Be Still, My Heart: New Suit Says Fitbits Fail to Track Heartbeats as Promised
Why it matters
Fitbit has been hit with another consumer class action asserting false advertising claims, this time alleging that the fitness tracker fails to accurately monitor the users' heart rates. The company pledged to fight the case, noting in a statement that "Fitbit trackers are designed to provide meaningful data to our users to help them reach their health and fitness goals, and are not intended to be scientific or medical devices."
Last summer, Fitbit faced similar false advertising allegations about sleep measurement claims for its products. "The heart rate monitoring function of the PurePulse Trackers is a material—indeed, in some cases, vital—feature of the product," the plaintiffs told the court. "Not only are accurate heart readings important for all of those engaging in fitness, they are critical to the health and well-being of those Class members whose medical conditions require them to maintain (or not to exceed) a certain heart rate."
Detailed discussion
According to the most recent federal court action filed by three Fitbit users, the "PurePulse" technology in Fitbit's Charge HR and Surge models misreports the number of heartbeats, particularly during exercise. In a test performed by a cardiologist comparing the Fitbit technology to an electrocardiogram, the Fitbit was off by an average of about 25 beats per minute, the complaint alleged.
One plaintiff claimed the error was potentially dangerous. Colorado resident Teresa Black's personal trainer manually recorded her heart rate during a training session at 160 beats per minute. At the same time, her Charge HR indicated her heart rate was only 82 beats per minute, she claimed. "Black was approaching the maximum recommended heart rate for her age, and if she had continued to rely on her inaccurate PurePulse Tracker, she may well have exceeded it, thereby jeopardizing her health and safety," the suit alleged.
Despite these inaccuracies, Fitbit engaged in a widespread national advertising campaign touting its activity trackers with the heart rate monitoring feature with slogans such as "Every Beat Counts" and "Know Your Heart," the plaintiffs said. To reinforce the claims, commercials depicted the Fitbits being used for activity and fitness, including high-intensity workouts.
In additional counts, the plaintiffs challenged Fitbit's use of an arbitration agreement featuring a class action ban as a separate and actionable unfair and deceptive trade practice. Consumers are not informed of the agreement prior to purchase, the suit said, and are instead forced to agree to the Terms of Service pursuant to an online registration required for the PurePulse products to work.
"Fitbit's attempt to bind customers who bought PurePulse Trackers through third party online and brick and mortar stores to an arbitration clause and class action ban post-purchase when they register the product—which is required to make the product function as intended—is unconscionable, invalid, and unenforceable," the plaintiffs wrote.
Seeking to certify a nationwide class of purchasers, as well as subclasses in California, Colorado, and Wisconsin, the complaint requested injunctive relief and restitution, as well as compensatory, exemplary, punitive, and statutory penalties and damages.
To read the complaint in McClellan v. Fitbit, Inc., click here.
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California Federal Court: Paid Leave Does Not Amount to Termination
Why it matters
Paid leave is not equivalent to termination, a California federal court told the Equal Employment Opportunity Commission (EEOC) in a case involving a worker alleging discrimination based on national origin. Marcela Ramirez claimed she was on the receiving end of comments including "Mexicans like you would rather lie than tell the truth" and "I never trusted your kind of people" during her time working at Peters' Bakery. She was fired in 2011, but the bakery was later ordered to reinstate her with back pay by a union arbitrator. The EEOC then filed suit on behalf of Ramirez.
Last July the federal court judge overseeing the case granted a preliminary injunction preventing the bakery from terminating her employment until the lawsuit was resolved. When the bakery placed Ramirez on paid leave at the end of December, the EEOC filed a motion to show cause why a contempt order should not be granted. But the judge sided with the bakery. Although the plaintiff might prefer to continue working on-site, the court could not find any authority for the proposition that fully paid leave constituted a constructive termination. As long as Ramirez continued to receive her wages and medical insurance, the employer would not be in violation of the injunction, the court said.
