California state judge rules against Uber's arbitration agreement with drivers
A state court judge in San Francisco ruled Monday that Uber Technologies Inc. cannot force a driver into arbitration because the contract contradicts itself, Bloomberg News reports.
The ruling follows a similar one in June by a federal judge in San Francisco, who ruled against the arbitration provisions and permitted a class action to proceed against the company, the Los Angeles Times reported earlier.
In state court Monday, Superior Court Judge Ernest Goldsmith said Uber’s contract with drivers is “flatly inconsistent,” with one provision saying a private arbitrator decides whether a dispute should go to arbitration and another saying that a judge is to make that choice.
“I can’t imagine that they’re going to continue with a contract like this,” Goldsmith said. “It’s not a close case. It starts with the clearest contradictory language and just goes on and on.”
Uber plans to appeal, as it is doing in the federal case in San Francisco. Its business model is at stake. In the state case, a former driver argued that she was an Uber employee, which the company denies. In the federal one, two Uber drivers challenged the company’s use of arbitration in a challenge of its background checks.
U.S. District Judge Edward Chen ruled in June that an opt-out provision of the arbitration agreement was buried in fine print on the second-to-last page of the contact that driver’s must sign. It also requires them to hand-deliver an opt-out note to Uber’s headquarters in San Francisco via one particular national overnight delivery service.
“At bottom, the opt-out right … was illusory, and thus there is no evidence that drivers actually could reject the arbitration provision,” Judge Chen wrote, adding that it is “oppressive” and “imposed and drafted by the party of superior bargaining strength.”
The state court decision in San Francisco is not binding on others in California. But “it’s persuasive authority that other drivers will be able to rely on in urging other courts to find that Uber’s arbitration agreement should not be enforced,” says James Evans, a lawyer who drafts and helps enforce arbitration agreements for companies.
Uber spokeswoman Jessica Santillo told Bloomberg News in an email that “the Uber partner in this case agreed to resolve disputes of this nature through arbitration when she joined the platform last year. The right to arbitrate has been confirmed multiple times by the Supreme Court.”
That driver, Barbara Berwick, complained to the California labor commissioner’s office that she should be treated as an Uber employee and should be entitled to claim wages and expense reimbursement. Uber asserted that she was an independent contractor, and a hearing officer disagreed.
