Zawada et al v. Uber Technologies, Inc. et al

Filing 28

OPINION AND ORDER GRANTING Motion to Dismiss the Complaint, COMPEL Arbitration, and STRIKE Class Allegations. Signed by District Judge Laurie J. Michelson. (KJac)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ARTHUR ZAWADA and NASHAT
FARHA, individually and on behalf of
all others similarly situated,
Plaintiffs,

Case No. 16-cv-11334
Honorable Laurie J. Michelson
Magistrate Judge Stephanie Dawkins Davis

v.
UBER TECHNOLOGIES, INC. and
RAISER, LLC,
Defendants.
OPINION AND ORDER GRANTING MOTION TO DISMISS THE COMPLAINT,
COMPEL ARBITRATION, AND STRIKE CLASS ALLEGATIONS [17]
Plaintiffs Arthur Zawada and Nashat Farha utilized a smartphone application created by
Defendant Uber Technologies, Inc. to connect with customers looking for transportation. They
also received payment from their customers through the app. In order to use the technology,
Plaintiffs had to “Agree” to a contract with Defendant Raiser, LLC that was presented to them on
their smartphones through the app. This contract included an arbitration provision, by which the
parties agreed to submit any disputes to arbitration rather than bringing suit in court. The contract
also included a conspicuously-presented opt-out provision, by which Plaintiffs could have
avoided arbitration. But they chose not to opt out. Nevertheless, when Plaintiffs became
dissatisfied with Uber’s payment practices, they filed suit in this Court. Because the arbitration
provision contains a clear and unmistakable delegation provision by which the parties agreed to
even arbitrate whether the arbitration controversy is arbitrable, the Court must compel
arbitration. Plaintiffs’ argument that the provision is unconscionable does not change that result.

I. BACKGROUND
Defendant Uber Technologies, Inc. created an on-demand transportation software
application (“app”) that operates through smartphones. (R. 15, ¶¶ 1, 22.) Defendant Raiser, LLC
is Uber’s wholly-owned subsidiary. (R. 18, ¶ 21.) Customers use their smartphones to request
rides through the Uber app. (R. 15, ¶ 1.) The request is routed to the locally-available Uber
drivers, who use their own vehicles to pick up and transport customers. (R. 15, ¶ 1.) The
customer pays through the smartphone app, and the driver “is paid directly by Uber for a portion
of the fare collected from the customer[.]” (R. 15, ¶ 30.) Plaintiffs Artur Zawada and Nashat
Farha were two such drivers in Michigan. Zawada worked as an Uber driver in 2015; Farhat
began working as an Uber driver in 2015 and is still employed with Uber. (R. 15, ¶¶ 10–18.)
When drivers seek to utilize Uber’s software to begin transporting customers, they must
enter into the “Raiser Software Sublicense & Online Services Agreement” (“Agreement”). (R.
17-5, PID 291.) To enter the Agreement, the driver must log in to the Uber app, sign up as a
driver, and click a hyperlink that is then presented on the screen. (R. 17-5, PID 291–92; R. 17-5,
PID 298–99.) Clicking the link opens the Agreement, which can then be reviewed in its entirety
by scrolling through the screen. (R. 17-5, PID 292.) There are no time limitations to reviewing
the Agreement. (R. 17-5, PID 292.) To advance past the “Agreement” screen, the Uber driver
must first click “YES, I AGREE” and then click “CONFIRM.” (R. 17-5, PID 292.) After
clicking the “agree” and “confirm” buttons, drivers are sent to the Driver Portal in the app, where
they can still access the Agreement at any time. (R. 17-5, PID 293.) As relevant here, the
Agreement contains an Arbitration Provision. (R. 17-5, PID 302, 326.) Once the driver accepts
the Agreement, he or she may still opt out of the Arbitration Provision if he or she so chooses.
(R. 17-5, PID 294.) Uber Operations Specialist Michael Coleman avers that “numerous” drivers

