Uber and Lyft Lawsuits Could Have Huge Implications for New Business Models

Separate class actions by Uber and Lyft drivers are pending in the U.S. District Court for the Northern District of California. The judges in both cases have overruled motions for summary judgment, paving the way for trial in both cases in which the drivers are seeking to be treated as employees rather than independent contractors. Professor Richard Epstein discusses the litigation in this report and in his Forbes article “Uber And Lyft In California: How To Use Employment Law To Wreck An Industry.”

Prof. Richard Epstein

Prof. Richard Epstein

Professor Epstein notes that the distinction between employees and independent contractors “is a line which in fact blurs at the middle.” Typically, an independent contractor is a firm with a staff. When the contractor is given a task, the contractor can determine how it is done. An employee is someone who is supervised by the employer. Employees usually work for only one or two people at any time. In a situation where someone is working part time, or is holding several jobs, or works from home, the distinction is not always clear.

In the Uber and Lyft business models, employees get paid through a wireless phone software application, use their own cars, and don’t wear uniforms—much as one would expect in an independent contractor situation. On the other hand, Prof. Epstein says, some of the drivers do this on a fairly repetitive basis, perhaps taking twenty or thirty jobs in a week. Also, Uber and Lyft have to protect their brands by checking on their drivers, making sure the cars are reasonably clean, and doing several other things that an employer would do. The question is whether the companies exercise sufficient oversight to push them into the employer category.

Being treated as employers might not put them out of business, but it would “blow up” their business models, Prof. Epstein opines. The companies would have much higher oversight standards to comply with, and they would have all the employment taxes that employers regularly deal with. The drivers could be unionized. What the judges in both cases have said, in effect, is that the factual situations are sufficiently unclear that the cases should be decided by juries. The problem with the class actions in these cases, says Prof. Epstein, is that the situations of the drivers are so different that it will be hard to arrive at a reasonable result that would apply to all of them. He notes that some of the drivers have other jobs, including as taxi drivers; some of them lease their cars. So there is no uniformity among the various drivers.

Prof. Epstein says that there are labor law cases that support the independent contractor status. However, the NLRB is moving against McDonald’s, among others, pursuing a theory of joint employment, as previously reported by LBN. The tricky part here is that some drivers work for both Uber and a cab company. If the cab company treats the drivers as independent contractors (as some do), it would be anomalous for those drivers to be treated as employers of Uber. Prof. Epstein suggests that the best solution in these cases is to leave the present business model alone, especially since there could be different results in the two cases pending in California. The years of appeals could damage the business.

Prof. Epstein also suggests that any partial settlement would cause more problems than it would solve. He feels that Uber and Lyft may look for a legislative solution to protect their business models. There are services that Uber and Lyft provide that a cab simply can’t or don’t.

Richard A. Epstein is the inaugural Laurence A. Tisch Professor of Law at NYU School of Law. Prior to his joining the faculty, he was a visiting law professor at NYU from 2007 through 2009. He has served as the Peter and Kirstin Bedford Senior Fellow at the Hoover Institution since 2000. Epstein is also the James Parker Hall Distinguished Service Professor of Law Emeritus and a senior lecturer at the University of Chicago. The Legal Broadcast Network is a featured network of the Sequence Media Group.

California Wines Are Safe to Drink, Says the Wine Institute

More than two dozen California wineries have been the subject of a lawsuit filed in federal court in San Francisco alleging that the wines contain dangerously high levels of inorganic arsenic. The lawsuit was the subject of an earlier LBN report which covered the lawsuit from the plaintiffs’ perspective. The Wine Institute says that the allegations of the lawsuit are false and misleading. Wine Institute spokesperson Nancy Light discusses the issues from the defendants’ perspective in this report.

Nancy Light

Nancy Light

At the outset, Light says, it’s necessary to understand that arsenic is a common element in the environment, present to some degree in almost all foods and beverages people consume. The amounts found in wines are trace amounts, Light says. The U.S. government has not set limits on the amount of allowable arsenic in any food or beverage except for drinking water—the EPA standard of ten parts per billion.