Detailed discussion
According to the complaint filed by the EEOC on behalf of Marcela Ramirez, she was subject to years of discrimination and harassment based on her national origin in violation of Title VII while employed by Peters' Bakery, on the receiving end of comments including "Mexicans like you would rather lie than tell the truth" and "I never trusted your kind of people."
In August 2011, Ramirez was fired. She was later reinstated after she filed a union grievance but was subject to retaliation after she later filed a charge of discrimination with the EEOC. After the agency filed its complaint, she claimed the bakery again tried to terminate her employment in July 2015.
On the EEOC's motion, U.S. District Court Judge Beth Labson Freeman granted a temporary restraining order and then entered a preliminary injunction ordering that the employer "is enjoined from terminating Ms. Ramirez's employment pending resolution of this lawsuit or until further order of the Court."
The agency returned to court in January, however, to consider a motion for an order to show cause why a contempt order should not be granted. Ramirez had again been terminated effective December 31, 2015, the EEOC told the court, in violation of the July order.
Bakery owner Charles Peters instructed Ramirez's supervisor not to schedule her for any shifts after December 31 and remove her from the work schedule for any shifts after that date. The owner stated "I don't want her here," adding that Ramirez was "bad for [his] health," the supervisor said in a declaration, explaining that "I am not firing her, I just want you to take her off the schedule."
These instructions were "in clear violation" of the preliminary injunction, the EEOC argued, demonstrating "not just a defiance of the Court's order, but arguably a deliberate and intentional maneuver to circumvent it by not 'terminating' Ms. Ramirez's employment, but rather simply forbidding her supervisor from giving her any hours of work. If an employee is not scheduled to work any hours, clearly that employee's employment is terminated."
The EEOC requested a stay of the removal of Ramirez from the work schedule, reimbursement for any shifts, and sanctions for violation of the court order.
But Judge Freeman sided with the bakery. The employer represented that Ramirez continues to receive her wages and medical insurance despite the fact she will not be scheduled for work hours and will continue to do so pending resolution of the lawsuit.
"While Plaintiff's counsel expressed Ms. Ramirez's preference to continue actually working on-site at the bakery, counsel has not cited any authority for the proposition that placing an employee on fully paid leave constitutes a constructive termination," the court wrote.
The cases the court discovered in its own research held to the contrary, the judge noted, citing a decision from a Nevada federal court where an employee who was initially told she would be terminated and then negotiated paid administrative leave pending an investigation failed to state a claim for constructive termination.
"Based upon the representation of Defendant's counsel that Ms. Ramirez will continue to receive her wages and medical insurance, the Court concludes that Plaintiff has not established a violation of the preliminary injunction," Judge Freeman concluded.
To read the order in EEOC v. Peters' Bakery, click here.
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NAD: Advertisers Can Be Responsible for Claims on Third-Party Sites
Why it matters
In a decision recommending that dietary supplement maker Neuracel LLC work to remove challenged claims on a website owned and operated by a prior owner, the National Advertising Division provided a reminder to advertisers that they are potentially responsible for claims found on third-party sites.
The lesson for advertisers? Don't think that just because claims are found on third-party websites or used by prior owners of the product, liability can be avoided. As the self-regulatory body emphasized, "NAD has held that advertisers apprised of inaccurate or unsupported claims being made about their products that appear in third-party advertising should take steps to ensure that such claims are promptly discontinued."
Detailed discussion
Claims for the Neuracel dietary supplement reviewed by the NAD included "The Complete Natural Everyday Nerve Pain Miracle," "Surgery Is Not An Option," and "This means you are getting a completely natural product in a plant-based capsule that is suitable for vegans." Testimonials for the dietary supplement touted, "James is an RN who ordered Neuracel for his partner Dustin. Since taking Neuracel, Dustin has been 100% pain-free. His tingling, numbness and pain are COMPLETELY GONE!"
