Uber Enforces Arbitration Due To Delegation Clause And Opt Out
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The 9th Circuit’s decision to enforce the arbitration agreement in Uber’s agreements with drivers made lots of news last week. And although it includes no new principles of law, it does emphasize some principles that come up regularly in consumer and employment arbitration, so it’s worth reviewing the details.
Former drivers brought an action in federal court, alleging two primary things: that when Uber terminated them for having bad consumer credit, Uber violated statutes regulating the use of credit reports; and that Uber had misclassified them as independent contractors. Mohamed v. Uber Technologies, Inc., __ F.3d __, 2016 WL 4651409 (9th Cir. Sept. 7, 2016). Uber responded by moving to compel arbitration. The district court denied the motion, finding that the delegation clauses were not “clear and unmistakable” and that the delegation clauses were unconscionable.
The appellate court disagreed on both fronts. Critically, the operative agreements had this language in the Arbitration Provision: “Such disputes include without limitation disputes arising out of or relating to interpretation or application of this Arbitration Provision, including the enforceability, revocability or validity of the Arbitration Provision or any portion of the Arbitration Provision.” Furthermore, the agreements mandated arbitration on an individual basis (precluding class or collective actions). Drivers could opt out of the Arbitration Provision, but the named plaintiffs did not exercise that option.
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