Is this arbitration agreement enforceable? The 9th Circuit has bolstered the position of employers who prefer to have an arbitrator (not a court) decide the initial question of whether an arbitration agreement itself is enforceable. Mohamed v. Uber Technologies (9th Cir 09/07/2016) [Opinion full text]
Two Uber drivers had agreed to contracts that included an arbitration provision requiring Uber drivers to submit to arbitration to resolve most disputes with the company. They 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. Although the two agreements were not identical, the following language was typical:
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.
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 drivers claimed that their access to the Uber app was terminated due to negative information on their consumer credit reports. They sued, claiming a variety of statutory violations, and Uber moved to compel arbitration.
The district court denied the motion to compel arbitration on the grounds that (1) the delegation of decision-making to the arbitrator was not "clear and unmistakable," and (2) even if the delegation clauses were clear and unmistakable, they were unenforceable because they were unconscionable.
The 9th Circuit upheld the delegation provisions, saying:
The delegation provisions clearly and unmistakably delegated the question of arbitrability 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 unconscionability, let an arbitrator determine arbitrability as to all but the claims specifically exempted by the 2013 Agreement.
Applying California law, the 9th Circuit found a lack of unconscionability.
The arbitration agreements allowed the drivers to opt out of arbitration, which they did not do, so there was no "procedural" unconscionabilty. So the court said:
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, 6 P.3d at 690, we need not reach the question whether the agreements here were substantively unconscionable.
One of the arbitration agreement contained a special provision saying that a court, not an arbitrator, should consider challenges to a waiver of representative claims under the California Private Attorney General Act (PAGA). So this claim was severed from the rest of the case, and will be litigated in court.
Moral of the whole story: Courts will enforce arbitration clauses as they are written, just like they do with other contract provisions.