When contacted by the NAD about the claims, the advertiser responded that they were made by the prior owner of Neuracel.com and not reviewed by counsel for the current owner of the company. As a fallback position, Neuracel argued that the challenged claims were supported by a 2014 study on mice of a compound found in the supplement.
The NAD was not persuaded. While it "appreciates" that the challenged claims appeared on a website owned and operated by a prior owner, "NAD has held that advertisers apprised of inaccurate or unsupported claims being made about their products that appear in third-party advertising should take steps to ensure that such claims are promptly discontinued," according to the decision.
Neuracel's website "prominently features" the challenged claims and testimonials, which "reasonably convey the message that Neuracel eliminates nerve pain (including diabetic neuropathy) and that consumers who are taking prescription medication to relieve nerve pain can instead take Neuracel to achieve better results," the NAD wrote. "These are powerful and potentially dangerous claims as they encourage consumers to forego taking prescription pain medication to treat a serious medication condition in favor of Neuracel."
The advertiser lacked competent and reliable scientific evidence to back up its claims, the NAD said, as a single animal study was insufficient to support claims relating to the performance of a product, or its ingredients, in humans.
As for the testimonials, Neuracel offered to add a disclaimer to its website that its statements have not been evaluated by the Food and Drug Administration and that "Neither the website nor our product is intended to diagnose, cure or prevent any disease. Before taking this supplement or discontinuing any medication you are currently taking, you should check with your treating physician. The testimonials on this website are individuals and do not guarantee that you will get the same results."
The proposed disclaimer "is insufficient because the challenged claims it would qualify, which promise relief from nerve pain, are unsupported," the NAD said. "Given the lack of any competent and reliable supporting evidence in the record, NAD recommended that the challenged performance claims and testimonials be discontinued."
To read the NAD's press release about the decision, click here.
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Bad Faith Claim Against Uber's Excess Insurer Moves Forward
Why it matters
A federal court in California recently held that bad faith claims Uber Technologies and its wholly owned subsidiary Raiser, LLC, brought against their excess carrier can move forward, denying the insurer's motion to dismiss the allegations. Two drivers for the ride-sharing app got into accidents and their victims filed suit against Uber and Raiser. The two entities tendered the defense of the suits to their insurers.
While the primary carrier agreed to provide coverage, the excess carrier, Evanston Insurance Company, filed a declaratory judgment action seeking an order that it owed no defense. Uber and Raiser filed bad faith counterclaims, which Evanston moved to dismiss. The court denied Evanston's motion to dismiss, holding that the policyholders' accusations were sufficient at the pleading stage to state a plausible claim that Evanston violated the implied covenant of good faith and fair dealing by unreasonably denying coverage.
Detailed discussion
Two different drivers using the Uber Technologies transportation app allegedly caused serious car accidents. In the first instance, an Uber driver hit three pedestrians in December 2013, killing one. In the second accident, another Uber driver struck a pedestrian in September 2013. Victims in both accidents filed state court lawsuits against Uber and Raiser, LLC, Uber's wholly owned subsidiary.
Uber had several layers of insurance in place. A primary layer contained two policies from National Union Fire Insurance Company: (1) a commercial general liability (CGL) policy (with a one million dollar per occurrence limit and two million dollar aggregate limit); and (2) a business auto policy (with a one million dollar total limit). Uber also purchased an excess policy from Evanston Insurance Company with a five million dollar total limit. The Evanston policy followed form to the National Union policies.
National Union accepted coverage for the accidents under its business auto policy, but Evanston denied coverage under the excess policy. Evanston filed a declaratory judgment action seeking an order that it had no duty to provide coverage in the underlying state actions. Uber and Raiser filed counterclaims alleging breach of contract and breach of the implied covenant of good faith and fair dealing.
Upon Evanston's motion to dismiss the bad faith counterclaims, the court set out the following standard for a bad faith claim: (1) the benefits due under the policy must be withheld; and (2) the reason for withholding the benefits must be unreasonable or without proper cause.
