236 F. Supp. 3d 711
E.D.N.Y2017Background
- Plaintiffs are NYC Uber drivers (native Chinese speakers with limited English) who signed Uber’s online Services Agreements and Driver Addenda in 2015 via a two-step “YES, I AGREE” click process; the agreements were available only in English.
- Uber’s December 2015 Services Agreement contained a broad arbitration provision (individual-only arbitration, class/collective/representative waivers, fee-splitting rules), a delegation clause (arbitrator decides arbitrability), and a 30-day opt-out right.
- Plaintiffs did not timely opt out and later sued alleging failure to reimburse tolls; Uber moved to compel arbitration.
- The Court applied New York choice-of-law principles to contract-formation issues and treated the December 2015 agreement as the operative contract (incorporating prior amendments and continued use).
- The court found (1) plaintiffs manifested assent by clicking to accept, (2) the delegation clause clearly and unmistakably delegated gateway arbitrability questions to the arbitrator, (3) the delegation clause was not procedurally or substantively unconscionable (noting the 30-day opt-out and fee protections), and (4) the class-action waiver was enforceable under Supreme Court precedent.
- The Court granted Uber’s motion to compel arbitration and stayed the action pending arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs assented to the Services Agreements / arbitration clause | Plaintiffs (Guan, Li) say terms were not reasonably communicated and they could not read the English agreements, so no knowing assent | Uber: clickthrough process, explicit prompts, hyperlinks and double “YES, I AGREE” clicks manifested assent | Court: assent established by clickwrap-like process; failure to read/understand English does not avoid contract formation |
| Which agreement governs the dispute (temporal scope) | Plaintiffs: December 2015 agreement should not apply retroactively to earlier claims | Uber: April 2015 allowed amendment; continued use and renewed assent to December 2015 make it operative for disputes arising under the agreement | Court: December 2015 Services Agreement is operative and applies to claims arising under the parties’ contractual relationship |
| Who decides gateway arbitrability (delegation clause validity) | Plaintiffs: delegation clause unclear/unconscionable; arbitrator shouldn’t decide existence/scope | Uber: delegation clause clearly and unmistakably delegates arbitrability to arbitrator; JAMS rules also delegate arbitrability | Court: delegation language is clear and unmistakable; gateway issues delegated to arbitrator |
| Whether delegation clause or class-action waiver is unenforceable (unconscionability / NLRA) | Plaintiffs: clause is procedurally/substantively unconscionable (non-English drivers, unequal bargaining power, cost barrier), and class waiver violates NLRA | Uber: 30-day opt-out and fee protections negate procedural unconscionability; Supreme Court precedent upholds class waivers; Sutherland controls re: NLRA | Court: delegation clause not procedurally or substantively unconscionable; class-action waiver enforceable under FAA and Supreme Court precedent; NLRA challenge rejected per Second Circuit authority |
Key Cases Cited
- Nicosia v. Amazon.com, Inc., 834 F.3d 220 (2d Cir. 2016) (standard for motions to compel arbitration similar to summary judgment)
- Wachovia Bank, Nat’l Ass’n v. VCG Special Opportunities Master Fund, Ltd., 661 F.3d 164 (2d Cir. 2011) (courts may resolve arbitrability as a matter of law when facts undisputed)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA preempts state rules invalidating class-action waivers in arbitration agreements)
- American Express Co. v. Italian Colors Restaurant, 570 U.S. 228 (2013) (class-arbitration waivers enforceable even if bilateral arbitration would be economically infeasible)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (separability; delegation clauses must be challenged specifically to avoid enforcement)
- Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287 (2010) (court must decide threshold question of whether parties agreed to arbitrate)
- VRG Linhas Aereas S.A. v. MatlinPatterson Global Opportunities Partners II L.P., 717 F.3d 322 (2d Cir. 2013) (court decides whether parties agreed to arbitrate before enforcing delegation)
- Fteja v. Facebook, Inc., 841 F. Supp. 2d 829 (S.D.N.Y. 2012) (clickwrap/sign-in wrap precedent—manifestation of assent via online prompts)
- Mohamed v. Uber Technologies, Inc., 848 F.3d 1201 (9th Cir. 2016) (upholding Uber delegation clause and finding opt-out supports procedural conscionability)
- Sutherland v. Ernst & Young LLP, 726 F.3d 290 (2d Cir. 2013) (rejecting NLRB’s view that collective-action waivers violate NLRA)