2

opted out of the Arbitration Provision in the timeframe in which Plaintiffs were Uber drivers. (R.
17-5, PID 294.)
Farha and Zawada each entered the November 10, 2014, and later, the December 10,
2015 versions of this agreement. (R. 17-5, PID 292.) Farha’s account was activated on
September 1, 2015, and that same day, he accepted the November 10, 2014 version of the
agreement. (R. 17-5, PID 293.) Zawada’s account was activated on November 10, 2015, and on
that day, he accepted the November 10, 2014 version of the agreement. (R. 17-5, PID 294.) Uber
circulated a new version of the agreement via the app in December 2015. (R. 17-5, PID 295.)
Uber Operations Specialist Michael Coleman avers that neither Farha nor Zawada opted out of
the Arbitration Provision in either agreement within 30 days of accepting it. (R. 17-5, PID 294.)
Plaintiffs say that Uber’s success has come at a price to its drivers: “Uber unlawfully
misclassifies its drivers as independent contractors when in fact it controls them as employees.”
(R. 1 ¶ 2.) Instead of seeking arbitration to resolve this dispute, however, Plaintiffs filed suit in
this Court on April 12, 2016. (R. 1.) Plaintiffs seek to represent a class of Uber drivers in the
state of Michigan. (R. 18, ¶ 65.) They allege that Uber’s business practices have deprived them
of fair compensation. (See generally R. 18.) Defendants now seek to compel arbitration in this
matter based on the Arbitration Provision. (R. 17.) The motion is fully briefed and the Court
heard argument on December 15, 2016.
The Court is not alone in addressing this arbitration issue. Similar lawsuits have been
filed across the country. At the time of the filing of this motion, every federal court save one in
the Northern District of California had granted Defendants’ motions to compel arbitration. Thus,
Plaintiffs urged this Court to follow the California ruling. But the Ninth Circuit recently reversed
that ruling, leaving little support for Plaintiffs’ arguments.

3

II. ANALYSIS
The Federal Arbitration Act (“FAA”) “creates federal substantive law requiring the
parties to honor arbitration agreements[.]” Ford v. Hamilton Inv., 29 F.3d 255, 257 (6th Cir.
1994). One section of the FAA provides,
A written provision in any . . . contract evidencing a transaction involving
commerce to settle by arbitration a controversy thereafter arising out of such
contract or transaction, or the refusal to perform the whole or any part thereof, or
an agreement in writing to submit to arbitration an existing controversy arising
out of such a contract, transaction, or refusal, shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for the revocation
of any contract.
9 U.S.C. § 2. This section “‘embodies the national policy favoring arbitration and places
arbitration agreements on equal footing with all other contracts.’” Seawright v. Am. Gen. Fin.,
Inc., 507 F.3d 967, 972 (6th Cir. 2007) (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546
U.S. 440, 443 (2006)). Even so, “[a]rbitration is a ‘matter of contract and a party cannot be
required to submit to arbitration any dispute which he has not agreed so to submit.’” Richmond
Health Facilities v. Nichols, 811 F.3d 192, 195 (6th Cir. 2016) (quoting AT&T Techs. v.
Commc’ns Workers of Am., 475 U.S. 643, 648 (1986)). Therefore, “Before compelling an
unwilling party to arbitrate, the court must engage in a limited review to determine whether the
dispute is arbitrable; meaning that a valid agreement to arbitrate exists between the parties and
that the specific dispute falls within the substantive scope of that agreement.” Javitch v. First
Union Sec., Inc., 315 F.3d 619, 624 (6th Cir. 2003).
Before engaging in that inquiry, the Court pauses to address a threshold issue. The parties
disagree as to whether the Court should examine the 2014 or the 2015 Raiser Agreement in its
analysis. On the one hand, the 2014 Agreement contains a survival clause, which states that
“Sections . . . 14 and 15 [the Arbitration Provision] shall survive the termination of this

4

Agreement.” (R. 17-5, PID 313.) And Defendants have largely cited the 2014 Agreement in their
arguments. On the other hand, Defendants say, “The validity of the December 2015 Arbitration
Provision is being litigated in another Court. . . . [but that judge] terminated his injunction
prohibiting enforcement of the December 2015 Arbitration Provision. Thus, Defendants can now
enforce the December 2015 Arbitration Provision, making it the operative agreement with
Plaintiffs.” (R. 22, PID 448 n.3.)
Ultimately, whether the Court examines the 2014 Agreement or the 2015 Agreement, the
language that operates to compel arbitration here is identical or functionally identical. And
because the Court views the Arbitration Provision as severable from the rest of the contract, any
changes in the rest of the contractual language from 2014 to 2015 would make no difference.
The Court therefore cites to the appropriate section from both agreements, and where there are
differences, explains why the differences are immaterial.
A. Delegation Clause
The Supreme Court “ha[s] recognized that parties can agree to arbitrate ‘gateway’
questions of ‘arbitrability,’ such as whether the parties have agreed to arbitrate or whether their
agreement covers a particular controversy.” Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68–69
(2010). “An agreement to arbitrate a gateway issue is simply an additional, antecedent agreement
the party seeking arbitration asks the federal court to enforce, and the FAA operates on this
additional arbitration agreement just as it does on any other.” Id.
Still, “Courts should not assume that the parties agreed to arbitrate arbitrability unless
there is ‘clea[r] and unmistakabl[e]’ evidence that they did so.” First Options of Chi., Inc. v.
Kaplan, 514 U.S. 938, 944 (1995) (citation omitted, modifications in original). Aside from the
“clear and unmistakable” requirement, which relates to the parties’ “intent,” a party could also