The insureds asserted that coverage under the policy for the state court lawsuits was clear, and that Evanston ignored allegations in the complaints regarding use of the Uber app. In addition, the insureds argued that Evanston's interpretation of its policy would render its auto coverage illusory.
The court ultimately denied Evanston's motion to dismiss the bad faith claims, stating the allegations were sufficient to state a plausible claim of bad faith against Evanston. In doing so, the court rejected both of Evanston's arguments: that the policy (1) precluded coverage as a matter of law and (2) two limitations in its policy precluded coverage for the car accidents. First, the designated premises limitation stated that the policy only applies to losses arising out of operations in 12 office building locations, while the auto liability limitation excludes coverage for any loss resulting from automobile use away from Uber's office buildings.
The insurer's reading of the limitations misinterpreted the structure of its excess coverage, the court said, as its policy sits above two separate National Union policies. While it might be reasonable to assume the designated premises and auto liability limitations apply to the CGL policy, it was not reasonable to apply them to the business auto policy.
"Under Evanston's interpretation, the business auto policy would only apply to car accidents occurring in the hallways of Uber office buildings," the court stated. "This would be absurd and inconsistent with the California Supreme Court's directive that 'contracts are to be interpreted in a manner that makes them reasonable and capable of being carried into effect, and that is consistent with the parties' intent.' "
To read the order in Evanston Insurance Company v. Uber Technologies, Inc., click here.
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California Supreme Court Lets State Lawsuit Over Organic Labeling Move Forward
Why it matters
A plaintiff's putative class action against Herb Thyme Farms, Inc., for falsely labeling its herbs "organic" is not preempted by federal law, the California Supreme Court has concluded, reversing a dismissal of the suit in a unanimous opinion.
Citing the seminal decision in Kwikset Corp. v. Superior Court, the unanimous court emphasized that "labels matter" to consumers. "They serve as markers for a host of tangible and intangible qualities consumers may come to associate with a particular source or method of production," the court wrote. "Misrepresentations in labeling undermine this signifying function, preventing consumers from correctly identifying the goods and services that carry the attributes they desire while also hampering honest producers' attempts to differentiate their merchandise from the competition."
Detailed discussion
Michelle Quesada sued Herb Thyme Farms, Inc., challenging the company's marketing of its herbs as organic. According to her complaint, the company sometimes processed its organic and conventionally grown herbs together and sold them using the same "Fresh Organic" label and packaging. She also claimed Herb Thyme passed conventionally grown herbs off as organic.
Relying on the Organic Foods Production Act of 1990, Herb Thyme Farms sought to toss the lawsuit. Both a trial court judge and an appellate panel agreed that Quesada's claims were preempted.
But the state's highest court reversed, ruling that despite the regulatory scheme put in place by the federal statute, consumers can still file suit over the veracity of an organic label.
"When Congress entered the field in 1990, it confined the areas of state law expressly preempted to matters related to certifying production as organic, leaving untouched enforcement against abuse of the label 'organic,'" the court explained. "Moreover, a central purpose behind adopting a clear national definition of organic production was to permit consumers to rely on organic labels and curtail fraud. Accordingly, state lawsuits alleging intentional organic mislabeling promote, rather than hinder, Congress' purposes and objectives."
The Organic Foods Act does not expressly preempt the claims, the court found. While language of exclusivity can be found in the Act with regard to organic production and certification, no similar language of exclusivity is found with regard to enforcement.
"As a matter of express preemption, we have no reason to conclude Congress intended its federal remedies as not only a floor—ensuring that, whatever else state law might provide for, some teeth would back up the new federal regulation of organic labeling—but also a ceiling, with states prohibited from continuing to augment these limited remedies," the California Supreme Court wrote. "On the subject of state consumer-deception laws of general application, the text of the Organic Foods Act offers only silence."
The regulatory framework established by the Act left room for state laws of general application to target fraud and misrepresentation, the court said, citing a similar conclusion from the Eighth Circuit Court of Appeals.
