Mohamed v. Uber Techs., Inc., C–14–5200 EMC

• Citation: 109 F.Supp.3d 1185
• Decision Date: 09 June 2015
• Docket Number: No. C–14–5241 EMC,No. C–14–5200 EMC,C–14–5200 EMC,C–14–5241 EMC
• Court: U.S. District Court — Northern District of California
• Parties: Abdul Kadir Mohamed, et al., Plaintiff, v. Uber Technologies, Inc., et al., Defendants. Ronald Gillette, et al., Plaintiff, v. Uber Technologies, et al., Defendants.

109 F.Supp.3d 1185

Abdul Kadir Mohamed, et al., Plaintiff,

v.Uber Technologies, Inc., et al., Defendants.

Ronald Gillette, et al., Plaintiff,

v.Uber Technologies, et al., Defendants.

No. C–14–5200 EMC

No. C–14–5241 EMC

United States District Court, N.D. California.

Signed June 9, 2015

Bradley Keith King, Robert Ahdoot, Theodore Walter Maya, Tina Wolfson, Ahdoot and Wolfson, P.C., West Hollywood, CA, for Abdul Kadir Mohamed.

Andrew Michael Spurchise, Rod M. Fliegel, Littler Mendelson, Joshua Seth Lipshutz, Kevin Joseph Ring–Dowell, Gibson, Dunn and Crutcher LLP, Nicholas Ryan Clements, Sarah Kepner Hamilton, Seyfarth Shaw LLP, Emily Erin O'Connor, San Francisco, CA, Debra W. Yang, Marcellus Antonio Mcrae, Theane D. Evangelis, Gibson Dunn & Crutcher LLP, Theodore J. Boutrous, Jr., Attorney at Law, Timothy Lee Hix, Seyfarth Shaw LLP, Los Angeles, CA, Dhananjay Saikrishna Manthripragada, Gibson Dunn and Crutcher, Washington, DC, Mitchell Jay Freedman, P.K. Schrieffer LLP, West Covina, CA, Pamela Quigley Devata, Seyfarth Shaw LLP, Chicago, IL, for Defendants.

Dana Marie Isaac Quinn, Lawyers' Committee for Civil Rights, San Francisco, CA, Laura L. Ho, Andrew Paul Lee, Goldstein Borgen Dardarian & Ho, Oakland, CA, for Ronald Gillette.

ORDER DENYING DEFENDANTS' MOTIONS TO COMPEL ARBITRATION; DENYING DEFENDANT HIREASE'S JOINDER IN MOTION TO COMPEL ARBITRATION

EDWARD M. CHEN, United States District Judge

I. INTRODUCTION

Plaintiff Ronald Gillette began driving for Uber in the San Francisco Bay Area in March 2013. Gillette Docket No. 7 at ¶ 12. Gillette's access to the Uber application was "abruptly deactivated" in April 2014. Id. at ¶ 15. According to Gillette, an Uber representative told him he was terminated because " 'something had come up' on his consumer background report." Id.

Gillette filed a lawsuit against Uber Technologies on November 26, 2014. Gillette Docket No. 1. Gillette's operative complaint alleges putative class claims under the federal Fair Credit Reporting Act (FCRA), individual claims under California's Investigative Consumer Report Agencies Act, and representative claims under California's Private Attorneys General Act (PAGA). See Gillette Docket No. 7. Generally speaking, Gillette's FCRA and Investigative Consumer Report Agencies Act claims challenge Uber's practices with regards to the use of background checks in its hiring and firing decisions. Gillette's PAGA claims are largely unrelated, and allege that Uber has violated a number of California Labor Code provisions, including failing to provide prompt payment of wages to employees upon termination and resignation, failing to provide itemized wage statements, failing to provide meal and rest breaks, and willfully misclassifying its drivers as independent contractors, rather than employees. See Gillette Docket No. 7 at ¶ 79. Uber filed a motion to compel all of Gillette's claims to individual arbitration pursuant to the terms of its 2013 contract with Gillette. Gillette Docket No. 16.

Plaintiff Abdul Mohamed began driving for Uber's black car service in Boston in 2012, and for uberX around October 2014. Mohamed Docket No. 1 at ¶ 31. According to Mohamed, his access to the Uber application was terminated around October 28, 2014, at least in part as a "result of information obtained [by defendants] through [a] Consumer Reporting Agency...." See id. at ¶ 32.

On November 24, 2014, Mohamed filed suit against Uber Technologies, Rasier LLC, and Hirease, LLC.¹ Mohamed Docket No. 1. Mohamed's complaint alleges that these defendants violated numerous laws that "impose certain strictures on employers' use of consumer background reports as a factor in their decisions to hire, promote, reassign, or terminate employees." See id. at ¶ 14. Specifically, Mohamed alleges putative class claims under FCRA, the California Consumer Credit Reporting Agencies Act (CCRAA), and the Massachusetts Consumer Reporting Act (MCRA). Uber and Rasier have moved to compel individual arbitration of Mohamed's claims under the terms of its contracts with him.Mohamed Docket No. 28. Hirease filed a joinder in its codefendants' motion to compel arbitration, contending that Mohamed's putative class claim against it should also be compelled to individual arbitration pursuant to Mohamed's contracts with Uber. Mohamed Docket No. 32.

