Kai Peng v. Uber Technologies, Inc.
237 F. Supp. 3d 36
E.D.N.Y2017Background
- Plaintiffs are New York City Uber drivers (native Chinese speakers with limited English) who clicked through Uber’s online "YES, I AGREE" workflow to register and continue using the Uber driver app in 2015; the agreements were provided in English only.
- The operative contract is the December 2015 Software License and Online Services Agreement and Driver Addendum, which includes a multi-page arbitration provision (with fee-splitting language), a delegation clause sending gateway arbitrability questions to the arbitrator, and a 30‑day opt‑out right.
- Plaintiffs brought a putative class action alleging breach of Uber’s New York City 2015 Guarantee Program and failed to timely opt out of arbitration; Uber moved to compel arbitration and to stay the action.
- The parties disputed whether plaintiffs validly assented to the online agreements (and thus to arbitration), whether New York law governs contract formation, whether the delegation clause validly delegates arbitrability, and whether the class‑action waiver and delegation clause are unconscionable or contrary to the NLRA.
- The Court found New York law governs formation issues, concluded plaintiffs assented via the clickwrap process, held the December 2015 agreement applies to the claims (including pre‑existing claims), found clear-and-unmistakable delegation of arbitrability to the arbitrator, rejected unconscionability challenges, and held the class‑action waiver/enforcement are governed by Supreme Court precedent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs validly assented to the online Services Agreements | Plaintiffs (non‑English speakers) could not read the English agreements and were "compelled" to click to work, so assent was not knowing or reasonably communicated | Uber: clickwrap/sign‑in workflow (prominent notices, hyperlinks, double "YES, I AGREE" confirmations) suffices to form a contract | Held: plaintiffs assented; clickwrap process and prompts provided constructive notice—failure to read or understand English does not avoid assent under New York law |
| Which agreement governs and whether arbitration applies to pre‑existing claims | Plaintiffs: December 2015 agreement should not govern earlier claims | Uber: April 2015 allowed amendments; continued use and re‑acceptance made December 2015 operative and its arbitration clause applies to related claims | Held: December 2015 Agreement is operative; arbitration clause applies to claims arising under the agreement, including related pre‑existing claims |
| Whether gateway questions of arbitrability are for the court or arbitrator (delegation) | Plaintiffs: court should decide arbitrability and challenge delegation as unconscionable | Uber: delegation clause (explicitly assigning enforceability/validity questions to arbitrator) and JAMS rules clearly and unmistakably delegate gateway issues | Held: delegation language clearly and unmistakably delegates gateway arbitrability issues to the arbitrator; carve‑out for class/PAGA interpretation does not negate delegation |
| Whether delegation clause or class‑action waiver is unconscionable or violates NLRA | Plaintiffs: clause is procedurally/substantively unconscionable (language, lack of translation, fee splitting, inequality of bargaining power); class waiver violates NLRA | Uber: 30‑day opt‑out, plain delegation language, fee provision limited (won’t require fees beyond court filing), Supreme Court and circuit precedent uphold waivers and opt‑out under these circumstances | Held: delegation clause is not procedurally or substantively unconscionable (30‑day opt‑out dispositive); class waiver enforceable under Supreme Court precedent; NLRA challenge rejected following controlling Second Circuit authority |
Key Cases Cited
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (class‑action waivers in arbitration agreements enforceable under the FAA)
- Rent‑A‑Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (delegation clauses are severable and enforceable if the delegation itself is not specifically challenged)
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (strong federal policy favoring arbitration and doubts about scope resolved for arbitration)
- Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287 (2010) (court must decide contract formation questions initially)
- Sutherland v. Ernst & Young LLP, 726 F.3d 290 (2d Cir. 2013) (Second Circuit: waiver of class arbitration does not violate NLRA)
- Mohamed v. Uber Techs., Inc., 848 F.3d 1201 (9th Cir. 2016) (30‑day opt‑out renders delegation clause procedurally conscionable and delegates arbitrability to arbitrator)
- Nicosia v. Amazon.com, Inc., 834 F.3d 220 (2d Cir. 2016) (motion to compel arbitration standard resembles summary judgment standard)
- Brady v. Williams Capital Group, L.P., 14 N.Y.3d 459 (N.Y. 2010) (party challenging fee‑splitting must show it prevents effective vindication of rights)