Mohamed v. Uber Techs., Inc.

• Decision Date: 07 September 2016
• Docket Number: No. 15-16178, No. 15-16181, No. 15-16250,15-16178
• Citation: 848 F.3d 1201
• Parties: Abdul Kadir MOHAMED, individually and on behalf of all others similarly situated, Plaintiff–Appellee, v. UBER TECHNOLOGIES, INC.; Rasier, LLC, Defendants–Appellants, and Hirease, LLC, Defendant. Ronald Gillette, Plaintiff–Appellee, v. Uber Technologies, Inc., Defendant–Appellant. Abdul Kadir Mohamed, individually and on behalf of all others similarly situated, Plaintiff–Appellee, v. Uber Technologies, Inc.; Rasier, LLC, Defendants, and Hirease, LLC, Defendant–Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

848 F.3d 1201

Abdul Kadir MOHAMED, individually and on behalf of all others similarly situated, Plaintiff–Appellee,

v.UBER TECHNOLOGIES, INC.; Rasier, LLC, Defendants–Appellants,andHirease, LLC, Defendant.

Ronald Gillette, Plaintiff–Appellee,

v.Uber Technologies, Inc., Defendant–Appellant.

Abdul Kadir Mohamed, individually and on behalf of all others similarly situated, Plaintiff–Appellee,

v.Uber Technologies, Inc.; Rasier, LLC, Defendants,andHirease, LLC, Defendant–Appellant.

No. 15-16178

No. 15-16181

No. 15-16250

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 16, 2016, San Francisco, California

Filed September 7, 2016

Amended December 21, 2016

Theodore Boutrous, Jr. (argued), Theane D. Evangelis, and Brandon J. Stoker, Gibson, Dunn & Crutcher LLP, Los Angeles, California; Joshua S. Lipshutz and Kevin J. Ring–Dowell, Gibson, Dunn & Crutcher LLP, San Francisco, California; Rod M. Fliegel, Littler Mendelson P.C., San Francisco, California; Andrew M. Spurchise, Littler Mendelson P.C., New York, New York; for Defendants–Appellants Uber Technologies, Inc. and Rasier, LLC.

Pamela Devata (argued) and Nicholas R. Clements, Seyfarth Shaw LLP, San Francisco, California; Timothy L. Hix, Seyfarth Shaw LLP, Los Angeles, California; for Defendant–Appellant Hirease, LLC.

Laura Ho (argued), Andrew P. Lee, and William Jhaveri–Weeks, Goldstein Borgen Dardarian & Ho, Oakland, California; Robert Ahdoot, Tina Wolfson, and Theodore Maya, Ahdoot & Wolfson, PC, West Hollywood, California; Meredith Desautels, Dana Isaac Quinn, and Elisa Della–Piana, Lawyers' Committee for Civil Rights of the San Francisco Bay Area, San Francisco, California; Monique Olivier, Duckworth Peters Lebowitz Olivier LLP, San Francisco, California; for Plaintiffs–Appellees.

Kevin Ranlett, Archis A. Parasharami, Evan M. Tager, and Andrew J. Pincus, Mayer Brown LLP, Washington, D.C.; Warren Postman and Kate Comerford Todd, U.S. Chamber Litigation Center, Inc., Washington, D.C.; for Amicus Curiae Chamber of Commerce of the United States.

Matthew C. Koski, National Employment Lawyers Association, Oakland, California; David H. Seligman, Towards Justice, Denver, Colorado; Jahan C. Sagafi, Outten & Golden LLP, San Francisco, California; for Amici Curiae National Employment Law Project, National Employment Lawyers Association, National Association of Consumer Advocates, and Towards Justice.

Before: Richard C. Tallman, Richard R. Clifton, and Sandra S. Ikuta, Circuit Judges.

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.

The petition rehearing en banc is DENIED . No further petition for rehearing may be filed.

OPINION

CLIFTON, Circuit Judge:

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 , 109 F.Supp.3d 1185 (N.D. Cal. 2015). Uber argues on appeal (1) that the district court erroneously considered whether the arbitration provisions were enforceable when that question was clearly delegated to an arbitrator, and (2) that even if the district court properly considered arbitrability, it erred in concluding that the arbitration provisions were invalid and in declining to compel arbitration.

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 UberX¹ around October 2014. Like all Uber drivers, Mohamed used a smartphone to access the Uber application while driving, which enabled him to pick up customers.

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 arbitration provision with an easier opt-out procedure that enabled drivers to opt out via e-mail as well as in person or by delivery service. It also included a provision requiring all disputes with the company "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." Mohamed accepted these agreements and did not opt out. In early October 2014, Mohamed accepted a similar agreement with Rasier, a wholly owned subsidiary of Uber ("Rasier Software Sublicense & Online Services Agreement" (Rasier Agreement)).²

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 Hirease, 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 , 109 F.Supp.3d at 1190, and Uber now appeals.

II. Discussion

We review de novo an order denying a motion to compel arbitration. Oracle Am., Inc. v. Myriad Grp. A.G. , 724 F.3d 1069, 1072 (9th Cir. 2013).

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,

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