ORDER
The opinion filed on September 7, 2016, is hereby amended as follows:
1. On page 18 of the slip opinion, in footnote 6, the last sentence (and related citations) should be deleted.
We note that Plaintiffs also raised the argument that the class and collective action waivers in the arbitration agreements may violate the National Labor Relations Act (NLRA) for the first time in a sur-reply. That untimely submission waived the argument. See, e.g., United States v. Dreyer,804 F.3d 1266 , 1277 (9th Cir. 2015) (“Generally, an appellee waives any argument it fails to raise in its answering brief.”).
With this amendment, the panel has voted to deny the petition for rehearing en banc. The Petition for Rehearing En Banc has been circulated to the full court, and no judge has requested a vote on whether to rehear the matter en banc. Fed. R. App. P. 35.
OPINION
Plaintiff-Appellees Abdul Mohamed and Ronald Gillette, former Uber drivers, filed an action in district court alleging on behalf of themselves and a proposed class of other drivers that Defendants Uber Technologies, Inc., Rasier, LLC, and Hirease, LLC, violated the Fair Credit Reporting Act (FCRA) and various state statutes. Gillette has also brought a representative claim against Uber under California’s Private Attorneys General Act of 2004 (PAGA) alleging that he was misclassified as an independent contractor rather than an employee. The district court denied Uber’s motion to compel arbitration of the claims. Mohamed v. Uber Technologies,
We conclude that the district court erred at the first step and improperly assumed the authority to decide whether the arbitration agreements were enforceable. The question of arbitrability as to all but Gillette’s PAGA claims was delegated to the arbitrator. Under the terms of the agreement Gillette signed, the PAGA waiver should be severed from the arbitration agreement and Gillette’s PAGA claims may proceed in court on a representative basis. All of Plaintiffs’ remaining arguments, including both Mohamed’s challenge to the PAGA waiver in the agreement he signed and the challenge by both Plaintiffs to the validity of the arbitration agreement itself, are subject to resolution via arbitration.
I. Background
Plaintiff Abdul Mohamed began driving for Uber’s black car service in Boston in-2012, and for UberX
In late July 2013, Mohamed was required to agree to two new contracts with Uber (the “Software License and Online Services Agreement” and the “Driver Addendum”; jointly, the “2013 Agreement”) before he was allowed to sign in to the application. The 2013 Agreement provided that it was governed by California law. It included an arbitration provision requiring Uber drivers to submit to arbitration to resolve most disputes with the company. It also included a provision requiring drivers to waive their right to bring disputes as a class action, a collective action, or a private attorney general representative action. Drivers could opt out of arbitration by delivering notice of their intent to opt out to Uber within 30 days either in person or by overnight delivery service. Mohamed accepted the agreements and did not opt out.
Nearly a year later, in June 2014, Uber released an updated version of the Software License and Online Services Agreement and the Driver Addendum (jointly, the “2014 Agreement”). The 2014 Agreement also provided that it was governed by California law. It included an updated
In late October 2014, shortly after he began driving for UberX, Mohamed’s access to the app was cut off due to negative information on his consumer credit report, effectively terminating his ability to drive for Uber.
Plaintiff-Appellant Ronald Gillette began driving for Uber in the San Francisco Bay Area in March 2013. Like Mohamed, he was required to agree to the 2013 Agreement before signing into the Uber application in late July 2013. Also like Mohamed, he did not opt out. In April 2014, Gillette’s access to the app was cut off because of negative information on his consumer credit report. This effectively terminated his relationship with Uber.
On November 24, 2014, Mohamed filed a class action in the Northern District of California against Uber, Rasier, and Hi-rease, an independent company that conducted background checks. Mohamed alleged that the use of his consumer credit report violated the FCRA, the Massachusetts Consumer Credit Reporting Act (MCCRA), and the California Consumer Credit Reporting Agencies Act (CCRAA). Two days later, on November 26, 2014, Gillette filed a separate lawsuit against Uber, also in the Northern District of California. Gillette alleged that the company’s use of his consumer credit report violated the FCRA and the California Investigative Consumer Reporting Agencies Act (ICRAA). He also alleged that Uber had misclassified him and other employees as independent contractors in violation of California’s PAGA statute.
