Mumin v. Uber Techs., Inc.

• Decision Date: 07 March 2017
• Docket Number: 15–CV–7387 (NGG) (JO),15–CV–6143 (NGG) (JO)
• Citation: 239 F.Supp.3d 507
• Parties: Manzoor MUMIN and Victor Mallh, individually and on behalf of all others similarly situated, Plaintiffs, v. UBER TECHNOLOGIES, INC., Rasier, LLC, and John Does 1–10, Defendants. Jose Ortega and Joce Martinez, on their own behalf, and on behalf of those similarly situated, Plaintiffs, v. Uber Technologies Inc., Rasier, LLC, Uber USA LLC, Uber New York LLC, Uber Transportation LLC, and John Doe "Uber Affiliates," Defendants.
• Court: U.S. District Court — Eastern District of New York

239 F.Supp.3d 507

Manzoor MUMIN and Victor Mallh, individually and on behalf of all others similarly situated, Plaintiffs,

v.UBER TECHNOLOGIES, INC., Rasier, LLC, and John Does 1–10, Defendants.

Jose Ortega and Joce Martinez, on their own behalf, and on behalf of those similarly situated, Plaintiffs,

v.Uber Technologies Inc., Rasier, LLC, Uber USA LLC, Uber New York LLC, Uber Transportation LLC, and John Doe "Uber Affiliates," Defendants.

15–CV–6143 (NGG) (JO)

15–CV–7387 (NGG) (JO)

United States District Court, E.D. New York.

Signed March 7, 2017

Filed March 8, 2017

Brittany Sloane Weiner, Jeanne Lahiff, Murray Friedman, Imbesi Law PC, Marie Napoli, Marie E. Napoli, Napoli Law PLLC, Paul Brian Maslo, Salvatore C. Badala, Hunter Jay Shkolnik, Napoli Shkolnik PLLC, New York, NY, Andrew J. Dressel, Pro Hac Vice, for Plaintiffs.

Andrew M. Spurchise, David M. Wirtz, Kevin Robert Vozzo, Littler Mendelson P.C., New York, NY, for Defendants.

MEMORANDUM & ORDER

NICHOLAS G. GARAUFIS, United States District Judge.

Plaintiffs in these two related putative class actions assert claims under New York Labor Law ("NYLL") and other New York statutory and common law against Uber Technologies, Inc. and a number of related or affiliated entities (collectively, "Uber"). In the first action (the "Mumin Action"), Plaintiffs Manzoor Mumin and Victor Mallh (the "Mumin Plaintiffs") bring their action against Defendants Uber Technologies, Inc., Rasier, LLC, and John Does 1–10. (Mumin 3d Am. Compl. ("Mumin Compl.") (Dkt. 22 in No. 15–CV–6143).) In the second action (the "Ortega Action"), Plaintiffs Jose Ortega and Joce Martinez (the "Ortega Plaintiffs," and together with the Mumin Plaintiffs, "Plaintiffs") have filed suit against Defendants Uber Technologies, Inc., Rasier, LLC, Uber USA LLC, Uber Transportation LLC, and John Doe "Uber Affiliates." (Ortega Am. Compl. ("Ortega Compl.") (Dkt. 16 in No. 15–CV–7387).)

Before the court are Uber's motions to (1) compel arbitration as to Plaintiff Victor Mallh in the Mumin Action and Plaintiff Joce Martinez in the Ortega Action; and (2) dismiss the operative complaints in both actions pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). (See Mumin Defs.' Mot. to Compel Arbitration (Dkt. 28 in No. 15–CV–6143); Ortega Defs.' Mot. to Compel Arbitration (Dkt. 19 in No. 15–CV–7387); Mumin Defs.' Mot. to Dismiss (Dkt. 26 in No. 15–CV–6143); Ortega Defs. Mot. to Dismiss (Dkt. 22 in No. 15–CV–7387).) Because of the substantial similarity in facts and the legal issues raised, the court will address these motions together in this Memorandum and Order.

For the following reasons, the court GRANTS Uber's motions to compel Plaintiffs Mallh and Martinez to arbitrate their claims. The court also GRANTS IN PART and DENIES IN PART Uber's motions to dismiss Plaintiffs' operative complaints.

I. BACKGROUND

A. Facts as Alleged in the Operative Complaints

1. General Allegations

Uber is a ride-sharing service that uses a mobile application to connect its drivers to potential passengers. (Mumin Compl. ¶¶ 3, 16; Ortega Compl. ¶ 25.) Uber's mobile application allows a rider to request a ride by inputting a pick-up location and a destination. (Ortega Compl. ¶ 25.) The application matches the rider with one of Uber's available drivers in the vicinity and then provides the rider with an estimated fare. (Id. ) If the rider accepts the estimated fare, then the available Uber driver is dispatched to pick up the rider. (Id. ) At the end of the ride, the passenger completes the transaction by paying Uber through the mobile application. (See id. ; see also Mumin Compl. ¶ 46.) Uber pays drivers, on a weekly basis, their share of the fares earned for their rides. (See Mumin Compl. ¶ 46; Ortega Compl. ¶¶ 25, 27.)

