Uber drivers win arbitration ruling

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.’”