O'Connor et al v. Uber Technologies, Inc. et al

Filing 550

ORDER DENYING STIPULATION VACATING THE RULE 23(D) ORDERS. Signed by Judge Edward M. Chen on 5/2/16. (bpfS, COURT STAFF) (Filed on 5/2/2016)

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GIBSON, DUNN & CRUTCHER LLP
THEODORE J. BOUTROUS, JR., SBN 132099
[e-mail]
THEANE D. EVANGELIS, SBN 243570
[e-mail]
DHANANJAY MANTHRIPRAGADA,
SBN 254433
[e-mail]
333 South Grand Avenue
Los Angeles, CA 90071-3197
Telephone: [phone]
Facsimile: 213.229.7520
JOSHUA S. LIPSHUTZ, SBN 242557
[e-mail]
KEVIN J. RING-DOWELL, SBN 278289
[e-mail]
555 Mission Street, Suite 3000
San Francisco, CA 94105-0921
Telephone: [phone]
Facsimile: 415.393.8306

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Attorneys for Defendants
UBER TECHNOLOGIES, INC. and
TRAVIS KALANICK

LICHTEN & LISS-RIORDAN, P.C.
SHANNON LISS-RIORDAN, pro hac vice
[e-mail]
ADELAIDE PAGANO, pro hac vice
[e-mail]
729 Boylston Street, Suite 2000
Boston, MA 02116
Telephone: [phone]
Facsimile: 617.994.5801
MATTHEW CARLSON, SBN 273242
[e-mail]
466 Geary Street, Suite 201
San Francisco, CA 94102
Telephone: [phone]
Facsimile: 617.994.5801
Attorneys for O’Connor Plaintiffs
DOUGLAS O’CONNOR, THOMAS COLOPY,
MATTHEW MANAHAN, and ELIE
GURFINKEL, and for Yucesoy Plaintiffs
HAKAN YUCESOY, ABDI MAHAMMED,
MOKHTAR TALHA, BRIAN MORRIS, and
PEDRO SANCHEZ

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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DOUGLAS O’CONNOR, et al., individually
and on behalf of all others similarly situated,
Plaintiffs,
v.
UBER TECHNOLOGIES, INC.,
Defendant.

CASE NO. 13-cv-03826-EMC
CASE NO. 15-cv-00262-EMC
JOINT STIPULATION AND [PROPOSED]
ORDER VACATING RULE 23(D) ORDERS
(Denied)

HAKAN YUCESOY, et al., individually and
on behalf of all others similarly situated,
Plaintiffs,
v.
UBER TECHNOLOGIES, INC., et al.
Defendants.

Gibson, Dunn &
Crutcher LLP

STIP. AND [PROPOSED] ORDER VACATING RULE 23(D) ORDERS

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JOINT STIPULATION VACATING RULE 23(D) ORDERS

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Pursuant to Federal Rule of Civil Procedure 54(b) and Civil Local Rule 7-12, O’Connor

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Plaintiffs Douglas O’Connor, Thomas Colopy, Matthew Manahan, and Elie Gurfinkel (collectively,

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the “O’Connor Plaintiffs”), Yucesoy Plaintiffs Hakan Yucesoy, Abdi Mahammed, Mokhtar Talha,

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Brian Morris, and Pedro Sanchez (collectively, the “Yucesoy Plaintiffs”) (together with the O’Connor

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Plaintiffs, “Plaintiffs”), and Defendants Uber Technologies, Inc. (“Uber”)1 and Travis Kalanick

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(together, the “Defendants”) (together with the Plaintiffs, the “Parties”), by and through their

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respective counsel of record, hereby stipulate as follows:

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WHEREAS, Uber filed motions to compel arbitration of certain named plaintiffs’ and absent

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class and putative class members’ claims in O’Connor v. Uber Techs., Inc., 13-cv-03826-EMC

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(“O’Connor”) and Yucesoy v. Uber Techs., Inc., 15-cv-00262-EMC (“Yucesoy”). See O’Connor,

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ECF Nos. 346, 397; Yucesoy, ECF Nos. 62, 94.

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WHEREAS, the Court denied Uber’s motions to compel arbitration and issued a series of

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orders invalidating Uber’s arbitration agreements with drivers who use the Uber software application.

