October 3, 2018

Ninth Circuit Reverses Grant of Class Certification and Denial of Motions to Compel Arbitration in Several Uber Class Actions

In a major victory for ride-share company Uber Technologies, Inc. (“Uber”), the United States Court of Appeals for the Ninth Circuit issued its much anticipated opinion in O’Connor v. Uber Technologies, Inc., Case No. 14-16078 (9th Cir. Sep. 25, 2018), reversing certification of a class of over 160,000 Uber drivers and several denials of motions to compel arbitration in numerous class action lawsuits filed by Uber drivers. The opinion involved several consolidated appeals from multiple class actions that are all pending before the U.S. District Court for the Northern District of California. The district court had denied Uber’s motions to compel arbitration in each of the class actions and granted class certification in the lead case. 

On appeal, the Court of Appeal held that the arbitration agreements at issue in all of the class actions were identical to the arbitration agreement that was previously found to be enforceable by the Court of Appeal in Mohamed v. Uber Technologies, Inc., 848 F.3d 1201, 1206 (9th Cir. 2016). In that case, the Court of Appeal disagreed with the district court’s finding that the agreement was unconscionable, determining instead that the agreement was enforceable because it clearly and unambiguously delegated the authority to determine arbitrability of claims to the arbitrator and provided adequate notice and opt out opportunities to employees. Thus, the Court of Appeal reasoned that the district court’s orders denying Uber’s motions to compel arbitration in each of the class actions had to be reversed for the same reasons that reversal was compelled in Mohamed.

Additionally, the Court of Appeal rejected plaintiffs’ additional argument that that the arbitration agreements were unenforceable because they had “constructively opted out” of them on behalf of the class. In rejecting this novel argument, the Court of Appeal highlighted that 1) the plaintiffs were never given the authority to “opt out” of the agreements on behalf of others; and 2) the argument relied on a single Georgia state supreme court case interpreting state law, and no federal court in the country had ever relied on the Georgia authority cited by plaintiffs, which it noted was likely due to the law’s preemption by the Federal Arbitration Act.

The Court also rejected plaintiffs argument that the class action waivers contained in the arbitration agreement violated the National Labor Relations Act, noting that the intervening opinion issued by the United States Supreme Court in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018), had already rejected that contention.

Based on its finding that the arbitration agreements in each of the class actions were enforceable, the Court of Appeal reversed the district court’s grant of class certification in the lead case, as well as several injunctions previously issued against Uber by the district court, finding that each of those orders relied on the erroneous denial of Uber’s motions to compel arbitration.

What Employers Should Know Now

Employers should keep in mind the importance of using clear and unmistakable language if their arbitration agreement purports to delegate the determination of arbitrability of a claim to an arbitrator. Employers should also ensure their arbitration provisions provide meaningful notice and/or opt out opportunities for employees who are asked to sign them.