Uber driv­ers win ar­bi­tra­tion rul­ing

Los Angeles Times - - BUSINESS BEAT - By Tracey Lien tracey.lien@la­times.com

SAN FRAN­CISCO — A U.S. dis­trict judge has re­jected on-de­mand trans­porta­tion com­pany Uber’s bid to en­force ar­bi­tra­tion agree­ments on its driv­ers, clear­ing the way for a driver law­suit to go ahead.

In a rul­ing Tues­day, Judge Ed­ward Chen said the ar­bi­tra­tion pro­vi­sions in both the 2013 and 2014 ver­sions of Uber’s con­tracts with its driv­ers “are both pro­ce­du­rally and sub­stan­tively un­con­scionable” and there­fore “un­en­force­able.” The rul­ing was based on un­clear word­ing in those con­tracts and the “largely il­lu­sory” abil­ity of driv­ers to opt out of the 2013 ar­bi­tra­tion agree­ment.

“We dis­agree with this rul­ing and plan to ap­peal it,” an Uber spokes­woman said Wed­nes­day.

Ar­bi­tra­tion agree­ments have be­come in­creas­ingly popular with com­pa­nies want­ing to avoid lit­i­ga­tion; those who sign a con­tract with an ar­bi­tra­tion clause agree to set­tle dis­putes out­side of court.

Chen said the pro­vi­sion al­low­ing driv­ers to opt out of the ar­bi­tra­tion agree­ment was printed on the sec­ond-to­last page of the 2013 con­tract and was not set off from the small and densely packed text sur­round­ing it.

In ad­di­tion, the fact that the opt-out pro­ce­dure re­quired driv­ers to ei­ther hand-de­liver a note to Uber’s San Fran­cisco head­quar­ters or send a note via a na­tion­ally rec­og­nized overnight de­liv­ery ser­vice “ren­ders the optout in the 2013 agree­ment ad­di­tion­ally mean­ing­less.”

“The opt-out right in the 2013 agree­ment was il­lu­sory, and thus there is no ev­i­dence that driv­ers could ac­tu­ally re­ject the ar­bi­tra­tion pro­vi­sion,” Chen said. “Thus, the court concludes that the del­e­ga­tion clause in the 2013 agree­ment was ‘op­pres­sive’ un­der Cal­i­for­nia law.’”

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