The basis for that standard, Light points out, is the quantity of water we all consume daily, about two liters. The toxicology principle is “level of exposure.” On the other hand, the average person drinks very little wine each day. Comparing water to wine is a flawed concept, Light says. Several countries/regions including Canada, the European Union, and Japan have set limits ranging from 100ppb up to 1000ppb—10 to 100 times the level the EPA determined to be safe for drinking water.

Light notes that inorganic arsenic can be harmful in high doses. Given the modest amount of arsenic found in wines, a person would have to drink about three bottles of wine every day for a year to reach the level of arsenic exposure that the EPA considers dangerous. As to where the arsenic comes from, Light explains that the element is in the soil and the water, so grapes are naturally exposed to arsenic. The arsenic levels in California wines are well within the levels found in the rest of the world.

The Wine Institute has information from the Liquor Control Board in Ontario, Canada. The board tests every wine. The information from the Canadian tests covering a dozen years shows that the California wines are well within the levels of wines from around the world.

As to the seemingly higher concentration of arsenic in the less expensive California wines, Light says there is no apparent issue with the method of production that would result in higher arsenic levels. Again, Light points out, the levels of the wines in question are well within limits accepted as safe throughout the world. Light characterizes the legal action against the California wines as a nuisance lawsuit.

Nancy Light is the Vice President of Communications for the Wine Institute, San Francisco, California. Wine Institute is the voice for California wine representing more than 1,000 wineries and affiliated businesses from the beautiful and diverse wine regions throughout the state. The Legal Broadcast Network is a featured network of the Sequence Media Group.

Winemakers Sued for Arsenic in Their Wines--Plaintiff's Attorney Brian Kabateck Explains the Lawsuit

Arsenic in apple juice and rice has been the subject of warnings to consumers. Now, a proposed class action lawsuit has been filed in California alleging that some top-selling wines have high levels of arsenic. In this report, Brian Kabateck, attorney for the plaintiffs, explains the litigation.

Brian Kabateck

Brian Kabateck

The lawsuit claims that some wines have four or five times the amount of arsenic allowed by the FDA in drinking water (10 parts per billion). Kabateck explains that Kevin Hicks, who was in the alcoholic beverage industry for fifteen years, left to start a company specializing in testing beverages. One of the tests involved wine, a beverage that is not heavily regulated. Tests on 1,308 bottles of wine revealed eighty bottles that had excessive amounts of arsenic, based on the FDA standard for drinking water. Kabateck says that, learning of this, his firm had additional tests performed, and afterward, the lawsuit was filed.

Kabateck notes that the higher levels of arsenic were mostly found in wines at the low end of the price scale. The highest arsenic levels were usually in blush wines (like a white zinfandel) or white wines (like a chardonnay).

Kabateck says that it is unclear how the arsenic finds its way into the wines. However, the tests show that the problem arsenic is inorganic in nature. Kabateck points out that organic arsenic is the substance found in apple juice, rice, and other foods. “It’s all around us.” Kabateck suggests that arsenic could be a clarifying agent, or something used to make wine sparkle. “We just don’t know.”

The greater concentration of arsenic in newer wines might suggest that aging helps to remove the element, but that is speculation. Kabateck says that one objective of the lawsuit is to bring the wine industry into the public eye so that people will know what they are drinking when they buy wine.

The U.S. standard (10 ppb) is considerably lower than the Canadian standard, for example (200 ppb). As to possible health problems caused by arsenic, Kabateck says that the medical literature links arsenic to cancer. It can cause respiratory problems and diabetes, among other things. There is also a question of how much arsenic any individual can consume safely over a lifetime.

Kabateck hopes that some winemakers will want to step forward early and respond positively to resolving the problem. The lawsuit is asking for recalls of some of the wines and refunds to consumers who bought those wines.

Brian S. Kabateck is the Founding and Managing Partner of Kabateck Brown Kellner, LLP in Los Angeles, California. He is a nationally recognized and respected consumer attorney and a preeminent leader in the fight to ensure access to the justice system.  He is a powerful advocate in the courtroom and at the California State Capitol for consumers’ rights and protections. The Legal Broadcast Network is a featured network of the Sequence Media Group.