SCROGGINS v. UBER TECHNOLOGIES, INC. et al
ORDER granting in part and denying in part Defendants' 55 Motion to Compel Arbitration. The parties are directed to notify the Court within 14 days of the issuance of any arbitration award or other action that terminates the arbitration proceedings. See Order for additional information. Signed by Magistrate Judge Mark J. Dinsmore on 1/26/2017. (SWM)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
UBER TECHNOLOGIES, INC.,
ORDER ON MOTION TO COMPEL ARBITRATION
This matter is before the Court on Defendants’ Motion to Compel Putative Opt-In
Plaintiff Richard Wilson to Arbitration and Dismiss Him From This Action. [Dkt. 55.] The Court
GRANTS IN PART and DENIES IN PART Defendants’ Motion. For the reasons set forth
below, this action is stayed as to Plaintiff Wilson’s claims only, pending arbitration. 1
Opt-in Plaintiff, Richard Wilson, is an Indiana resident who worked as an Uber driver. At
the heart of this case is Plaintiffs’ contention that Uber misclassifies its drivers as independent
contractors rather than employees resulting in the violation of wage payment laws. Plaintiff
Scroggins brought this diversity action on behalf of himself and all other similarly situated
persons working as drivers in this district for Defendant Uber Technologies, Inc.
This Order is limited to the claims of putative opt-in Plaintiff Richard Wilson. Defendants do not seek to compel
Plaintiff William Scroggins to arbitration because he opted out of the Arbitration Provision.
Uber Technologies is a technology company that offers a smartphone application to
connect riders looking for transportation to drivers. Defendant Raiser LLC is a wholly owned
subsidiary of Uber Technologies (Defendants hereinafter collectively referred to as “Uber”).
Customers use their smartphones to request rides through the Uber app. The request is routed to
the locally-available Uber drivers, who use their own vehicles to pick-up and transport
customers. The customer pays through the Uber app and the driver is paid directly by Uber for a
portion of the fare collected from the customer.
Prior to using Uber’s software to generate leads for riders, potential drivers must enter
into the Technology Services Agreement (the “Agreement”). 2 To enter the Agreement, Wilson
had to sign into the Uber app and click the appropriate hyperlink. The Agreement is then
presented on the screen and can be reviewed in its entirety by scrolling. There is no time
limitation to review the Agreement. To advance past the “Agreement” screen, the driver must
first click “YES, I AGREE” and then click “CONFIRM.” After confirming his acceptance of the
Agreement, it is automatically transmitted to Plaintiff’s personal Driver Portal, where he could
review it or print it at any time.
The Agreement contains an Arbitration Provision, which provides, in relevant part:
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 any forum other than arbitration, with the exception
of proceedings that must be exhausted under applicable law before pursuing
a claim in a court of law or in any forum other than arbitration. Except as it
otherwise provides, this Arbitration Provision requires all such disputes to be
resolved only by an arbitrator through final and binding arbitration on an
individual basis only and not by way of court or jury trial, or by way of class,
collective, or representative action.
Except as provided in Section 15.3(v) below, regarding the Class Action Waiver,
such disputes include without limitation disputes arising out of or relating to
Uber periodically revises its agreements and its drivers must assent to those revised versions to receive continued
access to the app. The Agreement cited here is the most recent Agreement between the parties.
interpretation or application of this Arbitration Provision, including the
enforceability, revocability or validity of the Arbitration Provision or any portion
of the Arbitration Provision. All such matters shall be decided by an Arbitrator
and not by a court or judge.
[Dkt. 56-1 at 52 (emphasis in original).] 3
Once a driver accepts the Agreement, he may still opt out of the Arbitration
Provision. The Agreement provides:
Arbitration is not a mandatory condition of your contractual relationship with the
Company. If you do not want to be subject to this Arbitration Provision, you may
opt out of this Arbitration Provision by notifying the Company in writing of your
desire to opt out of this Arbitration Provision, either by (1) sending, within 30
days of the date this Agreement is executed by you, electronic mail to
firstname.lastname@example.org, stating your name and intent to opt out of the Arbitration
Provision or (2) by sending a letter by U.S. Mail, or by any nationally recognized
delivery service (e.g. UPS, Federal Express, etc.) or by hand delivery . . .
[Dkt. 56-1 at 56.]
Wilson did not opt out of the Arbitration Provision. Uber now moves to compel the
arbitration of Wilson’s claims. 4
Plaintiff does not dispute that he accepted the Agreement and did not opt out of the
Arbitration Provision. Rather, he argues that the class action waiver included in the Arbitration
Provision violates the National Labor Relations Act (“NLRA”) and the Norris-LaGuardia Act
(“NLGA”) and therefore renders the Arbitration Provision unenforceable. The December 2015
Agreement, unlike prior versions of the Agreement, contains a “carve out” from the delegation
clause for disputes regarding the class action waiver. These disputes must be resolved by a court,
3 Although the Arbitration Provision begins on page 14 of the Agreement, potential drivers are advised of the
Provision and their ability to opt-out at the bottom of page one in a paragraph printed in bold-faced, ALL CAPS.
