ATTACHMENT 8(0)

Hon. Michael D. Marcus (Ret.)
ADR SERVICES, INC.

1900 Avenue of the Stars, Suite 250
Los Angelcs, California 90067
Phone: (310) 201-0010

Fax: (310) 201-0016

IN THE MATTER OF THE ARBITRATION BETWEEN

YE. an individual, ADRS Case No. 



Claimant, 

v. BINDING ARBITRATION AWARD
UBER TECHNOLOGIES, INC., a Delaware 
Corporation; EASIER, LLC, a Delaware 
Limited Liability Company, and RAISIER- 
CA, LLC, a Delaware Limited Liability 
Company, 
Respondents. 



 

 

 

I. INTRODUCTION

Claimant claims that he was an employee of Uber

Technologies, Inc. (Uber) and Rasier, LLC (Rasicr) and, as such, is entitled to the protections
and bene?ts afforded employees in California. In turn, Uber contends that was an
independent contractor and not an employee. Rasier contends that it never had a relationship of
any kind with  It is found that -, as a driver for Uber, was an independent

contractor. Also, the claim against Raisier is dismissed with prejudice for an absence of proof.

 

II. THE ARBITRATION PROCEEDING APPEARANCES

This binding arbitration took place on July 6, 7 and 8, 2016 at ADR Services, Inc., 1900
Avenue of the Stars, Suite 250, Los Angeles, California 90067. Additional brie?ng and written
argument by the parties followed that hearing. Appearing for - were Brian
Gudrnundson, Esq. of Zimmerman Reed in Minneapolis, Minnesota and Caleb L. Marker, Esq.
and Hannah Belknap, Esq. of Zimmerman Reed in Manhattan Beach, California. Uber and
Rasier were represented by Keith A. Jacoby, Esq. and Andrew M. Spurchise, Esq. of Littler
Mendelson, RC. and Sophia Behnia, Esq. and Dalene Bramer, Esq. of Uber.

THE FACTS

Ordinarily, the facts in an arbitration award are established before the applicable law is
discussed and then applied to those facts. That order is not followed here because it is clear that
the applicable law as to the issues at hand is conclusively set forth in S. G. Borello Sons. Inc.
v. Department of Industrial Relations (1989) 48 Cal.3d 341, which established a series of factors
to be followed in deciding whether an individual is or is not an employee of a business.
Accordingly, it is preferable to ?rst discuss Borello (and Ayala v. Antelope Valley Newspapers,
Inc. (2014) 59 Cal.4th 522 to the extent it supplements Boreilo) and then apply the admitted facts
to the Borello standards in arriving at a decision in this matter. (Claimant?s counsel submitted
additional authority on November 2, 2016, consisting of an October 7, 2016 court?s
memorandum concerning a judgment on the pleadings in a federal district court
matter and an October 28, 2016 United Kingdom decision. Both cases involved Uber. Uber has
objected to this submission. Neither matter is considered because the parties herein rested on
July 8, 2016, subject to written argument which was limited to an analysis of the facts as they
applied to the Borello standards. The last date for submission of that argument was August 31,
2016. Besides, the and United Kingdom actions are clearly distinguishable: The

action involves the defendants? motion for judgment on the pleadings, which was

 

both granted and denied. A judgment on the pleadings does not involve live testimony; rather,
according to the legal principles summarized in the memorandum, the court in that type of
proceeding considers only the allegations in the complaint, attached exhibits, matters of public
record and undisputable authentic documents. Thus, it is very much like a demurrer to a
complaint. The United Kingdom matter involved an employment tribunal, which heard live
testimony and argument. This Arbitrator did not review those submitted facts. The applicable
law in that forum were English statutes or regulations apparently governing what are or are not
?workers.? The legal principles or law relied upon by the tribunal in interpreting those statutes or
regulations was British. Thus, while what a British jurist decides regarding the legal relationship

between Uber and its drivers may be of interest, it has no precedential value on this arbitration.)

IV. S. G. BORELLO SONS, INC. DEPARTMENT RELATIONS
(1989) 48 341 and A YALA v. ANTELOPE VALLEY NEWSPAPERS,
INC. (2014) 59 CAL.4TH 522

Borello recognizes the continued vitality of the control test in looking at the employer-
employee relationship but acknowledges that other indicia are needed to evaluate that

relationship.

Following common law tradition, California decisions applying such statutes
uniformly declare that ?[t]he principal test of an employment relationship is whether the
person to whom service is rendered has the right to control the manner and means of
accomplishing the result desired. . . 1  However, the courts have long recognized that
the ?control? test, applied rigidly and in isolation, is often of little use in evaluating the
in?nite variety of service arrangements. While conceding that the right to control work
details is the ?most important? or ?most signi?cant? consideration, the authorities also

endorse several ?secondary? indicia of the nature of a service relationship.

 

(Id. at p. 350.)

Along with ?the right to discharge at will, without cause" which is ?[strong] evidence in
support of an employment relationship," Borello provides eight additional factors from the
Second and Third Restatements of Agency for determining whether an individual is or is not an.

employee. They are:

whether the one performing services is engaged in a distinct occupation or business;
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; the
skill required in the particular occupation; whether the principal or the worker
supplies the instrumentalities, tools, and the place of work for the person doing the work;
the length of time for which the services are to be performed; (0 the method of
payment, whether by the time or by the job; whether or not the work is a part of the
regular business of the principal; and (11) whether or not the parties believe they are

creating the relationship of employer-employee.

(1d. at pp. 350-351.) These factors ?cannot be applied mechanically as separate tests; they are

intertwined and their weight depends often on particular_combinations.? (Id. at p. 351.)

Borello notes that other jurisdictions have developed their own standards to determine the

independent relationship.

We also note the six-factor_test developed by other jurisdictions which determine
independent contractorship in light of the remedial purposes of the legislation. Besides
the ?right to control the work,? the factors include the alleged employee's opportunity
for pro?t or less depending on his managerial skill; (2) the alleged employee's investment
in equipment or materials required for his task, or his employment of helpers; (3) whether

the service rendered requires a special skill; (4) the degree of permanence of the working

 

relationship; and (5) whether the service rendered is an integral part of the alleged
employer's business.
(Id. at pp. 354-355.) DeSpite the obvious similarity of ?the otherjurisdiction? standards to many
of its own, Borello ?nds that all of the guidelines ?are logically pertinent to the inherently
dif?cult determination whether a provider of service is an employee or an excluded independent
contractor for purposes of workers? compensation law.? (Id. at p. 355.)

Although Ayala is signi?cant principally for reversing a trial court?s rejection of class
certi?cation in a wage and hour case conceming newspaper deliverers and not because of
differences in the paper?s right to exercise control, but on variations in how that right was exercised,
its discussion of the tests for determining the employment relationship are still useful. Like Borelto,
it ?rst recognized that principal test of an employment relationship is whether the person to
whom service is rendered has the right to (necessarily) control the manner and means of
accomplishing the result desired  (Id. at p. 531.) To that standard, Ayala added, fact
that a certain amount of freedom of action is inherent in the nature of the work does not change the
character of the employment where the employer has general supervision and control over it.?
(Authorities) Perhaps the strongest evidence of the right to control is whether the hirer
can_discharge the worker without cause, because ?[t]he power of the principal to terminate the

services of the agent gives him the means of controlling the agent's activities?? (Authorities.).?

(Ibid) Ayala then acknowledges Borello?s eight other ?secondary indicia.? (Id. at p. 532.)

Unlike Borella 's observation that the several factors ?cannot be applied mechanically as
separate tests; they are intertwined and their weight depends often on particular_combinations,?

Ayala provides greater guidance in how to apply the various standards to the case at hand.

When the issue of common law employment is involved, that weighing must_be
conducted with an to the reality that the considerations in the multifactor test are not of
uniform signi?cance. Some, such as the hirer?s right to ?re at will and the basic level of skill

called for by the job, are often of inordinate importance. (Authority) Others, such as the
?ownership of the instrumentalities and tools? of the job, may be of ?only evidential value,"

 

relevant to support an inference that the hiree is, or is not, subject _to the hirer?s direction

and _control. (Authorities)
(Id. at p. 539.)
V. APPLYING BORELLO AND AYALA TO THE INSTANT FACTS
A. The Control Test
1. ?contractual relationship? with Uber

Some of the facts concerning the right to control, or the lack thereof, may be re?ected in a
written agreement between and Uber. Other facts, that are part of or related to the

?driving experience,? are discussed after that agreement.

The ?rst agreement relating to - that could be found was for April 3, 2015. (Exhibit
203; ?Agreement?.) is uncertain that the April 3, 2015 Agreement is the ?rst one that
may apply to him. (For example, see exhibit 201, a June 21, 2014 Uber software license and
online services agreement, and exhibit 202, a June 21, 2014 Uber driver addendum related to
Uber services.) Regardless, for the purposes of this hearing, the operative agreement is the April
3, 2015 writing. (In the absence of documented evidence, Uber accepts July 30, 2013 as the date
on which began his relationship with Uber. [See exhibit 209].)

The Agreement states, as to the ?relationship of the parties,? that ?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 contractors. The parties
expressly agree that: this Agreement is not an employment agreement, nor does it create an
employment relationship, between Uber and Customer or Uber and any Driver; and no joint

venture, partnership, or agency relationship exists between Uber and Customer or Uber and any

 

Driver.? (Par. 13.1.) Another part of the Agreement also discusses the absence of 'control

between Uber and its drivers:

Customer acknowledges and agrees that Uber?s provision to Customer of the Driver
App and the Uber Services creates a direct business relationship between Uber and
Customer. Uber does not, and shall not be deemed to, direct or control Customer or its
Drivers generally or in their performance under this Agreement speci?cally, including in
connection with the operation of Customers business, the provision of Transportation
Services, the acts or omissions of Drivers, or the operation and maintenance of any
Vehicles. Customer and its Drivers retain the sole right to determine when and for how
long each of them will utilize the Driver App or the Uber Services. (?Driver app? is
de?ned as ?Uber?s mobile application that enables transportation providers to access the
Uber Services for the purpose of seeking, receiving and ful?lling on-demand requests for
transportation services by Users ?User? is de?ned as ?an end user authorized by

Uber to use Uber?s mobile application for the purpose of obtaining Transportation

Services offered by Uber?s transportation provider customers?)

(Par. 2.4.) The above language, by itself, is not su?icient to identify ?5 status with Uber
because ?The label placed by the parties on their relationship is not dispositive.? (Beretta, supra,
at p. 349.) It may however, with reSpect to all of the other factors, have value in in determining

the nature of that relationship.