The regulation of food labeling to protect the public "is quintessentially a matter of longstanding local concern," the court noted, with California beginning its regulation of food mislabeling in the 1860s.
"Substitution fraud, intentionally marketing products as organic that have been grown conventionally, undermines the assurances the USDA Organic label is intended to provide," the court said. "Conversely, the prosecution of such fraud, whether by public prosecutors where resources and state laws permit, or through civil suits by individuals or groups of consumers, can only serve to deter mislabeling and enhance consumer confidence."
Congress "singled out the very practice alleged here, the deliberate mislabeling of conventional produce as organic, as a major reason why national legislation was needed in the first place," the court wrote. "The Organic Foods Act cannot be interpreted, under the guise of obstacle preemption, as shielding from suit the precise misconduct Congress sought to eradicate...
"In sum: the complaint here alleges Herb Thyme has engaged in fraud by intentionally labeling conventionally grown herbs as organic, thereby pocketing the additional premiums organic produce commands. The purposes and objectives underlying the Organic Foods Act do not suggest such suits are an obstacle; to the contrary, a core reason for the Act was to create a clear standard for what production methods qualify as organic so that fraud could be more effectively stamped out and consumer confidence and fair market conditions promoted. Nor does anything in the text or background of the Act and its regulations indicate Congress intended remedial exclusivity for the enforcement mechanisms it provided. Finding no obstacle to congressional purposes and objectives, we conclude the complaint here is not preempted."
To read the opinion in Quesada v. Herb Thyme Farms, Inc., click here.
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California Court Finds Customer Consent to Receive Texts Ends TCPA Suit
Why it matters
A plaintiff provided his implied consent to receive text messages from the defendant by providing his telephone number to a cashier and therefore could not sue for violations of the Telephone Consumer Protection Act, a California federal court judge has ruled.
This is a victory for TCPA defendants on multiple fronts. The decision found that the welcome text sent by the defendant was not an advertisement or telemarketing and joined the list of courts that have found prior express consent where a consumer provides his telephone number to another party without limiting instructions.
Detailed discussion
While paying for his lunch at a Flame Broiler restaurant in North Hollywood, Sunil Daniel asked the cashier about a Five Stars Loyalty logo displayed in the window. The cashier replied that through the Five Stars program, customers earn points for food purchased that can then be redeemed for free food.
The cashier then asked for Daniel's phone number, which he provided orally, and swiped his card. Within minutes Daniel received a text from Five Stars stating: "Welcome to Five Stars, the rewards program of Flame Broiler. Reply with your email to finish registering and get free pts! Txt STOP to unsubscribe."
Daniel filed suit alleging a single violation of the TCPA and seeking to certify a nationwide class of persons who received similar messages from Five Stars. The consumer rewards program moved to dismiss the suit, arguing that the plaintiff consented to receive the text.
U.S. District Court Judge William H. Orrick agreed.
The level of prior consent required to avoid liability under the TCPA depends on the character of the call or text message, he explained. Where it "includes or introduces an advertisement or constitutes telemarketing," the recipient must have given his prior express written consent. Alternatively, calls or text messages that do not include or introduce an advertisement or constitute telemarketing only require "prior express consent" that does not have to be written.
Five Stars argued that the welcome message sent to Daniel merely provided information about how to complete registration and did not constitute an advertisement or telemarketing. The plaintiff countered that when viewed in context, the message was designed to encourage future purchases at Flame Broiler.
"[A] text sent solely for the purpose of allowing the recipient to complete a registration process that he or she initiated shortly before receiving the text is not telemarketing within the meaning of [the implementing regulations]," Judge Orrick wrote, adding that "[c]ontext and common sense" did not help the plaintiff's position.
