A new suit in New York claims that rideshare companies Via Transportation and its black car-owned Flatiron Transit (collectively Via) have refused to settle disputes with drivers through arbitration and asks the court to either order Via to participate and pay for the arbitration proceeding or assign the suit class action status for the more than 800 members.
The case, Gideon Itenberg v. Via Transportation, was filed March 2 in New York Supreme Court (Case index number: 0651432/2021). Felix Lam is also listed as a plaintiff in the case.
The next hearing in the case is scheduled for March 30. Attorney Marc J. Held of Held & Hines of Brooklyn, New York, is representing the plaintiffs. Via is an app-based ride-sharing company.
In the filing, the plaintiffs allege that Via has refused to submit to arbitration. It also claims that Via misclassified drivers as independent contractors instead of employees and misrepresented the income the drivers could make by “omitting the exorbitant commissions drivers have to pay Via and the exorbitant costs drivers have to pay on their own simply to drive for Via.”
The scheme, the suit alleges, ensured “that drivers earned less than minimum wage.” It argues that Via violated a variety of New York and New Jersey state laws as well as Federal Fair Labor Standards. In the employment contract that Via requires drivers to sign, paragraph 14 requires disputes to be submitted to arbitration, but Via has refused that step, the suit alleges.
“Via barred class actions and collective arbitration, stating that all arbitration demands ‘must be submitted only on behalf of driver partner individually. Driver partner shall not have the right to obtain relief through a class or collective action or to join or consolidate driver partner’s claims with the claims of any other person or entity,’” the suit states.
In addition, Via specifically states that federal or state courts in New York County “shall have the exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this arbitration agreement.”
In a statement issued to Modern Shipper, a Via spokesperson said the “complaint is filled with inaccuracies. According to Taxi and Limousine Commission data, Via has consistently paid its independent contractor driver partners more than other ridesharing services and in excess of the minimum pay set by the TLC for New York City drivers. The TLC rules also take into account expenses and, according to data published in a TLC report, Via drivers on average earned $21.73 per hour after expenses. Additionally, the claim that Via refuses to submit to arbitration is false, and Via has never refused an arbitrator’s request to pay claimants’ fees.”
According to the suit, on or about June 5, 2020, the named plaintiffs – Itenberg and Lam – served arbitration demands on Via and the Judicial Arbitration and Mediation Services (JAMS). At the time of the lawsuit’s filing, the number of petitioners had grown to 802.
JAMS responded to the arbitration filing with a request for fees, which were said to be $1,750 “for each of the demands,” the suit said, resulting in $1.4 million in fees for the 802 cases. In addition, an arbitrator’s initial retainer fee of $5,000 was necessary, resulting in an additional $4 million payment simply for JAMS to hear the claims. Held asked Via to pick up the cost of these fees, which he said is required under JAMS’ “employer-pays” rule and because Via required arbitration as the first step in resolving disputes. Via has declined, the suit alleges.
In an email chain submitted as evidence in the suit, Allan Bloom, counsel for Via, wrote to Held that Via maintained it was the responsibility of the drivers to pay for the arbitration filing.
“We’ve reviewed [the documents], and believe they are either inapposite or distinguishable,” Bloom wrote. “As such, our client’s position has not changed and remains that driver‐partners are responsible for fulfilling the filing requirements for claims at JAMS, including the payment of filing fees. Once individual arbitrations are properly commenced, our client would plan to split costs with each claimant in a manner consistent with the parties’ agreements.”
JAMS’ fees are outlined on its website.
The suit lays out the case for financial reward, noting that Itenberg earns approximately $4.69 per hour after taxes and driver-related costs, and Lam earns between $9 and $11 per hour. Because of these low rates, Held argued in the suit, even if the plaintiffs won their case, they would likely lose thousands of dollars due to the arbitration fees.
In an affidavit, Itenberg said that Via didn’t disclose the true costs of working with the company and that it deducted fees from his earnings. “That these fees and costs came out of my earnings made it impossible to earn anywhere near what Via promised, even working near full-time hours,” he said.
The plaintiffs’ underlying argument about employment status is not unique. In September 2020, a California judge dismissed a constitutional challenge to the state’s AB5 law, which sought to use the “ABC” test to determine whether drivers were employees or independent contractors. In that case, a driver from Uber and two drivers from Postmates challenged the constitutionality of AB5 on several grounds, including equal protection under the laws and due process, in part because of the many exemptions granted to a myriad of categories but not drivers. The plaintiffs in the case charged that AB5 violated several legal protections because it was specifically targeted at drivers. The dismissal handed down by federal District Court Judge Dolly Gee said many of the exemptions cited by the Uber and the Postmates drivers are not exemptions at all and that the ABC test still applies to the relationship between a subcontractor and the worker.
The main issue for app-based transportation companies with AB5 is the B prong of the ABC test. It classifies a worker as an employee if that person is engaged in an activity that is central to the company’s existence.
In November, California voters passed Proposition 22, which removed drivers from app-based services from the requirements of AB5.
Just this month, the U.S. House took up the fight over misclassification, passing the PRO Act bill, which seeks to amend the National Labor Relations Act that governs union elections and representation. According to attorney Scott Horton, the bill includes the ABC test but it would not be as all-encompassing as the test in California’s AB5 bill.
The inclusion of the ABC test is to ensure “employees are not misclassified as independent contractors and denied protections of the NLRA,” according to a summary of the proposed legislation published by the House’s Education and Labor Committee.