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Judge blocks Seattle law allowing Uber, Lyft drivers to unionize

Noting the business model has "created havoc" in the industry, a federal judge questions whether the ordinance is covered by state law.

Uber drivers have had several disagreements with the ride-hailing company.

James Martin/CNET

A federal judge has put the brakes on a Seattle ordinance that allows drivers for ride-hailing companies to unionize.

US District Court Judge Robert Lasnik on Tuesday issued a preliminary injunction against the city ordinance before it goes in to effect, granting a request by the US Chamber of Commerce. The Chamber, which counts ride-hailing companies Uber and Lyft as members, argued the ordinance violates antitrust laws by allowing independent contractors to collude through collective bargaining to fix prices.

"There can be no doubt that ride-share companies such as Uber and Lyft have, at a truly startling rate, created havoc in this industry using a business model that simply did not exist before its recent technological development," Lasnik wrote in his decision (PDF). The judge said it was unclear whether existing state law covers the city's ordinance.

The fight over Seattle's ordinance is part of a bigger fight over what level of benefits are owed to independent contractors in the "gig economy." Critics charge that Uber and Lyft reap a financial windfall by treating its drivers as contractors and thus avoiding higher costs such as paying benefits, overtime and insurance. If drivers unionize, they would have leverage in negotiating pay and perks.

The Seattle city attorney's office noted that the court had not reached a final decision on claims in the case and that the city "will move forward with efforts to defeat this legal challenge to its effort to improve the safety and reliability of for-hire transportation in the city," spokeswoman Kimberly Mills said in a statement.

Representatives for Uber and Lyft applauded the ruling. Lyft spokesman Adrian Durbin called the ordinance "a poorly drafted law" that could undermine drivers' work. Brooke Steger, general manager for Uber in the Pacific Northwest, said in a statement that "the court recognized the complexity of the issues and the imminent risk to drivers, transportation companies, and the people of Seattle if the ordinance were allowed to proceed without careful legal review."

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