days of work.” 161 F.3d at 303. Similarly here,
Plaintiffs’ freedom in choosing when, where, and with what
regularity to drive CTG clients shows the extent of their economic
independence—that they operated their “business organization[s]”
on their own terms, and as they saw fit. Rutherford, 331 U.S. at
730, 67 S.Ct. 1473.
Saleem, 854 F.3d at 148.
Because UberBLACK drivers can work as little or as much as they want –– the hallmark
of a lack of “relationship permanence” with an alleged employer –– this factor weighs heavily in
favor of Plaintiffs’ independent contractor status.
F. Integrality of Service – Factor #6
The sixth Donovan factor is “whether the service rendered is an integral part of the
alleged employer's business.”
As noted elsewhere in this opinion, and in other cases, Uber drivers are an essential part
of Uber’s business as a transportation company. See, e.g., O'Connor, 82 F. Supp. 3d at 1141
(“Uber simply would not be a viable business entity without its drivers.”). Indeed, it seems
beyond dispute that if Uber could not find drivers, Uber would not be able to function.
Similarly, Uber’s drivers depend on Uber’s technology in getting jobs. However, it is worth
noting that UberBLACK is only one of the many services that Uber provides through its Uber
For example, Plaintiffs submitted a U.K Employment Appeal Tribunal Decision regarding the
employment status of drivers for UberX, UberXL, UberEXEC, UberLUX, UberTAXI, and UberWAV.
Case 2:16-cv-00573-MMB Document 124 Filed 04/11/18 Page 38 of 38
Nevertheless, the Court finds that this factor tends to support the Plaintiffs’ burden of
proof that they are employees. This is only the second factor that supports such a conclusion, but
only to a slight degree.
Plaintiffs have had a full opportunity to present all relevant facts bearing on the question
of whether they are employees under the FLSA. Accepting that there are some disputes of fact,
the Court viewed all evidence in the light most favorable to Plaintiffs, as required by Anderson v.
Liberty Lobby, Inc.. See 477 U.S. at 255. Nonetheless, given the “totality of the circumstances”
and the fact “that no single factor in the economic reality test is dispositive,” Chao, 16 Fed.
App’x. at 107, Plaintiffs have not brought to the record sufficient proof to meet their burden of
showing that they are employees.
For the foregoing reasons, Uber’s Motion for Summary Judgment (ECF 66) will be
An appropriate Order follows.
O:\CIVIL 16\16-573 Razak v Uber Technologies\Memo Re MSJ 4.11.2018.docx
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