Healey v. Uber Techs., Inc.
| Decision Date | 25 March 2021 |
| Docket Number | Docket: 2084CV01519-BLS1 |
| Parties | MAURA HEALEY, IN HER OFFICIAL CAPACITY AS ATTORNEY GENERAL FOR THE COMMONWEALTH OF MASSACHUSETTS v. UBER TECHNOLOGIES, INC. AND LYFT, INC. |
| Court | Massachusetts Superior Court |
Dates: March 25, 2021
Present: Kenneth W. Salinger Justice of the Superior Court
County: SUFFOLK, ss.
Uber and Lyft pay people to use their own vehicles to transport passengers. The Attorney General claims that both companies misclassify their drivers as independent contractors, rather than as employees, and do not pay or provide all wages and related benefits required by State law. She seeks a judgment declaring that Uber and Lyft drivers are employees, and an injunction requiring the companies to treat their Massachusetts drivers as employees, for the purpose of applying wage-related statutes.
Uber and Lyft have moved to dismiss this action. They argue that the Attorney General may not seek a declaratory judgment because the complaint does not adequately allege that any drivers were denied benefits to which they would be entitled if they were employees, or that there is an actual controversy about the alleged misclassification. Uber, but not Lyft, also contends that the Attorney General lacks standing to seek declaratory relief.
The Court will deny both motions to dismiss.
There is no reason to dismiss the claim for declaratory relief. The Attorney General has identified an actual controversy that can be resolved by declaring whether Uber and Lyft have a duty to classify their Massachusetts drivers as employees. She has standing to seek such relief. And the allegations in the complaint plausibly suggest that Uber and Lyft misclassify their drivers and, as a result, deprive some drivers of required minimum wages, overtime, and sick leave. Nothing more is needed to state a claim for declaratory relief.
Though the request for injunctive relief is set out in a separate count, it is not actually a separate cause of action. The Court need not decide at this stage whether the Attorney General may obtain such additional relief if she proves the facts alleged in the complaint.
1. Claim for Declaratory Judgment. The complaint states a viable claim for declaratory relief because there is an actual controversy between these parties as to whether Uber and Lyft must treat their drivers as employees for the purposes of Massachusetts wage and hour laws, the Attorney General has standing to enforce those laws, all necessary parties have been joined,1 and the facts alleged plausibly suggest that the Attorney General is entitled to the declaratory judgment she seeks. See generally Buffalo-Water 1, LLC, v. Fidelity Real Estate Co., LLC, 481 Mass. 13, 18–20 (2018).
The requirements that there be an “actual controversy,” see G.L. c. 231A, § 1, and that a party seeking declaratory relief must have standing are both aspects of subject matter jurisdiction, without which a court has no power to issue a declaratory judgment. See, e.g., Alliance, AFSCME/SEUI, AFL-CIO v. Common- wealth, 425 Mass. 534, 536 (1997) (); City of Revere v. Massachusetts Gaming Commission, 476 Mass. 591, 607 (2017) ().
The further requirement that “the facts alleged by the plaintiff in the complaint, if true, state a claim for declaratory relief that can survive a defendant's motion to dismiss” comes from Mass. R. Civ. P. Rule 12(b)(6), as applied to a claim seeking declaratory judgment. See Buffalo-Water, 481 Mass. at 18. To survive a motion to dismiss under Rule 12(b)(6), a complaint must allege facts that, if true, would “plausibly suggest[] … an entitlement to relief.” Lopez v. Commonwealth, 463 Mass. 696, 701 (2012), quoting Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008), and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007). In applying this standard, the Court must assume the allegations in the complaint are true and “draw all reasonable inferences in plaintiff’s favor.” Buffalo-Water, 481 Mass. at 18.
The declaratory judgment statute must be “liberally construed and administered” to accomplish the goal of removing uncertainty about legal rights and duties. G.L. c. 231A, § 9; accord Libertarian Ass’n of Massachusetts v. Secretary of the Commonwealth, 462 Mass. 538, 547 (2012). Courts must keep this in mind in deciding whether a complaint states a viable claim for declaratory relief. See Mitchell v. Secretary of Admin., 413 Mass. 330, 333 n.7 (1992); Sun Oil Co. v. Director of Division on Necessaries of Life, 340 Mass. 235, 239 (1960).
