Case: 18-1944 Document: 89 Page: 1 Date Filed: 03/03/2020
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`PRECEDENTIAL
`
`
`UNITED STATES COURT OF APPEALS
`FOR THE THIRD CIRCUIT
`______________
`
`No. 18-1944
`______________
`
`ALI RAZAK; KENAN SABANI; KHALDOUN
`CHERDOUD, INDIVIDUALLY AND ON BEHALF OF
`ALL OTHERS SIMILARLY SITUATED,
`Appellants
`
`
`v.
`
`UBER TECHNOLOGIES, INC.; GEGEN, LLC
`______________
`
`On Appeal from the United States District Court
`for the Eastern District of Pennsylvania
`(D.C. Civil No. 2-16-cv-00573)
`District Judge: Hon. Michael M. Baylson
`______________
`
`Argued January 15, 2019
`______________
`
`Before: SMITH, Chief Judge, GREENAWAY, JR., and
`PORTER, Circuit Judges.
`
`(Opinion Filed: March 3, 2020)
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`
`
`
`PRECEDENTIAL
`
`
`UNITED STATES COURT OF APPEALS
`FOR THE THIRD CIRCUIT
`______________
`
`No. 18-1944
`______________
`
`ALI RAZAK; KENAN SABANI; KHALDOUN
`CHERDOUD, INDIVIDUALLY AND ON BEHALF OF
`ALL OTHERS SIMILARLY SITUATED,
`Appellants
`
`
`v.
`
`UBER TECHNOLOGIES, INC.; GEGEN, LLC
`______________
`
`On Appeal from the United States District Court
`for the Eastern District of Pennsylvania
`(D.C. Civil No. 2-16-cv-00573)
`District Judge: Hon. Michael M. Baylson
`______________
`
`Argued January 15, 2019
`______________
`
`Before: SMITH, Chief Judge, GREENAWAY, JR., and
`PORTER, Circuit Judges.
`
`(Opinion Filed: March 3, 2020)
`
`
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`Case: 18-1944 Document: 89 Page: 2 Date Filed: 03/03/2020
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`[ARGUED]
`
`
`
`Jeremy E. Abay
`John K. Weston
`Sacks Weston Diamond
`1845 Walnut Street
`Suite 1600
`Philadelphia, PA 19103
`
`
`Ashley Keller
`Seth A. Meyer
`Keller Lenkner
`150 North Riverside Plaza
`Suite 2570
`Chicago, IL 60654
`
`Counsel for Appellants
`
`Sharon M. Dietrich
`Community Legal Services
`1424 Chestnut Street
`Philadelphia, PA 19102
`
`Amicus Appellants
`
`Sophia Behnia
`Littler Mendelson
`333 Bush Street
`34th Floor
`San Francisco, CA 94104
`
`Wendy S. Buckingham
`Paul C. Lantis
`Littler Mendelson
`1601 Cherry Street
`Suite 1400, Three Parkway
`
`
`
`2
`
`
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`Case: 18-1944 Document: 89 Page: 3 Date Filed: 03/03/2020
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`[ARGUED]
`
`Philadelphia, PA 19102
`
`Robert W. Pritchard
`Joshua Vaughn
`Littler Mendelson
`625 Liberty Avenue
`EQT Plaza, 26th Floor
`Pittsburgh, PA 15222
`
`Andrew M. Spurchise
`Littler Mendelson
`900 Third Avenue
`8th Floor
`New York, NY 10022
`Counsel for Appellees
`
`
`Gabriel K. Gillett
`Jenner & Block
`353 North Clark Street
`Suite 4500
`Chicago, IL 60654
`
`Adam G. Unikowsky
`Jenner & Block
`1099 New York Avenue
`Suite 900
`Washington, DC 20001
`Amicus Appellees
`
`
`______________
`
`OPINION
`______________
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`
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`3
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`Case: 18-1944 Document: 89 Page: 4 Date Filed: 03/03/2020
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`GREENAWAY, JR., Circuit Judge.
