On January 19, 2016 NELA joined the National Employment Law Project, the National Association of Consumer Advocates, the National Consumer Law Center, and Towards Justice in filing an amicus brief in support of the plaintiff-appellees in Mohamed/Gillette v. Uber.
The plaintiffs in this case represent a class of current and former Uber drivers who have alleged that Uber’s background check policies violate the federal Fair Credit Reporting Act (FCRA) and the California Investigative Consumer Report Agencies Act (CICRAA), and have challenged Uber’s misclassification of its drivers as independent contractors under the California Private Attorneys General Act (PAGA). PAGA allows individuals to bring representative actions on behalf of the state of California to remedy violations of the California Labor Code. Of particular importance for this appeal is that the Ninth Circuit Court of Appeals recently held in Sakkab v. Luxottica that PAGA waivers contained in forced arbitration agreements are unenforceable under California law.
While Sakkab was pending in the court of appeals, the district court judge denied the defendant’s motion to compel arbitration of Mohamed/Gillette’s claims. After reviewing the delegation clauses contained in the operative arbitration agreements, Judge Chen concluded that neither “clearly and unmistakably” delegated the authority to resolve threshold questions of arbitrability to the arbitrator. After doing so, the court reviewed the PAGA waivers contained in the forced arbitration agreements and determined that they were unenforceable. Because the express language of the arbitration agreements stated that the PAGA waivers were not severable from the broader arbitration agreements, the court concluded that the entire arbitration agreements were unenforceable. Further, because Sakkab was still pending at the time of the district court’s ruling, the court went on to determine that one of the operative arbitration agreements was also unenforceable on unconscionability grounds.
In addition to the compelling arguments made by the plaintiffs’ counsel on the merits, our amicus brief makes three key arguments in support of the drivers. First, the brief points out that the provisions of the forced arbitration clauses at issue related to the sharing of fees and costs would make arbitration prohibitively expensive for the drivers, thus preventing them from effectively vindicating their rights under federal law. Second, the brief argues that the forced arbitration provisions are both procedurally and substantively unconscionable under California law, and cannot be saved through the inclusion of an opt-out mechanism that few drivers would understand and most would be unlikely to utilize. Third, the brief identifies the serious problems that would arise if the court adopted the defendants’ proposed rule regarding the severability of unlawful terms in arbitration agreements. Under such a rule, employers would have little incentive to refrain from including unconscionable terms in arbitration agreements, knowing that courts would merely sever the offending terms and enforce the arbitration agreement anyway.
The amicus brief was drafted by David Seligman of Towards Justice in Denver, CO, and can be downloaded from the Amicus Library on The NELA Exchange.