1.1. Actual Controversy. The complaint adequately describes an actual controversy. It alleges that Uber and Lyft misclassify their drivers as independent contractors rather than as employees, and that as a result many drivers have been not received minimum wage, overtime, and earned sick time payments that are required under Massachusetts law. In their memoranda, Uber and Lyft expressly deny that their drivers should be treated as employees under the independent contractor statute (G.L. c. 149, § 148B), and thus implicitly contend that their drivers are not entitled to minimum wage, overtime, or earned sick leave payments that under Massachusetts law need only be paid to employees.2
The Attorney General seeks to resolve a real dispute by seeking a declaration as to whether Uber and Lyft have a statutory duty to treat their drivers as employees. She did not file this action to seek an advisory opinion about an abstract question of law with no real-world consequences, as Uber and Lyft suggest. Instead, the Attorney General alleges that Uber and Lyft drivers have lost out on receiving very real benefits that Massachusetts law guarantees for all employees, but not for independent contractors. If Defendants’ obligations under the independent contractor statute were not declared in this action, then the Attorney General would almost certainly move forward with an enforcement action seeking penalties and perhaps compensation on behalf of individual drivers.
This lawsuit therefore involves an “actual controversy” within the meaning of the declaratory judgment statute. See Libertarian Ass’n, 462 Mass. at 546–547. A dispute like this, about whether a party owes duties under a statute, may properly be resolved by a declaratory judgment. See Service Employees Intern. Union, Local 509 v. Department of Mental Health, 469 Mass. 323, 334–336 (2014); G.L. c. 231A, § 2. And the allegations that Uber and Lyft will continue to violate the independent contractor statute and certain other wage and hour laws, if they keep doing business as they have been, show that an actual controversy exists between the Attorney General and the defendants. Cf. St. George Orthodox Cathedral of Western Massachusetts, Inc. v. Fire Dept. of Springfield, 462 Mass. 120, 124 (2012) ().
If the complaint left any doubt about the existence of an actual controversy, which it does not, Defendants’ own public statements would make it clear. The Court takes judicial notice of disclosures by Uber and Lyft, in Form 10-Ks that they recently filed with the Securities and Exchange Commission, of what would happen if the Attorney General were to prevail in this case.3 Just weeks ago, the defendants told current and potential investors that any declaration in this case that their Massachusetts drivers must be treated as employees either “would” (according to Uber) or “could” (according to Lyft) cause them to incur significant new costs to comply with minimum wage, overtime, and other
The Court concludes it is appropriate to consider Defendants’ more recent SEC disclosures as well. When deciding a motion to dismiss, a court may take judicial notice of matters of public record, Schaer v. Brandeis Univ., 432 Mass. 474, 477 (2000), including SEC filings that are publicly accessible. See, e.g., Fire & Police Pension Ass'n of Colorado v. Abiomed, Inc., 778 F.3d 228, 232 n.2 (1st Cir. 2015); Rothman v. Gregor, 220 F.3d 81, 88 (2d Cir. 2000); Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014); Yates v. Municipal Mortg. & Equity, LLC, 744 F.3d 874, 881 (4th Cir. 2014); Hometown 2006-1 1925 Valley View, L.L.C. v. Prime Income Asset Mgmt., L.L.C., 847 F.3d 302, 307 (5th Cir. 2017); Northstar Financial Advisors Inc. v. Schwab Investments, 779 F.3d 1036, 1043 (9th Cir. 2015); Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1276-1277 (11th Cir. 1999); see also G.L. c. 233, § 76A ().
If Uber or Lyft were to object to the Court taking judicial notice of their recent 10-K filings, the Court would allow the Attorney General to amend her complaint to quote and attach relevant excerpts from these documents. employee wage and benefit statutes.4,5 Lyft has confirmed that this controversy is not merely hypothetical, stating in its memorandum of law that a finding that its Massachusetts drivers are employees “would require a root-and-branch reinvention of Lyft’s business.” Uber similarly states that such a declaration would “fundamentally reshape” the relationship between Uber and its drivers.
Defendants’ arguments that the complaint does not describe an actual controversy cannot be squared with their own admissions about the likely impact if the Attorney General were to prevail in this case and obtain the declaration she seeks.
1.2. Standing. The Attorney General has standing to seek declaratory relief for allegedly misclassifying drivers as independent contractors. Uber’s argument to the contrary is without merit.
The Attorney General has broad rights to seek relief for a...
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