5

challenge the “validity” of the provision under § 2. Rent-A-Ctr., 561 U.S. at 70–71. However, “a
party’s challenge to another provision of the contract, or to the contract as a whole, does not
prevent a court from enforcing a specific agreement to arbitrate.” Id.
Here, the 2014 and 2015 Agreements contain an identical delegation provision:
[T]his Arbitration Provision is intended to apply to the resolution of disputes that
would otherwise be resolved in a court of law or before a forum other than
arbitration. . . . 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. All such matters shall be decided by an Arbitrator
and not by a court or judge.
(R. 17-5, PID 316, 342.) Defendants have invoked that provision. (R. 17, PID 251.) Plaintiffs
make both types of challenges outlined in Rent-A-Center: they say that the parties did not clearly
and unmistakably agree to arbitrate arbitrability (R. 20, PID 378) and, further, the delegation
provision is unconscionable (R. 20, PID 380).
1. Clear and Unmistakable
Plaintiffs base their clear-and-unmistakable argument on the ruling in Mohamed v. Uber
Techs., Inc., 109 F. Supp. 3d 1185 (N.D. Cal. 2015). That case involved a similar lawsuit by
Uber drivers in California. The contract between Raiser and those plaintiffs contained a
delegation provision identical to the one at issue here. Id. at 1198. The court began, “The first
(and often final) step in determining the validity and enforceability of a delegation clause is to
decide whether the language of the delegation clause, read in context with other relevant contract
provisions, unambiguously calls for the arbitration of gateway issues such as arbitrability.” Id.
Reading the delegation provision in conjunction with the other clauses in the 2013 and 2014
Agreements, the court concluded that there were “particularly obvious” inconsistencies between
the delegation provision and (1) a “carve out” provision in the 2013 Agreement leaving the

6

“validity of the arbitration provision’s class, collective, and representative action waivers,” to a
“court of competent jurisdiction” and (2) a venue provision in the 2014 Agreement. Id. at 1201.
The court concluded that it could not resort to “standard rules of contract interpretation” to
resolve the inconsistencies because “[i]f, as the Supreme Court requires, the language of the
delegation clauses here was truly ‘clear and unmistakable,’ there would be no need to resort to
rules of construction whatsoever.” Id. at 1203 (citation omitted). Plaintiffs urge this Court to
adopt Mohamed’s reasoning.
After the briefing in this case closed, however, the Ninth Circuit reversed the district
court’s determination regarding the delegation clause. Mohamed v. Uber Techs., Inc., No. 1516178, 836 F.3d 1102, 2016 U.S. App. LEXIS 16413, at *11 (9th Cir. 2016). The Ninth Circuit
concluded that the conflicts the district court identified were “superficial” because “[t]he clause
describing the scope of the arbitration provision was prefaced with ‘[e]xcept as it [i.e., the
arbitration provision] otherwise provides.’” Id. The Court explained that this preface “eliminated
the inconsistency between the general delegation provision” and the other provisions that the
district court had held were inconsistent. Id.
Specifically, the district court had pointed to the “carve out” provision, which stated,
“Notwithstanding any other clause contained in this Agreement, any claim that all or part of the
Class Action Waiver, Collective Action Waiver or Private Attorney General Waiver is invalid,
unenforceable, unconscionable, void, or voidable may be determined only by a court of
competent jurisdiction and not by an arbitrator.” Mohamed, 2016 U.S. App. LEXIS 16413 at
*10. The Ninth Circuit’s holding that this provision did not create inconsistency is reason enough
for this Court not to follow the district-court opinion, but an additional reason is that the “carve
out” only appears in the 2013 Agreement. The Ninth Circuit explicitly acknowledged that the

