Capriole v. Uber Techs., Inc.

• Citation: 7 F.4th 854
• Decision Date: 02 August 2021
• Docket Number: No. 20-16030,20-16030
• Parties: John CAPRIOLE, Martin El Koussa, and Vladimir Leonidas, Individually and On Behalf of Others Similarly Situated, Plaintiffs-Appellants, v. UBER TECHNOLOGIES, INC.; Dara Khosrowshahi, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

7 F.4th 854

John CAPRIOLE, Martin El Koussa, and Vladimir Leonidas, Individually and On Behalf of Others Similarly Situated, Plaintiffs-Appellants,

v.UBER TECHNOLOGIES, INC.; Dara Khosrowshahi, Defendants-Appellees.

No. 20-16030

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 16, 2020 San Francisco, California

Filed August 2, 2021

Shannon Liss-Riordan (argued), Lichten & Liss-Riordan PC, Boston, Massachusetts, for Plaintiffs-Appellants.

Theane Evangelis (argued), Blaine H. Evanson, Heather Richardson, and Samuel Eckman, Gibson Dunn & Crutcher LLP, Los Angeles, California, for Defendants-Appellees.

Rohit K. Singla and Dane P. Shikman, Munger Tolles & Olson LLP, San Francisco, California; Jeffrey Y. Wu, Munger Tolles & Olson LLP, Los Angeles, California; Elaine J. Goldenberg, Munger Tolles & Olson LLP, Washington, D.C.; for Amicus Curiae Lyft, Inc.

Kevin Ruf, Glancy Prongay & Murray, Los Angeles, California; Reynaldo Fuentes, Partnership for Working Families, Oakland, California; for Amici Curiae Boston Independent Drivers Guild, Gig Workers Rising, Mobile Workers Alliance, Rideshare Drivers United, and We Drive Progress.

Before: Kim McLane Wardlaw, Jacqueline H. Nguyen, Circuit Judges, and Richard K. Eaton,^* Judge.

WARDLAW, Circuit Judge:

Few technological advances have transformed the global economy as the internet. This technological revolution has left an indelible mark on the modern workplace. We live and work in the wake of this dramatic, digital upheaval, and its transformative power continues to shape the very nature of work itself, likely in ways which we cannot yet perceive. In less than three decades, companies like Amazon, DoorDash, Google (Alphabet), and Uber, among others, have transformed from nothing more than an entrepreneurial vision into fixtures of the modern economy, becoming household names along the way.

As these new industries have grown, their workforce has ballooned into the millions in America alone, generating countless opportunities and vast fortunes but also raising new questions of law. With transactions taking place at the speed of light, the once slow-rolling tides of supply and demand now change within minutes or even seconds, leading many of these companies to prize flexibility in their workforce and incentivize part-time work. This reality has also led to a Dickensian tale of two workforces. On one side of the divide are those involved in the design and high-level operation of a company's platform, who are almost always deemed "employees," entitling them to certain protections and benefits but at the cost of greater employer control over their activities. On the other side is a much larger bloc consisting of those who frequently directly transport goods or passengers, the so-called "gig-economy workers," most if not all of whom are classified as "independent contractors," a status conferring flexibility but little security.

As a result, the digital economy has begun to collide with laws designed for the analog age, raising important questions in the process about the relationship between these gig-economy companies and their workers. That said, the tradeoff between flexibility and security is not always so easily resolved. Disputes are inevitable given the differences between employees and independent contractors, and many gig-economy workers have unsurprisingly attempted to legally challenge their current classification.

We must now decide who will decide those disputes for Uber drivers whose contracts with Uber contain mandatory arbitration provisions. Answering this question requires us to first determine whether Uber drivers fall within the so-called "interstate commerce" exemption to mandatory arbitration under the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1 – 16. We conclude that they do not. Because we also conclude that the injunctive relief they requested, reclassification of their status from "independent contractors" to "employees," is not public injunctive relief that may have allowed them to avoid arbitration, we affirm the district court's order compelling arbitration.

I.

Uber Technologies, Inc. ("Uber") develops app-based platforms to connect "drivers," individuals who provide transportation services, with "riders," those in need of transportation services. John Capriole, Martin El Koussa, and Vladimir Leonidas ("Plaintiffs") are Massachusetts residents who have worked as Uber drivers since at least May 2016.

Uber classifies all of its Massachusetts drivers, including Plaintiffs, as independent contractors, not employees, under state law. As independent contractors, the drivers are required to pay business expenses (such as the cost of maintaining their vehicles, gas, insurance, phone and data expenses, as well as other costs), they have no guaranteed minimum wage or overtime premiums, and they do not accrue paid sick leave, as would be required by Massachusetts law.