4 Similar cases between Uber and its drivers have been filed in numerous courts across the country. Significantly,
every federal district court with the exception of one in the Northern District of California has granted Defendants’
motions to compel arbitration for plaintiffs who did not opt-out of the Arbitration Provision. The rogue California
district court recently was reversed by the Ninth Circuit in Mohamed v. Uber Technologies, Inc., 2016 WL 4651409
(9th Cir. 2016).
not an arbitrator. [Dkt. 56-1 at 54.] Therefore, the validity of the class action waiver is properly
before this Court and Wilson’s arguments will be addressed in turn below.
A. National Labor Relations Act
Wilson first asserts the Arbitration Provision is unenforceable because it contains a class
action waiver that violates Sections 7 and 8 of the National Labor Relations Act. In support of
this proposition, Wilson relies upon Lewis v. Epic Systems, wherein the Seventh Circuit held that
a class action waiver rendered an arbitration provision unenforceable because it interfered with
employees’ Section 7 right to engage in concerted activity. 823 F.3d 1147 (7th Cir. 2016). In
Lewis, the employer sent to its employees via email an arbitration agreement mandating that
wage and hour claims could only be brought through individual arbitration and that employees
waived the right to collective action for such claims. Employees were deemed to have accepted
the agreement if they continued working. In other words, employees had no option to decline or
“opt-out” of the agreement if they wanted to keep their jobs. Lewis, 823 F.3d at 1151.
Wilson argues the Court should find the Arbitration Provision in this case to be
unenforceable based upon Lewis. However, the Seventh Circuit expressly declined in Lewis to
decide the effect of an opt-out clause, such as the one in this case, on the enforceability of a class
action waiver. The Court stated, “[I]n our case, it is undisputed that assent to Epic’s arbitration
provision was a condition of continued employment. A contract that limits Section 7 rights that is
agreed to as a condition of continued employment qualifies as ‘interfer[ing] with’ or
‘restrain[ing] . . . employees in the exercise’ of those rights.” Id. at 1155. 5 In this case, Wilson
The Court likewise believes N.L.R.B. v. Stone, referenced within Lewis, to be sufficiently distinguishable from this
case to warrant a different result. 125 F.2d 752 (7th Cir. 1942). In Stone, employees were required (there was no optout available) by contract to bargain with their employer individually which the Court found to be a violation of the
NLRA. The Court noted that “we do not think this provision can be legalized by showing the contract was entered
into without coercion.” Id. at 756. Neither Stone nor Lewis addressed the effect of a clear opt-out provision on the
validity of a class action waiver, and the Court expressly declined to resolve that issue in Lewis.
was able to opt-out of the Arbitration Provision – including the class action waiver – even after
he began driving for Uber. At any time within the first 30 days of accepting the Agreement,
Wilson could have sent an email opting out of the Arbitration Provision, thereby preserving his
right to pursue a collective action, as Plaintiff Scroggins did. But Wilson did not do so.
Wilson next argues the Court should defer to the NLRB’s decision in On Assignment
Staffing, wherein the Board found a voluntary class waiver violated the NLRA. 2015 WL
5113231. rev'd per curiam, On Assignment Staffing Servs., Inc. v. NLRB, No. 15-60642, 2016
WL 3685206 (5th Cir. June 6, 2016). While Wilson notes that two district courts and a
bankruptcy court (none from within the Seventh Circuit) have deferred to the NLRB’s opinion
on this issue, the Court also notes that On Assignment Staffing was summarily reversed by the
Fifth Circuit. Given that the Seventh Circuit expressly declined to resolve the issue of the opt-out
provision in Lewis without referencing On Assignment Staffing, the Court declines to defer to
that reversed Board decision here.
B. Norris-LaGuardia Act
Finally, Wilson argues that the Norris-LaGuardia Act prohibits the enforcement of class
action waivers. The NLGA, enacted three years before the NLRA, restricts the power of federal
courts to issue injunctions to prohibit certain activities. Specifically, it prohibits two types of
agreements: (1) one in which a person promises not to join a labor union; and (2) one in which a
person promises to withdraw from a labor union. See 29 U.S.C. § 103. An agreement to arbitrate
is not covered by the NLGA. See Morvant v. P.F. Chang’s Bistro, Inc., 870 F. Supp. 2d 831, 844
(N.D. Cal. 2012). Therefore, the NLGA does not render the class action waiver, or the
Arbitration Provision, unenforceable.
Based on the foregoing, Defendant’s Motion to Compel Putative Opt-In Plaintiff Richard
Wilson to Arbitration and Dismiss Him From This Action [Dkt. 55] is GRANTED IN PART
and DENIED IN PART. The motion to compel individual arbitration is granted and this matter
is stayed as to Wilson only pending resolution of the arbitration proceeding. The motion to
dismiss is denied, as the Seventh Circuit has held repeatedly, “the proper course of action when a
party seeks to invoke an arbitration clause is to stay the proceedings rather than to dismiss
outright.” Halim v. Great Gatsby's Auction Gallery, Inc., 516 F.3d 557, 561 (7th Cir. 2008).
The parties are directed to notify the Court within 14 days of the issuance of any
arbitration award or other action that terminates the arbitration proceedings.
Dated: 26 JAN 2017
Service will be made electronically
on all ECF-registered counsel of record via
email generated by the court’s ECF system.
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