Game On! Federal Appeals Court Revives Antitrust Challenge to Seattle’s Gig Worker Union Organizing Ordinance

by Fisher Phillips

If you’ve been following the legal fight over Seattle’s 2015 proposal to permit ride-sharing drivers who work for companies such as Uber and Lyft to organize and form the country’s first gig economy unions, you might feel like you have been watching a tennis match. At first a court granted a preliminary injunction to block the ordinance from taking effect in April 2017, but a few months later the court dismissed a legal challenge and cleared the way for the ordinance to eventually take effect. But on May 11th, before the law could become official, the 9th Circuit Court of Appeals revived a challenge filed by the U.S. Chamber of Commerce to the ordinance on antitrust grounds, sending the case back down to the lower court for further action.

The stakes are high in this hard-fought legal battle over the first-ever law in the nation to create a gig worker union. May 11th's decision is a positive development for gig economy businesses who would rather not have a union representing the independent contractors that perform work for their platforms.

How We Got Here

By way of background, the City of Seattle became the first jurisdiction to pass a law aimed at unionizing ride-sharing drivers in 2015. This is significant because these workers are typically classified as independent contractors (and therefore excluded from the right to organize under federal labor law).  The controversial ordinance has been embroiled in legal challenges for several years now.

Initially, a federal district court in Washington granted a preliminary injunction blocking key portions of the ordinance. However, the same court later dismissed the underlying lawsuit brought by the U.S. Chamber of Commerce and others, which claimed that it violated federal antitrust laws and was preempted by federal labor law. The lower court’s August 2017 decision found that Seattle’s law remained valid because the state had delegated certain authority to enact certain anti-competitive restraints to the city, known as the “state action doctrine.”

The U.S. Chamber of Commerce and other challengers appealed that ruling to the 9th Circuit Court of Appeals, which heard oral argument in February.  The Federal Trade Commission and the U.S. Department of Labor also filed friend-of-the-court briefs, arguing that the ordinance should be overturned.

The 9th Circuit’s Decision

The 9th Circuit issued its decision on May 11th, overturning the lower court and holding that the ordinance violates, and is preempted by, federal antitrust law because it sanctions the price fixing of ride-referral service fees by private “cartels” of independent contractor drivers.

As discussed by the court, federal antitrust law generally prohibits illegal price-fixing arrangements, where private parties come together to raise, depress, or fix prices in an otherwise competitive marketplace. However, there is an important exception to the federal anti-trust law, known as the “state action doctrine.” Under this doctrine, states are allowed to regulate their economies and impose certain market restraints as an act of government.

The federal courts use a two-part test to evaluate whether this “state action doctrine” will save the otherwise anticompetitive actions of private parties. First, the challenged activity must be one “clearly articulated and affirmatively expressed” as state policy. Second, the policy must be “actively supervised” by the state.

In applying this test to the Seattle ordinance, the court ruled that it failed in both parts. First, the court held that the State of Washington has not “clearly articulated and affirmatively expressed” a state policy authorizing private parties to price-fix the fees for-hire drivers pay to companies like Uber or Lyft in exchange for ride-referral services. Second, the court held that the ordinance does not meet the “active supervision” component of the state-action doctrine, noting that the State of Washington plays no role in supervising or enforcing the terms of the ordinance.

In an interesting part of the decision that is likely to be quoted far and wide in gig economy cases in the future, the court stated:

Tellingly, Uber and Lyft did not exist when Washington statutes were enacted. The very concept of digital ridesharing services was probably well beyond the imaginations of lawmakers two to three decades ago, much less foreseeable. But the fact that technology has advanced leaps and bounds beyond the contemplation of the state legislature is not, on its own, the dispositive factor in our holding today. Digital platforms like Uber and Lyft have become ‘highly interconnected with modern economic and social life,’…and present novel challenges and contexts for regulation. Nevertheless, it is not our role to make policy judgments properly left to the Washington state legislature.

As a result, the court remanded the federal antitrust claims to the district court for further proceedings.

Game, Set…Match?

This likely isn’t the end of the story. This decision will likely be appealed and heard by a full en banc panel of the 9th Circuit in the next year or so. And that decision could then be appealed to the U.S. Supreme Court.

In addition, the 9th Circuit (in the language quoted above) was basically inviting the Washington state legislature to act. The court hinted that the “state action doctrine” analysis could be different were this a state legislative proposal rather than a municipal ordinance. Will the Washington state legislature respond? Only time will tell.

But if you plan on continuing to follow this case, you might want to consider some good neck exercises in the near future. The judicial back-and-forth is likely to continue for quite some time.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Fisher Phillips | Attorney Advertising

Written by:

Fisher Phillips

Fisher Phillips on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.