The Agreement describes Uber?s drivers as ?customers? or ?transportation service providers.?
?Driver? is de?ned, in part, as a ?principal, employee or contractor of Customer.? (While the
Agreement does not include the term ?livery partner,? it would appear that that term, as used by
Brad Rosenthal, the Risk Manager for Uber Tech, Inc., who helps manage Uber?s operations and
logistics, and was Uber?s only witness, is one and the same as a ?customer.? Thus, a customer, or
livery partner, may employ individuals who drive for Uber. Individuals, who do not have an

association with a livery partner, may also drive for Uber. (See par. 2.4 of the Agreement.)

 

The Agreement also refers to the relationship of livery partners or customers and users.
?Customer acknowledges and agrees that Customer?s provision of Transportation Services to
Users creates a direct business relationship between Customer and the User. Uber is not
re5ponsible or liable for the actions or inactions of a User in relation to the activities of a

Customer, a Driver or any Vehicle.? (Par. 2.3.)

At the end of the Agreement, the following language appears: ?By clicking accept,?
Customer expressly acknowledges that Customer has read, understood and taken steps to
thoughtfully consider the consequences of this Agreement, that Customer agrees to be bound by
the terms and conditions of the Agreement and that Customer is legally competent to enter into

this Agreement wit Uber.?

The Agreement was sent electronically to who clicked on the accept? button
without reading the agreement. He explained that he accepted the terms because he wanted to
work and did not read the agreement because, ?they were long and they gave it to us on an
IPhone 4 and I?m not going to read a contract within a few minutes of needing to go to work. So,
if they would have sent it to me in the mail and I would have had it in my hand, I would have
taken it to somebody to go over it, and then 1 would decide if I want to sign it or not.  I just

wasn?t going to read legal contracts on this small phone.?

?s explanations for not reading the Agreement are insufficient for its invalidation.
The fact that he could not work for Uber without agreeing to its terms does not make the
Agreement unconscionable or unenforceable in the absence of evidence that it was
?overreaching?. (Hernandez v. Badger Construction Equipment Co. (1994) 28 Cal.App.4th 1791,
1816 [?generally . . . one who assents to a contract cannot avoid its terms on the ground he failed
to read it before signing Brum? v. Didion (2008) 160 Cal.App.4th 1272, 1291 [?The general
rule ?that one who signs an instrument may not avoid the impact of its terms on the ground
that he failed to read the instrument before signing it? ?applies only in the absence of 

?overreaching? (citation) or ?imposition.? Rosencrans v. Dover Images. Ltd. (2011)

 

192 Cal.App.4th 1072, 1080 [?Generaily, it is not reasonable to fail to read a contract; this is true
even if the plaintiff relied on the defendant?s assertion that it was not necessary to read the
contract. [Citation] Reasonable diligence requires a party to read a contract before signing it.


2. The Uber Application Process

Rosenthal said that prospective drivers can apply online at Uber?s web site or in person. That
process includes providing their names, telephone or cell phone numbers, email information,
banking information, the make and model of their cars, proof of insurance, a driver?s license for
each driver, the TCP permit if the car is in the livery class, proof of corrmiercial insurance,

certi?cate of liability insurance and an insurance card for each vehicle.

In applying to Uber, provided a background check and then had an interview with

an Uber employee.
3. initial relationship with Uber

- said when he started with Uber, he was not in a direct relationship with the
Company. Instead, he drove with or for ZA Limo Transportation, the Arrue Company and Boyds
Limousine Service, three different companies that ?partnered? with Uber. It is assumed that these

entities were lively partners. (Before driving for these companies, had asked Uber in

May 2013 for the names of companies that did business with Uber because his current ?limo?

company did not wish to work for Uber. [ex. 225].)
4. Livery partners

Although the term ?livery partner? is not used in the above Agreement, it is assumed that it is
interchangeable with the term ?customer,? which is, as discussed above, an entity that may
employ individuals who drive for Uber. Individuals, who do not have an association with a livery

partner, may also drive for Uber. And, individuals may drive both for a livery partner that has an

9

 

association with Uber and as an individual. Rosenthal said that, because of regulatory
requirements and public safety, a California entity with over ?fty vehicles cannot drive on the
Uber platform. He said that drivers with a livery partner are not screened and that over ?fty
percent of Uber?s drivers are in the livery category. Uber does not require the inspection of
vehicles on the livery side. It may, however, confirm that the make and model of the livery
vehicles conform to the UberBlack platform. Rosenthal added that Uber does not direct its livery

partners how to use its drivers

Rosenthal testi?ed that was a livery partner with Uber in September 2014. He said
that the State of California, and not Uber, required that - have a livery license and that
livery partners do not need a driver?s license because ?the company doesn?t take trips,? but that
all drivers for that company, including the owner, must have a valid license. As such, 
was required to register with the state of California (on September 30, 2015, advised
Uber that he had an LLC [see exhibit 229]; see also exhibit 134), obtain a car; obtain a TCP
permit (see exhibit 205); have commercial automobile insurance (see exhibit 206, an April 23,
2015 certi?cate of liability insurance issued to consent to a motor
vehicle record check and be subject to a background check. - agreed that he was subject
to these requirements and understood, as a livery partner with Uber, that he could either drive

himself or have another person drive his car or cars.

testi?ed he applied for a TCP permit because Uber told him he had to. 
claimed he attempted to hire two additional drivers but that Uber rejected them. He could not
recall the reasons for the rejection. Rosenthal said that Uber never rejected _s drivers;
instead, the drivers never completed Uber?s ?onboarding? process. (See exhibit 102.) Rosenthal
explained that onboarding occurs when a driver goes through the sign-up criteria, which is
?going through a motor vehicle record and background check process or more of a screening . . 
If a driver is involved in ?incidents? after having onboarded, Uber ?rerun(s) motor vehicle record

checks as well as background checks, and if a driver does not meet the screening criteria, they

will be deactivated 

10

 

Rosenthal said that a livery partner determines how its drivers, who are subcontractors, shall
be paid. He said that Uber does not direct its livery partners how to use its drivers. Soren Jafari,
the CEO of Tesluxe, a Los Angeles car rental company, testi?ed that his company owns thirteen
mostly ?high end? vehicles, each with its own TCP numbers. Tesluxe employs up to 100 drivers
and pays them $20 an hour. Jafari said he gives the drivers drug tests and then submits their
names to Uber. Tesluxe, according to afari, has its own clients which Uber does not discourage,
and that 50% of his business is from private clients. He said Uber is aware that his drivers hand

out Tesluxe cards to passengers. His cars are on the Uber Luxe, SUV and Black platforms.
5. Manuals or handbooks

Rosenthal testi?ed that Uber does not provide its partners or drivers with a manual or
handbook and, speci?cally, there was no manual or guidelines in Los Angeles for drivers or

partners.
6. Training

- said that Uber had a PowerPoint at its Santa Monica of?ce which showed drivers
how the app worked and what was expected of them. After he was deactivated in July 2015, he
took a course, on his own, to learn more about himself. (Exhibit 223.) Witness 1 ., a former Uber
driver, said that online training was mandatory when he started with Uber around Thanksgiving

2013. He also said that about ?fty new drivers went to Uber?s of?ces in Santa Monica to learn

how to use the Uber app.

Rosenthal testi?ed that no training is required to gain access to the Uber app. Drivers Only
have to watch a ?fteen-minute video shown at a ?green-light hub? or presented by an Uber
operations manager on how to use the app. The video also provides customer service tips. (At his
deposition, Rosenthal said Uber ?outline(s) the onboarding process, which is what a driver needs

to do to become active on our platform?) Additionally, before using the app for the ?rst time, he

11

 

said the driver must consent to a software licensing agreement and, if applicable, a City

addendum.
7. Vehicles

The Agreement in par. 3.2 describes the drivers? responsibilities for the vehicles they are to

use:

(E)ach Vehicle shall at all times be: preperly registered and licensed to operate as
a passenger transportation vehicle in the Territory; owned or leased by Customer, or
otherwise in Customer?s lawful possession; suitable for performing the passenger
transportation services contemplated by this Agreement; and maintained in good
operating condition, consistent with industry safety and maintenance standards . . and in

a clean and sanitary condition.? (Par. 3.2.)

Both Rosenthal and ?agree that drivers for Uber must use their own cars. They differ
in that said Uber ?directed? him to Best Limos for a car and that he could only rent
from Uber. (See exhibit 225, a May 2013 email stream where communicated with an
Uber employee about companies that ?work with Uber so 1 can apply with them?) Gary

Witness 1 who also drove for Uber in Los Angeles, said he was required to buy a Prius to drive

for the Company.

Rosenthal denied that Uber ?partners? with any car dealer or rental companies. Instead, it
?connected? drivers with lenders that would lease vehicles to the drivers. (The use of the term
?connected? was not further explained.) He said that Uber, itself, has a subsidiary called
?Exchange Leasing? that purchases vehicles and leases them to driver partners. (This subject,
too, was not further developed; for example, it was not shown whether ever leased a

vehicle from Exchange Leasing.)

12

 

Rosenthal testi?ed that Uber has several platforms for its riders, from luxury cars to ordinary
four-door sedans: the highest one is Luxe, then SUV, Black (which is also ?high end?), Select (or
?mid-tier sedans?), for more economical sedans, XL consisting of cars for 6 passengers and

Pool. which is the least costly and for people who pool together to reduce the cost of the ride.

Rosenthal explained that Uber does not require that a partner have a certain type of car but, to
drive on a particular platform, the driver must conform to the Uber standard for that platform.
The eligibility requirements for each category are set by Uber's general managers and operation
managers and, as well, in some instances, by the CUPC. A car which comes under the UberLuxe
classi?cation is eligible for all levels. The car must also not be too old. Rosenthal said the
minimum eligibility for the UberX, XL and pool vehicle is a 2001 model year car, with four
doors and does not have a salvage title. Witness 2 testi?ed that Uber requires that a car be
no more than three or four years of age.) After research, Uber changed its eligibility requirement
in mid-2014 to create a greater demand for its product. (See exhibit '74 providing that 2000
model year cars were now ?off the platform? for UberX and 2007 model year cars were
eligible for UberX; 2010 year SUVS were in the UberXL platform; 2010 vehicles had been
?transitioned? ?om UberBlack to UberSelect and former 2010 cars in UberLuxe were now in

UberBlack.

