SIPERAVAGE v. UBER TECHNOLOGIES, INC.

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

EDWARD SIPERAVAGE, on behalf Civil Action No. 20-12265

of himself and all other

similarly situated,

OPINION

Plaintiff,

v.

UBER TECHNOLOGIES, INC.,

Defendants.

APPEARANCES:

JAMES A. FRANCIS

JOHN SOUMILAS

JOSEPH GENTILCORE

EDWARD SKIPTON

LAUREN KW BRENNAN

1600 MARKET STREET

SUITE 2510

PHILADELPHIA, PA 19103

Counsel for Plaintiff

STEPHEN ALLEN LONEY, JR.

HOGAN LOVELLS US LLP

1735 MARKET STREET

23rd FLOOR

PHILADELPHIA, PA 19103

Counsel for Defendant Uber Technologies, Inc.

HILLMAN, District Judge

This matter comes before the Court upon Defendant Uber

Technologies, Inc.’s (“Uber”) Motion to Compel Arbitration and

Stay Action. For the reasons expressed below, Uber’s motion

will be granted.

BACKGROUND

The Court draws its facts largely from Plaintiff’s

complaint. In 2015, Plaintiff started driving for Uber and was

driving a Cadillac CTS to complete UberBlack trips. (ECF No. 1-

1 (“Compl.”) at ¶26). In spring of 2017, Plaintiff started

researching options to purchase a vehicle eligible to drive for

Uber BlackSUV, which would increase his income. (Id. ¶28.) In

March 2017, Plaintiff asked Uber for the list of eligible

vehicles for Uber BlackSUV, to which an Uber representative

responded with a list of eligible vehicles, which included the

Chevrolet Tahoe. (Id. ¶¶29-30.) On December 31, 2018,

Plaintiff purchased a 2017 Chevrolet Tahoe in the amount of

$71,373.96 so he could drive for Uber BlackSUV. (Id. ¶31.)

Around August 5, 2019, Uber notified Plaintiff that as of

September 2, 2019, the Chevrolet Tahoe would no longer be

eligible for the Uber BlackSUV service level. (Id. ¶34.) As a

result of the foregoing, Plaintiff on behalf of himself and

others similarly situated, brought a lawsuit against Uber

asserting the following causes of action: (1) breach of

contract; (2) promissory estoppel; and (3) breach of covenant of

good faith fair dealing.

On September 23, 2020, Uber moved to compel arbitration

pursuant to the 2015 Technology Services Agreement (“2015 TSA”)

and 2020 Platform Access Agreement (“2020 PAA”), both of which

Plaintiff executed. The 2020 PAA contains a section entitled

“Arbitration Provision” which immediately thereafter includes

the following statement:

IMPORTANT: PLEASE REVIEW THIS ARBITRATION

PROVISION CAREFULLY, AS IT WILL REQUIRE YOU TO

RESOLVE DISPUTES WITH US ON AN INDIVIDUAL BASIS

THROUGH FINAL AND BINDING ARBITRATION, EXCEPT

AS PROVIDED BELOW. YOU MAY CHOOSE TO OPT OUT

OF THIS ARBITRATION PROVISION BY FOLLOWING THE

BELOW INSTRUCTIONS. THERE ARE AND/OR MAY BE

LAWSUITS ALLEGING CLASS, COLLECTIVE OR

REPRESENTATIVE CLAIMS ON YOUR BEHALF AGAINST

US. IF YOU DO NOT OPT OUT OF THIS ARBITRATION

PROVISION AND THEREFORE AGREE TO ARBITRATION

WITH US, YOU ARE AGREEING IN ADVANCE, EXCEPT

AS OTHERWISE PROVIDED BELOW, THAT YOU WILL NOT

PARTICIPATE IN AND, THEREFORE, WILL NOT SEEK

OR BE ELIGIBLE TO RECOVER MONETARY OR OTHER

RELIEF IN CONNECTION WITH, ANY SUCH CLASS,

COLLECTIVE OR REPRESENTATIVE LAWSUIT. THIS

ARBITRATION PROVISION, HOWEVER, WILL ALLOW YOU

TO BRING INDIVIDUAL CLAIMS IN ARBITRATION ON

YOUR OWN BEHALF.

(ECF No. 23-4 at 15-16)(emphasis in original).

Section 14.1(a) of that arbitration clause provides as

follows:

This Arbitration Provision is a contract

governed by the Federal Arbitration Act, 9

U.S.C. § 1 et seq. and evidences a transaction

involving commerce, and you agree that this is

not a contract of employment involving any

class of workers engaged in foreign or

interstate commerce within the meaning of

Section 1 of the Federal Arbitration Act.