`
`This case is an appeal from a grant of summary judgment on
`the question of whether drivers for UberBLACK are
`employees or independent contractors within the meaning of
`the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201–
`219, and similar Pennsylvania state laws. For the following
`reasons, we will vacate the District Court’s grant of summary
`judgment and remand for further proceedings.
`
`Facts1
`
`I.
`Plaintiffs Ali Razak, Kenan Sabani, and Khaldoun Cherdoud2
`(collectively, “Plaintiffs”) are Pennsylvania drivers who utilize
`Defendant Uber Technologies’ ride-sharing mobile phone
`application (“Driver App”). Plaintiffs bring this action on
`behalf of a putative class of all persons who provide limousine
`
`1 The facts recited in this section are undisputed except as
`otherwise noted.
`
` 2
`
` Plaintiffs argue that each Plaintiff should be viewed as an
`individual for FLSA analysis purposes. However, the FLSA
`analysis would remain the same regardless of whether
`Plaintiffs are treated collectively or individually. See United
`States v. Cook, 795 F.2d 987 (Fed. Cir. 1986). Additionally,
`Plaintiffs do not present significantly distinguishable facts, as
`all are self-incorporated drivers and have made similar choices
`regarding business opportunities within the UberBLACK
`platform.
`
`
`
`
`
`4
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`Case: 18-1944 Document: 89 Page: 5 Date Filed: 03/03/2020
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`services, now known as UberBLACK, through Defendant’s
`Driver App in Philadelphia, Pennsylvania.3 Plaintiffs bring
`individual
`and
`representative
`claims
`against Uber
`Technologies, Inc. and its wholly-owned subsidiary, Gegen,
`LLC, (“Gegen,” and collectively, “Uber”) for violations of the
`federal minimum wage and overtime requirements under the
`FLSA, the Pennsylvania Minimum Wage Act (“PMWA”), and
`the Pennsylvania Wage Payment and Collection Law
`(“WPCL”).
`
`Plaintiffs Razak, Sabani, and Cherdoud each own and operate
`independent
`transportation companies
`(“ITCs”)4 Luxe
`Limousine Services, Inc. (“Luxe”), Freemo Limo, LLC
`(“Freemo”), and Milano Limo, Inc. (“Milano”), respectively.
`In order for drivers to contract to drive for UberBLACK, they
`must form ITCs. Each ITC, in turn, enters into a Technology
`Services Agreement with Uber. The Technology Services
`Agreement includes a Software License and Online Services
`Agreement that allows UberBLACK drivers to utilize the
`
`3 This case only pertains to UberBLACK drivers, and not
`drivers for other Uber platforms, such as UberX or UberPool.
`All references to “Uber drivers” only pertain to “UberBLACK
`drivers” in Philadelphia.
`
` 4
`
` ITCs are independent companies “in the business of
`providing transportation services.” App. 385. Some ITCs are
`self-incorporated solo drivers, while others, like Plaintiffs’
`ITCs, are larger companies that work with additional drivers
`who utilize the Uber Driver App. Uber directly contracts with
`an ITC via their Technology Services Agreement.
`
`
`
`5
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`Case: 18-1944 Document: 89 Page: 6 Date Filed: 03/03/2020
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`technology service Uber provides to generate leads, as well as
`outlines the relationship between ITCs and Uber riders, ITCs
`and Uber, and ITCs and their drivers. Additionally, it describes
`driver requirements, vehicle requirements, financial terms, and
`contains an arbitration clause for dispute resolution between
`ITCs and Uber.
`
`Uber also requires that drivers sign a Driver Addendum,5
`which is a legal agreement between the ITC and the for-hire
`driver, before a driver can utilize the Driver App. The Driver
`Addendum allows a driver to receive “lead generation and
`related services” through Uber’s Driver App. App. 409. The
`Addendum also outlines driver requirements (such as
`maintaining a valid driver’s license), insurance requirements,
`dispute resolution, and the “Driver’s Relationship with Uber,”
`in which Uber uses clear language to attempt to establish the
`parameters of the Driver’s working relationship with Uber.6
`App. 411.