Rosenthal also said that livery drivers are not limited to driving on the Luxe or SUV
platforms but can drive on the platforms for Selectperception that a
driver needed to have a Town Car or Cadillac to drive on the UberBlack platform. In June 2013,
he wanted to drive for UberBlack but was told Uber was not hiring for that platform and to

?please check back next month.? (Ex. 23.) In July 2014, was advised that "Your car
was never onboarded as or Black, you were onboarded as UberXL. We are not

onboarding vehicles to UberBlack or SUV at this time.? (Ex. 218, p. 278.)

Before dealing directly with Uber, drove for ZA Limo Transportation, the Arrue

Company and Boyds Limousine Service, three different Uber livery partners. He rented vehicles

13

 

from each, paying at least $650 a week, and was paid directly by ZA, Arrue and Boyds. (See
exhibit 240, a 2013 W-2 statement from Boyds; exhibit 241, a 1099 statement from Arrue and
exhibit 242, a 1099 statement from ZA. DeSpite the 1099s, testi?ed he thought he was
an employee of both ZA and Arrue.) While driving for ZA and Arrue, paid for his
own gas. Boyd paid for -s gas and insurance. After leaving Arrue for Uber, 
?rst bought a Toyota Camry for $17,000 and drove on the UberX platform and later bought a
Chevrolet Suburban for $35,000.

8. Vehicle inspections

- said Uber required that cars had to pass an inspection at Penske. (Exhibit 110 are
documents he gave Uber to show his Chevrolet Suburban had passed an inspection at Powertech
in Culver City on October 10, 2014; Manhattan Auto Center on January 2, 2015 and at Pep Boys
in Redondo Beach on January 6, 2015.) Rosenthal denied that impections are required for livery
drivers except to occasionally verify, because of driver complaints, that vehicles on the
UberBlack and SUV platforms conformed to the criteria for those platforms. In his deposition,
Rosenthal was uncertain that a particular inspection application was in use when _was a
driver. (The application mentioned that ?All Uber partners need to have their vehicles inspected
before they can hit the road?) At the deposition, Rosenthal testi?ed that vehicle inspections are
required for non-livery vehicles under the Transportation Network Company business model as

mandated by the CPUC. (Page 81.1]. 21-25; p. 82,1]. 1-10.)
9. Driver schedules

- conceded that Uber drivers establish their own schedules; there was no minimum
number of hours to work; there was no required start time; he rarely worked before 11 took
as long as he liked for lunch; was off of the app for the entire summer of 2014 when he was in

New York City; did not tell Uber he was going to be off and did not need permission to be off.

The Agreement discusses the drivers? freedom to work when they want to:

14

 

Customer acknowledges and agrees that it has complete discretion to Operate its
independent business and direct its Drivers at its own discretion, including the ability to
provide services at any time to any third party separate and apart from Transportation
Services. For the sake of clarity, Customer understands that Customer retains the
complete right to provide transportation services to its existing customers and to use other

software application services in addition to the Uber services.

(Par. 2.4.)
10. Driver expenses

According to the Agreement, except for the Uber devices, such as the driver app, that Uber
provides, ?Customer shall provide all necessary equipment, tools, and other materials, at
Customer's own expense, necessary to perform the Transportation Services." (Par. 2.2.)
Rosenthal said that Uber does not reimburse driver expenses. In fact, at Uber?s discretion, its
?customers,? if they ?elect to use any Uber device,? may be required to reimburse Uber for the

wireless plan of such device and to provide a deposit for the device. (Agreement, par. 2.7.1.)

testi?ed that he paid for his own liability insurance in the amount of $750,000.
(Exhibit 206.) He added that Uber did not require that he use any particular carrier. Rosenthal
said that drivers must have commercial vehicle insurance of at least $750,000. (See the
Agreement, par. 8.1, which requires each customer to maintain on all vehicles commercial
liability insurance that includes protection against bodily injury and property damage to third
parties at levels that satisfy all applicable laws in the Territory, and par. 8.2, providing that the
Customer shall also maintain commercial general liability insurance that provides protection
against personal injury, advertising injury and property damage to third parties at levels that

satisfy all applicable laws in the Territory.)

If

15

 

11. Driver performance

According to an April 3, 2015 Uber USA, LLC ?software license and online services
agreement,? (April 2015 Agreement), ?Uber does not, and shall not be deemed to, direct or
control Customer or its drivers generally or in their performance under this Agreement
Speci?cally, including in connection with the Operation of Customer?s business, the provision of
Transportation Services, the acts or commissions of Drivers or the operation and maintenance of

any Vehicles.? (Joint ex. 3, p. 0004.)
- testi?ed that he did not have a supervisor while driving for Uber.
12. Driver conduct

Rosenthal testi?ed that Uber has a Code of Conduct on its website with respect to its drivers.
(That code was not further described at the arbitration.) He said that Uber provides suggestions,
rather than instructions, to the drivers, which do not have to be followed, and not instructions as
to how to engage with customers (identi?ed in the Agreement as ?Users) concerning such
matters as tips and asking about a preferred route. For example, in a weekly report card, it
reminded - that ?top positives? were to return lost items; offer complimentary
refreshments, such as water and gum; be professional and open doors whereas the ?top
negatives? were use of inef?cient routes, dirty cars, use of a cell phone and poor driving. (Ex.

62.)

said that Uber told its drivers to have water, gum and cell phone chargers in their

cars to keep the customers happy.

13. The Uber App

Rosenthal testi?ed that- the Uber app is at the center of the rider-driver experience. (The
Agreement, at par. 2.4, de?nes the app as ?Uber?s mobile application that enables transportation

providers to access the Uber Services for the purpose of seeking, receiving and ful?lling on-demand

16

 

requests for transportation services by Users Rosenthal opined that Uber has invested above
?seven ?gures? in its development. had no knowledge of the app?s capitalization.)
According to Rosenthal, Uber drivers must agree to the terms of a software license and online

services agreement before they can have access to the ?driver app? and, therefore, drive for Uber.

Rosenthal explained that partners can use their own phones or rent an Uber telephone to
access the app, which takes up a signi?cant amount of data. Riders who want a transportation
service use a function on their cell phone or smart phone to advise Uber where they want to be
picked up. The rider is randomly matched with the closest driver whose app is turned on. (After
the app is turned on, Uber gets a GPS of that driver every three seconds. Additionally, the app
records every time the driver turns the app on and off.) The app beeps in the car of the closest
driver and provides the rider?s ?rst name and the pickup address. (Agreement, par. 2.2.) If the
app is turned off, the driver does not know of an incoming call except if he or she looks at the
screen or the phone is on vibrate. The driver has ?fteen seconds to accept the trip by clicking the
screen. (However, drivers cannot accept a trip if they have not previously consented to the
addendum regarding fees.) If the driver does not respond or accept, the rider is matched with the
next closest driver. Although drivers are not required to accept any trip, Rosenthal testi?ed they
are ?encouraged? to do so because a rejection is ?poor business experience? since the rider must
then wait longer for a reSponse to the ride request. (On that point, the Agreement provides,
?Customer and its Drivers retain the option, via the Driver App, to attempt to accept or to decline
or ignore a User's request for Transportation Services via the Driver App, subject to Uber?s then-

current cancellation policies.? [Pan 

- testi?ed that drivers ?rst learn of the rider?s destination after they arrive at the
pickup location and that they are not allowed to reject a short ride for a longer one. In actuality,

the rider has the option to provide the destination on his or her mobile application or upon the

Uber driver?s arrival. (Agreement, par. 2.2.) - also said that drivers ask the riders for
their preferred route and, if they have none, the driver uses the GPS provided by Uber.

1?

 

14. Fares

Uber sets base or default fares, including the per-minute, per-mile and minimum-fare rates,

for each of its platforms.

Customer is entitled to charge a fare for each instance of completed Transportation
Services provided to a User that are obtained via the Uber Services (?Fare?) where such
Fare is calculated based upon a base fare amount plus mileage and/or time amount as
detailed for the applicable Territory.  (A)s between Customer and Uber, the fare is a
recommended amount, and the primary purpose of the pre?arranged Fare is to act as the
default amount in the event Customer does not negotiate a different amount. Customer
shall always have the right to: charge a fare that is less than the pre-arranged Fare; or
(ii) negotiate, at Customer?s request, a fare that is lower than the pre-arranged Fare 
Uber agrees to remit to Customer on at least a weekly basis: the Fare less the

applicable Service Fee 

(Agreement, par. 4.1.) For example, the fare for an UberBlack ride is $8 to start; $0.45 every
minute; $3.55 a mile with a $15 minimum and a $10 cancellation fee. (Ex. 65.) Uber also might
increase the rates during periods of high demand. Uber takes a ?software licensing fee? from the
driver of 25% from each UberBlack trip. - said the fee was 28% for rides.
(See par. 4.4 of the Agreement which provides that ?Customer agrees to pay Uber a service fee
on a per transportation Services transaction basis calculated as a percentage of the Fare
(regardless of the Negotiated Fare), as provided or otherwise made available by Uber from time
to time in the applicable Territory.?) As for taxes, ?Customer acknowledges and agrees that it is
responsible for collecting and remitting all applicable gross receipts, sales and use, excise or any

other transaction tax on the provision of Transportation Services." (Par. 4.8.)

Rosenthal testi?ed that while Uber sets the ?baseline fare? for the product, it is aware that
some drivers may negotiate both a lower fare and the charges for a return trip. He added that

some drivers may end a trip early and not charge for the whole ride. Other conditions regarding

18

 

the fares to be charged are that ?Uber retains the right to change the Fare Calculation at any time

in its discretion based upon local market factors (Agreement, par. 4.2.)

The rider pays the fare at the end of the trip by a credit card. Rosenthal eXplained that credit
cards are used because the payment of cash presents a safety issue for the driver. Uber
?facilitates? the payment to the driver for each ride. Livery partners, on the other hand, determine

how their drivers shall be paid.

and Witness 1 testi?ed that drivers had no input on the rates Uber charged riders.
However, Uber might adjust the fare upon a driver?s complaint that the drop off address was
incorrect (ex. 28) or provide the driver an additional credit to clean the car because the passenger
threw up in it. (Ex. 17.) said he unsuccessfully asked Uber to change its fares, for
example, where he had to wait an hour for a passenger since, according to Uber?s rules, the trip
did not start until the passenger entered the car. (Ex. 6.) On one occasion, he unsuccessfully

asked Uber to raise its rates for Ubchlack rides because he believed they were too low. (Ex. 6.)
15. Tips

Rosenthal said it is not required that passengers tip the driver; the rider may do so if he or she
wants to. He further testi?ed that drivers are not deactivated in Los Angeles for accepting tips.
On the other hand, Rosenthal said that drivers have been warned for soliciting tips because that
can create a ?negative experience in the market place?; it can cause ?reputational damage? for

Uber.

testi?ed he had accepted tips, if offered, while driving on the Uber app, even
though he knew Uber had a rule against accepting them.

