188 F. Supp. 3d 658
N.D. Ohio2016Background
- Bruster activated an Uber driver account on July 30–31, 2014 and electronically accepted Uber’s June 21, 2014 Technology Services Agreement, which contained arbitration, class-waiver, and delegation clauses and an 80-day opt-out right.
- Bruster did not opt out of the June 2014 arbitration/delegation provisions within the opt-out period.
- Uber deactivated Bruster’s account on November 27, 2015 for unsatisfactory customer experiences.
- On December 11, 2015 a revised Uber agreement was pushed to drivers; Bruster (although deactivated) tapped “YES, I AGREE” and later sent an opt-out notice on December 16, 2015.
- Bruster sued on December 21, 2015 asserting Ohio wage-and-hour claims and arguing he had opted out via the December 2015 acceptance/notice and that the June 2014 provisions were unconscionable.
- Uber moved to dismiss and compel arbitration under the June 2014 Agreement, arguing (among other things) the delegation clause sends arbitrability questions to the arbitrator.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Bruster formed a new agreement (Dec 2015) that replaced the June 2014 Agreement or validly opted out | Bruster says his December 2015 "acceptance" and opt-out notice revoked the June 2014 arbitration/delegation clauses | Uber says Bruster was deactivated before the December rollout, so there was no offer, no consideration, and no new contract or valid opt-out | Court held the December 2015 acceptance/opt-out was invalid: no offer or consideration after deactivation; June 2014 Agreement still governs |
| Whether the June 2014 delegation clause validly delegates arbitrability to an arbitrator | Bruster contends the arbitration and delegation provisions are unconscionable and unenforceable | Uber contends the delegation clause clearly and unmistakably delegates arbitrability to an arbitrator | Court held the delegation clause is valid under Ohio law and delegates arbitrability to the arbitrator |
| Whether the delegation clause is procedurally unconscionable under Ohio law | Bruster argues unequal bargaining power and boilerplate terms render delegation procedurally unconscionable | Uber notes the contract provided an explicit, 80-day, no-consequence opt-out mechanism that was easy to exercise | Court held no procedural unconscionability: opt-out was available, painless, and uncoerced, so delegation is enforceable |
| Whether the court should decide arbitrability or compel arbitration to an arbitrator | Bruster asks the court to resolve arbitrability because the clauses are unenforceable | Uber seeks to have arbitrability resolved by the arbitrator per the delegation clause | Court compelled arbitration and ordered arbitrability questions submitted to the arbitrator per the June 2014 Agreement |
Key Cases Cited
- Stout v. J.D. Byrider, 228 F.3d 709 (6th Cir. 2000) (federal court must determine whether parties agreed to arbitrate)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) (challenges to validity of contract clause generally for arbitrator if clause delegates such challenges)
- Rent-A-Ctr., West, Inc. v. Jackson, 561 U.S. 63 (2010) (delegation clause can be enforceable and send arbitrability questions to arbitrator)
- AT&T Techs., Inc. v. Communications Workers, 475 U.S. 643 (1986) (courts decide arbitrability unless parties clearly and unmistakably delegate it)
- Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681 (1996) (state law may not impose special formalities that single out arbitration agreements)
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941) (federal diversity courts apply forum state choice-of-law rules)
- Andrews v. Columbia Gas Transmission Corp., 544 F.3d 618 (6th Cir. 2008) (application of most-significant-relationship rule under Ohio choice-of-law analysis)
- Scovill v. WSYX/ABC, 425 F.3d 1012 (6th Cir. 2005) (Ohio unconscionability standard requires both procedural and substantive unconscionability)