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See O’Connor, ECF Nos. 395, 400; Yucesoy, ECF Nos. 142, 158; see also In re FCRA Litig., No. 14-

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cv-05200-EMC, ECF No. 70.

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WHEREAS, Uber promulgated revised versions of its Licensing Agreement and the Rasier

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Agreement on December 10, 2015 (the “December 2015 Arbitration Provision”). See O’Connor,

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ECF No. 410 Exs. A–C. In those agreements, Uber revised: (1) various contractual provisions

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unrelated to arbitration (e.g., provisions regarding drivers’ obligations to satisfy the Americans with

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Disabilities Act, fare calculations, and drivers’ automobile insurance obligations); and (2) certain

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clauses in the arbitration provision that the Court previously held to be unconscionable and/or

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otherwise unenforceable.

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WHEREAS, the O’Connor Plaintiffs, the Yucesoy Plaintiffs, and the Plaintiffs in In re FCRA

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Litigation (the “FCRA Plaintiffs”), filed motions pursuant to Federal Rule of Civil Procedure 23(d)

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Gibson, Dunn &
Crutcher LLP

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Throughout this Joint Stipulation and Proposed Order, Uber shall also refer to Uber Technologies,
Inc.’s past, present, and future parents, subsidiaries, affiliates, divisions, and any other legal
entities, whether foreign or domestic, that are owned or controlled by Uber Technologies, Inc.
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STIP. AND [PROPOSED] ORDER VACATING RULE 23(D) ORDERS

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on December 11, 2015, requesting that the Court enjoin Uber’s communications with class and

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putative class members and invalidate the December 2015 Arbitration Provision. See O’Connor,

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ECF No. 405; Yucesoy, ECF No. 145; In re FCRA Litig., ECF No. 127.

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WHEREAS, on December 23, 2015, the Court granted, in part, Plaintiffs’ Rule 23(d) motions.

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See O’Connor, ECF No. 435; Yucesoy, ECF No. 161. In its order, the Court declined to rule on the

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enforceability of the December 2015 Arbitration Provision, but nevertheless purported to exercise its

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Rule 23(d) authority and held as follows: (i) the December 2015 Arbitration Provision “shall have no

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effect on the rights of certified class members” to pursue their certified claims in O’Connor; (ii) the

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December 2015 Arbitration Provision “may not be enforced until a revised cover letter and

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arbitration agreement which conform to [the Court’s December 23, 2015 order] is issued;” and

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(iii) “[d]uring the pendency of Uber driver cases before [the] Court, all cover letters, notices and

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arbitration provisions given to new or prospective drivers must conform with the requirements [in the

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Court’s December 23, 2015 order], and be approved.” O’Connor, ECF No. 435 at 8; Yucesoy, ECF

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No. 161 at 8. The Court further requested that the parties meet and confer and stipulate to “the

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appropriate form, content, and procedures of the revised arbitration provision and corrective cover

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letter . . . .” O’Connor, ECF No. 435 at 8; Yucesoy, ECF No. 161 at 8.

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WHEREAS, on January 13, 2016, the Parties submitted a joint statement in response to the

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Court’s December 23, 2015 order, to which the Parties attached a draft proposed revised arbitration

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provision and corrective cover letter (with disagreements noted in redline). O’Connor, ECF No. 462;

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Yucesoy, ECF No. 180.

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WHEREAS, on January 19, 2016, the Court issued an order regarding the Parties’ joint

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statement and further clarifying the scope of the Court’s December 23, 2015 order. O’Connor, ECF

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No. 464; Yucesoy, ECF No. 183.

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WHEREAS, the Parties have reached a settlement agreement that will resolve the O’Connor

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and Yucesoy class and putative class action lawsuits, upon final Court approval. As part of that

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settlement agreement, Plaintiffs have agreed to stipulate to the enforceability of the December 2015

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Arbitration Provision. Further, as part of the settlement agreement, Plaintiffs have agreed to stipulate

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to a vacating of the Court’s December 23, 2015 (O’Connor, ECF No. 435) and January 19, 2016

Gibson, Dunn &
Crutcher LLP

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STIP. AND [PROPOSED] ORDER VACATING RULE 23(D) ORDERS

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(O’Connor, ECF No. 464) orders (together, the “Rule 23(d) Orders”) finding Uber’s December 2015

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Arbitration Provision to be invalid and unenforceable and compelling changes to the agreement. The

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Parties have filed a Motion for Preliminary Approval, attaching a copy of the settlement agreement,

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together with this Joint Stipulation and Proposed Order.