15. Drivers? pay and licensing fees

Rosenthal said that drivers pay a licensing fee established by Uber to Uber out of each fare

collected. At the time of Rosenthal's deposition, the licensing fee for UuberSUV was 28% and

19

 

25% for UberBlack. Rosenthal added that drivers cannot accept trips if they do not consent on
the app to the addendum regarding fees. said that Uber?s licensing fees were not based

on the rider?s evaluations.

Witness 2 a former Uber driver, said that his drivers, whom he treats as independent
contractors, pay him a small percentage of their fares. In the beginning, he said Uber took 20%
from the total charged; it now takes 28% of charges for SUVS. Witness 2 once had two drivers,

besides himself, but now can only afford one car.
16. Signage and driver clothing

Rosenthal testi?ed that livery cars do not have Uber decals. According to the April 2015
Agreement, ?With the exception of any signage required by local law or permit/license
requirements, Uber shall have no right to require Customer or ay Driver to: display Uber?s or

any of its Af?liates? names, logos or colors on any (Ex. 3, sec. 2.4.)
17. Number of rides

Rosenthal said that the drivers are not guaranteed any number of rides, there is no minimum
amount of time a driver must be online and there are no minimum number of trips a driver must

be online before going of?ine. In other words, he said all ofthis is up to the driver.
19. Driver unavailability

Witness 2 said that drivers must tell Uber if they are going to be unavailable for two or three

months but there is no obligation to inform Uber if that time is under a month.

Rosenthal testi?ed that Uber does not deactivate drivers who are off for two months or more.
That testimony may be inconsistent with the Agreement which states that ?Customer
acknowledges and agrees that each Driver is required to ful?ll a request for Transportation

Services using the Driver App at least once a month to maintain an active Driver pro?le, and

20

 

Uber reserves the right to deactivate the Driver ID of those Drivers who have not ful?lled a
request for TranSportation Services using the Driver App at least once a month.? (Par. 2.1.) In the
absence of clarifying evidence, of which there was none, it is uncertain whether this condition
was enforced or if a driver?s notice that he or she was going ?out of town for a while? was an

observed exception.

Rosenthal also testi?ed that there is no requirement that drivers be on line when they are in

their cars.
20. Where to drive

For the purposes of this discussion, ?where to drive,? as distinguished from the acceptance of

rides, refers to where a driver may drive when he or she is ?on the app."

- said he could drive anywhere for Uber when he started but, in 2014, was restricted,
when he lived in Hennosa Beach, to driving in Orange County on UberBlack. His email
exchange with Uber clari?es that situation. On July 26, 2014,  requested that his SUV
with new leather seats be added to the UberBlack platfonn. Uber reSponded on July 27, 2014 that
it could not put the car on the Los Angeles system at that time but could place it on the Orange
County Black or SUV platforms. -, in response, asked ?what hours and what city is the
busiest in Orange County?? Before being activated in Orange County, - was told on
July 28 that he would have to ?Take the background check (for Orange County)," which would
take ?5-7 days to process.? On August 2, 2014, wrote that he had completed more than
?ve background checks in the past few months. Uber replied on August 4, 2014 that he was
active and to start driving on UberXL. (Ex. 218.) Thus, it appears that it was _s choice

to drive with UberBlack in Orange County rather than on the Uber platform as an XL in Los

Angeles.

When was driving in Los Angeles, he chose not to obtain a permit to pick up

passengers at the airport because it was too much of a hassle. Rosenthal said that local

21

 

government, and not Uber, regulates who can pick up passengers at LAX, that obtaining a permit
to do so can take up to six months and that Uber lets the livery partner decide whether it wants to

obtain a permit.

According to Rosenthal, drivers are not obligated to go where Uber may suggest or the Uber
GPS might indicate that they drive to. He said that drivers can unsubscribe from this list or
related text messages. ?Promotions? suggested by Uber, which might attract large numbers of
people, such as Coachella, are relatively frequent (ten percent of the trips in Los Angeles are of
the surge type) but drivers do not have to participate; in fact, Rosenthal said that most drivers
decline to participate. Rosenthal also said that Uber can determine, from its app records, the
percentage of drivers who participate in a ?promotion.? (The Agreement requires its Customers
to agree to having their location available to Uber through a device when the Driver is logged
into the Driver App or providing Transportation Services. (Par. Uber also gave its drivers
advice on the best times to drive. (See exhibit 62 that the best times for weekends, which are the

busiest times, are rush hours, 10 pm. to 12 midnight and 12:30 am. to 2:00 am.)

- con?rmed that Uber might tell him about particular events where drivers could
?expect a high volume of calls.? Witness 1 testi?ed there was no guarantee that a driver would

get a surge passenger but was encouraged to participate at certain events at his discretion.
21. Driving for a competitor

- said he could have a app at the same time as an Uber app and drove for Ly?

for an undetermined period. Similarly, Witness 1

from Thanksgiving 2013 to October 2015, had Uber and Ly'ft apps and drove for both at the

another individual who drove for Uber

same time. He said he received a 1099 from Lyft, with which he had an independent contractor

relationship.

Rosenthal con?rmed that Uber drivers can have both Uber and apps and that both apps

can be open at the same time. He explained that is Uber?s biggest competitor in the United

22

 

States. Rosenthal also said that drivers are free to have their own clients outside of those that are

arranged by using the Uber app.
22. Expert evidence regarding Uber?s policies and the control issue

- offered the opinions of Alex Rosenblatt on the issue of Uber?s control of its
drivers. Rosenblatt, whose credentials are not known (other than, according to exhibit 11, he is a
researcher and technical writer for the Intelligence Autonomy Initiative at Data Society, a
project supported by the John D. and Catherine T. MacArthur Foundation), analyzed Uber?s
Rideshare service in a draft paper (draft) for the Centre for European Studies in Brussels,
Belgium. (Exhibit 10.) (This award considers Rosenblatt?s analysis, opinions and conclusions in
the draft rather than his article in exhibit ?The Truth About How Uber?s App Manages
Drivers? in the April 2016 Harvard Business Review, because the draft is more comprehensive

and the article appears to be a shorter summary of the dra?.)

Rosenblatt concludes that ?indirect management gives Uber power over its workers for which
it is often not held accountable. Uber?s claims regarding its labor Imodel - which center on
freedom, ?exibility and entrepreneurship are not borne out in the experience of Uber drivers, in
large part due to the information asymmetries and controls that Uber exerts over the driver
behaviors through performance metrics, behavioral nudges, unreliable, dynamic rates, and
scheduling prompts and design." He contends that ?Movers digitally and algorithmically
mediated system of ?exible employment builds new forms of surveillance and control into the
experience of using the system, which results in asymmetries around information and power for
workers. In Uber?s system, algorithms, CSRs (Community Support Representatives), passengers,
semi-automated performance evaluations, and the rating system all act as a combined substitute
for direct managerial control over drivers, but distributed responsibility for remote worker
management also exacerbates power asymmetries between Uber and its drivers.? One conclusion
from the paper is that ?the information asymmetries produced by Uber?s system are fundamental

to its ability to structure indirect control over its workers.?

23

 

arriving at the above conclusion, Rosenblatt examined Uber's electronic monitoring, surge
pricing and labor scheduling; and the con?ation of real-time and predictive analysis and driver
ratings. Rosenblatt relied essentially on the comments made by Uber drivers on ?ve dedicated
online forums, supplemented by seven individual driver interviews. (One of the problems in
analyzing Rosenblatt?s ?ndings is that he footnotes some of them, such as that ?the data was
observed and collected from ?ve dedicated forums," but does not publish the footnotes at the end

of the draft. Instead, he only sets forth the ?works cited,? without numbers, in alphabetical

order.)

While recognizing that Uber?s promise of ??exible employment" has great appeal, Rosenblatt
notes that it ?belies the fact that these jobs lack bene?ts or worker protections.? He also notes
that in the Uber system, its use of ?surveillant practices? effects ?soft control over otherwise
?exible independent contractors.? Rosenthal goes on to assume that the information gathered can

be compared by Uber?s full-time employees to ?drivers in aggregate and ranked accordingly.?

Rosenblatt was critical of Uber?s use of surge pricing in which fares are temporarily raised for
a particular geographic location because of a need for more drivers. (There was some testimony
in the arbitration about surge pricing but Rosenthal provided little of substance about it and
- and his witnesses were generally uncritical about it as a policy.) In any event,
Rosenblatt thought that it ?generate(s) and co-ordinates(s) clusters of labor in response to
dynamic market conditions without explaining the reliability of its cluster incentives or
guaranteeing the validity, accuracy, or error rates of its labor deployments.? The fallacy behind
Rosenthal?s ?nding in this particular area is that the term ?deployment? connotes the involuntary
movement of a person or persons from one location or job to another whereas, at the same time,
he recognizes that Uber?s drivers, at least on the surface, have the freedom to choose where and
when they want to work. Rosenblatt then adds, without any support, that surge pricing, in effect,
undercuts the ?free will? of Uber?s drivers: ?The regular occurrence of surge pricing along with
heat maps of passenger activity and affective messaging all work as behavioral engagement tools

that impact how drivers schedule their work, and their effect is ampli?ed when low base rates

24

 

result in unreliable income, undercutting the ?freedom that drivers have to login and log-out at

will.?

At another point in the draft, ROSenblatt repeats the theme that the drivers are often unawares
of the effect of Uber?s analytics on their actions: ?The opaque combination of algorithmic data
analytics and their rhetorical invocation act as a substitute for direct managerial power and
control. The ambiguities between real time analytics and predictive analytics shape the drivers?
own assessments of when they plan to drive.? (Query whether Califomia?s right to control test
contemplates a 21st Century model where indirect actions by a business are used to control the

thoughts and movements of its employee and contractors?)

