The US Court of Appeals for the Third Circuit ruled Wednesday that Uber drivers are not exempt from laws requiring private arbitration of disputes.
The Federal Arbitration Act (FAA) allows federal courts to enforce private arbitration agreements commonly found in employment contracts. These agreements are included in the standard contract Uber drivers agree to. However, the FAA allows for exemptions for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”
In a suit against Uber Technologies, Inc., a group of drivers working for Uber tried to argue that they fell into the “interstate commerce” worker exception because Uber drivers occasionally carry passengers across state lines.
Federal Chief District Judge Freda L. Wolfson initially ruled that the drivers were not covered by the interstate commerce exemption as Uber rides crossing state lines only accounted for two percent of all rides nationwide. Judge Wolfson also noted that Uber’s business model focused on “local” transportation.
On appeal, the Third Circuit again ruled in favor of Uber, deciding that drivers did not qualify under the “interstate commerce” exception. The court reasoned that “Most Uber drivers have never made a single interstate trip. When Uber drivers do cross state lines, they do so only incidentally, as part of Uber’s fundamentally local transportation business.”
This opinion is consistent with a 2021 ruling from the Ninth Circuit that reached the same decision. It also bars Uber drivers from bringing class action lawsuits.