`
`
`5 The Driver Addendum states, “[i]n order to use the Uber
`Services, Driver and Transportation Company must agree to
`the terms and conditions that are set forth below. Upon
`Driver’s execution (electronic or otherwise) of this Addendum,
`Driver and Transportation Company shall be bound by the
`terms and conditions set forth herein.” App. 409.
`
` 6
`
` Boilerplate language in the Driver Addendum to the
`Technology Services Agreement sets forth, among other
`things, that ITCs “acknowledge[] and agree[] that Uber is a
`technology services provider”
`that “does not provide
`transportation services, function as a transportation carrier, nor
`
`
`
`6
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`Case: 18-1944 Document: 89 Page: 7 Date Filed: 03/03/2020
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`For UberBLACK, Uber holds a certificate of public
`convenience from, and is licensed by, the Philadelphia Parking
`Authority
`(“PPA”)
`to operate a
`limousine company.
`Transportation companies and
`individual
`transportation
`providers who provide Black car services in Philadelphia are
`required to hold a PPA certificate of public convenience or
`associate with an entity that holds such a certificate. Some
`UberBLACK transportation providers operate under the PPA
`certificate held by Uber. Luxe, an ITC owned by Razak,
`operates under its own PPA certificate. Additionally,
`approximately 75% of UberBLACK drivers use Uber’s
`automobile insurance.
`
`Plaintiffs claim that they are employees, and sue Uber for
`violations of minimum wage and overtime requirements under
`federal and state laws. Under the FLSA, employers must pay
`employees the applicable minimum wage for each hour
`worked, and, if an employee works more than forty hours in a
`given week, the employer must pay one and a half (1 ½) times
`
`operate[s] as a broker for transportation of passengers . . . .”
`App. 13. “ITCs shall provide all necessary equipment; Uber
`does not direct or control ITCs or their drivers generally or in
`their performance.” Id. “ITCs and their drivers retain the sole
`right to determine when, where, and for how long each of them
`will utilize the Driver App or the Uber Service, and ITCs agree
`to pay Uber a service fee on a per transportation services
`transaction basis.” Id. ITCs must also “maintain during the
`term of this Agreement workers’ compensation insurance for
`itself and any of its subcontractors . . . .” Id. The Driver
`Addendum also sets forth and requires that the relationship
`between the ITCs and their drivers is “contractual or [an]
`employment arrangement.” Id.
`
`
`
`7
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`Case: 18-1944 Document: 89 Page: 8 Date Filed: 03/03/2020
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`the regular rate for each hour subsequently worked. 29 U.S.C.
`§§ 206–207. Plaintiffs contend that time spent online on the
`Uber Driver App qualifies as compensable time under the
`FLSA. Principal among Plaintiffs’ arguments is that Uber
`controls the access and use of the Driver App.
`
`To access Uber services, drivers open the Driver App on a
`mobile device, log in, and tap a button to be online. Once
`online, a driver can choose to accept a trip, but if the driver
`does not accept the trip within fifteen seconds of the trip
`request, it is deemed rejected by the driver. The Driver App
`will automatically route the trip request to the next closest
`driver, and if no other driver accepts the trip, the trip request
`goes unfulfilled, as Uber cannot require any driver to accept a
`trip. UberBLACK drivers are free to reject trips for any reason,
`aside from unlawful discrimination. However, if a driver
`ignores three trip requests in a row, the Uber Driver App will
`automatically move the driver from online to offline, such that
`he cannot accept additional trip requests.
`
`Uber sets the financial terms of all UberBLACK fares, and
`riders pay by having their credit cards linked to the App. After
`a ride is completed, Uber charges the rider’s credit card for the
`fare. Uber then deposits the money into the transportation
`company’s Uber account with a commission taken out by
`Uber. The transportation company then distributes the
`payment to the driver who provided the ride.
`
`Uber also has regulations under which it logs off drivers for a
`period of six hours if the driver reaches Uber’s twelve-hour
`driving limit. Trip requests are generally sent to the driver
`closest in proximity to the requesting rider, and drivers have no
`way of knowing from the Uber Driver App what the demand
`for drivers is at any given time (and thus, how much their
`
`
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`8
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`Case: 18-1944 Document: 89 Page: 9 Date Filed: 03/03/2020
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`earnings will be based on that demand). Drivers also do not
`know where a rider’s final destination is prior to accepting the
`ride.