Rosenblatt is very critical of Uber?s ratings of individual drivers. He cpines that the rating by
a passenger on a to 5 scale of the drivers ?acts as a remote threat and a tangible nudge to
drivers to be in compliance with workplace expectations" and that ?In a service economy
supported by the practices and characteristics of digital labor, the data that workers produee and
are monitored by creates affordances for managerial control.? He also writes that passengers are
empowered to act as middle managers over drivers, whose ratings directly impact their
employment eligibility.? (None of these ??ndings? are supported by a footnote or another
source.) Through ratings, Rosenblatt concludes that Uber can achieve an organization where the
workforce behaves relatively homogenously without giving explicit directives as with
traditional employers.? Homogeneity might possibly be produced if Uber were to give its riders
factors to consider in rating the drivers on a scale from 1 to 5 (for example, ?pleasant,?
?courteous? or ?on time? are a 5, whereas ?rude,? ?vulgar? or ?got lost? are a 1) but, without any
factors as guidelines or standards, as is the case here, riders use their own subjective criteria to
rate each driver, which produces the antithesis of group thinking, a theme which appears to
motivate Rosenblatt. In this context, it is dif?cult to see how one rider?s rating of 4.0, for

example, has any correlation to another rider?s 4.0 rating.

25

 

Rosenblatt also ?nds that ?the rating system provides a channel for direct feedback, such that a
negative passenger experience can directly affect the employability or income-earning potential
of platform-based workers.? Rosenblatt misunderstands the impact of one low rating. Rosentha]
testi?ed that a passenger?s negative comment might be brought to the attention of the driver, and
can affect his or her employability (for example, where the passenger complained that 
?hugged her) but, otherwise, one low rating, such as a 1.0, has a negligible effect when
considered with four hundred ninety-nine other ratings, especially if the other ratings were

mostly 55.

Regarding the practice of ?logging out? of the Uber App to avoid being given an
unacceptable ride, such as the prospect of a low minimum fare or a ride in a high-crime area,
Rosenblatt states that such practice is a resistance to Uber?s policies rather than indicative of an
entrepreneurial strategy ?they log out precisely because they would not be ?free? to refuse an
unpro?table ride otherwise." Rosenblatt does not, however, explain the loss of freedom in this

context.

Thus, Rosenblatt?s draft is not considered in deciding whether Uber, for the purposes of this
arbitration, had the right to control  In addition to the above comments, his draft is
based on data observed and collected by others ?-om ?ve ?dedicated forums? and eight ?in-
depth? interviews with seven individual drivers.? The accuracy of the information from these
forums and interviews has not been established. The methodology used by sources, other than
Rosenblatt, for analyzing the content of the forums was not discussed. There is no showing
whether these ?ve forums attract a broad spectrum of Uber drivers or are a source for only the
disaffected. On a broader scale, the accuracy of forums of all types in which people
anonymously post their thoughts is not shown. Also, no one, including Rosenblatt, interviewed
anyone associated with Uber; instead, he relied apparently on comments by former and present

drivers. Accordingly, the premises he arrives at are interesting but have little weight in this

arbitration.

26

 

?The Right to Discharge at Will, without Cause?

Uber passengers and drivers may rate each other at the end of a trip. The ratings for the

drivers, according to par. 2.6.1 of the Agreement, may have certain negative consequences:

Uber desires that Users have access to high-quality services via Uber?s mobile
application  In order to continue to receive access to the Driver App and the Uber
Services, each Driver must maintain an average rating by Users that exceeds the
minimum average acceptable rating established by Uber for the Territory, as may be
updated from time to time by Uber in its sole discretion.  In the event a Driver?s
average rating falls below the Minimum Average Rating, Uber will notify Customer and
may provide the Driver in Uber?s discretion, a limited period of time to raise his or her
average rating above the Minimum Average rating. If such Driver does nor not increase
his or her average rating above the Minimum Average Rating within the time period
allowed (if any), Uber reserves the right to deactivate such Driver?s access to the Driver
App and the Uber Services. Additionally, Customer acknowledges and agrees that
repeated failure by a Driver to accept User requests for Transportation Services while
such Driver is logged in to the Driver App creates a negative experience for Users of
Uber?s mobile application. Accordingly, Customer agrees and shall ensure that if a Driver
does not wish to accept User requests for Transportation Services for a period of time,

such Driver will log off of the Driver App.? (Par. 2.6.2.)

Rosenthal explained that the rating system helps to determine whether drivers are meeting
Uber's minimum business standards. He testi?ed that drivers and passengers rate each other on a
to 5 scale at the end of a trip and that a driver?s rating is an average of the driver?s last 500
trips. In Los Angeles, Rosenthal stated that the minimum rating, both for livery partners and
individual drivers, is approximately 4.65 to 4.70 and that a driver can be deactivated if his or her
rating falls below that number. said the minimum rating was 4.65 and then became

4.70.) The minimum rating was created in Los Angeles by looking at a distribution curve and at

27

 

various standard deviations below the curve. The average driver rating is 4.85. Rosenthal said
that drivers cannot see the ratings by individual customers because of privacy concerns (Uber
considers its customer lists to be proprietary) but have access to their own, individual ratings.
Rosenthal also testi?ed that Uber drivers in Los Angeles are noti?ed of their ratings by email
and receive weekly ?report cards.? (Ex. 62.). acknowledged the existence of this

system.

According to Rosenthal, Uber prefers that drivers accept trips when offered ?for the general
health of the platform,? because the refusal to pick up a rider causes the rider to wait longer for a
car and becomes a ?poor rider experience.? In other words, although ?driver(s) cannot select
which riders they want to pick up. . .. (On the other hand), a driver can accept or decline or not
accept any particular trip.? - said that drivers can be deactivated if they do not accept at
least 35 percent of the rides assigned to and accepted by the drivers. (See exhibit 24, a July 22,
2013 email message in which Uber advised he was in danger of being deactivated
because his acceptance rate had dropped below 85 percent.) Witness 1., who drove for Uber
?om Thanksgiving 2013 to October 2015, testi?ed drivers were deactivated if their acceptance
rate fell below 80 percent. Rosenthal said that drivers are deactivated when their cancellation rate

is ?abnormally high,? which is usually greater than 50 percent of the trips.

Rosenthal testi?ed that fewer than three percent of Uber?s drivers are deactivated in
California for ?material? breaches of the software licensing agreement. He said that Uber
investigates rider complaints about reckless driving and egregious conduct and that the driver has
the opportunity to tell his or her side of the story. He added that ?hugging? a passenger could
come under ?inappropriate behavior? as a basis for deactivation. Altercations with a rider is
another reason for deactivating a driver. At his deposition, Rosenthal said that Uber also

deactivates drivers for ?breaches of a contract that we would have with the driver partner.?

The Agreement, at par. 12.2, provides for its termination by either Uber or its customers

and/or drivers:

28

 

Either party may terminate this Agreement: without cause at any time upon seven
(7) days prior written notice to the other party; immediately, without notice, for the
other party?s material breach of this Agreement; or immediately, without notice, in the
event of the insolvency or bankruptcy of the other party, or upon the other party?s ?ling
or submission of request for suspension of payment (or similar action or event) against
the terminating party. In addition, Uber may terminate this Agreement or deactivate
Customer or a particular Driver immediately, without notice, with respect to Customer
and/or any Driver in the event Customer and/or any Driver, as applicable, no longer
quali?es, under applicable law or the standards and policies of Uber, to provide
Transportation Services or to operate the Vehicle, or is otherwise set forth in this

Agreement.

said he was deactivated by Uber ?more times than I could remember.? Some of the
deactivations were for having low ratings. (See exhibit 9 where was deactivated on
February 9, 2015 for having a 4.75 rating.) On one occasion, he was deactivated for giving a
passenger a ride and then later driving the person home; a?erward, the rider?s secretary
complained because the total had charged was greater than the amount Uber had
charged. Another time he was deactivated when Uber learned he had asked riders for their
telephone numbers. explained that Uber did not want its drivers to contact riders for
any reason after a trip, except if a personal item had been left in the car. (See ex. 32 and par. 2.2
of the Agreement which provides that ?Customer shall not, and shall ensure that all Drivers do
not, contact any Users for any reason except for the purpose of ful?lling Transportation
Sewices,,") Witness 1 testi?ed it was his ?understanding? that he could be deactivated for
handing out his own business cards to riders and then giving rides to such customers separately

from the Uber app.

Before his last and permanent deactivation, - said that he did not take any courses

provided by Uber, which he described as discretionary and not mandatory, before being

reactivated. (See ex. 123, a sign up by an Uber partner for drivers who have low ratings or had

29

 

been deactivated.) 0n the other hand, Witness said that he had to take a class offered by Uber
before he could be reactivated. Rosenthal said that a third party, and not Uber, offers a ?quality
improvement? course for drivers vvho have been deactivated; it is one of the methods that drivers

could use to regain access to the Uber platform.

- was deactivated permanently on July 6, 2015 for what he described as giving a hug
to a female passenger and what Uber described as ?sex harassment.? (Ex. 21.) -
explained he had given a ?dnmk? female passenger a ride and rather than sit in the rear of his
car, she sat in the front next to him. He said the passenger wanted to ?hang out? with him and
that he gave her a hug after she asked him for one ?to diffuse the situation." Uber advised
on August 9, 2015 that it could not reactivate him because ?Sexual harassment is a

serious offense?) Paragraph 2.4 of the Agreement appears to cover that situation:

Uber retains the right to, at any time in Uber?s sole discretion, deactivate or otherwise
restrict Customer or any Driver ?'om accessing or using the Driver App or the Uber
Services in the event of a violation of this Agreement, a violation of a Driver Addendum,
Customer?s or any Driver?s disparagement of Uber or any of its af?liates, Customer?s or
any Driver?s act or omission that causes harm to Uber?s or its Af?liate's brand,
reputation or business as determined by Uber in its sole discretion, or for any other reason

at the reasonable discretion of Uber.

B. Borello?s Secondary Indicia of Control

1. Whether the one performing services is engaged in a distinct occupation or

business

The response to this factor depends on whether ?the one performing services? is Uber or its
drivers. Rosenthal sees Uber as more than a transportation company. He explained that Uber is in
the business of facilitating and providing information to determine where rider demand is - it is a

software company that provides mobile apps that connect riders with. providers. It can provide

30

 

for the transportation of peeple, goods and food. He said that Uber?s technology is being used to
determine the demand for food and goods; it has designed a market plan for determining what

the public desires and wants to connect people with transactions by car or even helicopter.

Rosenthal said that Uber Tech globally has approximately 8,000 employees, roughly 2,000 of
them are engineers. Rosenthal testified at his deposition that Uber's application, at one point,

used to say that it was, ?Everyone?s Private Driver.?

apparently had no other means of support than his income ??om driving for Uber,

l0

and private taxi services. On a larger scale, Uber?s customers" include its livery ?partners?
and individual drivers who, like derive some or all of their support from driving for

themselves or others, or work at other jobs and supplement that income by driving.

