Diva Limousine, Ltd. v. Uber Techs., Inc.
| Decision Date | 09 January 2019 |
| Docket Number | Case No. 18-cv-05546-EMC |
| Parties | DIVA LIMOUSINE, LTD., Plaintiff, v. UBER TECHNOLOGIES, INC., et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
Plaintiff Diva Limousine ("Diva"), a licensed provider of livery services in California, brings this putative class action on behalf of providers of pre-arranged ground transportation services against Uber Technologies and related business entities ("Uber"). Diva alleges that Uber secures cost savings by misclassifying its drivers as independent contractors instead of employees and in doing so takes market share from competitors like Diva that operate their businesses in compliance with the law. Diva asserts two causes of action: a claim under the California Unfair Competition Law ("UCL"), and a claim under the California Unfair Practices Act ("UPA").
Diva filed its class action complaint on September 10, 2018. See Docket No. 1. It then filed a motion for partial summary judgment on a "single issue": whether Uber drivers are properly classified as independent contractors or employees under the California Supreme Court's recent ruling in Dynamex Operations W. v. Superior Court, 4 Cal. 5th 903 (2018). Docket No. 33. On October 24, 2018, Uber filed the instant motion to disqualify Diva's counsel Warren Postman and his firm, Keller Lenkner LLC ("KL"). See Docket No. 40 ("Mot."). Uber contends that Mr. Postman, during his previous tenure at the U.S. Chamber of Commerce Litigation Center ("the Chamber"), had worked with Uber on litigation implicating the driver classification question under a common interest agreement, pursuant to which he became privy to Uber's privileged and confidential information.
For the reasons discussed below, Uber's motion to disqualify is GRANTED.
A handful of basic facts are not in dispute. Mr. Postman joined the Chamber as Senior Counsel for Litigation in 2014 and worked there in various positions until he joined KL in June 2018. See Mot. at 1; Opp. at 5, 8. While at the Chamber, Mr. Postman worked with Uber in several areas of litigation, two of which Uber highlights. First, in March 2016, the Chamber filed a lawsuit challenging a Seattle ordinance that authorized independent contractor drivers to collectively bargain with "driver coordinators" like Uber (the "Seattle litigation"). See Mot. at 3-4; Opp. at 6. In April 2017, Uber joined the litigation as a co-plaintiff with the Chamber. See Mot. at 6; Opp. at 6. Second, during Mr. Postman's time at the Chamber, the Chamber filed amicus briefs in several appeals in driver classification suits against Uber. See Mot. at 8; Opp. at 8. Among those appeals is O'Connor et al. v. Uber Technologies, Inc., No. 13-3826 (N.D. Cal. filed August 16, 2013), which originated in this Court and to which the instant case has been related. See Docket No. 23. The issue on appeal was whether the driver classification suits should be sent to arbitration, and the Chambers' amicus briefs supported Uber's position that the arbitration agreements in Uber's contracts with its drivers were enforceable. See Mot. at 8; Opp. at 8.
From here, the parties' characterization of the facts diverges.
Uber's account: In the Seattle litigation, Uber exchanged confidential communications with the Chamber about "[l]egal strategy and litigation tactics," "[p]otential legal claims and defenses," and "[t]hreshold legal issues such as ripeness and standing." Mot. at 4. Uber recognizes that it did not have a formal, written common interest agreement with the Chamber, but asserts that "Uber and the Chamber agree that (i) they entered into a common interest agreement by December 2015 for the purpose of pursuing a joint legal strategy as to the Seattle Ordinance; (ii) they shared privileged information and attorney work product under the agreement; and (iii) Mr. Postman was intimately involved at every step along the way." Id. at 5. In particular, "Uberand the Chamber frequently exchanged confidential and privileged communications on the driver classification issue." Id. at 7. And as part of the Chamber's work on the appellate amicus briefs, Mr. Postman "'engaged with in-house counsel for Uber to discuss overall strategy,' and exchanged draft work product with Uber's outside counsel pursuant to their common interest in the appeals." Mot. at 8 . Uber states that Mr. Postman "regularly received or sent communications marked 'ATTORNEY CLIENT PRIVILEGED,' 'SUBJECT TO JOINT DEFENSE PRIVILEGE' and/or 'COMMON INTEREST PRIVILEGE' related to the Seattle litigation and multiple amicus briefs." Mot. at 2-3.
