In this week’s article, we examine two recent decisions rendered in two different federal District Courts enforcing new mandatory arbitration clauses in the driver contracts of Uber Technologies, Inc., (Uber). The cases are Suarez v. Uber Technologies, Inc., Case No: 8:16-cv-166-T-30MAP (S.D. Fla. May 24, 2016) and Varon v. Uber Technologies, Inc., Civil Action No. MJG-15-3650-MJG (D. Md. May 3, 2016).
What makes these decisions, particularly, important is that only one year earlier [see Travel Law: Uber drivers and the validity of mandatory arbitration agreements, eturbonews.com (7/16/2015)] United States District Judge Edward M. Chen of the Northern District of California rendered a decision in the consolidated cases of Mohamed v. Uber Technologies, Inc.(No. C-14-5200 EMC) and Gillette v. Uber Technologies, Inc. (No. C-14-5241) finding unenforceable Uber’s earlier version of its mandatory arbitration agreement with its drivers.
As we have noted several times, mandatory arbitration clauses in consumer and employment contracts as well as class action and class arbitration waivers have the effect of preventing aggrieved consumers and employees from suing together in class actions. Quite often the class action device provides the only viable remedial mechanism by which relatively small consumer and employee claims may be aggregated and prosecuted [see Dickerson, Class Actions: The Law of 50 States, Chapter 4, Law Journal Press (2016)].
Terror Targets Update
In Rubin, Nossiter, Breeden & Blaise, Death Toll From Terrorist Attack in Nice , France, Rises to 84, nytimes.com (7/15/2016) it was noted that “The death toll from the terrorist attack on a Bastille Day fireworks celebration in the southern French city of Nice rose to 84 on Friday, as the government raced to establish the attacker’s identity, extended a national state of emergency and absorbed the shock of a third major terrorist attack in 19 months…The attack unfolded on Thursday around 10:30PM, when a large truck turned left unto the Promenade des Anglais, a seaside boulevard filled with an enormous crowd of spectators. The truck initially killed two people and continued for 1.1 miles down the boulevard, brutally mowing down people left and right until police shot and killed the driver outside a hotel and casino. The 84 dead included two Americans and one Russian…There was no immediate claim of responsibility for the attack”.
In Rubin & Breeden, ISIS Claims Truck Attacker in France Was Its ‘Soldier’, nytimes.com (7/16/2016) it was noted that “The Islamic State claimed on Saturday that the man who attacked the seaside city of Nice was one of the group’s ‘soldiers’. France’s defense minister promptly blamed the terrorist network for inspiring the assault, while its top law enforcement official said the attacker, who was not previously known to intelligence agencies, may have ‘radicalized himself very quickly’”.
In Mazzetti & Schmitt, In the Age of ISIS, Who’s a Terrorist, and Who’s Simply Deranged?, nytimes.com (7/17/2016) it was noted that “The age of the Islamic State, in which the tools of terrorism appear increasingly crude and haphazard, has led to a reimagining of the common notion of who is and who is not a terrorist”.
In Arango & Yeginsu, Turkey Rounds Up Thousands of Military Personnel, nytimes.com (7/16/2016) it was noted that “Turkey’s government, rallying behind a defiant leader, rounded up thousands of military personnel on Saturday who were said to have taken part in an attempted coup, moving swiftly to re-establish control after a night of chaos and intrigue that left hundreds dead”. nytimes.com
In Al-Jawoshy, Dozens Killed in Suicide Attack on Shiite Shrine North of Baghdad, nytimes.com (7/7/2016) it was noted that “Militants fired mortars on a Shiite shrine north of Baghdad late on Thursday, and in the confusion that followed, three suicide bombers in military uniforms infiltrated the compound and blew themselves up, the Iraqi authorities said. At least 36 people were killed and more than 40 were wounded”.
Brazil & Anti-Gay Violence
In Jacobs, Brazil Is Confronting an Epidemic of Anti-Gay Violence, nytimes.com (7/5/2016) it was noted that “In a nation seemingly inured to crime, the brutal killings stood out: The victims were not robbed, the police have yet to identify any suspects and all of the dead were either gay or transgender. While Americans have fiercely debated how to respond to the massacre last month at a gay nightclub in Orlando, Fla., Brazilians have been confronting their own epidemic of anti-gay violence-one that, by some counts, has earned Brazil the ignominious ranking of the world’s deadliest place for lesbians, gays, bisexuals and transgender people. Nearly 1,600 people have died in hate-motivated attacks in the past four and half years, according to Grupo Gay da Bahia, which tracks deaths through news articles. By its tally, a gay or transgender person is killed almost every day in this nation of 200 million”.
Bribery Over Airline Route
In McGeehan, David Samson, Ally of Christie, Admits to Bribery Over Airline Route, nytimes.com (7/14/2016) it was noted that “David Samson…pleaded guilty to a felony count of bribery on Thursday and admitted that he had pressured United Airlines to operate a weekly flight to South Carolina for his personal convenience. The plea…appears to put an end to Mr. Samson’s career as a public official and power broker. And it casts a shadow over the political fortunes of Mr. Christie”
Bus Crash In Saudi Arabia
In Over a dozen pilgrims killed, 36 injured in Saudi Arabia bus crash, eturbonews.com (7/2/2016) it was noted that “Over a dozen pilgrims have died in Saudi Arabia as the bus they were traveling in overturned on the road between the cities of Ta’if and Riyadh. At least 36 pilgrims were also injured in the incident which occurred on Saturday. All of the casualties, among them women and children, are reportedly Egyptian and Sudanese nationals”.