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

While did not have a supervisor at Uber and Uber did not provide its drivers with a
manual, this factor is somewhat of an oxymoron because Uber has apparently brought a new
dimension to the workplace in which an app has replaced human intervention. Regardless, this
factor cannot be considered because, assuming Uber is a tranSportation company, there was no
evidence how or by what means other transportation companies in Southern California, such as

or taxi companies, supervise their drivers.
3. The skill required in the particular occupation

To drive for Uber, a person needs a driver?s license, a vehicle and insurance. See par. 3.1 of

the Agreement, which states that:

Driver shall at all times hold and maintain a valid driver?s license with the

appropriate level of certi?cation to operate the Vehicle assigned to such, and (ii) all

31

 

licenses, permits, approvals and authority applicable to Customer and lor Driver that are
necessary to provide passenger transportation services to third parties in the Territory; 
possess the appropriate and current level of training, expertise and experience to provide
Transportation Services in a professional manner with due skill, care and diligence; and

maintain high standards of professionalism, service and courtesy.

- said that one needs only to be able to drive and Open a door to work for Uber.
Witness 1 testi?ed no specialized skill was required. Jafari testi?ed that the livery business

requires customer service skills, attention to detail and a genuine interest in the client, especially

with high-end clients.

4. Whether the principal or the worker supplies the instrumentalities, tools, and the place

of work for the person doing the work

As noted in the Agreement, except for the driver app, that Uber provides, ?Customer shall
provide all necessary equipment, tools, and other materials, at Customer's own expense,
necessary to perform the Transportation Services.? (Par. 2.2.) An essential piece of equipment,
besides a cell phone, is the vehicle which, agreed, the driver provides. As noted
earlier, there was evidence that Uber was involved in the rental or sale of these vehicles.
said he rented a car from a company that Uber recommended and Witness 2 said he
bought a Chevrolet Suburban through Uber at Penske Chevrolet in Cerritos Auto Square.)

5. The length of time for which the services are to be performed

The driving services are of an undetermined basis; depending on the needs of the passenger,
the ride can be short or long. According to Rosenthal, the average participation by a driver on the
Uber platform is for six months. It does not appear that this factor is relevant to the control issue

herein.

6. The method of payment, whether by the time or by the job

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Uber drivers are paid for the individual ride, giving Uber a percentage of that fare, based on a

predetemtined rate for the vehicle used and the distance and time of the ride.
7. Whether or not the work is a part of the regular business of the principal

The answer to this factor depends on the meaning of the term ?principal.? As a principal,
Rosenthal said that Uber is a software service that provides transportation services through an
app available to consumers. Its primary competitors are rail, buses, taxi companies, taxi dispatch
services, black car companies and Lyft. If the individual driver is the ?principal,? the answer to
that issue is and depends upon the individual needs or characteristics of each driver;
some, like may depend entirely on the transportation business for their incomes;

others may use it to supplement their incomes.

8. Whether or not the parties believe they are creating the relationship of

employer-employee

The Agreement states, as to the ?relationship of the parties,? that ?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 contractors. The parties
expressly agree that: this Agreement is not an employment agreement, nor does it create an
employment relationship, between Uber and Customer or Uber any Driver; and no joint
venture, partnership, or agency relationship exists between Uber and Customer or Uber and any

Driver." (Par. 13.1.)

Rosenthal testi?ed that ?s relationship with Uber was as a livery partner, which,
according to the Agreement, made him an independent contractor. Uber issued a
1099K for 2014 (ex. 244) and sent him information about ?ling his 2014 returns ?as a partner.?
(Ex. 246.) Linkedin page (exhibit 247), in which he described himself as an

33

 

?entrepreneur,? is not given any weight because that self-description was most probably ?rst

used before - began driving for Uber.

The fact that - had private clients when driving for Uber is not necessarily
determinative herein because one can be employed and under the control of an entity and have a

private business ?on the side.?

- said he believed he was an employee because, was W-2  and I ?gured - I went
to Uber thinking I didn?t even know I could be a partner, actually. So I thought I was just
working for somebody.  I did not even think to differentiate between Arrue and Uber. I was
working whoever gave me the car, follow follow the payment structure, and that?s it.? (Boyd?s
Limousine Service issued a W-Z for 2013 [ex. 240]; Arrue LLC issued him a 1099 for
2013 [ex. 241]; S. A. Limo issued him a 1099-Misc for 2013 [ex. 242] and Centurion Car
Service issued him a 1099-Misc for 2014 [ex. 245].) Like Witness 1 thought he was
an employee of Uber although he knew he had signed a contract providing he was an

independent contractor.

C. The Six-Factor Test of Other Jurisdictions

l. The alleged employee's opportunity for pro?t or less depending on his

managerial skill

Rosenthal testi?ed there was a skill in how to use the Uber market place in order to maximize
earnings. He explained that drivers decide when to drive, can have their own clients (as

con?rmed by Witnessz who said that two percent of his rides are from his own clients); can

market their own businesses and establish their own rates with their own passengers.

noted that there was a higher return for having a nice car, which therefore impacts

compensation.

34

 

The alleged employee's investment in equipment or materials required for his task, or his

employment of helpers

This factor is the same as Borello?s ?instrumentalities? secondary factor and is not discussed

further.

3. Whether the service rendered requires a Special skill
This factor is the same as Borello?s ?skills? secondary factor and is not discussed further.
4. The degree of permanence of the working relationship

This factor is the same as Borello?s ?length of time? secondary factor and is not discussed

further.
5. Whether the service rendered is an integral part of the alleged employer's business.

This factor is the same as Borello?s ?regular business? secondary factor and is not discussed

further.

VI. NO EVIDENCE WAS INTRODUCED REGARDING RAISIER, LLC AND
RAISIER-CA, LLC

Raisier, LLC, a Delaware Limited Liability Company, and Raisier-CA, LLC, a Delaware
Limited Liability Company, are respondents, along with Uber, in this arbitration. Since
- does not know the relationship between either Raiser and Uber, never had an
agreement with either Raiser entity, never drove for them, never received any monies from them
and never got a tax form from either, he has failed to prove by a preponderance of evidence that
he had an employment relationship with either of them. Accordingly, his claim against both
Raisier, LLC, a Delaware Limited Liability Company, and Raisier-CA, LLC, a Delaware
Limited Liability Company, is dismissed with prejudice.

35

 

VII. UBER DOES NOT HAVE THE RIGHT TO CONTROL ITS DRIVERS

A. The ?Right to Control? Test as Interpreted by the Courts

A review of the ?right to control? test as applied in Alexander v. FedEx Ground Package Sys.
(9th Cir. 2014) 765 F.3d 981 (Alexander); Arnold v. Mutual of Omaha Ins. Co. (2011) 202
Cal.App.4th 580 (Arnold), Millsap v. Federal Express Corp. (1991) 227 Cal.App.3d 425 (Millsap)
and Estrada v. FedEx Ground Package System, Inc. (2007) 154 Cal.App.4"? 1 (Estrada) is helpful in
applying that te5t to the facts herein.

Alexander is an action in which a class of FedEx drivers alleged that they were employees in
California rather than independent contractors. The Court of Appeals, ?nding that the Borello
right to control test applied (at p. 988), held that the drivers were employees and remanded the
matter to the district court with instructions to enter summary judgment for plaintiffs on the

question of employment status.

The relationship in Alexander between the drivers and FedEx is governed by an Operating
Agreement (0A) which requires the drivers to pick up and deliver packages within assigned
service areas. Drivers must deliver packages every day that FedEx is open for business, and must
deliver every package they are assigned each day. They must deliver each package within a
Speci?c window of time negotiated between FedEx and its customers. FedEx does not_require
drivers to follow speci?c delivery routes. However, FedEx tells its managers to design and
recommend to its drivers routes that Will ?reduce travel time? and ?minimize expenses and
maximize earnings and service.?

FedEx does not expressly dictate working hours, but it structures drivers? workloads to ensure
that they work between 9.5 and 11 hours every working day. Drivers are compensated according
to a somewhat complex formula that includes per-day and per-stop components. Drivers are
expected to arrive at their delivery terminals each morning, and they are not to leave the terminal

until all of their packages are available for pick-up. The DA gives FedEx the authority to

36

 

?recon?gure? a driver's service area upon ?ve days? written notice. Drivers have the right to

propose a plan to avoid recon?guration, ?using means satisfactory to FedEx.?

FedEx trains its drivers on how best to perform their job and to interact with customers. The
0A provides that, during the first 30 days of the contract term, FedEx ?shall  familiarize
[drivers] with various quality service procedures developed by FedEx.? The CA requires drivers
to conduct themselves ?with integrity and honesty, in a professional manner, and with proper

decorum at all times.?

A driver?s managers may conduct up to four ride-along performance evaluations of the sriver
each year, ?to verify that [the driver] is meeting the standards of customer service? required by
the 0A. After ?nishing a ride-along evaluation, managers are to give immediate feedback to
drivers about the quality of their work. Drivers must follow FedEx's ?Safe Driving Standards.?
These standards prohibit many illegal acts, such as ?[d]riving while under the in?uence of
alcohol or drugs? and ?[u]sing a motor vehicle in the commission of a felony.? They also forbid
some legal conduct, including ?[d]riving a motor vehicle in a speed exhibition, contest or drag
race? and ?[c]arrying passengers not authorized by FedEx.?

FedEx requires its drivers to provide their own vehicles. Vehicles must not only meet ?all
applicable federal, state and municipal laws and regulations,? but also must be Speci?cally
approved by FedEx. All vehicles must be painted ?FedEx white.? They must be marked with the
FedEx logo. FedEx requires vehicles to have speci?c dimensions, and all vehicles must also
contain shelves with speci?c dimensions. Drivers must provide maintenance at their own
expense and must ?bear all costs and expenses incidental to Operation? of the vehicle.

The 0A requires that while vehicles are ?in the service of FedEx,? they must be used
?exclusively for the carriage of the goods of FedEx  and for no other purpose.? Drivers may
use their vehicles ?for other commercial or personal purposes when [they are] not in the service
of FedEx,? but only if all ?identifying numbers, marks, logos and insignia? are removed or
covered up.

The 0A allows drivers to operate more than one vehicle and route, but only ?with the consent

of FedEx? and only if ?consistent with the capacity of the [driver's] terminal." Drivers may also

37

 

hire third parties to help perform their work. Third-party helpers must be ?quali?ed pursuant to
applicable federal, state and municipal safety standards and [FedEx's] Safe Driving Standards."