7

2014 Agreement did not contain the carve-out provision, id., and the Court does not find the
same carve-out clause in the 2015 Agreement (nor do Plaintiffs argue that there is one).
The Ninth Circuit further reasoned that the venue provision elsewhere was not in conflict
with the delegation provision because “[n]o matter how broad the arbitration clause, it may be
necessary to file an action in court to enforce an arbitration agreement, or to obtain a judgment
enforcing an arbitration award, and the parties may need to invoke the jurisdiction of a court to
obtain other remedies.” Id. (citation omitted). Accordingly, a court would be “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.” Id.
at *15.
The Ninth Circuit’s conclusion—that the delegation provision properly delegated
questions of arbitrability to an arbitrator—is consistent with every other district court to reach the
issue when examining the same or substantially similar Raiser agreements since Mohamed. See
Congdon v. Uber Techs., Inc., No. 16-cv-02499, slip op. at 4 (N.D. Cal. Dec. 8, 2016); Micheletti
v. Uber Techs., Inc., No. 15-1001 (RCL), 2016 U.S. Dist. LEXIS 137318 (W.D. Tex. Oct. 3,
2016); Lee v. Uber Techs., No. 15 C 11756, 2016 U.S. Dist. LEXIS 140171 (N.D. Ill. Sep. 21,
2016); Bruster v. Uber Tech., Inc., No. 15-cv-2653, 2016 WL 2962403 (N.D. Ohio May 23,
2016); Suarez v. Uber Tech., Inc., No. 8:16-cv-166-T-30MAP, 2016 WL 2348706 (M.D. Fla.
May 4, 2016); Varon v. Uber Tech., Inc., No. MJG-15-3650, 2016 WL 1752835 (D. Md. May 3,
2016); Sena v. Uber Tech. Inc., No. CV-15-02418, 2012 WL 1376445 (D. Ariz. Apr. 7, 2016);
but see Marc v. Uber Techs., Inc., No. 16-cv-579-FtM-99MRM, slip op. at 7 (M.D. Fla. Dec. 13,
2016) (holding that, on the narrow question of whether the arbitrator or the court should “enforce

8

the Agreement’s class action waivers,” the Agreement did “not clearly and specifically indicate
the parties’ intent to have the arbitrator decide if class-action claims are authorized.”).
The Court agrees with the Ninth Circuit and these district courts for two reasons. First,
the Court agrees with these courts that the arbitration clause must be construed independent from
the remainder of the contract. “As a matter of substantive federal arbitration law, an arbitration
provision is severable from the rest of the remainder of the contract.” Buckeye Check Cashing,
Inc. v. Cardegna, 546 U.S. 440, 445 (2006). Moreover, Rent-A-Center “extended the separability
rule . . . to delegation provisions within arbitration agreements.” Law Offices of Daniel C. Flint,
P.C. v. Bank of Am., N.A., No. 15-13006, 2016 U.S. Dist. LEXIS 49426, at *12 (E.D. Mich. Apr.
13, 2016). That is,
Post-Rent-A-Center, the line has shifted. Now, the same contract, if it contains a
delegation clause, is divided into: (1) the delegation clause; (2) the rest of the
contract. Under this new system, if the contract contains a delegation clause,
courts decide only if the delegation clause is valid and enforceable. Arbitrators
decide claims relating to the underlying contract, plus those related to the rest of
the arbitration clause.
Sajay Rai v. Ernst & Young, LLP, No. 09-13194, 2010 U.S. Dist. LEXIS 93196, at *10 (E.D.
Mich. Sep. 8, 2010). Therefore, the Court examines the delegation provision separately from the
rest of the contract in order to determine whether it “clearly and unmistakably” delegates
arbitrability questions to the arbitrator. This is not the approach that the district court in
Mohamad took, and the courts to reach the issue since have rejected Mohamad’s approach. See,
e.g., Sena, 2016 WL 1376445 at *4 (“The Court is not convinced that it may look beyond the
four corners of the Arbitration Provision to find ambiguity, as the court did in Mohamad.”).
Second, looking only to the delegation provision, the Court concludes that the parties’
intent to delegate questions of arbitrability to the arbitrator was “clear and unmistakable.” The
provision says that matters including “the enforceability, revocability, or validity of the
9

