Class Certification Reversed in Consolidated Appeals Against Uber
On September 25, 2018, a Ninth Circuit panel 1) reversed the district court’s denial of Uber Technologies, Inc.’s motions to compel arbitration, 2) reversed the district court’s class certification orders, and 3) reversed as moot and without foundation the district court’s Fed. R. Civ. P. 23(d) orders in several putative class actions. The class actions were brought by current and former Uber drivers alleging violations of various federal and state statutes arising from Uber’s classification of drivers as independent contractors rather than employees.
The four consolidated appeals included O’Connor v. Uber Technologies, Inc.; Yucesoy v. Uber Technologies, Inc.; Mohamed v. Uber Technologies, Inc.; and Del Rio v. Uber Technologies, Inc. Litigation involving Uber’s business model and worker classification has garnered much attention over the past five years with numerous decisions from district and Ninth Circuit courts.
The cases above began when two Uber drivers filed a class action against the company in August 2013 (the O’Connor action) alleging claims for failure to give the entire gratuity paid by customers to drivers in violation of the California Labor Code (tip claim) and for misclassifying the drivers as independent contractors and not paying their business expenses (for vehicles, gas and maintenance), also in violation of the California Labor Code (expense reimbursement claim). Shortly after the filing, the O’Connor plaintiffs sought to foreclose or limit Uber’s use of its arbitration agreement. The district court granted the plaintiffs’ request in part, enjoining Uber from enforcing its arbitration agreement and requiring enhanced notice of opt-out provisions and extension of the opt-out periods.
Plaintiff Abdul Mohamed filed a putative class action against Uber and an independent background check company on Nov. 24, 2014, raising a variety of federal and California state claims, including under the Fair Credit Reporting Act. The district court denied Uber’s motion to compel arbitration based on its 2013 and 2014 arbitration agreements, finding in part that the arbitration provisions were unconscionable.
Ninth Circuit Opinion
Writing for the majority, Judge Richard R. Clifton began the opinion by acknowledging that in Mohamed v. Uber, 848 F.3d 1201, 1206 (9th Cir. 2016), the same panel (judges Richard Tallman, Clifton and Sandra Ikuta) reversed the district court’s orders denying Uber’s motion to compel arbitration. The panel rejected plaintiffs’ additional arguments in this current appeal alleging that the arbitration agreements were unenforceable.
First, the plaintiffs argued that the lead plaintiffs in the O’Connor case constructively opted out of arbitration on behalf of the entire class. The panel held this was unpersuasive because nothing gave the O’Connor lead plaintiffs the authority to take that action on behalf of and binding other drivers, and the decision in Bickerstaff v. Suntrust Bank, 788 S.E.2d 787 (Ga. 2016), was not instructive where it relied exclusively on state law grounds and did not discuss the Federal Arbitration Act.
Second, the plaintiffs argued that the arbitration agreements were unenforceable because they contained class action waivers that violated the National Labor Relations Act of 1935. The panel held that this argument was rejected by the Supreme Court in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018). The panel held that it had jurisdiction to review both the original class certification order and the December 9, 2015 certification order. The panel held that in the wake of the decision in Mohamed, the class certification orders must be reversed because they were premised upon the district court’s conclusion that the arbitration agreements were not enforceable. The question whether those agreements were enforceable was not properly for the district court to answer because the question of arbitrability was designated to the arbitrator.
The panel held that remand for further proceedings was appropriate, and leaving the existing class certification orders in place in the meantime was not appropriate. The panel held that the district court’s Fed. R. Civ. P. 23(d) orders must be reversed as moot and without foundation in light of the panel’s reversal of the district court’s orders denying the motions to compel arbitration and certifying the class.
California Employment Laws and Class Certification
California employers and employees alike should understand the nuances of class certification and individual arbitration agreements. As Uber cases around the country reach resolution, don’t hesitate to contact leading employment lawyers at Kingsley & Kingsley with any questions you might have. Call toll-free at (888) 500-8469 or click here to contact us via email.
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