"The context in which the text message was sent—i.e., minutes after Daniel asked the Flame Broiler cashier about Five Stars and gave the cashier his telephone number—merely highlights the text's purpose of enabling Daniel to complete the registration process that he had initiated minutes before," the court said. "Likewise, common sense points to the conclusion that Daniel received a confirmatory text as part of the process of registering for Five Stars, not a telemarketing message. To the extent that it could be reasonably inferred based on context or otherwise that the text's purpose was also to 'encourage future purchases at Flame Broiler,' that purpose is simply too attenuated to make the text telemarketing."
The plaintiff received a single text message in "direct and immediate response to his inquiry" about the Five Stars program and the provision of his phone number, the court noted. "The message he received did not urge him to 'redeem' Five Stars points, did not direct him to a location where points could be redeemed or where more information about the Five Stars program could be obtained, and did not reference shopping or purchasing."
Further, the reference to "free pts" in the text message did not encourage the purchase of a product, Judge Orrick added, as it could be reasonably understood to mean that Daniel could earn points by replying with his e-mail address or could generally earn points by joining the program.
Having concluded the text message was not an advertisement or telemarketing, the court then found Daniel provided his prior express consent to receive it. "[T]he great weight of authority holds that an individual who knowingly provides her telephone number to another party without limiting instructions has given her prior express consent to receive calls at that number from that party," the court said, in a position that was affirmed by the Federal Communication Commission's July 2015 Order.
The complaint "establishes that Daniel asked a restaurant cashier about the Five Stars program and provided the cashier with his telephone number," Judge Orrick wrote, granting Five Star's motion to dismiss. "[B]y providing his telephone number Daniel gave his prior express consent to receive the text."
To read the order in Daniel v. Five Stars Loyalty, Inc., click here.
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Uber's Legal Issues Continue With Drivers in California and Florida
Why it matters
The question of whether drivers for the ride-sharing app Uber are employees or independent contractors continues to keep courts and regulators across the country busy. While the Florida Department of Economic Opportunity determined that drivers are independent contractors—reaching a contrary conclusion from similar authorities in California and Oregon—a federal court judge in California has certified multiple classes of roughly 160,000 drivers in a wage suit.
A group of drivers sued Uber for tips and expense reimbursement under state law and moved to certify the class. The judge had earlier certified a class seeking tips the plaintiffs alleged Uber withheld, and in the latest ruling, certified a subclass of drivers seeking reimbursement. In addition, the court rejected the employer's attempt to enforce an arbitration agreement, ruling that it was unenforceable because it contained a non-severable waiver of Private Attorney General Act (PAGA) claims. Litigation looks to continue through 2016, with Uber already filing an appeal of the California decision and the Florida driver appealing the state agency's ruling.
Detailed discussion
Ride-sharing company Uber Technologies ended 2015 on a litigious note, with the issue of whether its drivers are independent contractors or employees, a hot topic for courts and regulators alike.
Several California drivers filed a putative class action alleging they were misclassified as independent contractors, requesting reimbursement for "all necessary expenditures or losses incurred … in direct consequence of the discharge" of their duties, as well as for the entire amount of any tips or gratuities "paid, given to, or left" by a patron.
In September, U.S. District Court Judge Edward M. Chen certified a class of approximately 160,000 Uber drivers seeking tips but denied certification on the claim for reimbursement.
The court also limited the time period for the class, expressing concern about drivers who signed an arbitration agreement in 2014 and 2015 that waived claims under the Private Attorney General Act (PAGA) and whether an individualized assessment of the economic means of the driver and the circumstances under which he or she accepted the arbitration agreement was necessary.
But subsequent case law changed Judge Chen's position. Based on the California Supreme Court's decision in Sanchez v. Valencia Holding Co., the court concluded that the PAGA waiver found in Uber's arbitration agreement was unenforceable on public policy grounds. As for the 2014 and 2015 agreements, the non-severable PAGA waiver rendered the entire arbitration agreement unenforceable, the judge added.