Kenya Tourist Resort Burns
In Tourist resort in Diani burns to the ground, eturbonews.com (6/29/2016) it was noted that “Sad news came in from Kenya’s famous Diani beaches, where yesterday the Neptune Resort burned down, flames consuming the Makuti covered roofs (Makuti is a roofing material made from palm tree leaves) in a matter of minutes”).
Kenya Travel Advisory
In Steinmetz, Kenya response to U.S. Travel Advisory for Kenya Likoni ferry, eturbonews.com (7/4/2016) it was noted that “While US security chiefs now believe another terrorist attack against America is almost inevitable has the US State Department thought it fit to slap another anti travel advisory against Kenya…In Mombasa in particular was the Likoni Ferry named…The State Department cited unspecified safety concerns when it advised US citizens to avoid using the Likoni ferry while Mombasa’s old stone town, which included UNESCO World Heritage Site Fort Jesus, should only be visited during days hours”.
Philadelphia’s Cracked Trains
In Fitzsimmons & Hurdle, Philadelphia Rail Traffic Disrupted by Cracks in New Trains, nytimes.com (7/5/2016) it was noted that “Commuters here faced delays and crowded trains Tuesday after a third of regional rail cars were abruptly pulled out of service over the weekend when a major defect was discovered in part of the fleet. Officials at the Southeastern Pennsylvania Transportation Authority said inspectors had found cracks in the suspension systems of most of the commuter railroad’s relatively new Silverliner V cars. The repairs could take weeks-a signal that misery may not end before the Democratic National Convention here later this month”.
Airbnb Disputes With San Francisco & New York
In Benner, Airbnb in Disputes With New York and San Francisco, nytimes.com (6/28/2016) it was noted that “On Monday, Airbnb sued San Francisco over a unanimous decision on June 7 by the city’s Board of Supervisors to find the company $1,000 a day for every unregistered host on its service. If Airbnb does not comply, it could face misdemeanor charges. The suit follows a bipartisan move by New York lawmakers who voted this month to heavily fine anyone who uses Airbnb to rent a whole apartment for fewer than 30 days, a practice that has been illegal in the state since 2010, The actions show how Airbnb, despite aggressive lobbying efforts, has not been able to persuade some local legislators to play ball. And in the case of New York, the company has demonstrated a surprisingly tin ear for local politics”.
Airbnb Not Welcome In Hawaii?
In Hawaii Governor: No Aloha for AIRBNB tourists, eturbonews.com (7/14/2016) it was noted that “In a state like Hawaii, the power that major hotel companies have is great. Tourism is the number one industry in the Aloha State, and when a hotel group says NO, the government and the governor listen. Hotels in Hawaii get away with a lot. In includes not paying accommodation taxes on questionable ‘mandatory resort fees’…In Hawaii, hotels and resorts had a strong message to Governor Ige, and he listened, and as a result, he vetoed a bill to allow AIRBNB to collect taxes from families that host a paying…guest in their home. The Governor’s argument is he feels allowing ‘illegal’ vacation rentals in the state will take from the housing shortage and make the homeless issue even worse”.
Travel Law Article: The Suarez Case
In Suarez v. Uber Technologies, Inc. the Court noted, inter alia, that:
“Plaintiffs, who were drivers for (Uber)…allege that Uber misclassified them and other drivers as independent contractors, rather than as employees. As a result, Plaintiffs assert the following claims under the Fair Labor Standards Act (FLSA): they were paid for all of the hours they actually worked; they were not paid at least the Federal minimum wage for each hour worked; and they were not paid overtime compensation for hours they worked in excess of forty hours in one week”.
The Arbitration Agreement
“Uber moves to compel arbitration and strike the class/collective allegations based on arbitration agreements that each Plaintiff executed in connection with their employment. Uber argues that the arbitration agreements are enforceable and cover the claims asserted in this action. Uber also moves to strike the class/collective allegations because the arbitration agreements state that the parties agree to resolve their disputes in arbitration on an individual basis only. The relevant facts related to the arbitration agreements now follow”.
The Services Agreement
“Each of the four named Plaintiffs signed up to use the Uber App to connect with potential passengers using the ‘uberX’ platform so that they could have the opportunity to transport those passengers for a fare. In order to access the uberX platform to accept ride requests from prospective passengers, Plaintiffs were first required to electronically accept the applicable Software License and Online Services Agreement, dated November 10, 2014 (Services Agreement)”.
“When Plaintiffs logged on to the Uber App using their unique user names and passwords, they had the opportunity to review the Services Agreement by clicking a hyperlink within the Uber App. To advance past the screen with the hyperlink to the Services Agreement, Plaintiffs had to confirm that they had first reviewed and accepted the Services Agreement by clicking ‘YES, I AGREE’. After clicking ‘YES, I AGREE”, they were prompted to confirm their review and acceptance of the Services Agreement a second time”.