Plaintiffs allege that Uber misclassifies its drivers as independent contractors rather than employees in order to avoid New York Labor Law requirements, such as minimum wage, overtime pay, and expense reimbursement. (Mumin Compl. ¶¶ 4, 41; Ortega Compl. ¶ 57.) They assert that Uber "exercised control over their wages, their hours, and their working conditions," and "regulate[d] every aspect of Uber Drivers' job performance." (Mumin Compl. ¶¶ 25–26; see also Ortega Compl. ¶ 58.) Uber controls the qualifications of the drivers it chooses to hire, requiring prospective drivers to submit to background checks and to complete an in depth training process. (Mumin Compl. ¶¶ 27, 43–44; Ortega Compl. ¶¶ 28, 59–68.) For example, potential drivers must watch an instructional video detailing Uber's rules for how drivers are to interact with riders. (Mumin Compl. ¶¶ 44; Ortega Compl. ¶¶ 62–65.) The video allegedly directs drivers "to stock their cars with water, snacks, and phone chargers for use by the customer," and "to dress in a certain way that would convey the message that the driver is the rider's personal chauffeur." (Ortega Compl. ¶ 65.) Uber also allegedly requires its drivers to pass a "City Competency Test" before they can begin working. (Id. ¶¶ 66–67.) In addition, Uber drivers must register their vehicles with Uber, which bars the use of vehicles over ten years old. (Mumin Compl. ¶ 28.)

Once a driver begins working for Uber, his or her performance is monitored through a five-star rating system whereby riders are asked to rate the driver at the end of each trip. (See Mumin Compl. ¶ 45; Ortega Compl. ¶ 69.) Drivers must maintain an average customer rating of 4.5 stars out of 5. (See Mumin Compl. ¶ 45; Ortega Compl. ¶ 69.) If drivers' customer rating falls below the minimum threshold, they have 30 days to improve their rating. (See Mumin Compl. ¶ 45; see also Ortega Compl. ¶¶ 69–72.) Failure to increase the rating to the required 4.5 stars will result in the deactivation of a driver in Uber's mobile application, effectively terminating the parties' working relationship. (Mumin Compl. ¶ 45; Ortega Compl. ¶ 72.)

Plaintiffs allege that they incurred weekly expenses such as fuel, insurance, finance payments for their vehicles, as well as cleaning, tolls, and car maintenance costs, while driving for Uber. (Mumin Compl. ¶¶ 10, 15; Ortega Compl. ¶ 28.) Uber did not reimburse Plaintiffs for their expenses. (Mumin Compl. ¶ 11; Ortega Compl. ¶ 28.) Plaintiffs additionally allege that Uber shifts the burden of its own expenses onto the drivers through its $1 per ride "safe ride" fee. (Mumin Compl. ¶ 33; Ortega Compl. ¶¶ 27–28.) Uber supposedly uses this fee to pay for background checks, driver safety education, and the development of safety features in its mobile application. (Mumin Compl. ¶ 33; Ortega Compl. ¶ 28.)

Plaintiffs also take issue with Uber's policy on gratuities. Uber directs its drivers to decline any tips offered by their riders. (Mumin Compl. ¶ 38; Ortega Compl. ¶¶ 75–76 (noting that Uber permits drivers to accept gratuity only after a rider offers it three times).) Uber allegedly represents to riders that gratuity is included in the cost of the fares. (Mumin Compl. ¶ 37; Ortega Compl. ¶ 77.) Uber's website advises riders that "there's no need to tip." (Mumin Compl. ¶ 69; Ortega Compl. ¶ 77.)

Plaintiffs further allege that Uber misled them in marketing materials designed to recruit prospective drivers. (Mumin Compl. ¶¶ 34–35; OrtegaCompl. ¶¶ 98–99.) The details of the deceptive advertisements vary between the two Complaints, and are described in greater detail below.

2. Allegations Specific to the Mumin Action

Plaintiff Manzoor Mumin allegedly drove for Uber from November 2011 to July 2013, while Plaintiff Victor Mallh began driving for Uber in June 2015 and continues to do so. (Mumin Compl. ¶¶ 8, 13.) Mumin worked an estimated 55 hours per week as an Uber driver, and Mallh works 70 hours per week. (Id. ¶¶ 9, 14.) Mumin alleges that he earned approximately $1,100 a week before taking into account weekly expenses of about $766, and Mallh states that he earns $1,400 each week while incurring $900 in weekly expenses. (Id. ¶¶ 10, 15.) After deducting his weekly expenses, Mumin calculates that his effective hourly wage was $6.07. (Id. ¶ 10.) Mallh similarly estimates his effective wage to be $7.14. (Id. 15.) During Mumin's time with Uber, the minimum wage in New York was $7.25 and later $8.00 per hour. (Id. ¶ 10.) The minimum wage is $9.00 an hour for the time that Mallh drove for Uber. (Id. ¶ 5.)

The Mumin Plaintiffs further allege that Uber's drivers are required to log a certain number of hours driving or they risk deactivation. (Id. ¶ 45.) Relatedly, drivers who accept less than 90% of the ride requests sent to them through the Uber mobile application risk temporary deactivation. (Id. ¶ 61 (including screenshots of the Uber application in which a driver was deactivated for 24 hours for accepting less than 90% of the ride requests and, separately, an Uber recommendation to its drivers that they should accept at least 80% of trip requests).) Drivers are also prohibited from soliciting or accepting requests for future rides from their Uber passengers outside of the Uber mobile application. (Id. ¶ 47.)

As to gratuity, the Mumin Complaint includes specific allegations that up until the end of 2012, Uber's website contained statements such as "There's no need to hand your driver any payment and the tip is included," and "Please thank your driver, but tip is already included." (Id. ¶ 69.) Although Uber revised its website in 2013 to state only that "there's no need to tip," Uber has on occasion continued to represent to passengers that "tip [is] included" as late as April 2015. (Id. ¶¶ 69–70.) The Mumin Plaintiffs assert that Uber's "there's no need to tip" statement harmed its drivers by depriving them of tips that they otherwise would have received. (Id. ¶ 40.)

Finally, the Mumin Plaintiffs assert that Uber misled its drivers by claiming that "drivers can earn $2,000 a week by driving for Uber." (Id. ¶ 34 (including a screenshot of an Uber advertisement which states: "Depending on your market, it is easy to make $2,000 a week driving for...