`
`There is one exception affecting a driver’s ability to accept trip
`requests from anywhere in Philadelphia. If a driver is at one of
`Philadelphia’s major transportation hubs: 30th Street Train
`Station or Philadelphia International Airport, he must utilize a
`“queue” system that routes trips to the next driver in the queue,
`and the driver can only enter, or advance in, the queue while
`physically located inside a designated zone.
`
`On appeal, Uber reasserts that Plaintiffs are not employees as
`a matter of law, and therefore, their putative class action should
`be subject to summary judgment. To support this contention,
`Uber portrays UberBLACK drivers as entrepreneurs who
`utilize Uber as a software platform to acquire trip requests.
`Uber asserts that Plaintiffs are not restricted from working for
`other companies, pay their own expenses, and on some
`occasions, engage workers for their own ITCs. They can use
`UberBLACK as little or as much as they want or choose not to
`work for UberBLACK and instead work for competitors such
`as Blacklane and Lyft.
`
`Uber asserts that it places no restrictions on drivers’ ability to
`engage in personal activities while online. Plaintiffs in this
`matter engaged in a range of personal activities, including
`accepting rides from private clients, accepting rides from other
`rideshare programs, sleeping, running personal errands,
`smoking cigarettes, taking personal phone calls, rejecting
`UberBLACK trips because they were tired, and conducting
`personal business.
`
`
`
`9
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`Case: 18-1944 Document: 89 Page: 10 Date Filed: 03/03/2020
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`Alternatively, Plaintiffs claim that they are “employees” under
`the FLSA because they are controlled by Uber when they are
`online and perform an integral role for Uber’s business. The
`District Court agreed with Uber’s position, and granted Uber’s
`Motion for Summary Judgment on the question of whether
`Plaintiffs qualify as “employees” of Uber under the FLSA and
`PMWA. Plaintiffs now appeal from the summary judgment
`order.
`
`Procedural History
`
`II.
`Plaintiffs commenced this action in the Court of Common
`Pleas of Philadelphia County on January 6, 2016. Defendants
`successfully removed the action to the United States District
`Court for the Eastern District of Pennsylvania asserting federal
`question and diversity jurisdiction. Uber moved to dismiss the
`case and compel arbitration. Alternatively, as a separate matter,
`Uber moved to stay this action. The District Court denied both
`motions, concluding that Plaintiffs had complied with the
`arbitration opt-out procedures allowed by the Technology
`Services Agreement. Uber then moved for judgment on the
`pleadings, which the District Court granted in part and denied
`in part. The District Court found that Plaintiffs alleged
`sufficient facts to support that they were “employees” instead
`of “independent contractors,” such that judgment on the
`pleadings was not appropriate.
`
`Plaintiffs filed an Amended Complaint on October 13, 2016,
`and Uber moved to dismiss Plaintiffs’ Amended Complaint in
`its entirety, as well as moved to strike certain portions of the
`Amended Complaint in the alternative. The District Court
`denied the motion to dismiss. The Court found that Plaintiffs’
`allegations that they were logged into the Uber Driver App and
`eligible to receive trip requests from prospective UberBLACK
`
`
`
`10
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`Case: 18-1944 Document: 89 Page: 11 Date Filed: 03/03/2020
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`riders (“Online”) for more than 40 hours was sufficient to state
`a claim at the pleading stage under the FLSA. However, the
`District Court found that the question of whether Plaintiffs’
`time spent online was actually compensable work time within
`the meaning of the FLSA was a dispositive issue, and
`designated the issue of compensability of Plaintiffs’ online
`time for expedited discovery.
`
`After substantial discovery, Uber moved for partial summary
`judgment on the limited issue of whether, assuming that
`Plaintiffs qualify as “employees” and Uber as an “employer”
`under the FLSA for purposes of the motion only, the time they
`spent online on the Uber Driver App is compensable work time
`under the FLSA, and by extension, the PMWA. The Court
`ultimately denied the motion for partial summary judgment,
`determining that the compensability question at issue in the
`motion “may be inextricably intertwined with the threshold
`employee versus independent contractor question.” App. 8.
