In a major ruling with significant ramifications for class actions challenging the classification of Uber drivers as independent contractors, the Ninth Circuit Court of Appeals in Mohamed v. Uber held that the majority of Uber’s driver arbitration agreements are in fact enforceable. In so doing, the Ninth Circuit reversed the determination of Judge Edward Chen of the Northern District of California (in prior proceedings and other cases) that the agreements were invalid and unenforceable since they contained what he found to be non-severable waivers of California’s Private Attorney General Act (PAGA). The arbitrability of the claims in Mohamed thus should have been determined by an arbitrator pursuant to the agreements, and not by Judge Chen.
As a result, Uber can compel arbitration of the claims in Mohamed, with the exception of claims arising under the PAGA. While the ruling technically only applies to the particular case, it serves as precedent and indicates the Ninth Circuit will compel arbitration in many claims by drivers against Uber, significantly limiting the scope and size of class action lawsuits. As we noted earlier today, Judge Chen recently rejected a proposed settlement in O’Connor v. Uber, the major class action suit challenging Uber’s classification of drivers as independent contractors. The O’Connor plaintiffs would have been forced to arbitrate their claims individually had Judge Chen not found the mandatory arbitration claims invalid and unenforceable.
According to The New York Times, “if Uber files a motion to apply [the Mohamed] ruling to the driver classification suit, that could force drivers in the case to turn to individual arbitration.” Uber could alternatively walk away from negotiations or force a reduced settlement, per The Wall Street Journal.
Not all is lost for drivers, however. As Bloomberg notes, drivers can still proceed with potentially-significant PAGA claims and/or attempt to overwhelm Uber with a large amount of individual arbitrations absent a settlement. Nevertheless, the Ninth Circuit’s ruling is undoubtedly a setback for California Uber drivers seeking recognition as employees. Like many other embattled American workers, they will be subject to the unforgiving process of mandatory arbitration in attempting to assert rights under employment laws.