Uber Overreach by Court?
Uber has found itself engaged in a messy class action suit that has now generated a First Amendment challenge to what looks like a textbook example of judicial overreach. And the First Amendment issue may clarify (or muddy) the concept of “commercial speech.” In short, there’s a lot going on here.
The underlying issue is the philosophical question at the heart of the Uber business model. Is an Uber driver an employee or an independent contractor? Uber says drivers are independent contractors who use Uber’s technology to find riders. A group of drivers, seeking to proceed with a class action, however, claim they are employees, and entitled to certain compensation and other benefits befitting that status. Litigation is pending over this issue in a California District Court.
A related, but important issue baked into the class action litigation, however, is the question whether the case belongs in the federal court at all. Uber considers itself a technology company that connects individuals in need of transportation with independent riders searching for riders. To facilitate this match making, Uber licenses a software application to drivers. That license contains a provision whereby the drivers agree to arbitrate all disputes rather than litigate in court. Arbitration tends to be a more efficient means of resolution and perhaps more importantly, it makes class actions impossible.
The potential to frustrate class action relief concerned the federal court. So much so that the court imposed stringent burdens on what Uber needed to tell drivers about how to opt out of the arbitration provision. And the court didn’t merely tell Uber what it needed to say to current drivers, the court imposed rules about how Uber needed to communicate even with prospective drivers. Included in the mandate was a requirement that Uber, in the cover e-mail to its licensing agreement, provide a hyperlink that allowed prospective drivers to opt out of the arbitration clause before they even read it.
Among Uber’s objections to the order is that the First Amendment prohibits the order. The First Amendment not only prohibits the government from telling someone what they can’t say, it also prohibits compelled speech. The plaintiffs in the case argue that the obligations are a reasonable restriction on commercial speech. But Uber contends the order are not “narrowly drawn” enough to satisfy the First Amendment. That may be.
But this case may ultimately get to a bigger issue – the ability to regulate government speech at all. Traditionally, courts have given more leeway to regulations governing “commercial speech.” The thinking was, apparently, that speech that does no more than propose a commercial transaction was not as “valuable” as political or ideological speech. That may be true, but on occasion, courts determined whether speech was “commercial” by looking at the speaker. And if the speaker was a money making entity, almost anything that entity said was deemed “commercial.” So while courts would apply the most rigid test – strict scrutiny – to most laws restricting speech, courts would apply a less rigid standard to speech affecting corporations or other business entities.
I’m not sure how that view can stand in light of the Supreme Court’s decisions in Citizens United and Hobby Lobby. The former found that corporations are “people” with First Amendment speech rights and the latter ruled that corporations have religious freedom rights. The point is that it doesn’t really make sense to treat speech differently depending on the speaker’s identity. And to the extent the court does so in the Uber case, that could be a problem. And there’s one more interesting wrinkle. Last year, the Supreme Court decided the case of Reed v. Town of Gilbert, Arizona. In that decision, the court said that any content based speech regulation is subject to strict scrutiny analysis. The court’s order is absolutely content based – that is, it applies depending on what Uber is saying. And if strict scrutiny applies, the court will need to establish that the order serves a compelling state interest and that the regulation is narrowly tailored to serve that interest. Odds are, if strict scrutiny applies, Uber wins this battle.