Uber moved to compel arbitration in both lawsuits, arguing that Gillette was bound by the arbitration provision in the 2013 Agreement and Mohamed by the arbitration provision in the 2014 Agreement. The district court denied both motions, Mohamed,
II. Discussion
We review de novo an order denying a motion to compel arbitration. Oracle Am., Inc. v. Myriad Grp. A.G.,
Both the 2013 and the 2014 Agreements contained provisions that provided, using very similar language, that disputes would be resolved by arbitration and, further, that any dispute as to arbitrability (with one exception discussed below) would be resolved by the arbitrator. These provisions stated:
Except as it otherwise provides, this Arbitration Provision is intended to apply to the resolution of disputes that otherwise would be resolved in a court of law or before a forum other than arbitration. This Arbitration Provision requires all such disputes to be resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial. 3
Such disputes include without limitation disputes arising out of or relating to interpretation or application of this Arbitration Provision, including- the enforceability, revocability or validity of the Arbitration Provision or any portion of the Arbitration Provision.
The 2014 Agreement continued: “All such matters shall be decided by an Arbitrator and not by a court or judge.”
Both the 2013 and 2014 Agreements also contained provisions that required drivers to waive the right to bring class, collective, and representative actions (including claims under the PAGA statute), either in court or in arbitration. The 2013 Agreement, but not the 2014 Agreement, carved out challenges to these waivers from the general delegation provision: “Notwithstanding any other clause contained in this Agreement, any claim that all or part of the Class Action Waiver, Collective Action Waiver or Private Attorney General Waiver is invalid, unenforceable, unconscionable, void or voidable may be determined only by a court of competent jurisdiction and not by an arbitrator.”
The district court concluded that the delegation clauses in both the 2013 and the 2014 Agreements were ineffective because they were not clear and unmistakable. Mohamed,
A. Delegation of the issue of arbitrability
“[U]nlike the arbitrability of claims in general, whether the court or the arbitrator decides arbitrability is ‘an issue for judicial determination unless the parties clearly and unmistakably provide otherwise.’ ” Oracle Am.,
In Momot, we held that language “delegating to the arbitrators the authority to determine the validity or application of any of the provisions of the arbitration clause[ ] constitutes an agreement to arbitrate threshold issues concerning the arbitration agreement.” Id. (quoting Rent-A-Ctr., 561
The district court determined that the delegation provisions themselves were “unambiguous,” but it nonetheless held that they conflicted with venue provisions elsewhere in the 2013 and 2014 Agreements. Mohamed,
These conflicts are artificial. The clause describing the scope of the arbitration provision was prefaced with “[e]xcept as it otherwise provides,” which eliminated the inconsistency between the general delegation provision and the specific carve-out in the 2013 Agreement. As for the venue provision, the California Court of Appeal has observed that “[n]o matter how broad the arbitration clause, it may be necessary to file an action in court to enforce an arbitration agreement, or to obtain a judgment enforcing an arbitration award, and the parties may need to invoke the jurisdiction of a court to obtain other remedies.” Dream Theater, Inc. v. Dream Theater,
The delegation provisions clearly and unmistakably delegated the question of ar-bitrability to the arbitrator for all claims except challenges to the class, collective, and representative action waivers in the 2013 Agreement. In accordance’ with Supreme Court precedent, we are required to enforce these agreements “according to their terms” and, in the absence of some other generally applicable contract defense, such as fraud, duress, or uncon-scionability, let an arbitrator determine arbitrability as to all but the claims specifically exempted by the 2013 Agreement. Rent-A-Ctr.,
The district court also held that, even if the delegation provisions were clear and unmistakable, they were both unenforceable due to unconscionability. Mohamed,
The district court concluded that the delegation provisions in both the 2013 and 2014 Agreéments were procedurally and substantively unconscionable. For the 2013 Agreement, the court concluded that the provision was procedurally unconscionable because it was “hidden in a prolix printed form,” Nagrampa v. MailCoups, Inc.,
Uber argues that the delegation provisions could not have been procedurally unconscionable because both agreements gave drivers an opportunity to opt out of arbitration altogether. The district court agreed with Uber that, under Ninth Circuit precedent, “the existence of a meaningful right to opt-out of [arbitration] necessarily renders [the arbitration clause] (and the delegation clause specifically) procedurally conscionable as a matter of law.” Id. at 1212. As to the 2013 Agreement, the court concluded that the right to opt out was not “meaningful” because drivers were required to opt out either in person at Uber’s San Francisco offices or by overnight delivery service, both of which were
The district court does not have the authority to ignore circuit court precedent, and neither do we. “Binding authority must be followed unless and until overruled by a body competent to do so.” Hart v. Massanari,
The district court’s conclusion that the right to opt out of the 2013 Agreement was illusory fares no better. “An illusory promise is one containing words ‘in promissory form that promise nothing’ and which ‘do not purport to put any limitation on the freedom of the alleged promisor.’ ” Flores v. Am. Seafoods Co.,
The delegation provisions were not procedurally unconscionable in either the 2013 or the 2014 Agreements. Because the agreements were not procedurally unconscionable, and because both procedural and substantive unconscionability must be present in order for an agreement to be unenforceable, see Armendariz,
C. The effective vindication doctrine
Plaintiffs also argue that even if the delegation provisions are otherwise enforceable, they are invalid because both ■the 2013 and 2014 Agreements contain a fee term requiring drivers to split the costs of arbitration equally with Uber and thus preclude drivers from effectively vindicating their federal statutory rights. Effective vindication provides courts with a means to “invalidate, on ‘public policy’ grounds, arbitration agreements that ‘op-erat[e] ... as a prospective waiver of a party’s right to -pursue statutory remedies.’ ” Am. Exp. Co. v. Italian Colors Rest., - U.S. -,
However, Uber has committed to paying the full costs of arbitration. So long as Uber abides by this commitment, the fee term in the arbitration agreement presents Plaintiffs with no obstacle to pursuing vindication of their federal statutory rights in arbitration. As a result, we decline to reach the question of whether the fee term would run afoul of the effective vindication doctrine if it were enforced as written.
