Freedom Foundation

The Ninth Circuit rules against Big Labor (yes, you read that right)

If anyone knows anything about monopolies, it’s modern-day unions (Big Labor). After all, unions themselves constitute monopolies through exclusive representation and compulsory collective bargaining.

Unions exploit these monopolies to the tune of millions of dollars in dues which, in turn, are spent to push leftist political agendas.

So it should come as a shock to no one that Big Labor in Seattle lobbied Seattle’s city council to allow Uber and Lyft drivers to unionize and collectively bargain with the for-hire car services even though Uber and Lyft drivers are independent contractors, rather than employees of the companies.

Such an ordinance would effectively force independent actors to collude to set prices – just as all monopolies do. Unsurprisingly, Seattle’s uber-liberal city council unanimously passed the ordinance, which immediately became the subject of multiple lawsuits seeking to invalidate it.

The Freedom Foundation and the National Right to Work Legal Defense Foundation filed a lawsuit on behalf of several Uber drivers alleging the National Labor Relations Act (NLRA) preempts the ordinance.

The United States Chamber of Commerce also brought suit alleging the ordinance is invalid because it violates the Sherman Antitrust Act, which prohibits independent actors from forming a monopoly to control prices.

Reversing a decision from the U.S. District Court for the Western District of Washington, a three-judge panel of the 9th Circuit Court of Appeals unanimously ruled last Friday that the ordinance almost certainly violates the federal Sherman Antitrust Act, delivering a victory to both consumers and rideshare drivers who value their independence and did not want to be corralled by a city ordinance which may have compelled union representation on such drivers regardless of their desire to remain independent.

A U.S. District Court judge had previously ruled in Big Labor’s favor in both cases, applying in the Chamber of Commerce’s case the exception in the Sherman Antitrust Act that allows states and cities to set regulations on these matters if the state has “clearly articulated and affirmatively expressed” an intention to allow such economic regulation.

The 9th Circuit panel disagreed, holding that:

“The state statutes relied upon by the City Council in enacting the ordinance do not ‘plainly show’ that the Washington Legislature ‘contemplated’ allowing for-hire drivers to price-fix their compensation…”

The 9th Circuit has yet to rule on the case brought by Freedom Foundation and the National Right to Work Legal Defense Foundation.

The Chamber’s case now returns to the District Court to determine if the city ordinance actually promotes competition rather than curbs it when the broader context is considered, which is the other exception in the Sherman Antitrust Act.

The city will most likely be unable to make such a showing.

Even the 9th Circuit knows the Seattle city council’s ordinance breaks federal law. Beyond that, of course, the city ordinance is terrible economic policy.

We know compulsory collective bargaining in the public sector leads to ballooning government budgets, higher taxes, lower quality public services, and stagnant economies. The private sector is similar because compulsory collective bargaining results in more expensive yet lower quality products for consumers.

Imagine for a moment you want to build a shed in your backyard or remodel a room in your house. Unless you do it yourself, you would hire a contractor to do it for you. Now imagine if the government forced every contractor in the area to collude to determine a uniform price and quality for services. Would that be good for you or the contractors?

Obviously not you. Costs would increase and no single contractor would be incentivized to separate him or herself from the pack by providing a lower price and/or higher quality services. In fact, because the government enforces this monopoly, offering lower prices, higher quality services, or technological innovation would be illegal.

The only folks a monopoly is good for are those who can’t or won’t compete to provide quality services at reasonable prices, i.e., those who would likely go out of business without the government-backed monopoly.

This is exactly how compulsory collective bargaining works in both the public and private sectors. Prices increase, quality decreases, efficiency drops, and innovation stalls—whether the context is the local state Medicaid office or a car company in Detroit. This decreases the buying power of people’s money and lowers their standard of living.

Even more than the “corporate interests” they decry, unions hate competition. They don’t see the value competition brings to a workplace or market.

This should surprise no one because the primary tools unions use to perpetuate their power are anti-competitive. These tools include: 1) exclusive representation, which makes it illegal for a single worker or another union to try to acquire better working conditions than the current union achieved; 2) compulsory collective bargaining, which makes it illegal for both public and private sector employers to refuse to negotiate with a union; and, 3) nonexistent union recertification requirements and difficult decertification procedures, which ensure that a union need not be responsive to the desires of the workers they forcibly represent.

Coercion is the name of the game for unions; as the saying goes, their ideas are so good they must be forced on people.

For now at least, the 9th Circuit has prevented the possibility that every for-hire driver in Seattle could be forced into a union. This is a victory for both independent-minded drivers and consumers who want high quality services at reasonable prices.