Photographer: Victor J. Blue/Bloomberg

Uber Can’t Force Arbitration Over Pricing Antitrust Claim

  • Judge won’t apply waiver linked to online registration form
  • Uber drivers also challenge arbitration mandate in labor cases

Uber Technologies Inc. can’t require a Connecticut customer accusing the company of price-fixing to resolve the fight in arbitration, a federal judge ruled in one of several cases challenging the ride-hailing company’s efforts to steer disputes of all kinds away from public courtrooms.

U.S. District Judge Jed Rakoff in Manhattan said Friday that Uber’s online user agreement didn’t provide Spencer Meyer with sufficient notice of its arbitration policy for it to be binding. He denied Uber’s request to throw out the antitrust lawsuit over the company’s practice of raising prices during periods of high demand and have the matter sent to an arbitrator.

The ruling comes as Uber has sought to enforce its arbitration agreements with drivers in several states. A San Francisco federal judge is considering whether to approve the company’s $100 million settlement with California and Massachusetts drivers in an agreement that would leave them as contractors rather than employees and would also leave the arbitration provision in place.

A California agency said Friday in a filing in that case that claims based on violations of labor laws against Uber would amount to more than $1 billion in penalties under the state’s unique “bounty hunter” statute. As part of the accord, a lawyer for the drivers and Uber settled those claims for $1 million.

California’s Labor and Workforce Development Agency said Friday that there was “no rationale” for the $1 million allotted for those claims, according to the filing. The agency’s finding may give the judge in California a reason to deny approval of the agreement.

“The Judge has broad discretion to reject the settlement,” said James Evans, a lawyer who defends companies against employment lawsuits. “The state’s brief could give him additional grounds to force the parties back to the drawing board -- but he doesn’t need it.”

‘Bounty Hunter’

The claim is based on a 2004 California law that gives employees the right to step into the shoes of the state labor secretary to bring enforcement actions and lets the state keep 75 percent of any penalties won. Attorneys for employers have nicknamed the Private Attorneys General Act, or PAGA, the “bounty hunter” and “sue your boss” law in recognition of the 25 percent reward sought by workers who have filed thousands of lawsuits over the past 12 years.

Matt Kallman, a spokesman for San Francisco-based Uber, declined to comment on the New York ruling or the California filing.

In the New York case, Rakoff said that Meyer registered with Uber in October 2014 using a Samsung smartphone. The registration form included the words "By creating an Uber account, you agree to the Terms of Service & Privacy Policy," according to the judge. 

The form didn’t require users to click on the "Terms of Service & Privacy Policy" to register. Users who clicked on the link were taken to “nine pages of highly legalistic language that no ordinary consumer could be expected to understand,” Rakoff said. The arbitration clause, which includes a waiver of the right to sue in court, was at the bottom of Page 7, he said.

Rakoff ruled the registration process didn’t provide sufficient notice to Meyer that he was waiving his right to have his claim heard by a jury in court.

The New York case is Meyer v. Kalanick, 15-cv-09796, U.S. District Court, Southern District of New York (Manhattan). The California case is O’Connor v. Uber Technologies Inc., 13-cv-03826, U.S. District Court, Northern District of California (San Francisco).

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