If notwithstanding the foregoing, the Federal

Arbitration Act does not apply to this

Arbitration Provision, the law pertaining to

1 The Court’s Opinion will focus on the 2020 PAA, which as Uber

notes, is currently applicable, and was in effect at the time

Plaintiff filed the action. (ECF No. 22-1 at 5 n.2.)

arbitration agreements of the state where you

reside when you entered into this Agreement

shall apply. Except as it otherwise provides,

this Arbitration Provision applies to any

legal dispute, past, present or future,

arising out of or related to your relationship

with us or relationship with any of our

agents, employees, executives, officers,

investors, shareholders, affiliates,

successors, assigns, subsidiaries or parent

companies (each of which may enforce this

Arbitration Provision as third party

beneficiaries), and termination of that

relationship, and survives after the

relationship terminates.

(ECF No. 23-4 at 16).

Section 14.1(b) of the arbitration clause includes

a delegation provision, which states:

This Arbitration Provision applies to all

claims whether brought by you or us, except as

provided below. This Arbitration Provision

requires all such claims to be resolved only

by an arbitrator through final and binding

individual arbitration and not by way of court

or jury trial. Except as provided below

regarding the Class Action Waiver and

Representative Action Waiver, such disputes

include without limitation disputes arising

out of or relating to interpretation or

application of this Arbitration Provision,

including the formation, scope,

enforceability, waiver, applicability,

revocability or validity of this Arbitration

Provision or any portion of this Arbitration

Provision.

(ECF No. 23-4 at 16).

Section 14.4 of the arbitration provision includes a class

action waiver, which provides:

Class Action Waiver. This Arbitration

Provision affects your ability to participate

in class or collective actions. Both Uber and

you agree to bring any dispute in arbitration

on an individual basis only, and not on a class

or collective basis on behalf of others. There

will be no right or authority for any dispute

to be brought, heard or arbitrated as a class

or collective action, or for you to

participate as a member in any such class or

collective proceeding (“Class Action Waiver

”). Notwithstanding any other provision of

this Arbitration Provision or the JAMS Rules,

disputes in court or arbitration regarding the

validity, enforceability, conscionability or

breach of the Class Action Waiver, or whether

the Class Action Waiver is void or voidable,

may be resolved only by the court and not by

an arbitrator. In any case in which (1) the

dispute is filed as a class or collective

action and (2) there is a final judicial

determination that all or part of the Class

Action Waiver is unenforceable, the class or

collective action to that extent must be

litigated in a civil court of competent

jurisdiction, but the portion of the Class

Action Waiver that is enforceable shall be

enforced in arbitration.

(ECF No. 23-4 at 19-20)(emphasis in original).

DISCUSSION

A. Subject Matter Jurisdiction

This Court has subject matter jurisdiction over this matter

pursuant to 28 U.S.C. § 1332(d), the Class Action Fairness Act

(“CAFA”), which provides, in relevant part, that “district

courts shall have original jurisdiction of any civil action in

which the matter in controversy exceeds the sum or value of

$5,000,000, exclusive of interest and costs, and is a class

action in which . . . (A) any member of a class of plaintiffs is

a citizen of a State different from any defendant.” To the

extent Plaintiff wishes to proceed individually, this Court has

subject matter jurisdiction pursuant to 28 U.S.C. § 1332(a) as

there is complete diversity of the parties and the amount in

controversy exceeds $75,000.

B. Legal Standard

“[W]hen it is clear on the face of the complaint [or

documents relied upon by the complaint] that a validly formed

and enforceable arbitration agreement exists and a party’s claim

is subject to that agreement, a district court must compel

arbitration under a Rule 12(b)(6) pleading standard ....” MZM

Constr. Co. v. N.J. Bldg. Laborers Statewide Benefit Funds, 974

F.3d 386, 406 (3d Cir. 2020). But if (1) the materials subject

to review on a Rule 12(b)(6) motion are unclear as to the

arbitrability question, or (2) the parties have come forward

with facts putting the arbitrability question at issue, then the

court may order limited discovery and then consider the

arbitrability question on a summary judgment standard. Guidotti

v. Legal Helpers Debt Resol., LLC, 716 F.3d 764, 774 (3d Cir.

2013) (quotation marks and citation omitted).