Arbitration Provision or any portion of the Arbitration Provision . . . shall be decided by an
Arbitrator and not by a court or judge.” (R. 17-5, PID 316, 342.) Courts in this circuit have held
similar language to be clear and unmistakable. See, e.g., Wynn v. Five Star Quality Care Tr., No.
3:13-cv-01338, 2014 U.S. Dist. LEXIS 77295, at *8 (M.D. Tenn. June 5, 2014) (“All challenges
to the enforceability of any provision of this Agreement shall be brought before the arbitrator,
and the arbitrator shall rule on all questions regarding the interpretation and enforceability of this
Agreement.”). And the district courts examining substantially similar or the same provision in
other Raiser agreements found the provision to be a clear and unmistakable delegation.
Micheletti, 2016 U.S. Dist. LEXIS 137318 at *6; Lee, No. 2016 U.S. Dist. LEXIS 140171 at *6;
Suarez, 2016 WL 2348706 at *4; Varon, 2016 WL 1752835 at *7; Sena, 2016 WL 1376445
at *4.
For these reasons, the Court concludes that the delegation provision evinces a clear and
unmistakable intent to delegate the question of arbitrability to the arbitrator.
2. Unconscionability
Although the Court has found that the delegation clause constitutes a clear and
unmistakable intent to arbitrate arbitrability, the Court can still refuse to enforce the arbitration
provision if it is unconscionable. Rent-A-Ctr, 561 U.S. at 72–74.
The parties’ first dispute regarding unconscionability is whether Michigan or California
law applies. On the one hand, the 2014 Agreement contains a choice-of-law provision specifying
as follows:
The interpretation of this Agreement shall be governed by California law, without
regard to the choice or conflicts of law provisions of any jurisdiction, and any
disputes, actions, claims or causes of action arising out of or in connection with
this Agreement or the Uber Services shall be subject to the exclusive jurisdiction
of the state and federal courts located in the City and County of San Francisco,
California.
10

(R. 17-5, PID 314.) The 2015 Agreement’s choice of law provision similarly selects California
law, but also clarifies that “[t]he choice of law provisions contained in this Section 15.1 do not
apply to the arbitration clause contained in Section 15.3, such arbitration clause being governed
by the Federal Arbitration Act.” (R. 17-5, PID 339.) Accordingly, Plaintiffs encourage the Court
to apply California law to the unconscionability analysis. (R. 20, PID 367.)
However, as Defendants repeatedly observed in their briefing, the Arbitration Provision
is severable from the rest of the contract and does not itself contain a choice of law provision.
Buckeye, 546 U.S. at 445, 126; see also Sena, 2016 WL 1376445, at *4. Therefore, the Court
applies Michigan’s choice-of-law rules. Uhl v. Komatsu Forklift Co., 512 F.3d 294, 302 (6th Cir.
2008).
Michigan courts have adopted the Restatement (Second) of Conflict of Laws approach
for contract disputes. See Chrysler Corp. v. Skyline Indus. Servs., Inc., 528 N.W.2d 698, 702
(1995). Therefore,
In the absence of an effective choice of law by the parties . . . , the contacts to be
taken into account . . . to determine the law applicable to an issue include: (a) the
place of contracting, (b) the place of negotiation of the contract, (c) the place of
performance, (d) the location of the subject matter of the contract, and (e) the
domicile, residence, nationality, place of incorporation and place of business of
the parties.
Uhl, 512 F.3d at 302 (quoting Restatement (Second) of Conflict of Laws § 188(2) (1971)).
Because the contract was signed and performed in Michigan, and plaintiffs live in Michigan, the
Court will apply Michigan law. However, as discussed below, even if the Court were to apply
California law, the result would be the same.
In Michigan, “[i]n order for a contract or contract provision to be considered
unconscionable, both procedural and substantive unconscionability must be present.” Clark v.
DaimlerChrysler Corp., 706 N.W.2d 471, 474 (2005). The same is true under California law.
11

Sanchez v. Valencia Holding Co., LLC, 353 P.3d 741, 748 (Cal. 2015). “Procedural
unconscionability exists where the weaker party had no realistic alternative to acceptance of the
term,” whereas “[s]ubstantive unconscionability exists where the challenged term is not
substantively reasonable.” Id.
The Arbitration Provision, which included a 30-day “opt out” period, is not procedurally
unconscionable. “If, under a fair appraisal of the circumstances, the weaker party was free to
accept or reject the term, there was no procedural unconscionability.” Law Offices of Daniel C.
Flint, P.C. v. Bank of Am., N.A., No. 15-13006, 2016 U.S. Dist. LEXIS 49426, at *20 (E.D.
Mich. Apr. 13, 2016). Both the 2014 and 2015 Agreements gave Plaintiffs ample opportunity to
opt out of the Arbitration Provision. For example, both Agreements included the following
warning in bold typeface at the very beginning of the document:
PLEASE REVIEW THE ARBITRATION PROVISION SET FORTH BELOW
CAREFULLY, AS IT WILL REQUIRE YOU TO RESOLVE DISPUTES WITH
THE COMPANY ON AN INDIVIDUAL BASIS THROUGH FINAL AND
BINDING ARBITRATION UNLESS YOU CHOOSE TO OPT OUT OF THE
ARBITRATION PROVISION. . . . IF YOU DO NOT WISH TO BE SUBJECT
TO ARBITRATION, YOU MAY OPT OUT OF THE ARBITRATION
PROVISION BY FOLLOWING THE INSTRUCTIONS PROVIDED IN THE
ARBITRATION PROVISION BELOW.
(R. 17-5, PID 302, 326.) And the instructions for opting out of the Arbitration Provision were not
vague or ambiguous (and were the same in both Agreements):
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
[e-mail], stating your name and intent to opt out of the Arbitration
Provision or (2) by sending a letter by U.S. mail . . . . Should you not opt out of
this Arbitration Provision within the 30-day period, you and the Company shall be
bound by the terms of this Arbitration Provision. You have the right to consult
with counsel of your choice concerning this Arbitration Provision. You