Uber argued that the non-severable PAGA waiver didn't ban all PAGA claims but only prevented such claims from being arbitrated, with the blanket PAGA waiver found in a different section that was severable. But the court found this contention circular, as "it is impossible to grammatically or linguistically sever the PAGA claims waiver without completely undermining arbitration itself." Because of the non-severable section of the agreement, the PAGA claim cannot be brought in arbitration, resulting in a driver having no forum in which to bring a PAGA claim, Judge Chen explained.
The court also found that severance would not be permitted as a matter of equity. "This is not a case where there has been performance, and voiding the contract will result in one party receiving an unfair windfall," the court wrote. "Instead, Uber has drafted a contract that deters ab initio drivers from bringing representative actions. Any driver who reads the arbitration agreement will be misled into believing that they have no right to bring a PAGA claim, as the arbitration agreement not only outright prohibits representative actions, but requires that all disputes be arbitrated on an individual basis."
Uber told the court that the 2014 and 2015 arbitration agreements featured an opt-out provision and that drivers who failed to exercise this choice should not be permitted to avoid the results. But Judge Chen again disagreed. "Absent California authority to the contrary, the Court concludes that the PAGA waiver is an unenforceable pre-dispute waiver despite the opt-out provision," he wrote. "As a valid waiver can only be made after a dispute has arisen, the PAGA waivers contained in the 2014 and 2015 agreements are unenforceable against the subclass of drivers that the Court will certify in this order."
The court then certified a subclass of drivers seeking reimbursement for vehicle-related and telephone expenses. Such expenses constitute the majority of the money spent by drivers, the plaintiffs asserted, and will not cause individualized issues to predominate, even where drivers have unlimited data plans for their phones, the judge said.
Uber has already filed an appeal.
Taking a different approach to Uber's business model, the Florida Department of Economic Opportunity (DEO) sided with the ride-sharing company to find that drivers are independent contractors—and therefore not entitled to unemployment insurance from the state.
Considering the case of former driver Darren McGillis, the agency emphasized that Uber operates not as an employer but as a middleman or broker for transportation services.
"Uber is no more an employer to drivers than is an art gallery to artists," DEO Executive Director Jesse Panuccio wrote. "Just as technological advances have amplified the reach of social networks, [s]uch advances have also amplified the reach of commercial relationships through applications like Uber, [S]tubHub, Airbnb. . . . None of these commercial platforms would be in business without the goods and service providers who use the platforms, but that does not mean the providers are automatically employees of the platform company."
Reversing a determination from the Department of Revenue finding McGillis to be an employee of Uber, the agency said Florida law begins with review of the contract between the parties, which in this case specified that the driver was an independent contractor. The actual practice of the parties did not belie the agreement, the decision found.
While Uber requires some basic conformity from drivers (such as using a car less than 10 years old), "the Driver maintains autonomy over the most significant details of the engagement," such as when to work, what car to use and how to present it, how to choose passengers, and the speed and the route taken when driving.
"As a matter of common sense, it is hard to imagine many employers who would grant this level of autonomy to employees—permitting work whenever the employee has a whim to work, demanding no particular work be done at all even if customers will go unserved, permitting just about any manner of customer interaction, permitting drivers to offer their own unfettered assessments of customers, engaging in no direct supervision, requiring only the most minimal conformity in the basic instrumentality of the job (the car), and permitting work for direct competitors," according to the order.
Other factors—which party provides the instrumentalities and how drivers are paid—also pointed to independent contractor status. Although Uber is in business and provides lead generation for transportation services, it does not provide transportation services, the agency said. "Essentially, Uber is a middleman or broker for transportation services," Panuccio wrote. "This is related to and dependent upon provision of transportation services, but it is not the same thing. A broker is a distinct and common profession in the American marketplace."
The order distinguished contradictory decisions from California and Oregon based on differences in case law and a failure to recognize that "[t]echnological advances like the Internet and smartphones have provided new platforms for middlemen."
McGillis filed an appeal the following day.
To read the order in O'Connor v. Uber Technologies, click here.
To read the final order from the Florida Department of Economic Opportunity, click here.
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