C. Analysis

Uber moves to compel arbitration, primarily relying on the

Federal Arbitration Act (“FAA”), and alternatively, on New

Jersey arbitration law. Plaintiff argues that this Court cannot

compel arbitration pursuant to the FAA because the relevant

class of workers are exempt from application of the FAA, and New

Jersey arbitration law should not apply because the FAA

exemption applies here and “state law may be considered only if

the FAA does not apply.” (ECF No. 38 at 15.) Plaintiff further

argues the Court cannot compel arbitration under New Jersey law

because the arbitration provision is unconscionable for the

following two reasons: (1) the arbitration provision requires

Plaintiff to pay significant arbitration fees; and (2) the

arbitration agreement contains a class action waiver.

Although the FAA authorizes, and in fact requires, courts

to enforce most private arbitration contracts, employment

contracts for “transportation workers” are exempted from the

FAA’s purview. New Prime, Inc. v. Oliveira, 139 S. Ct. 532, 536

(2019); see also 9 U.S.C. § 1 (“[N]othing contained herein shall

apply to contracts of employment of seamen, railroad employees,

or any other class of workers engaged in foreign or interstate

commerce.”). Prior to ordering arbitration pursuant to the FAA,

the Court must first address the question of whether Plaintiff

qualifies for the transportation worker exemption to determine

the enforceability of the parties’ arbitration agreement under

the FAA. A transportation worker, for purposes of the FAA

exemption, is defined as only those “classes of workers who are

actually engaged in the movement of interstate or foreign

commerce or in work so closely related thereto as to be in

practical effect part of it.” Palcko v. Airborne Express, Inc.,

372 F.3d 588, 594 (3d Cir. 2004) (quoting Tenney Eng’g, Inc. v.

United Elec. Radio & Mach. Workers of Am., 207 F.2d 450, 452

(1953)); see also Singh v. Uber Techs. Inc., 939 F.3d 210, 214

(3d Cir. 2019) (holding that “the residual clause of § 1 may

extend to a class of transportation workers who transport

passengers, so long as they are engaged in interstate commerce

or in work so closely related thereto as to be in practical

effect part of it”). Plaintiff, relying on Singh, argues at a

minimum Plaintiff is entitled to discovery relevant to the class

of Uber workers engaged in interstate commerce. In response,

Uber argues the relevant class of workers are not subject to the

FAA § 1 exemption and discovery is not required because “[i]n

the six months since Uber filed its Motion, Plaintiff has failed

to marshal any ‘reliable evidence’ to dispute his agreement to

arbitrate or to identify factual disputes to contest

arbitration.” (ECF No. 39 at 7.) The Court need not resolve

these matters, however, because even if the § 1 exemption

applies, the arbitration provision is nevertheless enforceable

under New Jersey law, for the reasons explained below.

The Court highlights that other courts in this Circuit and

outside of this Circuit have compelled arbitration under state

law without first deciding whether the FAA applies to the

parties’ agreements and merely assuming that the FAA’s

transportation work exemption is applicable. Reese v. Uber

Techs., Inc., No. 18-3300, slip op. at 1 n.1 (E.D. Pa. Mar. 4,

2020), ECF No. 41; Adams v. Parts Distrib. Xpress, Inc., No. 20-

697, 2021 U.S. Dist. LEXIS 52822, at *7-8 (E.D. Pa. March 22,

2021) (“Regardless, the Court need not definitively resolve

whether she qualifies as a transportation worker for purposes of

section 1 of the FAA. For the reasons explained below, even

assuming, without deciding, that Adams was a transportation

worker exempted from the FAA, the Court concludes that the

arbitration agreement is still enforceable under Pennsylvania

law.”); Kauffman v. U-Haul Int’l, Inc., No. 16-4580, 2018 U.S.

Dist. LEXIS 145717, at *5 (E.D. Pa. Aug. 28, 2018) (declining to

resolve the question of whether the parties’ agreement is

covered by the FAA because “even if the [parties’] Agreement is

exempt from the FAA, the Agreement’s arbitration clause is

nevertheless enforceable under Pennsylvania law”); Burgos v. Ne.

Logistics, Inc., No. 15-6840, 2017 U.S. Dist. LEXIS 233939, at

*11 (E.D.N.Y. Mar. 30, 2017) (compelling arbitration under state

law without deciding whether the FAA applies because “regardless

of whether plaintiffs’ claims are exempt from the FAA, the

Arbitration Provision remains enforceable”); Diaz v. Mich.

Logistics Inc., 167 F. Supp. 3d 375, 380–81 (S.D.N.Y. 2016)

(“[T]he Court need not make that determination [of whether the

FAA applies] because the Court agrees with Defendants that, even

assuming that Plaintiffs fall within the § 1 exemption (and the

FAA does not apply), Plaintiffs’ claims are subject to mandatory

arbitration under New York arbitration law.”).

