CALIFORNIA – The U.S. Court of Appeals for the 9th Circuit has
found that Uber’s arbitration agreements with its drivers are legal and
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
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
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.