`
`After discovery was fully complete, Uber filed its motion for
`summary judgment on the dispositive question of whether
`Plaintiffs are employees or independent contractors. The
`District Court granted Uber’s motion for summary judgment
`determining that Plaintiffs do not qualify as “employees” of
`Uber under the FLSA and PMWA. As a matter of law, the
`District Court found that Plaintiffs did not meet their burden to
`show that they are employees of Uber. Plaintiffs timely
`appealed from the summary judgment order.
`III. Applicable Law: Donovan v. DialAmerica Marketing,
`Inc.
`
`The minimum wage and overtime wage provisions at issue all
`require that Plaintiffs prove that they are “employees.” 29
`
`
`
`11
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`Case: 18-1944 Document: 89 Page: 12 Date Filed: 03/03/2020
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`U.S.C. §§ 203, 206–207. Although Plaintiffs’ case includes
`claims under the PMWA, Pennsylvania state courts have
`looked to federal law regarding the FLSA for guidance in
`applying the PMWA. See Dep’t of Labor & Indus. v. Stuber,
`822 A.2d 870, 873 (Pa. Commw. Ct. 2003), aff’d, 859 A.2d
`1253 (Pa. 2004).
` The FLSA defines “employer” as
`“includ[ing] any person acting directly or indirectly in the
`interest of an employer in relation to an employee,” and
`“employee” as “any individual employed by an employer.” 29
`U.S.C. §§ 203(d), (e)(1). Given the circularity of the
`definitions, federal courts, with guidance from the Department
`of Labor, have established standards to determine how to
`define employee and employer.
`
`The Third Circuit utilizes the test outlined in Donovan v.
`DialAmerica Marketing, Inc., 757 F.2d 1376 (3d Cir. 1985), to
`determine employee status under the FLSA. This seminal case
`acknowledges that when Congress promulgated the FLSA, it
`intended it to have the “broadest definition of ‘employee.’”
`See id. at 1382 (citing 81 Cong. Rec. 7657 (remarks of Senator
`Hugo L. Black)). In DialAmerica, we used six factors—and
`indeed adopted the Ninth Circuit’s test—to determine whether
`a worker is an employee under the FLSA:
`
`1) the degree of the alleged employer’s right to
`control the manner in which the work is to be
`performed;
`2)
`the
`alleged
`employee’s
`opportunity for profit or loss depending upon his
`managerial skill; 3) the alleged employee’s
`investment in equipment or materials required
`for his task, or his employment of helpers; 4)
`whether the service rendered required a special
`skill; 5) the degree of permanence of the
`working relationship; [and] 6) whether the
`
`
`
`12
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`service rendered is an integral part of the alleged
`employer’s business.
`
`Id. (quoting Donovan v. Sureway Cleaners, 656 F.2d 1368
`(9th Cir. 1981)).
`
`Our decision in DialAmerica is consistent with the Supreme
`Court’s general guidance in Rutherford Food Corp. v.
`McComb, 331 U.S. 722 (1947). In Rutherford, the Supreme
`Court first determined “employee” status under the FLSA. Id.
`at 728–30. And in DialAmerica, we agreed with Sureway
`Cleaners that “neither the presence nor absence of any
`particular factor is dispositive.” 757 F.2d at 1382. Therefore,
`“courts should examine the circumstances of the whole
`activity,” determining whether, “as a matter of economic
`reality, the individuals are dependent upon the business to
`which they render service.” Id. (internal citations and
`quotation marks omitted). The burden lies with Plaintiffs to
`prove that they are employees. See, e.g., Anderson v. Mt.
`Clemens Pottery Co., 328 U.S. 680, 686–87 (1946) (a plaintiff
`who brings suit under the FLSA “has the burden of proving
`that he performed work for which he was not properly
`compensated”) (internal citations omitted).
`
` The District Court Opinion
`
`IV.