D. The PAGA waiver
Plaintiffs argue that the arbitration provisions in the 2013 and 2014 Agreements were invalid under California law because they both contained unenforceable, unsev-erable waivers of Plaintiffs’ claims under the California PAGA statute. Because we conclude that the district court should not have reached the question of whether the arbitration agreements were enforceable in the first place, it is not necessary to address this argument pertaining to the 2014 Agreement. Plaintiffs’ challenges to the enforceability and severability of the PAGA waiver in the 2014 Agreement fall to the arbitrator to decide.
As noted above, however, the 2013 Agreement specifically required the district court, and not the arbitrator, to consider certain challenges to the arbitration provision, including challenges to the enforceability of the PAGA waiver. Because of that carve-out, it remains for us to consider on the merits whether the PAGA waiver in that agreement is enforceable, and what effect the waiver has on the arbitration provision as a whole.
The district court concluded that the arbitration provision in the 2013 Agreement was procedurally unconscionable because it was adhesive, oppressive, and a surprise to drivers who accepted the agreement, and that it was substantively unconscionable because it contained a
Perhaps recognizing that the district court’s uneonscionability analysis ran counter to existing Ninth Circuit precedent, Plaintiffs argue on appeal that even if the district court erred in finding that the arbitration provision in the 2013 Agreement was unconscionable, the PAGA waiver was still invalid under California law and unseverable from the remainder of the arbitration provision under the terms of the contract. Plaintiffs argue that the invalid PAGA waiver thus dooms the entire arbitration provision, such that claims governed by that agreement (i.e., all of Gillette’s claims) must be litigated in court. Although we agree that the PAGA waiver in the 2013 Agreement was invalid under California law, we conclude that it is sever-able from the remainder of the 2013 agreement.
In Iskanian v. CLS Transp. L.A., LLC,
The PAGA waiver is severable from the remainder of the arbitration provision in the 2013 Agreement, however. In Section 14.1, the agreement provided that “[i]f any provision of the Agreement is held to be invalid or unenforceable, such provision shall be struck and the remaining provisions shall be enforced to the fullest extent under law.” In Section 14.3(v), the agreement further provided:
There will be no right or authority for any dispute to be brought, heard, or arbitrated as a private attorney general representative action (“Private Attorney General Waiver”). The Private Attorney General Waiver shall not be severable from this Arbitration Provision in any case in which a civil court of competent jurisdiction finds the Private Attorney General Waiver is unenforceable. In such instances and where the claim is brought as a private attorney general, such private attorney general claim must be litigated in a civil court of competent jurisdiction.