Drivers enter into the 0A for an initial term of one, two, or three years. At the end of the initial
term, the 0A provides for automatic renewal for successive one-year terms if neither party
provides notice of their intent not to renew. The CA may be terminated by the parties' mutual
agreement; for cause, including a breach of any provision of the if FedEx stops doing
business or reduces Operations in all or part of the driver's service area or upon thirty days?

written notice.

The CA requires drivers to comply with personal-appearance _standards and wear a FedEx
uniform ?maintained in good condition.? Drivers must keep their ?personal appearance
consistent with reasonable standards of good order as  promulgated from time to time by

FedEx.?

Alexander found several factors of importance in holding that FedEx had the right to control
its drivers: edEx can and does control the appearance of its drivers and their vehicles. ?FedEx
dictates the vehicles? dimensions, including the dimensions of their ?package shelves? and the
materials from which the shelves are made. Managers may prevent drivers from working if they
are improperly dressed or groomed, or if their vehicles do not meet speci?cations.? ?Second,
FedEx can and does control the times its drivers can work.? ?Third, FedEx can and does control
aspects of how and when drivers deliver their packages. It assigns each driver a speci?c service
area, which it ?may, in its sole discretion, recon?gure.? It tells drivers what packages they must
deliver and when. It negotiates the delivery window for packages directly with its customers.?
(Id. at p. 990.) In so holding, Alexander discussed Millsap and Arnold, both of which applied the

right to control standard.

Millsap also involved FedEx but from a personal injury rather than an employment
perspective. The plaintiff was injured when her car was struck by a vehicle driven by an
individual who was delivering parcels for FedEx and North Country Express (NCE), another

delivery company. The appellate com-t, in affirming the trial court?s summary judgment motion

38

 

and dismissals for FedEx and NCE, found that the individual driver was an independent
contractor because he used his_own car to deliver the packages, furnished his own gas and oil,
?imished his own liability insurance, paid for whatever car repairs were necessary and was paid
on a ?per route? basis; he was paid a lump sum based on the distance traveled to deliver the
packages he delivered. Also, ?he would be called if there were packages available for delivery,
or he would stop by to see if there was anything available. He received no employee bene?ts and
no taxes were withheld by NCE from his paychecks. Other than to say ?be careful' or to give him
directions to a particular location, or possibly to tell him to deliver the packages in the order
received, NCE did not instruct (the driver) how to make the deliveries or how to drive his car.
(He) was required to obtain a signed con?rmation of delivery which he then returned to NCE.
NCE gave him a Federal Express Guide and a list of prices, apparently so that he could answer

questions posed by the persons to whom the packages were delivered.? (Id. at p. 431.)

Arnoid was a suit by a former insurance agent for Mutual of Omaha who sued it for unpaid
employee bene?ts after leaving the company. She appealed ?-om a summary judgment in favor of
defendant Mutual, in which the trial court determined that she was an independent contractor rather
than an employee. The critical facts in af?rming the trial court?s dismissal were that Arnold had the
responsibility to maintain the proper licenses to solicit and procure applications for Mutual?s
products; she was paid by commissions for products she sold; either party could terminate the
contract with or without cause through written notice to the other (id. at p. 584); she did not receive
performance evaluations; her work was not monitored or supervised; attendance at training sessions
was not required; she was required to pay for her own business expenses; Mutual did not provide
business cards, vehicles, or computers ?ee of charge and agents, such as Arnold, if they chose to
work out of the Concord, California office, were required to pay fees to cover ?workspace

and telephone service.? (Id. at p. 585.)

The facts of Estrada, in which the court, in part, af?rmed a trial court order granting class
certi?cation for FedEx drivers and the ?nding that the drivers were employees, are substantially
similar to those in AIexander. The drivers were subject to an Operating Agreement, the terms of
which required the drivers to provide their own trucks, mark the trucks with the FedEx logo, pay all

39

 

costs of operating and maintaining the trucks and use them exclusively in the service of FedEx (or
mask the logo if the truck is used for any other purpose). A driver leases a scanner from FedEx and
purchases or leases a truck (usually obtained from FedEx preferred vendors) that meets FedEx's
size, model and condition speci?cations, paints the truck ?FedEx White,? and applies the FedEx

logo to the truck.

Drivers work full time and exclusively for FedEx, and must work every day FedEx provides
service unless they have preapproved replacements. FedEx sets the drivers' work hours (9.5 to 11
hours a day). Trucks must be parked in assigned spots and loaded by FedEx employees with the
packages assigned to the driver by management (the drivers may not refuse an
assignment). FedEx adjusts the number of assigned packages (thereby controlling the driver's
hours and pay) by ??exing? from an adjacent route to balance the workload between drivers and
in ?n'therance of its goal?deliver ?every package, every day.? Almost all drivers participate in
the ?ex program.

The driver must provide competitive? service to a ?primary service area? assigned by
FedEx, and the Operating Agreement acknowledges the driver's ?proprietary interest? in his
primary service area's customer accounts?but gives FedEx the right to recon?gure primary
service areas (and to reassign packages to another driver) if the volume of packages in the
driver's primary service area exceeds the amount the driver could reasonably be expected to
handle on any given day. Drivers may not leave the terminal at the beginning of the workday
until sorting is completed, and terminal managers may contact drivers during the day about
additional assignments. Drivers may ?sequence? the order of deliveries and pickups but must
meet all pickup and delivery times or ?windows? arranged by FedEx's sales representatives and
certain customers. These windows affect a driver's ability to sequence his or her own
route. _Drivers must comply with FedEx's rules for obtaining signatures on scanners, releasing
packages without signatures, special handling of _overnight and C.O.D. packages, and tracing
undelivered or improperly delivered packages. Drivers must place their scanners in their

computers after each delivery and, at the end of each day, must return to their assigned terminal

40

 

parking spaces, deliver all paperwork and cash from C.0.D. payments, download their scanners,

and provide details about any unsuccessful deliveries.

When on any given day a driver makes no attempt to deliver a package, misses a pickup time
or window, or is the subject of a complaint, the matter must be discussed with the terminal
manager who, in addition, meets with each driver twice each year to communicate and document
shortcomings. Several times each year, terminal managers evaluate each driver's performance by
means of a ?customer service ride? and there are covert checks and security audits conducted in
the ?eld. Each driver receives an annual progress review. Terminal managers decide which
?failures to service? or alleged breaches of the Operating Agreement to document, and they have
discretion (subject to the regional managers' and upper management?s approval) to recommend

termination or nonrenewal.

Drivers must also ?cooperate? with edEx's employees, customers, and other drivers for the
common goal of ef?cient pickup delivery; wear a FedEx-approved uniform and maintain his or .her
appearance ?consistent with reasonable standards of good order.? Drivers are paid weekly at rates
set by FedEx without negotiation (the drivers? rate is based on a daily rate, a piece rate for packages

handled, and bonuses for length and quality of service).

Estrada found that FedEx had the right to control ?every exquisite detail of the drivers?
performance, including the color of their socks and the style of their hair  The drivers must
wear uniforms and use speci?c scanners and forms, all obtained from FedEx and marked with
FedEx's logo. The larger items?trucks and scanners?are obtained from FedEx-approved
providers, usually ?nanced through FedEx, and repaid through deductions ?'om the drivers?
weekly checks. Many standard employee bene?ts are provided, and the drivers work full time,
with regular schedules and regular routes. The terminal managers are the drivers' immediate
supervisors and can unilaterally recon?gure the drivers' routes without regard to the drivers?
resulting loss of income.? 1] Drivers ?must be at the terminal at regular times for sorting and
packing as well as mandatory meetings, and they may not leave until the process is

completed. The drivers are not engaged in a separate profession or business, and they are paid

41

 

weekly, not by the job. They must work exclusively for FedEx. Although they have a nominal
opportunity to pro?t, that Opportunity may be lost at the discretion of the terminal managers by

??exing? and withheld approvals, and for very slight violations of the rules." (1d. at pp. 11-12.)

B. - was an Independent Contractor Rather than an Employee of Uber?s

1. as a livery driver

Other than the Agreement, itself, which has already been discussed as not being determinative
as to whether is an employee, -s status must be analyzed in two parts: his
position as a livery partner and as a driver for Uber. From the description in the Agreement and
from Rosenthal?s testimony, it is undisputed that livery partners are treated differently by Uber.
A livery partner may employ individuals who drive for Uber. It pays the drivers according to a
scale or rate determined by the livery company. Livery companies are regulated by the State of
California, which requires that the company have a permit. Drivers with a livery partner are not
screened by Uber. Uber does not direct its livery partners how to use its drivers. Uber does not

require the inspection of vehicles on the livery side.

The fact that was unsuccessful in being unable to hire drivers for his 
- company does not make it any less a livery business. (Rosenthal said that Uber did not
reject -s drivers; instead, the drivers never completed Uber?s ?onboarding? process.)
Thus, any person who is a livery company or has been ?hired? by a livery company licensed with
the State of California to drive on an Uber platform is not within the control of Uber and Uber
has no right to control that person. The analysis does not end here because it is unclear when, or
if, - stopped being a livery partner and became a driver for Uber. Thus, it is also
necessary to examine -s relationship as a driver with Uber. The facts that demonstrate
that Uber did not have the right to control will be discussed ?rst.

1/

42

 

Factors that do not constitute the right to control

Uber does not provide drivers with a manual or handbook. Drivers are instructed (in this
instance, at a Santa Monica location) how the app works and what was expected of them.
Witness 1., the former Uber driver, said the training was mandatory. Rosenthal testified
otherwise. He said that drivers need only watch a ?fteen-minute video shown at a ?green-light
hub? or presented by an Uber operations manager on how to use the app. The video also provides
customer service tips. The con?ict between Witness 1 and Rosenthal is not material because,

even if Witness 1 ?3 version is accepted, the training is modest and brief, at best.

Uber requires that drivers provide their own vehicles, whether they are owned or leased, pay
for any repairs on the vehicles, the gas used and the liability insurance coverage. The type of car
(luxury to a basic four-door sedan) will determine which platform the driver is eligible for. The

vehicle must also be in good operating condition and be clean and sanitary.

- and Witness 1 testi?ed, in effect, that drivers were required to either rent or buy
from companies af?liated with Uber. Rosenthal denied that Uber ?partners? with any car dealer
or rental companies. Instead, it ?connected? drivers with lenders that would lease vehicles to the
drivers. (The use of the term ?connected? was not further explained.) He said that Uber, itself,
has a subsidiary called ?Exchange Leasing? that purchases vehicles and leases them to driver
partners. (This subject, too, was not further developed; for example, it was not shown whether
- ever leased a vehicle ?'om Exchange Leasing.) In the absence of evidence con?rming
?s and Witness 1 ?s conclusions, it is found that Uber does not require that drivers

must buy or lease with Uber-af?liated companies.