Take Your Time To Review
“Plaintiffs were free to spend as much time as they wished reviewing the applicable agreement on their smartphones or electronic devices. After confirming their acceptance a second time through the Uber App, the Services Agreement was immediately sent to each Plaintiff’s driver portal, where Plaintiff could access the agreement to review at their leisure, either online, or by printing a copy”.
The Arbitration Provision
“The Services Agreement contains an arbitration agreement (the Arbitration Provision) that requires transportation providers, if they do not opt out, to arbitrate all disputes… arising out of or related to the agreement or their relationship with Uber, including disputes alleging breach of contract, wage and hour claims, unfair competition, or any other claims brought under similar state and federal statutes [relevant sections of the Arbitration Provision reproduced]”.
The Opt-Out Provision
“Notably, after twice confirming their review and acceptance of the Services Agreement, Plaintiffs were provided an additional thirty days to opt out of the Arbitration Provision, which could be accomplished by simply sending an email to ‘email@example.com’ as follows:
Your Right To Opt Of Arbitration
Arbitration is not a mandatory condition of your contractual relationship with the Company. If you do not want to be subject to this Arbitration Provision, you may opt out…by notifying the Company in writing of your desire to opt out…Should you not opt out of this Arbitration Provision within the 30-day period, you and the Company shall be bound by the terms of this Arbitration Provision. You have the right to consult with counsel of your choice concerning this Arbitration Provision. You understand that you will not be subject to retaliation if you exercise your right to assert claims or opt-out of coverage under this Arbitration Provision”.
The Court’s Analysis
“Numerous Uber drivers have elected to opt out of the Arbitration Agreement. Plaintiffs did not elect to opt out of the Arbitration Provision. The Federal Arbitration Act (FAA) provides that a written arbitration agreement in any contract involving commerce ‘shall be valid, irrevocable and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract’. ‘The FAA places arbitration agreement on equal footing with all contracts ad sets forth a clear presumption – ‘a national policy’ – in favor of arbitration’”.
Clear And Unmistakable Intent
“The Delegation Clause…provides that ‘disputes arising out of or relating to interpretation or application of this Arbitration Provision, including the enforceability, revocability or validity of the Arbitration Provision…shall be decided by an Arbitrator and not by a court or judge’. Notably, Plaintiffs do not directly challenge the validity of the delegation provision. As such, Defendant’s motion should be granted on this basis alone and adjudication of Plaintiffs’ attacks on the Arbitration Provision should be left to the arbitrator because it is clear and unmistakable that the parties agreed to arbitrate arbitrability (citing Sena v. Uber Technologies Inc., 2016 WL 1376445 (D. Ariz. April 7, 2016)). However, even if the Court were to analyze the validity of the Arbitration Provision as a whole, Plaintiffs’ unconscionability arguments fail on the merits.
“[P]rocedural unconscionability addresses the fairness of the bargaining process. As Defendant points out, there is no procedural unconscionability because Plaintiffs had the absolute right to opt out of the Arbitration Provision (with no) adverse effect on the other terms of Plaintiffs’ contract and numerous Uber drivers have exercised their right to opt out of the Arbitration Provision”.
“Substantive unconscionability focuses on the fairness of the contract terms. Plaintiffs argue that the Arbitration Provision’s fee-splitting clause renders the contract one-sides and unfair. This provision states, in relevant part: ‘Unless the law requires otherwise, as determined by the Arbitrator based upon the circumstances presented, you will be required to split the cost of any arbitration with the Company’. There is also language further down in the document under the category ‘Paying For the Arbitration’ that states in relevant part: ‘In all cases where required by law, the Company will pay the Arbitrator’s and arbitration fees. If under applicable law the Company is not required to pay all of the Arbitrator’s and/or arbitration fees, such fee(s) will be apportioned equally between the Parties’… The Court concludes that Plaintiffs have not established the fee-splitting clause renders the cost of arbitration prohibitively or unfairly expensive…Indeed, Plaintiffs may incur no arbitration costs under a number of scenarios, including if they prevail on their claims. Therefore, there can be no finding of substantive unconscionability”.
“The parties entered into valid and enforceable agreements to arbitrate questions of arbitrability. The Court also concludes that the Arbitration Provision at issue here is not unconscionable under Florida law…the Court (dismisses) this action so that plaintiffs may submit their claims to arbitration on an individual basis”.
Justice Dickerson has been writing about travel law for 39 years including his annually updated law books, Travel Law, Law Journal Press (2016) and Litigating International Torts in U.S. Courts, Thomson Reuters WestLaw (2016), and over 400 legal articles many of which are available at nycourts.gov/courts/9jd/taxcertatd.shtml. Justice Dickerson is also the author of Class Actions: The Law of 50 States, Law Journal Press (2016). For additional travel law news and developments, especially in the member states of the EU, see IFTTA.org.
This article may not be reproduced without the permission of Thomas A. Dickerson.