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WHEREAS, the settlement agreement in O’Connor and Yucesoy permits Uber to void the

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settlement agreement in its entirety unless and until this Court vacates the Rule 23(d) Orders, permits

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Uber to enforce the December 2015 Arbitration Provision as it was distributed to drivers nationwide,

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and permits Uber to continue distributing the December 2015 Arbitration Provision and/or any other

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arbitration provision Uber desires to drivers nationwide without prior court approval, in light of the

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significant changed circumstances that would result from the settlement of the O’Connor and

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Yucesoy actions. The Parties’ stipulation to vacate the Rule 23(d) Orders is a significant and material

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term of the Parties’ settlement agreement.

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WHEREAS, Federal Rule of Civil Procedure 54(b) grants district courts authority to vacate or

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revise “any order or other decision, however designated, that adjudicates fewer than all claims or the

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rights and liabilities of fewer than all the parties . . . at any time before the entry of a judgment

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adjudicating all the claims and all the parties’ rights and liabilities,” if it would be “consonant with

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equity” to do so. Fed. R. Civ. P. 54(b); Simmons v. Brier Bros. Co., 258 U.S. 82, 90–91 (1992).

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WHEREAS, courts routinely grant parties’ stipulations to vacate or revise non-final orders as

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part of the settlement approval process, including in class actions. See, e.g., U.S. Gypsum Co. v. Pac.

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Award Metals, Inc., 2006 WL 1825705, at *1 (N.D. Cal. July 3, 2006) (granting request to vacate

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claims construction and summary judgment orders under Rule 54(b) and noting that the parties’

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agreement to vacate “was a significant factor in successfully resolving [the] litigation”); De la O v.

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Arnold Williams, 2008 WL 4192033, at *1 (E.D. Wash. Aug. 27, 2008) (granting Rule 54(b) motion

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for vacatur and vacating orders finding statutes and regulations to be unconstitutional as part of class

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action settlement); Gemini Ins. Co. v. N. Am. Capacity Ins. Co., 2015 WL 3891423, at *2–3 (D. Nev.

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June 18, 2015) (granting joint request to vacate summary judgment and motion for reconsideration

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orders under Rule 54(b) where settlement was contingent on vacatur of the orders); Jaynes Corp. v.

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Amer. Safety Ins., 2014 WL 11115424, at *3 (D. Nev. Dec. 2, 2012) (granting joint motion to vacate

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Crutcher LLP

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STIP. AND [PROPOSED] ORDER VACATING RULE 23(D) ORDERS

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summary judgment order under Rule 54(b) in accordance with the parties’ conditional settlement

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agreement); see also In re L. Bruce Nybo, Inc., 263 B.R. 905 (D. Nev. 2001) (granting motion to

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vacate opinion per stipulation for settlement under Rule 60(b)(6)).

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WHEREAS, the Parties believe it would be “consonant with justice” for this Court to vacate

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its Rule 23(d) Orders and permit Uber to enforce the December 2015 Arbitration Provision, now that

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the Parties have reached a settlement agreement. Simmons, 258 U.S. at 90–91; see also Gemini, 2015

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WL 3891423, at *3 (granting Rule 54(b) request for vacatur as part of conditional settlement

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agreement, in part, because the parties joined in the stipulated motion seeking vacatur).

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WHEREAS, Rule 23(d) vests courts with the authority to “exercise control over a class action

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and to enter appropriate orders governing the conduct of counsel and parties.” Gulf Oil v. Bernard,

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452 U.S. 89, 100 (1981). Plaintiffs recognize that Uber had appealed the Court’s orders regarding the

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arbitration clause and its distribution and, in its appeal, had made the following arguments: The

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Court’s authority “is not unlimited, and indeed is bounded by the relevant provisions of the Federal

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Rules” and the First Amendment. Id. Thus, a “mere possibility of abuses does not justify” a Rule

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23(d) order. Id. at 104. Rather, any “order limiting communications between parties and potential

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class members should be based on a clear record and specific findings that reflect a weighing of the

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need for a limitation and the potential interference with the rights of the parties.” Id. at 101.