12

understand that you will not be subject to retaliation if you exercise your right to
assert claims or opt-out of coverage under this Arbitration Provision.
(R. 17-5. PID 319, 346.) Again, the Plaintiffs had ample opportunity to opt out of binding
arbitration, and this opportunity was communicated to them clearly in the Agreements. Some
drivers in fact did opt out. (R. 17-5, PID 294.) There was no time limit for the Plaintiffs to
review the Agreements. Thus, the Court does not find that the Arbitration Provision is
procedurally unconscionable.
Nor is the Arbitration Provision substantively unconscionable. Plaintiffs first argue that
“the arbitration fee provisions require costs to be shared unless otherwise required by law,” and
“[a]llowing Uber to impose substantial forum costs on the drivers would chill them from
exercising their rights.” (R. 20, PID 384.)
The Court disagrees. Plaintiffs’ characterization is based on an incomplete reading of the
fee-splitting provision, which provides, in relevant part:
In all cases where required by law, the Company will pay the Arbitrator’s and
arbitration fees. If under applicable law the Company is not required to pay all of
the Arbitrator’s and/or arbitration fees, such fee(s) will be apportioned equally
between the Parties or as otherwise required by applicable law. Any disputes in
that regard will be resolved by the Arbitrator.
(R. 17-5, PID 319.) Thus, Uber has agreed to pay fees where the law so requires, and will
otherwise generally pay half of the fees for arbitration. To speculate that this arrangement would
result in prohibitive costs for the Plaintiffs is not enough to make the provision substantively
unconscionable. See Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 91 (2000) (“The
‘risk’ that Randolph will be saddled with prohibitive costs is too speculative to justify the
invalidation of an arbitration agreement.”).
Plaintiffs next argue that the Arbitration Provision’s class-action waiver is substantively
unconscionable. That waiver, as set forth in the 2014 Agreement, provides:
13

IMPORTANT: This arbitration provision will require you to resolve any claim
that you may have against the Company or Uber on an individual basis pursuant
to the terms of the Agreement unless you choose to opt out of the arbitration
provision. This provision will preclude you from bringing any class, collective, or
representative action against the Company or Uber. It also precludes you from
participating in or recovering relief under any current or future class, collective, or
representative action brought against the Company or Uber by someone else.
(R. 17-5, PID 315.) The waiver contained in the 2015 Agreement is similar in all material
respects.1
The Supreme Court has held that class-action waivers in FAA-governed arbitration
agreements are enforceable. In AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 341 (2011),
the Court considered whether the FAA preempted California state law prohibiting class-action
waivers. The Court observed, “Although § 2’s saving clause preserves generally applicable
contract defenses, nothing in it suggests an intent to preserve state-law rules that stand as an
obstacle to the accomplishment of the FAA’s objectives.” Id. at 343. One of those objectives “is
to ensure the enforcement of arbitration agreements according to their terms so as to facilitate
streamlined proceedings.” Id. Therefore, “Requiring the availability of classwide arbitration
interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with
the FAA.” Id.; see also Sanchez, 353 P.3d at 750 (acknowledging that “Concepcion clarifies the
limits the FAA places on [California] state unconscionability rules as they pertain to arbitration
agreements.”).

1

The waiver provision in the 2015 Agreement reads, “IMPORTANT: This Arbitration
Provision will require you to resolve any claim that you may have against the Company or Uber
on an individual basis, except as provided below, pursuant to the terms of the agreement unless
you choose to opt out of the Arbitration Provision. Except as provided below, this provision will
preclude you from bringing any class, collective, or representative action (other than actions
under the Private Attorneys General Act (“PAGA”), California Labor Code § 2698 et seq.
(“PAGA)) against the Company or Uber, and also precludes you from participating in or
recovering relief under any current or future class, collective, or representative (non-PAGA)
action brought against the Company or Uber by someone else.” (R. 17-5, PID 340.)
14