When they signed up to become Uber drivers, Plaintiffs agreed to Uber's 2015 Technology Services Agreement (the "Agreement"). The Agreement's first page advised Plaintiffs of the mandatory arbitration agreement ("Arbitration Provision"), and the Agreement explicitly specifies that the Arbitration Provision is governed by the FAA.¹ The Arbitration Provision provides, in relevant part, that all disputes between Uber and its drivers are to be resolved through binding and final arbitration pursuant to the terms of the agreement. The Arbitration Provision also contains a "Class Action Waiver," providing that Uber and the signatory "agree to resolve any dispute that is in arbitration on an individual basis only, and not on a class, collective action, or representative basis" and that the "Arbitrator shall have no authority to consider or resolve any claim or issue any relief on a class, collective, or representative basis." However, any disputes about the "enforceability, revocability or validity" of the Class Action Waiver are to be resolved only by courts, and not by an arbitrator. The Agreement also expressly permits any driver who does not wish to be subject to mandatory arbitration to opt out (by mail or email) within 30 days of agreeing to the Arbitration Provision, and provides instructions on how to do so.

Plaintiffs each agreed to the Arbitration Provision in the 2015 Agreement, and none of them opted out. In January 2020, Uber implemented a new Platform Access Agreement, which contained a materially identical arbitration provision. All Plaintiffs again agreed to the new provision, but this time Capriole chose to opt out within 30 days.²

In September 2019, Plaintiffs filed a putative class action in the District Court for the District of Massachusetts on behalf of all "individuals who have worked as Uber drivers in Massachusetts who have not released all of their claims against Uber." Plaintiffs simultaneously requested a preliminary injunction prohibiting Uber from "classifying its drivers in Massachusetts as ‘independent contractors’ " and an order directing "Uber to classify its drivers as employees and comply with Massachusetts wage laws." Plaintiffs claimed Massachusetts Uber drivers are properly considered employees under the state's test for determining whether a worker is an employee or independent contractor. See Mass. Gen. Laws ch. 149, § 148B.³

Plaintiffs claimed that as a result of this misclassification, Uber violated state wage and hour law when it "required drivers to pay business expenses," see Mass. Gen. Laws chs. 148, 149, 150, "failed to guarantee and pay its drivers minimum wage for all hours worked," see id. ch. 151, § 1, and "failed to pay overtime premiums for hours worked in excess of eight hours per day or forty hours per week," see id. ch. 151, § 1A.

When the COVID-19 pandemic struck, Plaintiffs added new claims for paid sick leave under the Massachusetts Earned Sick Time Law.⁴ Specifically, Massachusetts requires larger employers to provide "a minimum of one hour of earned sick time for every thirty hours worked by an employee." Mass. Gen. Laws ch. 149, § 148C(d)(1). Massachusetts employees may accrue and use up to five days (40 hours) of paid sick leave per calendar year. Id . § 148C(d)(4). Pursuant to Massachusetts’ COVID-19 Order No. 13, Uber and other rideshare drivers are considered "essential workforce" in Massachusetts, so they were not subject to any shutdown orders and could continue working throughout the pandemic. Because they are essential workers, Plaintiffs argued that Uber's alleged misclassification of them as independent contractors "creat[es] an immediate danger, not only to Uber drivers, but to the general public as well." Specifically, Plaintiffs alleged Uber's failure to provide paid sick leave forced drivers to drive, even if they had experienced COVID-19 symptoms and risked infecting their passengers, because the drivers "need[ed] to continue working in order to support themselves."⁵

Separately, Uber moved to compel arbitration, stay proceedings pending arbitration, and transfer the case to the District Court for the Northern District of California pursuant to a forum selection clause in Uber's driver agreements. On March 20, 2020, the Massachusetts district court denied Plaintiffs’ request for a preliminary injunction, see Capriole v. Uber Techs., Inc. , No. 1:19-cv-11941-IT, 2020 WL 1323076, at *1 (D. Mass. Mar. 20, 2020), but, just three days later, Plaintiffs filed a new Emergency Motion for a Preliminary Injunction (the "Emergency Motion"). Shortly thereafter, the Massachusetts district court granted Uber's motion to transfer the action to the California district court, including the pending Emergency Motion and Motion to Compel Arbitration.⁶ By this point, Plaintiffs had amended their complaint to add new claims regarding paid sick leave, additional named plaintiffs, and the allegation that "Capriole has driven passengers across state lines while driving for Uber." The California district court denied Plaintiffs’ request...