David Micheletti v. Uber Technologies, Inc.
5:15-cv-01001
W.D. Tex.Oct 3, 2016Background
- Plaintiff David Micheletti, a Texas resident, signed Uber/Rasier online service agreements (June 2014 and Oct. 2014) to access the driver platform and clicked “YES, I AGREE.”
- The June 2014 agreement contained an arbitration clause with an express delegation provision assigning questions of arbitrability (enforceability/validity) to an arbitrator and an opt-out right within 30 days.
- Micheletti sued Uber and related entities on behalf of Texas drivers alleging wage-and-labor claims and common-law causes of action; defendants moved to compel individual arbitration and to dismiss in favor of arbitration.
- Plaintiffs conceded assent but argued the arbitration clause and the delegation provision were unenforceable under California law as unclear and unconscionable; defendants argued Texas law applies and the delegation clause is valid.
- The court held the delegation provision is clear and unmistakable, applied Texas choice-of-law rules to the delegation question, found no procedural or substantive unconscionability under Texas law, and dismissed the case in favor of arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the agreement clearly and unmistakably delegates arbitrability to an arbitrator | Micheletti: delegation conflicts with forum-selection language and is unclear | Uber: the clause expressly assigns enforceability/validity questions to an arbitrator | Court: delegation is clear and unmistakable and governs arbitrability |
| Which state law governs validity of delegation provision | Micheletti: California law applies via choice-of-law clause | Uber: delegation is antecedent/severable so Texas choice-of-law rules apply; apply forum state rules | Court: Texas law applies to the delegation provision |
| Procedural unconscionability of the delegation provision | Micheletti: drivers were disadvantaged and the clause was buried, causing oppression/unfair surprise | Uber: drivers could opt out, were not forced, and are bound by the contract they signed | Court: not procedurally unconscionable (no fraud, pressure, or incapacity; opt-out existed) |
| Substantive unconscionability (e.g., prohibitive arbitration costs) | Micheletti: potential arbitrator/filing fees and fee-splitting could prevent vindication of statutory rights | Uber: fee allocation limited by law; company must pay fees where required; plaintiffs’ cost claims speculative | Court: not substantively unconscionable — plaintiffs failed to show likely prohibitive costs |
Key Cases Cited
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (delegation clauses can commit arbitrability to arbitrators; courts must enforce clear delegation)
- Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681 (FAA places arbitration agreements on equal footing with other contracts)
- Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (strong federal policy favoring arbitration)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (standards for who decides arbitrability)
- Banc One Acceptance Corp. v. Hill, 367 F.3d 426 (Fifth Circuit: validity of arbitration agreement is a state-law question)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (challenges to the contract as a whole go to arbitrator unless challenge is to the arbitration clause itself)
- Green Tree Financial Corp.-Ala. v. Randolph, 531 U.S. 79 (party seeking to avoid arbitration based on costs must show likelihood of prohibitive costs)