Similarly, in American Express Co. v. Italian Colors Restaurant, — U.S. —, 133 S. Ct.
2304, 2308 (2013), the Court considered the Second Circuit’s conclusion that because plaintiffs
“had established that ‘they would incur prohibitive costs if compelled to arbitrate under the class
action waiver,’ the waiver was unenforceable and the arbitration could not proceed.” (citation
omitted). Though the plaintiffs argued that “requiring them to litigate their claims individually—
as they contracted to do—would contravene the policies of the antitrust laws,” the Court
reasoned that “courts must ‘rigorously enforce’ arbitration agreements according to their
terms . . . unless the FAA’s mandate has been ‘overridden by a contrary congressional
command.’” Id. at 2309 (citations omitted). And “[n]o contrary congressional command requires
us to reject the waiver of class arbitration here.” Id.
Plaintiffs made no mention of any such contrary congressional command in their
response brief. But, on the eve of the hearing, Plaintiffs filed a “Notice of Supplemental
Authority” identifying the case of Lewis v. Epic Systems Corp., 823 F.3d 1147 (7th Cir. 2016), in
which the Seventh Circuit found a mandatory class action waiver to be invalid under the
National Labor Relations Act. (R. 27.) “Supplemental Authority” is not an accurate term for this
filing because the case supports an argument that was not made in Plaintiffs’ response brief.
Further, Lewis issued on May 26, 2016, over two months before Plaintiffs’ response brief was
due and nearly seven months before the hearing. The Court is not inclined to deny Defendants’
motion based on arguments that Plaintiffs could have developed in their response brief. See
Bruster v. Uber Tech. Inc., No. 15-cv-2653, 2016 U.S. Dist. LEXIS 101312, at *3 (N.D. Ohio
Aug. 2, 2016) (“[T]he idea underlying Lewis, that arbitration clauses that limit employees’ rights
under the National Labor Relations Act are invalid and unenforceable, could have, with due
diligence, been offered in opposition to arbitration.”).

15

Even if the Court were to consider this late filing, it would not change the result. In
Lewis, an employee of Epic Systems Corporation sought to invalidate a mandatory class action
waiver. Epic had sent via email an arbitration agreement “mandating that wage-and-hour claims
could be brought only through individual arbitration and that the employees waived ‘the right to
participate in or receive money or any other relief from any class, collective, or representative
proceeding.’” 823 F.3d at 1152. Epic told the employees they would be “deemed to have
accepted this Agreement” if they continued to work at Epic, and “gave the employees no option
to decline if they wanted to keep their jobs.” Id. When the plaintiff-employee brought suit
against Epic in federal court under the Fair Labor Standards Act, 29 U.S.C. § 201, Epic sought to
compel arbitration. The employee responded that the class action waiver violated the National
Labor Relations Act, 29 U.S.C. § 151.
The Seventh Circuit agreed that the class action waiver violated the NLRA. The court
began with Section 7 of the NLRA, which provides, “Employees shall have the right to selforganization . . . to engage in other concerted activities for the purpose of collective bargaining
or other mutual aid or protection.” 29 U.S.C. § 157. Section 8 of the NLRA further provides that
it “shall be an unfair labor practice for an employer . . . to interfere with, restrain, or coerce
employees in the exercise of the rights guaranteed in [Section 7].” 29 U.S.C. §158(a)(1). The
Seventh Circuit concluded that “The NLRA’s history and purpose confirm that the phrase
‘concerted activities’ in Section 7 should be read broadly to include resort to representative,
joint, collective, or class legal remedies,” and “[a]long with Section 8, it renders unenforceable
any contract provision purporting to waive employees’ access to such remedies.” Lewis, 823
F.3d at 1153–1154.