`The District Court granted summary judgment to Uber ruling
`that drivers for UberBLACK are independent contractors
`within the meaning of the FLSA and similar Pennsylvania
`laws. The District Court, in applying the six factors, relied
`heavily on the analysis in DialAmerica and other cases that had
`examined the use of internet or app-based programs for
`acquiring work.
`
`
`
`13
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`Case: 18-1944 Document: 89 Page: 14 Date Filed: 03/03/2020
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`The District Court applied all six factors in DialAmerica, and
`on balance, found that Plaintiffs were independent contractors.
`There were four factors the Court applied that were interpreted
`in favor of independent contractor status. The District Court
`analyzed the employer’s right to control the manner in which
`the work is to be performed and noted that the written
`agreements entered
`into by
`the Plaintiffs and
`their
`transportation companies, in addition to the ability of Plaintiffs
`to hire sub-contractors and work for competing companies,
`point to a lack of control by Uber. Next, the District Court
`analyzed the alleged employees’ opportunity for profit or loss
`and found that this also supports independent contractor status.
`The District Court found that Plaintiffs can work as much or as
`little as they would like and choose not to accept trip requests
`where the opportunity for profit was greater to work for
`themselves or competitors. Because the “profit-loss” factor
`does not require that Plaintiffs be solely in control of their
`profits or losses, Plaintiffs were unsuccessful in convincing the
`District Court that they were employees despite the fact that
`Uber retains the right to determine how much to charge
`passengers and which driver receives which trip request.
`UberBLACK drivers must purchase or lease their own
`expensive vehicle to drive for UberBLACK, demonstrating
`independent status as well. And the “relationship permanence”
`can be as long or non-existent as the driver desires, again
`illustrating the impermanent working relationships often found
`with independent contractors.
`
`The District Court determined that only two factors militated
`in Plaintiffs’ favor. As limousine drivers, the service they
`render does not really require a special skill. Second, the
`limousine driving service rendered to Uber by UberBLACK
`drivers
`is an essential part of Uber’s business as a
`
`
`
`14
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`Jurisdiction and Standard of Review
`
`transportation company. The District Court held that the
`movant demonstrated that there was no genuine dispute as to
`any material fact, and that a majority of the DialAmerica
`factors leaned against employment status. The District Court
`granted Uber’s motion for summary judgment and determined
`that Plaintiffs were independent contractors.
`V.
`The District Court had subject matter jurisdiction over the
`Plaintiffs’ FLSA claims under 28 U.S.C. § 1331. The District
`Court had and executed supplemental jurisdiction over the
`Plaintiffs’ state law claims under 28 U.S.C. § 1367. This Court
`has appellate jurisdiction under 28 U.S.C. § 1291 because the
`District Court’s order granting summary judgment is a final
`order.
`
`This Court exercises plenary review over a District Court’s
`grant of summary judgment. Aruajo v. N.J. Transit Rail
`Operations, Inc., 708 F.3d 152, 156 (3d Cir. 2013). This Court
`can affirm a grant of summary judgment only if “there is no
`genuine dispute as to any material fact and the movant is
`entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
`A factual dispute is “genuine” if the “evidence is such that a
`reasonable jury could return a verdict for the nonmoving
`party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
`(1986). A factual dispute is “material” if it “might affect the
`outcome of the suit under the governing law.” Id. The Court
`must view the facts and evidence presented on the motion in
`the light most favorable to the nonmoving party. Id. at 255. In
`attempting to defeat summary judgment, “[s]peculation and
`conclusory allegations do not satisfy [the nonmoving party’s]
`duty.” Ridgewood Bd. of Educ. v. N.E. ex rel. M.E., 172 F.3d
`238, 252 (3d Cir. 1999).
`
`
`
`15
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`VI. Analysis
`Genuine Disputes of Material Fact Exist
`A.
`
`For summary judgment to have been appropriate, there must
`have been no genuine disputes as to any material facts on the
`record, entitling Uber to judgment as a matter of law. See Fed.