Having considered the parties' briefs, supplemental briefs, and lengthy oral arguments, the Court denies both motions to compel arbitration, and thus denies Hirease's joinder. First, the Court finds that both Gillette and Mohamed validly assented to be bound to the terms of the various contracts at issue here. Next, the Court finds that the delegation clauses contained in those contracts—which purport to reserve the adjudication of the validity and enforceability of the contracts' arbitration provisions to an arbitrator—are unenforceable. The Court then concludes that the arbitration provisions contained in both the 2013 and 2014 versions of Uber's contracts with its drivers are both procedurally and substantively unconscionable, and therefore unenforceable as a matter of California law. Hence, both Gillette and Mohamed may continue to litigate their actions in this forum.

II. BACKGROUND

A. Gillette's and Mohamed's Relationships with Uber

Ronald Gillette was hired in February 2013 by Abbey Lane Limousine, which provides limousine and car services within the San Francisco Bay Area. Gillette Docket No. 7 at 11. Abbey's owner opened an Uber account for Gillette shortly thereafter. Gillette Docket No. 22–3 (Gillette Deck) at ¶ 3. Gillette did not have a personal email address or an Abbey-provided email account at this time, and does not know what email address was submitted to Uber in association with his Uber account, if any. Id. at ¶ 5. After his application was submitted to Uber, Gillette states that he "met with an Uber representative at one of Uber's San Francisco office locations ... passed a short test given on a tablet device, and had my picture taken." Id. at ¶ 3. Gillette began driving an Abbey vehicle on the UberBlack service shortly thereafter. Id. at ¶¶ 3–4.

Gillette, like other Uber drivers, used a smartphone to access the Uber application while working as an Uber driver. Gillette Deck at 4. The specific phones Gillette used were not his, and they remained permanently in the Abbey vehicles that Gillette drove. Id. Gillette would log into the Uber application as soon as he picked up a vehicle from Abbey. Id.

Around July 23, 2013, Uber notified its drivers via email that "it was planning on rolling out a Software License and Online Services Agreement ... and Driver Addendum within the next couple of weeks." Gillette Docket No. 16–2 (Colman Deck Gillette ) at ¶ 9. Because Gillette did not provide Uber with an email account, Gillette claims he did not receive any such notification. Gillette Decl. at ¶ 5.

Once the relevant agreements were finalized, drivers saw the following message when they attempted to log-on to the Uber application:

Colman Deck Gillette, Ex. B. According to Uber, the words "Driver Addendum," "Software License and Online Services Agreement," and "City Addendum" that appear in the picture above were hyperlinks that "a driver could have clicked in order to review [the relevant agreements] prior to hitting 'Yes, I agree.' " Colman Deck Gillette at ¶ 10. If the driver hit the "Yes, I agree" button, Uber contends that the driver would next see the following screen:

Colman Decl. Gillette, Ex. C.

According to Uber's records, Gillette electronically accepted the 2013 Software License and Online Services Agreement (2013 Agreement) on July 29, 2013. Colman Decl. Gillette at ¶¶ 11–12. Gillette avers that he does "not recall accepting" the agreements on July 29. Gillette Decl. at ¶ 7. He does not dispute, however, that he continued to drive for UberBlack until April 2014, when Uber allegedly deactivated his account and terminated his employment "without notice or explanation." Id. at ¶ 6.

Abdul Mohamed lives and works in Boston. Mohamed Docket No. 1 at ¶ 7. He began driving as an UberBlack driver sometime in 2012. Mohamed Docket No. 28–2 (Colman Decl. Mohamed ) at ¶ 8. It is undisputed that on July 31, 2013, Mohamed clicked to accept the 2013 Agreement following the same steps described above. Id. at ¶¶ 11, 13. Exactly one year later, Mohamed was prompted to electronically accept Uber's 2014 Software License and Online Services Agreement (2014 Agreement). Id. at ¶¶ 12–13. It is undisputed that the process for accepting the 2014 Agreement was the same as for the 2013 Agreement (i.e., clicking "Yes, I agree" when prompted by the Uber application, and then once more confirming agreement on the next application screen), and that Mohamed pressed the relevant buttons. Id. at ¶ 12.

Around September 2014, Mohamed applied to drive as an uberX driver, but was told that he needed to get a new car for the position. Mohamed Docket No. 1 at ¶ 29. Mohamed subsequently purchased a new vehicle for approximately $25,000. Id. at ¶ 30. On October 3, 2014, Uber claims that Mohamed accepted the 2014 Rasier Software Sublicense & Online Services Agreement (2014 Rasier Agreement) through the same process described above. Colman Decl. Mohamed at ¶ 15. He thereafter drove for uberX in Boston. Mohamed Docket No. 1. at ¶ 30.

On October 28, 2014, Mohamed received an email from "uberreports@hirease.com" informing him that his "proposal to enter an independent contractor relationship" with Rasier could not be "further consider[ed] ... at this time." Mohamed Docket No. 1 at ¶ 32. The email went on to state that "[t]he decision, in part, is the result of information obtained through the Consumer Reporting Agency identified below." Id. Mohamed's access to the Uber application was turned off around the same time he received the email. Id. at ¶ 33,

It is undisputed that neither Plaintiff received a paper copy of any of the relevant contracts with either Uber or Rasier. See, e.g., Gillette Decl. at ¶ 8, Uber...