16

The waiver in the Epic agreement violated Section 7, the Seventh Circuit held, because it
meant that “no matter where the claim is brought, the plaintiff may not take advantage of any
collective procedures available in the tribunal.” Id. at 1155. The Seventh Circuit did
acknowledge that the Ninth Circuit held in Johnmohammadi v. Bloomingdale’s, Inc., 755 F.3d
1072 (9th Cir. 2014) that an agreement mandating individual arbitration did not violate the
NLRA where it contained an opt-out provision, but stated that decision conflicted with an older
Seventh Circuit case. Id. (citing NLRB v. Stone, 125 F.2d 752, 756 (7th Cir. 1942)). But this
Court, in the absence of Sixth Circuit case law to the contrary, see Schnaudt v. Johncol, Inc., No.
2:15-cv-2619, 2016 U.S. Dist. LEXIS 132321, at *28 (S.D. Ohio Sep. 27, 2016) (discussing
circuit split and noting that the Sixth Circuit “has not directly addressed the question”),
concludes that an opt-out provision is still a valid way to distinguish Lewis’s reasoning.
In Johnmohammadi, a Bloomingdale’s employee received as part of her initial package a
document describing the company’s dispute resolution program. The documents informed her
that she agreed to resolve all disputes through arbitration and waived her right to class-wide
arbitration unless she returned an opt-out form within 30 days. Johnmohammadi, 755 F.3d at
1074. Based on the opt-out provision, the Ninth Circuit found that Bloomingdale’s had not
interfered with the employee’s rights under the NLRA: the employee was not required to accept
the class-action waiver as a condition of employment and she had the opportunity to make a fully
informed decision about whether to accept the waiver or opt out. Id. at 1076. Thus, the classwide arbitration waiver did not violate the FLSA.
Even when the Ninth Circuit followed Lewis’s reasoning in Morris v. Ernst & Young,
LLP, 834 F.3d 975, 984 (9th Cir. 2016), it acknowledged in a footnote that Johnmohammadi’s
holding was still valid. Morris, 834 F.3d at 982 n.4 (“[T]here was no § 8 violation in

17

Johnmohammadi v. Bloomingdale’s, Inc. because the employee there could have opted out of the
individual dispute resolution agreement and chose not to.”). The Ninth Circuit’s opinion in
Mohamed also affirms that the opt-out provision is still a valid basis to distinguish Lewis. See
Mohamed, 836 F.3d at 1112 n.6 (“Even if the argument had been properly raised, however, the
option to opt out meant that Uber drivers were not required ‘to accept a class-action waiver as a
condition of employment,’ and thus there was ‘no basis for concluding that [Uber] coerced
[Plaintiffs] into waiving [their] right to file a class action’ in violation of the NLRA.” (citations
omitted)).
“Various district courts have followed, distinguished, or declined to adopt Lewis’s
holding.” Gaffers v. Kelly Services, No. 16-cv-10128, 2016 U.S. Dist. LEXIS 112789, at *21
(E.D. Mich. Aug. 24, 2016) (collecting cases). In this case, the Court finds Lewis (and Gaffers)
distinguishable on the basis of the opt-out provision, which was clearly presented to Plaintiffs in
both the 2014 and 2015 Agreements. See Bruster, 2016 U.S. Dist. LEXIS 101312, at *6
(reaching the same result). In other words, class or collective action is available to any Uber
driver who voluntarily opted out of the arbitration provision. Indeed, counsel for Defendants
advised at oral argument that such collective actions are being pursued in at least two
jurisdictions. Accordingly, the Court concludes that the Arbitration Provision is not invalid nor
substantively unconscionable based on the class-action waiver. See Reed Elsevier, Inc. v.
Crockett, 734 F.3d 594, 600 (6th Cir. 2013) (“[T]he absence of a class-action right does not
render an arbitration agreement unenforceable.” (citing Italian Colors, 133 S. Ct. at 2309)).
III. CONCLUSION
In sum, the Court finds that the Arbitration Provision clearly and unmistakably delegates
the gateway issue of arbitrability to an arbitrator. And because the provision is not

18

unconscionable or illegal under the NLRA, the Court must enforce it by compelling arbitration.
Therefore, the Court does not reach the merits of the case, nor Plaintiffs’ argument that Uber is
not a third-party beneficiary of the Agreements.2 See Arnold v. Arnold Corp., 920 F.2d 1269,
1276 (6th Cir. 1990).
Accordingly, IT IS ORDERED that Defendants’ Motion to Compel Arbitration (R. 17) is
GRANTED. This case is DISMISSED.

Dated: December 27, 2016

s/Laurie J. Michelson
LAURIE J. MICHELSON
U.S. DISTRICT JUDGE

CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served upon counsel of record
and any unrepresented parties via the Court=s ECF System to their respective email or First Class
U.S. mail addresses disclosed on the Notice of Electronic Filing on December 27, 2016.
s/Keisha Jackson
Case Manager

2

Even if the Court were to reach the issue, the Arbitration Provision, in both the 2014
and 2015 Agreements, expressly provides that Uber is an intended third-party beneficiary of the
Arbitration Provision. (R. 17-5, PID 317, 343.) Again, the Arbitration Provision is severable
from the rest of the Agreement; therefore, Plaintiffs’ attempt to use language from outside of the
provision to invalidate it is unavailing. See Nitro-Lift Techs., LLC v. Howard, 133 S. Ct. 500, 503
(2012).
19