`R. Civ. P. 56(a). As such, if there is a genuine dispute of
`material fact, the question of which DialAmerica factors favor
`employee status is a question of fact that should go to a fact-
`finder. Here, the ultimate question of law is whether Plaintiffs
`are employees or independent contractors, which is for a judge
`to decide. But, if a court finds that there are any issues of fact
`that remain in dispute, it must resolve those disputes prior to
`granting summary judgment. See DialAmerica, 757 F.2d at
`1381. In DialAmerica, the parties stipulated to some facts and
`reserved the right to present testimony on any remaining
`disputed issues. Then, the district court held an evidentiary
`hearing on the remaining disputed issues of fact:
`
`the extent to which home researchers and
`(1)
`distributors were dependent on DialAmerica;
`the extent
`to which
`they had an
`(2)
`opportunity for profit or loss;
`they exercised
`the extent
`to which
`(3)
`initiative, business judgment, or foresight in their
`activities;
`the extent of any financial investment in
`(4)
`conjunction with their work for DialAmerica;
`and
`the extent to which the services provided
`(5)
`by the home researchers and distributors were an
`integral part of DialAmerica’s business.
`
`
`
`16
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`Id.
`
`These factual issues refer directly to the factors which
`determine whether someone is an employee or independent
`contractor. The district court resolved these disputes and
`granted DialAmerica’s motion for summary judgment. We
`reviewed the district court’s decision in DialAmerica and
`determined that summary judgment was a mischaracterization,
`but the proper outcome, as all the factual disputes were
`resolved prior to adjudication on the merits.7 Id. at 1381, 1388.
`
`DialAmerica teaches that where there are questions of fact that
`need resolution, these questions must go to a fact-finder.8 This
`
`7 In DialAmerica, Judge Becker noted that, because the district
`court held a two-day hearing to find relevant facts, this Court
`would “simply treat the [district] court’s letter opinions as the
`findings of facts and conclusions of law required by Fed. R.
`Civ. P. 52, and its orders as judgments entered after trial
`pursuant to Fed. R. Civ. P. 58.” 757 F.2d at 1381–82. Here,
`that avenue is not available to us, as no evidentiary hearing was
`held to find relevant facts to determine if summary judgment
`was appropriate.
`
` 8
`
` An important distinction exists between a factual dispute, and
`a factual dispute that is material. Summary judgment is
`correctly granted in many situations where the parties
`genuinely dispute facts but where the dispute is not material to
`the adjudication of the case. See, e.g., Verma v. 3001 Castor,
`Inc., 937 F.3d 221, 229 (3d Cir. 2019) (granting summary
`judgment on the question of employee versus independent
`contractor status, but noting that “[i]n some cases, one or more
`
`
`
`17
`
`
`
`Case: 18-1944 Document: 89 Page: 18 Date Filed: 03/03/2020
`
`case presents such genuine disputes of material facts. Uber
`submitted a Statement of Undisputed Material Facts to which
`Plaintiffs responded with almost a hundred pages of disputes.
`For example, disputed facts include whether Plaintiffs are
`operating within Uber’s system and under Uber’s rules, and
`whether Plaintiffs or their corporations contracted directly with
`Uber. Although the District Court states that its decision
`derived from undisputed facts, the disputes presented by the
`parties go to the core of the DialAmerica factors and present a
`genuine dispute of material facts. Accordingly, we will
`remand to the District Court as summary judgment was
`inappropriate.
`
`B.
`
`The “Right to Control” Factor
`
`To illustrate that there are genuine disputes remaining, we look
`to the first DialAmerica factor: “the degree of the alleged
`employer’s right to control the manner in which the work is to
`be performed.” DialAmerica, 757 F.2d at 1382 (citation
`omitted). While not dispositive, this factor is highly relevant
`to the FLSA analysis. The District Court in this case held that
`the first factor supported a finding of independent contractor
`status. Actual control of the manner of work is not essential;
`
`
`genuine issues of fact concerning the relevant economic
`relations may preclude a trial court from drawing a conclusion
`as a matter of law on the . . . issue[,]” and addressing that it
`would be appropriate for those cases to go to trial so that the
`genuine disputes of material fact be resolved by the jury).