While this provision is hardly a model of clarity, the third sentence stated explicitly
E. Hirease cannot compel arbitration
Plaintiff Mohamed (but not Gillette) named independent background-check company Hirease in his complaint alongside Uber. Hirease moved to join Uber’s motion to compel Mohamed into arbitration, though Hirease was not identified as a party or a signatory to the agreement between Uber and the drivers. The district court denied Hirease’s joinder in Uber’s motion to compel on the same grounds that it denied Uber’s motion, without separately discussing the question of whether Hirease was covered by the arbitration provisions. Mohamed,
On appeal, Hirease argues that it should be covered by the arbitration agreement because: (1) Mohamed has alleged an agency relationship between Hirease and Uber, see, e.g., Murphy v. DirecTV, Inc.,
Hirease’s first argument rests on the wording of Mohamed’s complaint, which alleged generally that Defendants — defined to include Hirease, Uber, Rasier, and unknown Does — knowingly violated the FCRA, MCRA, and CCRAA by failing to provide job applicants and employees with adequate notice regarding the use of their consumer credit reports for employment purposes. The complaint also included allegations that “each named Defendant and DOES 1-50 were the employees, agents, or representatives of each other” and that “[e]ach Defendant has ratified and approved the acts of its agents.” Hirease argues that under California law, “a plaintiffs allegations of an agency relationship among defendants is sufficient to allow the alleged agents to invoke the benefit of an arbitration agreement executed by their principal even though the agents are not parties to the agreement.” Thomas v. Westlake,
As the California Court of Appeal has noted elsewhere, however, “[c]om-plaints in actions against multiple defendants commonly include conclusory allegations that all of the defendants were each other’s agents or employees and were acting within the scope of their agency or employment.” Barsegian v. Kessler & Kessler,
There is no specific indication of an actual agency relationship between Uber and Hirease, either in the complaint or elsewhere in the record. An agency relationship “requires that the principal maintain control over the agent’s actions.” Murphy,
In the same vein, there is no indication in the complaint that Uber and Hirease share an identity of interest, which Black’s Law Dictionary defines as “[a] relationship between two parties who are so close that suing one serves as notice to the other.” (10th ed. 2014). Because Hirease’s liability stems from its own alleged violation of Massachusetts law, independent of any actions Uber may or may not have taken, there is no such relationship here.
Finally, the allegations Mohamed leveled against Hirease were not “intimately founded in and intertwined with” the underlying contract obligations established in the 2014 Agreement. Murphy,
[m]ere allegations of collusive behavior between signatories and non[-]signatories to a contract are not enough to compel arbitration between parties who have not agreed to arbitrate: those allegations of collusive behavior must also establish that the plaintiffs claims against the nonsignatory are intimately founded in and intertwined with the obligations imposed by the contract containing the arbitration clause. Id. (quoting Goldman,92 Cal.Rptr.3d at 545 ). Here, the claims against Hirease arise under the MCRA and not out of obligations imposed by the 2014 Agreement. Therefore, the rule that an arbitration agreement can be enforced by a non-signatory when the allegations against the non-signatory are intimately founded in and intertwined with underlying contract obligations does not apply.
III. Conclusion
We affirm in part and reverse the district court’s order denying Uber’s motions to compel arbitration and remand for proceedings consistent with this opinion.
We affirm the district court’s order denying Hirease’s joinder in the motion to compel.
All parties shall bear their own costs.
AFFIRMED in part, REVERSED in part, and REMANDED.
Notes
. An Uber black car is a commercially registered livery car that passengers can access using the Uber smartphone application. UberX is a lower-cost alternative in which drivers use their own cars to pick up passengers via the app.
. Except where necessary, this opinion refers to Uber and Rasier collectively as "Uber.” The Rasier Agreement contained terms similar to those in the Software License and Online Services Agreement, and neither party has- alleged any arguments specific to the Ra-sier Agreement. Thus, we treat it as part of the 2014 Agreement.
. In the 2014 Agreement, this sentence read: "This Arbitration Provision requires all such disputes to be resolved only by an arbitrator through final and binding arbitration on an individual basis only and not by way of court or jury trial, or by way of class, collective, or representative action.
. The arbitration agreements may not have clearly and unmistakably delegated to the arbitrator the authority to decide the question of waiver by litigation conduct. See Martin v. Yasuda,
. The district court order cited several of our decisions, culminating with Kilgore v. KeyBank, Nat’l Ass’n,
. We note that Plaintiffs also raised the argument that the class and collective action waivers in the arbitration agreements may violate the National Labor Relations Act (NLRA) for the first time in a sur-reply. That untimely submission waived the argument. See, e.g., United States v. Dreyer,
. MGL ch. 93 § 60 requires consumer reporting agencies under certain circumstances to:
notify the consumer of the fact that public record information is being reported by the consumer reporting agency, together with the name and address of the person to whom such information is being reported; or maintain strict procedures designed to insure that whenever public record information which is likely to have an adverse effect on a consumer’s ability to obtain employment is reported it is complete and up to date.
It also requires consumer reporting agencies to "enter into an agreement with the user of such consumer report which provides that no consumer report may be requested by the user until and unless the user has provided written notice to the employee or prospective employee that a consumer report regarding the employee will be requested.” Id.
. ' MGL ch. 93 § 62 provides in relevant part that "[w]henever ... employment involving a consumer is denied or terminated ... because of information contained in a consumer report from a consumer reporting agency, the user of the' consumer report shall ... notify such consumer in writing against whom such adverse action has been taken.”