208 F. Supp. 3d 886
N.D. Ill.2016Background
- Plaintiffs Horace Lee and Imran Sandozi, Illinois Uber drivers, sued Uber Technologies, Inc. and Rasier, LLC asserting state-law claims (e.g., tortious interference, breach of contract, wage/labor claims) on behalf of a class of drivers.
- Drivers accessed and accepted successive electronic Rasier Software License & Online Services Agreements through the uberX app; those Agreements included an arbitration provision that barred class/collective actions and contained a delegation clause sending arbitrability disputes to an arbitrator.
- Both plaintiffs accepted earlier versions of the Agreement before filing suit (2014–2015); they later emailed opt-out requests after a December 11, 2015 revision but accepted that revision only after filing this lawsuit.
- Plaintiffs argued the Arbitration Provision (and its delegation clause) was procedurally and substantively unconscionable and that the prohibition on collective actions violated the NLRA.
- Uber moved to compel arbitration and to dismiss; the court considered whether the delegation clause was "clear and unmistakable" and whether unconscionability could defeat it.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a valid written arbitration agreement exists covering these claims | Lee/Sandozi: Arbitration clause unconscionable; opt-out attempted | Uber: Plaintiffs accepted Agreement; arbitration clause governs disputes | Valid arbitration agreement exists and covers the claims; arbitration compelled |
| Whether the delegation clause clearly delegates arbitrability questions to an arbitrator | Plaintiffs: Clause ambiguous or inconsistent with other terms | Uber: Clause language plainly delegates "enforceability, validity" to arbitrator | Delegation clause is clear and unmistakable and enforces delegation to arbitrator |
| Whether unconscionability can invalidate the delegation clause | Plaintiffs: Clause procedurally/substantively unconscionable (adhesive contract; fee-splitting; no negotiation) | Uber: Delegation clause severable; Agreement includes an opt-out; unconscionability directed at other provisions doesn't invalidate delegation | Court may not decide unconscionability of the Arbitration Provision because the delegation clause delegates that question to the arbitrator |
| Whether collective-action waiver violates NLRA and is for court to decide | Plaintiffs: Collective waiver invalid under NLRA (citing Lewis) | Uber: Because of delegation clause, enforceability of collective-waiver is for arbitrator | Arbitrability/enforceability of collective-waiver delegated to arbitrator; court stayed the case and compelled arbitration |
Key Cases Cited
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (delegation clauses can validly commit arbitrability questions to arbitrators)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (clear-and-unmistakable standard for delegating arbitrability)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (generous construction of arbitration agreements)
- Mohamed v. Uber Techs., Inc., 836 F.3d 1102 (9th Cir. decision finding Rasier delegation clause enforceable on appeal)
- Lewis v. Epic Sys. Corp., 823 F.3d 1147 (7th Cir. decision holding collective-waiver may violate NLRA absent delegation clause)
- Zurich Am. Ins. Co. v. Watts Indus., Inc., 417 F.3d 682 (standard to compel arbitration)
- Halim v. Great Gatsby's Auction Gallery, Inc., 516 F.3d 557 (stay, not dismissal, is proper when arbitration invoked)