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Moreover, because Rule 23(d) orders can “involve[] serious restraints on expression,” a court’s

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“weighing” process must “result in a carefully drawn order that limits speech as little as possible,

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consistent with the rights of the parties under the circumstances.” Id. at 102, 104; see also In re Sch.

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Asbestos Litig., 842 F.2d 671, 680–81, 684 (3d Cir. 1988) (“Orders regulating communications

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between litigants . . . pose a grave threat to first amendment freedom of speech”).

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WHEREAS, the Parties disagree as to whether this Court properly exercised its Rule 23(d)

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authority in the first place when it entered the Rule 23(d) Orders. However, all Parties jointly agree

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that, given the settlement, an order enjoining Uber’s communications and placing restrictions on

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Uber’s ability to enforce the December 2015 Arbitration Provision is no longer appropriate under

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Rule 23(d).

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Gibson, Dunn &
Crutcher LLP

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STIP. AND [PROPOSED] ORDER VACATING RULE 23(D) ORDERS

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WHEREAS, this Court originally granted Plaintiffs’ Rule 23(d) motion, in large part, in order

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to provide “clarity” to drivers regarding a “legal landscape” that, in the Court’s view, became

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“materially more complicated” when this Court certified the O’Connor class action. O’Connor, ECF

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No. 435 at 3–4; Yucesoy, ECF No. 161 at 3–4. Virtually all of the legal and factual developments

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cited by this Court in support of its Rule 23(d) Orders pertain only to the O’Connor litigation and

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thus are unique to that particular case. See, e.g., O’Connor, ECF No. 435 at 3 (“[T]here have been

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significant developments since . . . December 6, 2013, including . . . the denial of Uber’s motion for

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summary judgment in O’Connor, certification of a class and claims in O’Connor, . . . and the setting

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of the O’Connor case for trial.”); id. at 4 (“[D]rivers may give greater credence to litigation over

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arbitration in view of the progression of the O’Connor case . . . .”); see also id. (noting that Uber’s

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promulgation of the December 2015 Arbitration Provision supposedly “led to considerable confusion

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among the drivers” in the O’Connor class). Those concerns and the supposed legal complexity that

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this Court identified no longer exist now that the Parties have reached a settlement agreement in

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O’Connor. Thus, the Court’s Rule 23(d) Orders are no longer necessary to accomplish the stated

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purpose of reducing or eliminating drivers’ purported confusion, to the extent they ever were.

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WHEREAS, the Court’s December 23, 2015 order held that Uber’s December 2015

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Arbitration Provision threatened to interfere with O’Connor class members’ rights because “Uber

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contend[ed] that it [did] not intend to invoke the [December 2015 Arbitration Provision] against the

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members of the certified class” in O’Connor, but “the [December 2015 Arbitration Provision] [did]

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not reflect this limitation.” O’Connor, ECF No. 435 at 4; Yucesoy, ECF No. 161 at 4. This purported

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concern no longer exists now that the Parties have reached a settlement agreement in O’Connor.

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WHEREAS, the Parties’ settlement agreement also eliminates any supposed confusion among

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putative class members in the Yucesoy matter. Thus, the Court’s Rule 23(d) Orders are no longer

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necessary to reduce or eliminate any purported confusion pertaining to Yucesoy, to the extent they

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ever were.

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WHEREAS, the Court stated that its Rule 23(d) Orders regulating Uber’s communications

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with class and putative class members were necessary, in part, due to the “problematic nature of some

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of the arbitration provisions” in Uber’s Licensing Agreement and Rasier Agreement. O’Connor,

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Crutcher LLP

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STIP. AND [PROPOSED] ORDER VACATING RULE 23(D) ORDERS

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ECF No. 435 at 4; Yucesoy, ECF No. 161 at 4. The Parties disagree as to whether previous iterations

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of Uber’s arbitration agreements contained any “problematic” provisions; however, all Parties jointly