Additionally, Mr. Postman notified Uber and other members of the Chamber's Labor and Employment Litigation Advisory Committee about a petition for rehearing of Dynamex before the California Supreme Court, "provided his legal assessment of that petition," and "solicited 'additional thoughts' from members, including Uber, about the Chamber's legal strategy" before submitting an amici curiae letter supporting the petition for rehearing. Mot. at 9. The letter urged the California Supreme Court not to give retroactive effect to the Dynamex decision, which announced a new "ABC test" for classifying workers as employees or independent contractors. See Amici Curiae Letter in Support of Petition for Rehearing, Dynamex Operations West, Inc. v. Superior Court of Los Angeles (Cal. No. S222732), https://www.chamberlitigation.com/cases/dynamex-operations-west-inc-v-superior-court-los-angeles-0.
Diva's account: In contrast, Diva asserts that "Mr. Postman has no confidential information from or about Uber that is related to this case." Opp. at 2. According to Diva, the Chamber only raised facial challenges to the Seattle ordinance and "[t]he position that Uber drivers were misclassified as independent contractors was never asserted by any party in the litigation." Id. at 6. Diva acknowledges that communications regarding the litigation were sometimes marked privileged, but points out that there was no written common interest agreement and that "[t]hroughout the litigation, the Chamber shared . . . case strategy, draft pleadings, and status updates[] with other Chamber members and donors that were not parties." Id. at 7. Divaclaims "Uber was aware of some of those disclosures and did not object to them." Id. As for the amicus briefs, Diva contends the Chamber was only involved on appeal and its briefs "dealt solely with whether drivers' state-law arguments for avoiding arbitration were preempted by the Federal Arbitration Act." Id. at 8. "The Chamber never filed a brief addressing misclassification in any case involving Uber." Id. Finally, Diva states that Mr. Postman's communication analyzing the Dynamex decision and indicating the Chamber's intent to supporting rehearing was distributed to hundreds of the Chamber's members. Id. at 6.
Prior to Mr. Postman joining KL, he and KL separately consulted legal ethics experts about the conflict that may potentially arise from Mr. Postman litigating against Uber on the driver classification issue. Id. at 8-9. "Both experts independently advised that Mr. Postman's work at the [Chamber] did not establish an attorney-client relationship with Uber" and "did not appear" to create a conflict. Id.
Diva believes that Uber is seeking to disqualify Mr. Postman and KL "for strategic gain rather than out of a genuine concern about unfair advantage," "[p]erhaps" because Diva recently filed a motion for partial summary judgment in this case based on Dynamex, or because KL over the past few months has served Uber with over 10,000 demands for arbitration on behalf of individual Uber drivers in Razak v. Uber Technologies, Inc., No. 18-1944 (3d Cir. filed Apr. 27, 2018), a Third Circuit appeal about the driver classification issue. Opp. at 3. Uber has not moved to disqualify KL in Razak. See id.
After the hearing on this motion, Diva sought to alert the Court to "new evidence . . . material to Uber's motion to disqualify" through an administrative motion under Local Rule 7-11. See Docket No. 85. This new evidence takes the form of declarations submitted by Lyft in support of a lawsuit Lyft recently filed against KL and Mr. Postman. The lawsuit alleges tort claims based on KL's representation of Lyft drivers. See Lyft v. Postman et al., No. 18-cv-6978-EMC (N.D. Cal. filed Nov. 16, 2018), Docket Nos. 4-2, 4-3, 4-4. Diva contends that the declarations show the Chamber shared "weekly updates" about the Seattle litigation with Lyft, "Uber's fiercest competitor," and therefore "undermine[] Uber's claim of a confidential, common-interestarrangement with the Chamber." Docket No. 85 at 1-2.
An administrative motion is intended to address "miscellaneous administrative matters," N.D. Cal. Civ. L.R. 7-11, but Diva's motion makes substantive legal arguments regarding the Chamber's duty of confidentiality to Uber and attorney disqualification, see Docket No. 85 at 2-5. Accordingly, Diva's administrative motion is DENIED. In any event, the declarations and legal arguments discussed in the motion do not change the Court's analysis, as explained in Part II.B., infra.
Lawyers appearing before this Court must "comply with the standards of professional conduct required of the members of the State Bar of California." N.D. Cal. Civ. L.R. 11-4(a)(1). Thus, "we apply state law in determining matters of disqualification." In re Cty. of Los Angeles, 223 F.3d 990, 995 (9th Cir. 2000).
"The right to disqualify counsel is a discretionary exercise of the trial court's inherent powers." Certain Underwriters at Lloyd's London v. Argonaut Ins. Co., 264 F. Supp. 2d 914, 918 (N.D. Cal. 2003). Courts subject disqualification motions to "strict judicial...
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