CALIFORNIA – The U.S. Court of Appeals for the 9th Circuit has found that Uber’s arbitration agreements with its drivers are legal and binding.
The decision partially reversed and partially affirmed a decision made in federal district court.
“The panel held that the district court erred in assuming the authority to decide whether the parties’ arbitration agreements were enforceable,” the court document stated. It upheld the district court’s order that denied a motion to compel arbitration by Hirease LLC. The company was found not be entitled to compel arbitration on behalf of Uber.
However, the appeals court confirmed the legality of agreements between Uber and drivers, which state that any dispute between the two parties must not be solved by class-action lawsuits.
Uber’s attorney Ted Boutrous said the company was satisfied with the court’s decision.
“Arbitration is a fair, speedy and less costly alternative to class-action litigation,” he told the Northern California Record in an e-mailed statement.
“We’ve always believed our option arbitration agreements should have applied in this case, and we’re pleased with the court’s decision.”
Former drivers for Uber filed a class-action lawsuit claiming the company violated the Fair Credit Reporting Act and other state statutes.
One of those plaintiffs, Abdual Mohammed, began driving for Uber in Boston in 2012. In 2013 he was required to sign two agreements before he could access the smartphone app.
There was an arbitration provision that stated drivers need to agree to arbitration to resolve disputes with the company. It also required drivers to waive their rights to class-action lawsuits.
According to court documents, drivers could opt out of the arbitration clause by submitting notice of intent to opt out of Uber within 30 days in person or via overnight delivery service. Mohamed did not opt out.
In 2014, a new agreement was issued to drivers with an arbitration clause. This time they could opt out by sending emails as well as in person or via overnight delivery service.
“It also included a provision requiring all disputes with the company ‘to be resolved only by an arbitrator through final and binding arbitration on an individual basis only, and not by way of court or jury trial or by way of class, collective or representative action,” the court document stated.
Mohamed did not opt out but was cut off from the app because of negative info on his consumer credit report.
Another plaintiff, former Uber driver Ronald Gillette began driving for the company in San Francisco in 2013. He did not opt out of the agreement. In 2014 he was cut off because of negative information on his consumer credit report.
In November 2014 both men filed separate lawsuits.
Uber tried to compel arbitration for both lawsuits but the district court denied both motions.
The decision will also affect a class-action lawsuit filed by lawyer Shannon Liss-Riordan, which claimed Uber drivers should be considered employees, not contracted workers.
“We were very aware that this decision was likely coming, which was the primary argument for why I was urging the district court to approve the settlement,” Liss-Riordan told Bloomberg.