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Delay In Seeking Arbitration Waived Right To Arbitrate

Court Finds Uber’s Arbitration Clauses With Its Drivers Unenforceable

By: Howard S. Suskin

TrafficA California federal district court denied Uber’s motion to compel arbitration of its driver’s disputes concerning background checks, holding that the arbitration provisions in the drivers’ contracts were procedurally and substantively unconscionable. Mohamed v. Uber Technologies, No. C-14-5200 EMC (N.D. Cal. June 9, 2015).  As an initial matter, the court found that delegation clauses contained in the drivers’ contracts, which purported to reserve the adjudication of the validity and enforceability of the contracts’ arbitration provisions to an arbitrator, were unenforceable because they were not clear and unmistakable and conflicted with other language in the contracts.   The court also found that the delegation clauses were  unconscionable, as they were buried in the lengthy contract, had an onerous opt-out provision, and imposed substantial arbitration costs and fees on the driver.  The court then concluded, on similar grounds, that the arbitration provisions in the Uber contracts were procedurally and substantively unconscionable and therefore unenforceable under California law.  The court further found that contractual provisions purporting to waive private attorney general claims were void as a matter of California law.      

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