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NLRB vs, Uber: Battle over nationwide subpoenas in class action waiver investigation

By Pamela Wolf, J.D.

Ride-share giant Uber Technologies, Inc., and the National Labor Relations Board are battling over the scope of the Board’s subpoenas aimed at information that would establish whether Uber drivers are statutory employees. The question arises in the context of the Board’s action to enforce subpoenas as it investigates claims that Uber’s arbitration agreement, which includes a class action waiver, violates the NLRA. But the battle is set in the territory of the Ninth Circuit, where the appeals court has already held that Uber’s arbitration agreements with valid opt-out provisions do not run afoul of the NLRA. And that very issue—the validity of class waivers in arbitration agreements—is the subject of conflicting circuit rulings that landed the question at the feet of the Supreme Court Justices (see Justices asked three time to settle NLRA class action waiver battle, September 13, 2016).

The subpoena battle has moved forward in the aftermath of a pair of Uber defeats last month when a federal magistrate refused to stay the subpoenas, and a district court rejected a proposed $100 million settlement in a separate (but related) lawsuit challenging the independent contractor status of Uber drivers. Uber scored one, however, on September 7, when the Ninth Circuit held that an arbitrator must determine in the first instance whether two Uber drivers must arbitrate their claims that the company violated the Fair Credit Reporting Act when it blocked them and similarly situated drivers from continuing to drive for Uber based on information in their consumer credit reports.

Necessary information. The Board is seeking nationwide information in order to make a threshold determination of whether Uber drivers are statutory employees. According to the Board, the court has already recognized that it needs the subpoenaed information to make that determination. “Enforcement of the NLRB subpoenas now is critical because all charges pending before the NLRB require resolution of the threshold issue because only statutory employees are covered under the Act,” the Board said in a joint briefing with Uber. “Issuing subpoenas under different case numbers in other offices where NLRB charges have been filed will not further the investigation because the NLRB will continue to need the same information that is being requested in the subpoenas at issue here to resolve the threshold issue.”

Same court would decide new enforcement actions. The Board also pointed out that if it needed to enforce any new subpoenas—even those issued by another office—the enforcement action would be filed in the Northern District of California because Uber is headquartered there, and it’s also where the Region 20, the regional office that the NLRB’s General Counsel has selected to investigate the threshold issue, is located. Moreover, the Board said that any assertion that Uber has partially complied with the subpoena request does not render enforcement of them unnecessary—providing information pertaining to two drivers in the San Francisco Bay Area when the company estimates it has more than 700,000 drivers across the country “is clearly insufficient to render a sound decision on the threshold issue.”

Barred from challenging scope of subpoenas. According to the Board, the real question is whether Uber can even challenge the scope of the subpoenas because of an administrative exhaustion problem—the company never filed a petition to revoke the subpoenas before the Board. Based on Ninth Circuit precedent, in NLRB v. Fresh & Easy Neighborhood Market, Inc., “the Court should reject all challenges to the subpoenas based on scope because there are no circumstances here that would warrant an exception to the general exhaustion rule,” the Board argued.

Scope matches nationwide investigation. Even if the Court entertains Uber’s challenge to the scope of the subpoenas notwithstanding Ninth Circuit precedent, the Board said there is plenty of reason to find that the scope of the subpoenas “is clearly within the bounds of the NLRB’s nationwide investigation and therefore not burdensome or irrelevant.” The Board noted that courts have enforced nationwide investigatory subpoenas when the matters under investigation are nationwide in scope, pointing to the ruling in Raleigh Restaurant Concepts, Inc., No. 5:15-CV-438-D (E.D.N.C. Aug. 12, 2016). There the court granted enforcement of an NLRB subpoena for documents premised on an individual charge that might contain evidence about company-wide enforcement of certain policies to determine whether persons like the charging party were employees or independent contractors.

Two charges do not make a nationwide investigation. Uber, however, argued that the Board’s subpoenas are overbroad, given that Region 20 has only two charges before it, each of which contains the single allegation that ‘”Respondent violated the [National Labor Relations] Act by requiring its drivers to forgo their rights to engage in protected concerted activity for mutual aid and protection by requiring drivers to agree to its Licensing Agreement which includes an agreement to arbitrate their claims against Respondent.”’ “The Region relies solely on these Charges, filed by two California based individuals, in asking this Court to enforce a nationwide, overly broad, and burdensome subpoena,” Uber said, asserting that there is no legal basis to justify the relief sought by the Region.

According to Uber, the Board has ignored “the fact that Courts consistently decline to enforce agency subpoenas seeking nationwide information on the basis of individual charges,” relying on several rulings in EEOC cases. Moreover, the Raleigh Restaurant case relied on by the Board involved one policy at one facility over a few months, Uber argued. “The subpoena there was limited to three document requests. The documents sought in this case encompass 34 document requests and 107 interrogatories. Aside from the burdensome nature of the production request in terms of scope and time, the Region seeks production of nationwide documents, not documents limited to one location, relating to policies and procedures that do not apply to the named charging parties in the underlying charges.” Uber asserted that the nationwide information that the Board wants is not relevant to deciding the two individual charges at issue, which undercuts the enforcement the NLRB seeks.

Class action waiver issue decided. Uber also argued that the basis for the Board’s request for subpoena enforcement is “the single premise that the arbitration agreements signed by the charging parties, which contain class action waivers, may violate the National Labor Relations Act.” But that premise is now “flatly contrary” to Ninth Circuit law, and as a result, the subpoenas are unenforceable.

Uber pointed to Morris v. Ernst & Young, LLP, where the Ninth Circuit ruled that an employer violates the NLRA by requiring employees to accept a mandatory pre-dispute arbitration agreement—one that does not contain an opt-out provision—which precludes employees from bringing concerted legal claims pertaining to wages, hours and conditions of employment. The arbitration provisions, however, in the Uber agreements signed by each of the charging parties in the two cases underlying the subpoenas here permitted them to opt-out. And, on September 7, 2016, in Mohamed v. Uber Technologies, Inc., the Ninth Circuit held that Uber’s arbitration agreements with valid opt-out provisions did not violate the NLRA. The NLRB is thus collaterally estopped from pursuing the validity of Uber’s arbitration agreements here, in the Ninth Circuit, according to Uber.