890 F.3d 769
9th Cir.2018Background
- Seattle Ordinance 124968 (2015) created a collective-bargaining scheme requiring "driver coordinators" (e.g., Uber, Lyft, Eastside) to negotiate with an elected exclusive driver representative (EDR) of independent-contractor drivers, including the "nature and amount of payments to be made by, or withheld from" driver coordinators to drivers.
- The Ordinance applies only to independent contractors and allows the EDR and driver coordinators to submit negotiated agreements to the City Director for review and approval; if parties fail to agree, the Ordinance requires interest arbitration with Director review.
- The U.S. Chamber of Commerce and Rasier (Uber subsidiary) sued, alleging the Ordinance (1) violates and is preempted by §1 of the Sherman Act (price-fixing by independent drivers) and (2) is preempted by the National Labor Relations Act (NLRA) under Machinists and Garmon doctrines.
- The district court dismissed the suit, finding state-action (Parker) immunity protected the Ordinance from Sherman Act challenge and rejecting NLRA preemption claims; the Ninth Circuit stayed enforcement pending appeal and then addressed the immunity and preemption issues.
- The Ninth Circuit reversed the dismissal as to the Sherman Act claims (holding state-action immunity was not satisfied) and affirmed dismissal as to NLRA preemption claims; the Sherman Act claims were remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Ordinance is preempted by §1 of the Sherman Act (state-action immunity/Parker) | Chamber: Ordinance authorizes per se horizontal price-fixing by independent contractors and is not immune from Sherman Act because no valid state authorization or supervision exists | City: Washington statutes delegate power to regulate for-hire transportation and thus confer Parker immunity; municipal and state supervision suffice | Reversed dismissal: state-action immunity fails — the statutes do not "clearly articulate" authorization to let private parties fix driver referral fees, and active state supervision is lacking, so Parker immunity does not apply |
| Whether active-state supervision requirement applies | Chamber: N/A (argues no immunity) | City: municipal/state supervision suffices; municipalities can be treated as State agents | Active supervision applies (because private parties exercise delegated discretion) and is unmet; municipal supervision alone insufficient here |
| Whether the Ordinance is preempted by NLRA under Machinists (implied preemption) | Chamber: exclusion of independent contractors from NLRA implies Congress left independent-contractor relations to free market, preempting local regulation | City: NLRA does not occupy the field; Congress did not preclude local regulation of independent contractors | Affirmed dismissal: Machinists preemption inapplicable — Congress’s exclusion of independent contractors from §152(3) does not imply field preemption of local regulation |
| Whether the Ordinance is preempted by NLRA under Garmon (Board preemption) | Chamber: Ordinance will force local/state actors to resolve NLRA-covered status (employee v. independent contractor), displacing NLRB jurisdiction | City: Ordinance expressly disclaims deciding NLRA employment status and does not implicate activity that is "arguably" protected/prohibited by NLRA | Affirmed dismissal: Garmon preemption fails — Chamber did not show drivers are "arguably" NLRA-covered such that NLRB jurisdiction would preclude local action |
Key Cases Cited
- Parker v. Brown, 317 U.S. 341 (state-action immunity principle)
- FTC v. Phoebe Putney Health Sys., Inc., 568 U.S. 216 (Parker immunity is narrow; two-part Midcal test explained)
- California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97 (two-part test: clear articulation and active supervision)
- Town of Hallie v. City of Eau Claire, 471 U.S. 34 (municipal exception and role of private-party delegation)
- City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365 (zoning statutes as clear authorization of anticompetitive effects)
- United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (horizontal price-fixing is per se illegal)
- Southern Motor Carriers Rate Conference, Inc. v. United States, 471 U.S. 48 (state authorization of collective ratemaking and active supervision)
- Lodge 76, Int’l Ass’n of Machinists & Aerospace Workers v. Wisconsin Employment Relations Comm’n (Machinists), 427 U.S. 132 (limits on state regulation where Congress left matters to free play of economic forces)
- San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236 (preemption where state regulation would interfere with NLRB jurisdiction)
- Goldfarb v. Virginia State Bar, 421 U.S. 773 (state regulation of an occupation does not imply authorization to fix prices)