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agree and stipulate that the December 2015 Arbitration Provision does not contain any problematic

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provisions identified by the Court and thus the Parties will now, in light of the settlement, agree that

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it is enforceable in its entirety. Specifically:

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The December 2015 Arbitration Provision makes clear that (to the extent Private Attorneys
General Act (“PAGA”) waivers are unenforceable) all representative PAGA claims must be
asserted in a civil court of competent jurisdiction. O’Connor, ECF No. 410 Ex. A at § 15.3(i)
& 15.3(v), Ex. B at § 15.3(i) & 15.3(v); cf. O’Connor, ECF No. 395 at 9–21 (finding that the
PAGA waiver contained in Uber’s 2014 arbitration agreement could not be severed from the
remainder of the agreement).

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The December 2015 Arbitration Provision expressly guarantees that drivers “will not be
required to bear any type of fee or expense that [they] would not be required to bear if [they]
had filed the action in a court of law,” “[a]ny disputes in that regard will be resolved by the
Arbitrator as soon as practicable after the Arbitrator is selected, and Uber shall bear all of the
Arbitrator’s and arbitration fees until such time as the Arbitrator resolves any such dispute.”
O’Connor, ECF No. 410 Ex. A at § 15.3(vi), Ex. B at § 15.3(vi); cf. In re FCRA Litig., ECF
No. 70 at 53–55 (finding the cost provisions in Uber’s 2013 and 2014 arbitration agreements
unconscionable).

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The December 2015 Arbitration Provision does not include the confidentiality provision that
had appeared in previous arbitration agreements. Cf. In re FCRA Litig., ECF No. 70 at 54–55
(finding the confidentiality provisions in Uber’s 2013 and 2014 arbitration agreements
unconscionable).

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The December 2015 Arbitration Provision does not include a unilateral modification
provision, and instead contains an express guarantee stating that any modifications will
become operative only upon drivers’ acceptance of newly promulgated agreements.
O’Connor, ECF No. 410 Ex. A at § 14.1, Ex. B at § 14.1; cf. In re FCRA Litig., ECF No. 70
at 57–59 (finding the modification provisions in Uber’s 2013 and 2014 arbitration agreements
unconscionable).

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WHEREAS, the December 2015 Arbitration Provision permitted drivers to opt out of

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arbitration altogether within thirty (30) days of acceptance in any one of four ways (via hand

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delivery, overnight mail, U.S. mail, or email). See O’Connor, ECF No. 410 Ex. A at § 15.3(viii), Ex.

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B at § 15.3(viii). The December 2015 Arbitration Provision also retained the opt-out notices and

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warnings that this Court previously approved in the O’Connor action. See In re FCRA Litig., ECF

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No. 70 at 61 (“[T]he 2014 agreements contain highly conspicuous and non-illusory opt-out

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provisions that permit drivers to obtain all of the benefits of the contracts, while avoiding any

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potential burdens of arbitration.”); id. at 33–34 (“Put simply, it would be hard to draft a more visually

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STIP. AND [PROPOSED] ORDER VACATING RULE 23(D) ORDERS

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conspicuous opt-out clause even if the Court were to aid in the drafting process, which it actually

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did.”).

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WHEREAS, several thousand drivers did, in fact, opt out of the December 2015 Arbitration
Provision—many more drivers than opted out of Uber’s previous arbitration agreements

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WHEREAS, the Parties do not believe that the pending In re FCRA action stands as an

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impediment to vacatur of this Court’s Rule 23(d) Orders. As discussed above, this Court based its

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Rule 23(d) Orders almost exclusively on the supposed confusion and complexity pertaining to the

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O’Connor action, not any developments that have taken place in the In re FCRA case. In any event,

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the First Amendment harms Uber contends it is suffering as a result of the Rule 23(d) orders, together

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with the benefits of the settlement agreement reached by the Parties, weigh strongly in favor of

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vacatur. See Valle Del Sol Inc. v. Whiting, 709 F.3d 808, 828–29 (9th Cir. 2013) (“Both [the Ninth

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Circuit] and the Supreme Court have repeatedly held that ‘[t]he loss of First Amendment freedoms,

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even for minimal periods of time, unquestionably constitutes irreparable injury.’”) (citation omitted).