`Here, genuine disputes of material fact exist because certain
`facts bear on how the DialAmerica factors will be resolved.
`
`
`
`18
`
`
`
`Case: 18-1944 Document: 89 Page: 19 Date Filed: 03/03/2020
`
`rather, it is the right to control which is determinative. Drexel
`v. Union Prescription Ctrs., 582 F.2d 781, 785 (3d Cir. 1978).
`
`The parties contest whether Uber exercises control over
`drivers. While Uber categorizes drivers as using the Uber App
`to “connect with riders using the UberBLACK product,” App.
`486, which may imply that drivers independently contract with
`riders through the platform, Plaintiffs contend that this is not
`so. Uber also contends that drivers can drive for other services
`while driving for Uber, however Plaintiffs contend that while
`“online” for Uber, they cannot also accept rides through other
`platforms. Plaintiffs reference Uber’s Driver Deactivation
`Policy that establishes that “soliciting payment of fares outside
`the Uber system leads to deactivation” and “activities
`conducted outside of Uber’s system—like anonymous
`pickups—are prohibited.” App. 487.
`
`Uber also asserts that it does not control the “schedule start or
`stop times” for drivers or “require them to work for a set
`number of hours.” App. 536. Again, Plaintiffs dispute this,
`stating that the Uber Owner/Operator Agreement states, “[the]
`frequency with which [Uber] offers Requests to [the driver]
`under this Agreement shall be in the sole discretion of the
`Company” and “the number of trip requests available to
`Plaintiffs is largely driven by Uber.” Id.
`
`The above factual disputes all go to whether Uber retains the
`right to control the Plaintiffs’ work. The District Court in its
`analysis acknowledged what the Plaintiffs asserted, but
`assigned little value to their assertions in light of Uber’s
`contractual agreement with Plaintiffs, Uber’s assertion that
`Plaintiffs are permitted to hire sub-contractors, and that
`“plaintiffs and their helpers are permitted to work for
`competing companies.” App. 31. However, whether Plaintiffs
`
`
`
`19
`
`
`
`Case: 18-1944 Document: 89 Page: 20 Date Filed: 03/03/2020
`
`are considered to “work” for a competing company while being
`“online” on the Uber Driver App is also a disputed factual
`issue.
` This
`illustrates why summary
`judgment was
`inappropriate at this stage.
`
`Further, these and other disputed facts regarding control
`demonstrate why this case was not ripe for summary judgment.
`For example, Plaintiffs assert that “Uber does punish drivers
`for cancelling
`trips,” App. 539, and “Uber coerces
`UberBLACK drivers to go online and accept trips by making
`automatic weekly deductions against their account.” App. 538.
`Plaintiffs additionally assert that they derived all of their
`income for their respective businesses from Uber in certain
`years, which Uber disputes.
`
`Although both parties argue that there are no genuine disputes
`regarding control, the facts adduced show otherwise. While
`Uber determines what drivers are paid and directs drivers
`where to drop off passengers, it lacks the right to control when
`drivers must drive. UberBLACK drivers exercise a high level
`of control, as they can drive as little or as much as they desire,
`without losing their ability to drive for UberBLACK.
`However, Uber deactivates drivers who fall short of the 4.7-
`star UberBLACK driver rating and limits the number of
`consecutive hours that a driver may work.
`
`Opportunity
`C.
`Managerial Skill
`
`for Profit or Loss Depending on
`
`As with the right to control, the District Court held that there
`was no genuine dispute as to another factor—the opportunity
`for profit or loss depending on managerial skill. Again, we
`disagree with the District Court’s conclusion. The District
`Court, in this case, ruled that this factor strongly favored
`
`
`
`20
`
`
`
`Case: 18-1944 Document: 89 Page: 21 Date Filed: 03/03/2020
`
`independent contractor status because drivers could be
`strategic in determining when, where, and how to utilize the
`Driver App to obtain more lucrative trip requests and to
`generate more profits. Plaintiffs could also work for
`competitors and transport private clients.9
`
`However, other material facts reveal that there was and still is
`a genuine dispute
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