Uber provides suggestions to drivers, which do not have to be followed, such as return lost
items; offer complimentary refreslunents, such as water and gum; be professional and avoid
using inef?cient routes, dirty cars, use of a cell phone and poor driving. It was also suggested

that drivers have cell phone chargers in their cars to keep the customers happy.

43

 

According to Rosenthal, the State of California requires that the cars of non-livery drivers

must be inspected.

Uber does not guarantee its drivers the number of rides they shall be given, does not require a
minimum amount of time a driver must be on] inc, allows its drivers to drive for competitors and
to be available to both Uber and the competitor at the same time and does not tell drivers where
to drive while they are on the app. (Uber might ?encourage? drivers to participate in certain
?surge? events by offering a higher volume of calls for their participation in the ?surge.?) Uber
drivers establish their own schedules; have no required start time; take as long as they want for
lunch; do not tell Uber when they are going not need permission to be

off the app. These conditions are consistent with par. 2.4 of the Agreement which states:

Customer acknowledges and agrees that it has complete discretion to operate its
independent business and direct its Drivers at its own discretion, including the ability to
provide services at any time to any third party separate and apart from TranSportation
Services. For the sake of clarity, Customer understands that Customer retains the
complete right to provide transportation services to its existing customers and to use other

software application services in addition to the Uber services.

Uber does not require either a livery customer or driver to wear a uniform or any other

clothing diSplaying Uber?s or any of its A?iliates? names, logos or colors.

These factors, individually, or in the aggregate, establish that Uber did and does not have the
right to control or any comparable driver.

3. Factors that arguably may constitute the right to control drivers

Facts ?'om which it may be inferred that Uber has the right to control drivers include the

following: Every person who drives for Uber, whether it be with a livery company or as an

44

 

individual, must agree to the terms of a soltwane license and online services agreement before

they can have access to the app and, therefore, drive for Uber.

Uber sets base or default fares, including the per-minute, per-mile and minimum-fare rates,
for each of its platforms. Uber also retains the right to change the fare calculation at any time in
its discretion based upon local market factors. Drivers have no input on the fares passengers are
to be charged. Drivers pay a licensing fee established by Uber to Uber from each fare collected.

The fee varies, depending on the platform used in the particular instance.

Uber discourages its drivers from soliciting tips from passengers and - accepted tips,
while driving on the app, even though he knew the practice was discouraged. Uber did not

deactivate drivers in Los Angeles who accepted tips.

Uber uses ratings by passengers in evaluating drivers which may lead to its deactivating 
terminating) drivers whose average rating falls below the acceptable standard for the area in
which the driver operates, in this instance Los Angeles County. Passengers are not given criteria
or standards for rating drivers between a 1 to 5 scale. In Los Angeles, a driver could be
deactivated if his or her rating fell below 4.65 or 4.70. The minimum rating was created by
looking at a distribution curve and at various standard deviations below the curve. Uber drivers
in Los Angeles are noti?ed of their ratings by email and receive weekly ?report cards.?
Rosenthal explained that the rating average of 500 trips helps to determine whether drivers are

meeting Uber?s minimum business standards.

Drivers may also be deactivated for refusing to accept trips when offered on the app. There
was no uniformity on the percentage of refusals which may lead to deactivation: 
thought that drivers must accept at least 85 percent of the trips offered; Witness 1 said it was 80
percent and Rosenthal said that drivers are deactivated when their cancellation rate is
?abnormally high,? which is usually greater than 50 percent of the trips. Regardless, Uber does

terminate drivers ?for the general health of the platform? who re?ise to accept too many trips

45

 

because the refusal to pick up a rider causes that rider to wait longer a car and becomes a

?poor rider experience.?

Uber also deactivates drivers in California for ?material? breaches of the software licensing
agreement, which can include reckless driving, inappropriate behavior (such as hugging a
passenger) and asking riders for their telephone numbers. More speci?cally, the Agreement, at
par. 12.2, provides for termination by Uber its customers or drivers in the following

circumstances:

Either party may terminate this Agreement: without cause at any time upon seven
(7) days prior written notice to the other party; immediately, without notice, for the
other party?s material breach of this Agreement; or (0) immediately, without notice, in the
event of the insolvency or bankruptcy of the other party, or upon the other party?s ?ling
or submission of request for suspension of payment (or similar action or event) against
the terminating party. In addition, Uber may terminate this Agreement or deactivate
Customer or a particular Driver immediately, without notice, with respect to Customer
and/or any Driver in the event Customer and/or any Driver, as applicable, no longer
quali?es, under applicable law or the standards and policies of Uber, to provide
Transportation Services or to operate the Vehicle, or is otherwise set forth in this

Agreement.
Par. 2.4 of the Agreement provides a more general basis for termination:

Uber retains the right to, at any time in Uber?s sole discretion, deactivate or otherwise
restrict Customer or any Driver from accessing or using the Driver App or the Uber
Services in the event of a violation of this Agreement, a violation of a Driver Addendum,
Customer?s or any Driver?s disparagement of Uber or any of its af?liates, Customer?s or
any Driver?s act or omission that causes harm to Uber?s or its Af?liate?s brand,
reputation or business as determined by Uber in its sole discretion, or for any other reason

at the reasonable discretion of Uber.

46

 

1Drivers who have been deactivated may take a course to regain access to the Uber app. The

course is not a requirement for reactivation.

Ayala noted, in instructing how the various Borello factors shall be applied, that the right to
?re at will and the basic level of skill called for by the job are of inordinate value and that other
factors, such as the owner of the instrumentalities and tools are of ?only ?evidential value.?

(Supra, 59 Cal.4"? at p. 539.)

Although the Agreement herein contained a provision that either Uber or the driver could
terminate the relationship without cause upon seven day?s notice (which is comparable to an at?
will termination, which may not include a notice clause), that language does not have the
importance Ayala placed upon it because the Agreement also provides several other bases for
termination: a material breach of the Agreement; a violation of a driver addendum;
disparagement of Uber; an act that causes harm to Uber?s brand or reputation; insolvency or
bankruptcy of a party and a driver no longer quali?es under existing law or Uber?s policies to
operate a vehicle. Further, there was no evidence introduced at the hearing that or his

peers were ever terminated without cause.

The circumstances in this case are much closer to those in Millsap and Arnold than those in
Alexander and Estrada. Uber drivers are not supervised; supply the cars they drive; do not wear
Uber uniforms or signage; can drive simultaneously for any competitor, including Ly?, Uber?s
biggest competitor; are paid for each ride and have the unfettered option to work as little or as
much as they want and wherever they want in the geographical location assigned to their
platform. The fact, alone, that Uber has an active interest in deactivating certain drivers does not
establish an employer-employment situation because an employer ?is permitted to exercise a
certain measure of control for a de?nite and restricted purpose without incurring the
responsibilities or acquiring the immunities of a master, with respect to the person controlled.?
(Bohanon v. James McClatchy Publishing Co. (1936) 16 Cal.2d 188, 199; see also Milsapp,
supra, 227 Cal.App.3d 425, 432.) Uber?s right to require drivers to use an app to obtain rides and



 

set passenger fares and the percentages that drivers shall receive ?om those fares and to
terminate drivers who do not meet passengers? and Uber?s standards fall under the same rubric

and do not constitute the right to control drivers.
CONCLUSION

Because has not proven by a preponderance of evidence that he was an
employee of Uber Technologies, Inc., his claim(s) against that company are dismissed with

prejudice.

November 23, 2016

 

D. Marcus (Ret), Arbitrator

48

 

REQUEST FOR CERTIFIED MAIL

 

fg- v. UBER

5  Caleb L. Marker, Esq.

Bradley C. Buhrow, Esq.

-3.- ZIMNIERMAN REED

2381 Rosecrans Avenue, Suite 328
Manhattan Beach. CA 90245

7015 214530 5117'? 
 Christie Woo

November 23,r 2016

 

 

 

 

m'  v. UBER

 

 
 
 
  
   
 

Andrew Spurchise, Esq.

 LITTLER MENDELSON

650 California Street, 20lh Floor

 San Francisco, California_94108

I 7Ul5 1530 U530
Christie Woo

1 November 23, 2016

  

{u rr!

   
 

 
 
  



 

 

v. UBER

Sophia Behnia, Esq.
UBER TECHNOLOGIES, INC.
1455 Market Street Floor 4

 
 
 
 
  

. 

 

PROOF OF SERVICE

State of California
County of Los Angeles

I certify that I am employed in the County of Los Angeles, State of California. I am over the age of 18
and not a party to the within action; my business address is 1900 Avenue of the Stars, Suite 250, Los
Angeles, California 90067.

On November 23, 2016, I served the foregoing document described as the BINDING ARBITRATION
AWARD on the interested parties in this action as follows:

Caleb L. Marker, Esq. Andrew Spurchise, Esq.
Bradley C. Buhrow, Esq. LITTLER MENDELSON
2mm REED 650 California Street, 20?? Floor
2381 Rosecrans Avenue, Suite 328 San Francisco, California 94108
Manhattan Beach, CA 90245 aspurchise@littler.com
caleb.rnarker@zimmreed.corn
brad.buhrow@zimmreed.com
. Sophia Behnia, Esq.
UBER TECHNOLOGIES, INC.
1455 Market Street Floor 4
San Francisco, California
sbehnia@uber.com

BY U.S. CERTIFIED MAIL, I placed a true copy of the document described above in a
sealed envelope and caused such envelope with postage thereon to be placed in the United
States mail at Los Angeles, California.

BY FACSIMILE, I caused such to be faxed to the attorneys on November 23, 2016

BY EMAIL OR ELECTRONIC TRANSMISSION: I caused a cepy of the document(s)
to be sent from e-mail address garricia@adrservices. org to the persons at the e-mail
addresses listed in the Service List. I did not receive, within a reasonable time after the
transmission, any electronic message or other indication that the transmission was

unsuccessful.
BY PERSONAL SERVICE, I caused such envelope to be delivered by hand to the

attorneys on November 23, 2016.

STATE I declare under penalty of perjury under the laws of the State of California that the
above is true and correct.

FEDERAL I declare under penalty of perjury under the laws of the United States that the
above is true and correct.

Executed on November 23, 2016 at Los Angeles, California

Patricia Taylor

Proof qf Service 2 7/13