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Plaintiffs’ class counsel, who actually represents nearly all California drivers who use Uber in an

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attorney-client relationship, supports vacatur of the Rule 23(d) Orders, whereas plaintiffs’ counsel in

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In re FCRA does not currently represent any driver other than the named plaintiffs in In re FCRA.

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WHEREAS, the Parties anticipate that they will expend substantial costs and significant

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efforts, and that it will take several years of litigation in this Court and the appellate courts, in order

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to resolve the O’Connor and Yucesoy actions if the Court does not approve the Parties’ settlement

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agreement, an agreement that is contingent on the vacatur of this Court’s Rule 23(d) Orders. Thus,

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vacatur of the Court’s Rule 23(d) Orders will substantially minimize the time and cost that would

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otherwise be expended by the Parties and also the Court in litigation. See Gemini, 2015 WL

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3891423, at *1 (granting Rule 54(b) request for vacatur as part of conditional settlement agreement

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because “[t]he alternative [was] continued litigation and trial in [the] Court, followed by appellate

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proceedings and potential further litigation on remand”); Jaynes, 2014 WL 11115424, at *2 (granting

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stipulated motion to strike pursuant to conditional settlement because “[t]he proposed resolution . . .

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conserve[d] judicial resources in several respects”); De la O, 2008 WL 4192033, at *2 (granting Rule

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54(b) motion for vacatur because “[t]he certain cost of continuing the case [would] be significant and

Gibson, Dunn &
Crutcher LLP

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STIP. AND [PROPOSED] ORDER VACATING RULE 23(D) ORDERS

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the results of both . . . [an] appeal and the action itself [were] uncertain with considerable risk of an

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adverse outcome for Plaintiffs”).

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NOW THEREFORE, the Parties hereby stipulate, subject to the approval of this Court, that:

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1.

The Court’s December 23, 2015 and January 19, 2016 orders, see O’Connor, ECF

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Nos. 435, 462; Yucesoy, ECF Nos. 161, 183; In re FCRA Litig., ECF Nos. 137, 156, are hereby

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vacated pursuant to Federal Rule of Civil Procedure 54(b).

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2.

Uber is permitted to continue distributing to drivers nationwide the arbitration

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agreement it began distributing on December 10, 2015, and may seek to enforce the December 2015

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Arbitration Provision against any and all drivers who have assented to, and did not opt out of, that

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agreement.
3.

Uber shall not be required to obtain approval from this Court prior to implementation

of any revised arbitration agreements in the future.
IT IS SO STIPULATED
Dated: April 21, 2016

GIBSON, DUNN & CRUTCHER LLP

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By:

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/s/ Dhananjay S. Manthripragada
Dhananjay S. Manthripragada

Attorneys for Defendants UBER
TECHNOLOGIES, INC. and TRAVIS
KALANICK

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Dated: April 21, 2016

LICHTEN & LISS-RIORDAN, P.C.

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By:

/s/ Shannon Liss-Riordan
Shannon Liss-Riordan

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Gibson, Dunn &
Crutcher LLP

Attorneys for O’Connor Plaintiffs DOUGLAS
O’CONNOR, THOMAS COLOPY, MATTHEW
MANAHAN, and ELIE GURFINKEL
Attorneys for Yucesoy Plaintiffs HAKAN YUCESOY,
ABDI MAHAMMED, MOKHTAR TALHA, BRIAN
MORRIS, and PEDRO SANCHEZ
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STIP. AND [PROPOSED] ORDER VACATING RULE 23(D) ORDERS

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The joint stipulation to vacate the Rule 23(d) orders is denied without prejudice,
pending review of the motion for preliminary approval.

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S

Dated: ___________, 2016

UNIT
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DENIE UDICE
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d M. Ch

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R NIA

The Honorable Edward M. Chen
United States ITHOUT
District Judge

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May 2

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PURSUANT TO STIPULATION, IT IS SO ORDERED.

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[PROPOSED] ORDER

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ECF ATTESTATION
I hereby attest that I have on file all holographic signatures corresponding to any signatures
indicated by a conformed signature (/s/) within this e-filed document.

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By:

/s/ Kevin J. Ring-Dowell
Kevin J. Ring-Dowell

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