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Uber appeals class-action status ruling in drivers' lawsuit

Ride-hailing service requests appeal of class status ruling that expanded employee vs. independent-contractor case from three drivers to thousands.

Uber on Tuesday requested an appeal to a federal judge's ruling that granted class-action status to a lawsuit challenging how the ride-hailing service classifies its drivers.

On September 1, US District Judge Edward Chen approved class-action status for that lawsuit, in which three drivers sued Uber for classifying them as independent contractors rather than employees. The outcome of the case could have a huge impact on Uber's business model and also create a ripple effect throughout the entire on-demand economy.

Filed in the 9th US Circuit Court of Appeals, Uber's 22-page request to appeal called Chen's ruling "manifestly erroneous" and asked the appeals court to reverse the judge's order. In the petition, Uber attorney Ted Boutrous questioned why the judge would allow a single jury to decide whether thousands of drivers who use Uber in widely different ways should be included in the case when the California Labor Commission reached two different conclusions about two separate drivers.

Uber has filed an appeal in a case that could determine whether its drivers are considered employees or independent contractors. CNET

"The potential ramifications of this closely-watched class-certification order are difficult to overstate," Boutrous wrote. "In the face of such novel and difficult questions of law, stark differences between putative class members and staggering potential consequences, the district court should not have risked 'commit [ting] the fate of an entire a single jury.'"

The attorney representing the drivers called Uber's filing "premature" and "desperate."

"As the court pointed out, Uber thought it could make that decision on a classwide basis -- it decided that all of its drivers are independent contractors," Shannon Liss-Riordan said in a statement. "It's disingenuous for the company now to argue that's actually an individualized consideration."

Uber makes a smartphone app that sidesteps taxicabs and provides a connection between people who want a ride and de facto cab drivers who pilot their own vehicles. Since its launch six years ago, the ride-hailing service has grown from a San Francisco-based startup into a multinational service in 295 cities and 55 countries.

But its current classification of drivers as contractors means the company is not responsible for all sorts of costs, including Social Security, health insurance, paid sick days and overtime. Drivers also supply and maintain their own cars, so Uber doesn't pay for gas, repairs and other related expenses.

If Chen's classification status holds, Uber may have to contend with thousands of Uber drivers in California, rather than just the drivers who first brought the complaint (which has been dropped from three plaintiffs to two plaintiffs). That means if Uber loses the case, it might have to pay damages to all of those drivers.

The driver classification lawsuit was originally filed in 2013. Over the past couple of years, Uber has tried to get the case thrown out. It filed a motion to dismiss the suit, which was denied in March, and in July it filed a 52-page motion to limit the case to just the three drivers.

In the wake of this battle, several on-demand companies appear to be rethinking the independent contractor classification. The grocery-delivery startup Instacart said in June that it's switching hundreds of its personal shoppers from contract workers to part-time employees. And house-cleaning startup Homejoy announced in July that it was permanently shutting down after being sued over the classification of its workers. Several similar lawsuits have also popped up against other on-demand companies, including Postmates, Handy, Shyp and Washio.