Federal Trade Commission headquarters in Washington. Credit: Diego M. Radzinschi / ALM

The Federal Trade Commission is siding with Uber Technologies Inc. in a fight to block a Seattle law that would allow ride-hailing drivers to collectively bargain.

In an amicus brief, the FTC and the U.S. Justice Department told the U.S. Court of Appeals for the Ninth Circuit that a federal trial judge's ruling that upheld the law threatened to “open the antitrust exemption door for nearly any type of regulation.”

Such an outcome “would effectively put a large swath of plainly anti-competitive conduct out of reach of the antitrust laws, seriously undermining the public interest in fostering competition,” the government lawyers wrote in their jointly filed brief.

The government's lawyers said that they are only challenging the district court's interpretation of the so-called “state action doctrine” and not taking a position on whether ride-hailing drivers are employees or independent contractors under federal labor law. That issue is playing out in cases that confront worker protections in the gig economy.

The FTC's brief made allies of past adversaries. The agency has hit Uber with several complaints in recent years. In January the San Francisco-based company paid $20 million to settle claims that it misled drivers about how much money they could make and car-financing details. In the Seattle case, though, the agency is on Uber's side—for the first time. FTC spokeswoman Betsy Lordan said no one at the agency was aware of filing an amicus brief in any other Uber-related litigation.

“Competition is the lynchpin of the U.S. economy. Although states can displace competition with regulation, they must clearly articulate their intent to do so,” acting FTC chairwoman Maureen Ohlhausen said in a prepared statement. “Because Seattle's action exceeded its authority from the state, the state action defense should be rejected.”

The FTC declined to comment about the amicus brief, which was signed by veterans from the agency and by new leadership at the Justice Department's antitrust division, led by Makan Delrahim. He joined the Justice Department this year from Brownstein Hyatt Farber Schreck's Los Angeles office.

A spokeswoman for the Seattle city attorney's office said the city would address the government's arguments “in the proper course of this appeal.”

The U.S. Chamber of Commerce and Uber's subsidiary, Rasier, sued to block Seattle's driver-unionizing law shortly after its enactment in 2015, arguing that the ordinance effectively authorizes price-fixing. The district court dismissed the claims, finding the city had the authority under state law to allow drivers to collectively bargain. The ruling remains on hold until the Ninth Circuit rules on the subsequent appeal filed by the chamber and Uber.

Attorneys for the FTC argue that the state of Washington never expressly gave Seattle the authority to require Uber and other ride-for-hire apps to bargain with organized drivers.

The city of Seattle is represented by a team from Altshuler Berzon and members of the city attorney's office.

The case has attracted a number of other friend-of-the-court briefs, including one, submitted by attorneys from Morgan, Lewis & Bockius, from business groups that oppose the Seattle law.

 

The FTC and DOJ amicus brief is posted below.