9th Circuit on Uber Arbitration

From this morning’s National Law Journal article (available here) reporting on the 9th circuit’s consideration of the appeal from a N.D.CA court’s finding that Uber’s arbitration clause was unenforceable for reasons of unconscionability:

According to Uber, Chen’s rulings refused to follow the Ninth Circuit’s 2013 en banc decision in Kilgore v. KeyBank, which held that an arbitration agreement cannot be deemed procedurally unconscionable if it provides meaningful opportunity to opt out.

Laura Ho of Oakland-based Goldstein, Borgen, Dardarian & Ho argued for Uber drivers who contend that the company violated state and federal laws in conducting background checks, including by not notifying them upon finding adverse information. Ho has reached a settlement with Uber in that suit, but the proposed settlement value would increase from $7.5 million to $9 million if she won the appeal.

Ruling last year in Mohamed v. Uber,  Chen rejected Uber’s arbitration agreements with its drivers as unfair and one-sided. Chen’s order examined Uber’s 2013 arbitration agreement, as well as a subsequent version introduced in 2014, finding both to be procedurally and substantively unconscionable. Among other concerns, he took issue with provisions that waived a driver’s right to pursue claims under the state’s Private Attorney General Act, or PAGA.

The decision was virtually the same as rulings he handed down in the course of major California and Massachusetts class actions that alleged drivers should be treated as employees and reimbursed for gas and other expenses.

An $84 million settlement in those cases is pending approval and Chen earlier this month was sharply critical of some of its elements. A finding by the Ninth Circuit that the arbitration agreements are enforceable would give Uber more leverage in any renegotiation of the settlement, should it be rejected, and would go a long way to slowing the onslaught of class action litigation that Uber has faced across the country.

On Thursday, the Ninth Circuit panel for the most part focused on the PAGA waiver.

According to Uber, the provision at issue only bars drivers from arbitrating such claims, but allows them to be dealt with in court. Ho argued, however, that the restriction could be interpreted more broadly or is at best unclear, and thus is illegal under Ninth Circuit case law prohibiting PAGA waivers.

But she had a difficult time getting the judges to buy that. “How can it be more clear?” said Judge Tallman.

She also wasn’t winning points with arguments that because Uber sent the arbitration agreement to drivers’ electronic devices, and made them accept before accepting new fares, it didn’t give them an adequate chance to review the details of the contract.

“I’m having trouble with an argument that [being sent] things that you only read on your tablet or iPhone is procedurally unconscionable,” Judge Ikuta said.



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