Liu v. Uber Techs. Inc.

551 F.Supp.3d 988

Thomas LIU, Plaintiff,

v.UBER TECHNOLOGIES INC., Defendant.

Case No. 20-cv-07499-VC

United States District Court, N.D. California.

Signed July 30, 2021

Shannon Liss-Riordan, Anne R. Kramer, Lichten & Liss-Riordan, P.C., Boston, MA, for Plaintiff.

Sophia Behnia, Blair Copple Senesi, Littler Mendelson, P.C., San Francisco, CA, Andrew Michael Spurchise, Littler Mendelson, P.C., New York, NY, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS FIRST AMENDED COMPLAINT

Re: Dkt. No. 36

VINCE CHHABRIA, United States District Judge

Thomas Liu brings this suit alleging violations of federal and state anti-discrimination laws against the ride-sharing company Uber. According to the complaint, Uber uses a "star rating system" to gather feedback from riders, allowing them to rate each driver on a scale of one to five stars after a ride. If a driver's average rating falls below a certain level, Uber terminates the driver. Liu, an Asian American man, was terminated when his rating dropped below the threshold. He now alleges that Uber's practice of terminating drivers based on customer ratings discriminates against minority drivers on the basis of race because the ratings reflect the racial biases of Uber riders. Although Liu's overall theory is certainly plausible, his first amended complaint does not adequately allege facts to support each element of a disparate impact claim. Nor does Liu adequately allege that Uber intentionally discriminated against him on the basis of race. The disparate impact claims are dismissed with leave to amend, and the disparate treatment claims are dismissed with prejudice. Any amended complaint is due within 28 days of the date of this order.

Title VII Disparate Impact

To state a claim for disparate impact discrimination under Title VII, a plaintiff must allege (1) a significant disparity with respect to employment for the protected group, (2) the existence of a specific employment practice or set of practices, and (3) a causal relationship between the identified practice and the disparity. Freyd v. University of Oregon , 990 F.3d 1211, 1224 (9th Cir. 2021). At the pleading stage, the complaint need only allege facts giving rise to plausible inferences that the disparity exists and is caused by the identified practice. Moussouris v. Microsoft Corporation , 2016 WL 6037978, at *3 (W.D. Wash. Oct. 14, 2016) ; see also Chaidez v. Ford Motor Company , 937 F.3d 998, 1007 (7th Cir. 2019). Liu's complaint satisfies the second and third elements—identifying a business practice and showing that it could plausibly cause a disparate impact. But the complaint essentially skips over the first element—plausibly alleging that a disparity actually exists, in the sense that minority Uber drivers are disproportionately terminated for low ratings compared to white drivers.

In its motion to dismiss, Uber overstates Liu's burden with respect to the first element. It's true, as Uber notes, that plaintiffs in disparate impact cases often satisfy the first element through a precise counting exercise. For example, a plaintiff might show that the original pool of candidates for promotion included a significantly higher percentage of racial minorities than the group of candidates who passed the test. Connecticut v. Teal , 457 U.S. 440, 443, 102 S.Ct. 2525, 73 L.Ed.2d 130 (1982). But at the pleading stage, allegations of a disparity need not be so precise. For example, a plaintiff can survive a motion to dismiss by pointing to visually obvious inconsistencies between the racial composition of the defendant's employees and that of the surrounding population. See, e.g., Chaidez , 937 F.3d at 1002 n. 1, 1007. A plaintiff may also draw on their own personal observations and experience, such as by alleging that they and their female colleagues received lower performance evaluations despite performing as well as or better than their male peers. Moussouris , 2016 WL 6037978 at *6.

But Liu has offered no allegations about what is actually happening (or appears to be happening) with driver terminations at Uber. He has merely described his own experience, and even that he has done sparingly. To be clear, Title VII does not require Liu to follow any particular formula in identifying a racial disparity in terminations. The endpoint that matters at the pleading stage is the plausible inference of a disparity, not the manner in which the plaintiff alleges it. It's also worth acknowledging that the nature of working for Uber creates particular challenges for a plaintiff seeking to plead a disparate impact claim. Unlike a worker in an office or on a factory floor, Liu cannot just look around himself to see that all of his minority colleagues have been fired or discover over happy hour drinks that his white colleagues all have higher ratings than he does. And a company cannot be immune from liability for discriminatory practices merely because it uses a business model that leverages dispersed and isolated workers. But the answer is not—as Liu seemingly contends—to plow ahead to discovery before successfully pleading the first element of a disparate impact claim. The answer is that Liu must make a more sophisticated effort at the front end to develop a plausible factual basis in support of his assertion that terminations at Uber occur on a racially disparate basis. He has not yet done this legwork (or if he has, he has not described it in the complaint). Ultimately, all that Liu has alleged so far is that he himself was terminated, and the Court cannot draw an inference of disparity from a single data point.¹

In contrast, with respect to the second and third elements, the current complaint does more than enough to support an inference that, if there were indeed a racial disparity in driver terminations, it would likely have been caused by Uber's star rating system. Liu cites to a broad body of social science literature cataloguing the pervasive effects of racial bias in situations where customers rate or value the services they are receiving. Several of these studies evaluated practices similar to rating Uber drivers (such as tipping taxi drivers) while others found similar effects extending into the e-commerce sphere.² Indeed, as the complaint notes, Uber has itself professed concern about racial bias among riders, invoking it as a justification for not allowing tipping on its platform. Complaint at 4 n. 1 (citing Dan Adams, Uber's Argument Against Tipping: Riders Have a Racial Bias. Boston Globe, April 27, 2016). Although no published research has directly analyzed the...