In Reese, the plaintiff argued he should not be compelled

to arbitrate because he is a part of a “class of workers engaged

in foreign or interstate commerce” and thus the FAA does not

apply. Reese, slip op. at 1 n.1. The Court concluded this issue

“need not be resolved here, since the Agreement is enforceable

even if the FAA does not apply.” Id. (emphasis in original).

In reaching this conclusion, the Court adopted the reasoning

from Kauffman, where the Court declined to decide the issue of

whether the FAA’s transportation worker exception applied

because the arbitration agreement was still enforceable under

Pennsylvania law. Id. In Reese, the Court concluded it was

“aware of no grounds that might bar enforcement of the

Agreement’s arbitration provisions” and thus ordered the parties

to arbitration pursuant to Pennsylvania law. Id.

Here, Plaintiff first argues the Court “need not consider

the New Jersey Arbitration Act at all” because Section 1 of the

FAA applies. (ECF No. 38 at 15.) The Court agrees with Uber

that Plaintiff’s position is directly inconsistent with binding

Third Circuit precedent. In Palcko, the Third Circuit held

“[t]here is no language in the FAA that explicitly preempts the

enforcement of state arbitration statutes.” Palcko v. Airborne

Express, Inc., 372 F.3d 588, 595 (3d Cir. 2004); see Volt

Information Sciences, Inc. v. Board of Trustees of Leland

Stanford Junior University, 489 U.S. 468 (1989) (“The FAA

contains no express pre-emptive provision, nor does it reflect a

congressional intent to occupy the entire field of

arbitration.”). Thus, if the § 1 exception applies to a

plaintiff, “the effect of Section 1 is merely to leave the

arbitrability of disputes in the excluded categories as if the

[Federal] Arbitration Act had never been enacted.” Id. at 596

(quoting Mason-Dixon Lines, Inc. v. Local Union No. 560, 443

F.2d 807, 809 (3d Cir. 1971)). In Palcko, after holding that

the Section 1 exemption of the FAA applied, the Third Circuit

held “we see no reason to release the parties from their

agreement” and remanded the case for the District Court to

determine if the arbitration agreement was enforceable pursuant

to state law. Id. at 596. Based on the foregoing case law, the

Court rejects Plaintiff’s position that the Court need not

consider New Jersey law if § 1 of the FAA applies.

Moreover, Plaintiff does not argue that the determination

of whether the matter should be compelled to arbitration

pursuant to the New Jersey law is not ripe until the § 1

analysis is complete. However, this Court is aware of at least

one case within this District where the Court held an

alternative state law argument was not ripe for the Court to

adjudicate until the § 1 exemption analysis was complete. In

Harper, the Court held “[i]f, after discovery, the Court

concludes that the parties’ arbitration agreement is exempt from

the FAA, Defendant may against, move to compel arbitration under

state law arbitration statutes.” Harper v. Amazon.com Servs.,

No. 19-21735, 2020 U.S. Dist. LEXIS 133238, at *21 (D.N.J. July

28, 2020). In reaching this conclusion, the Court relied on

case law where the Court first conducted the FAA analysis and

then reached the state law analysis. Id.

This Court, however, finds the case law referenced above,

which assumed the applicability of the Section 1 exemption

without requiring the parties to engage in months long

discovery, is more in line with the real benefits of enforcement

of individual arbitration provisions recognized by the Supreme

Court. The Supreme Court has found “[i]n individual

arbitration, ‘parties forgo the procedural rigor and appellate

review of the courts in order to realize the benefits of private

dispute resolution: lower costs, greater efficiency and speed,

and the ability to choose expert adjudicators to resolve

specialized disputes.’” Lamps Plus, Inc. v. Varela, 139 S. Ct.

1407, 1416 (2019) (quoting Stolt-Nielsen S.A. v. AnimalFeeds

Int’l Corp., 559 U.S. 662, 685 (2010)). Moreover, the Court

finds whether § 1 exemption applies has “no impact on other

avenues (such as state law) by which a party may compel

arbitration.” Oliveira v. New Prime, Inc., 857 F.3d 7, 24 (1st

Cir. 2017), aff’d, 139 S. Ct. 532 (2019).

This Court’s analysis now turns to Plaintiff’s remaining

arguments regarding why the Court should not compel arbitration

pursuant to New Jersey law. Plaintiff argues the arbitration

agreement is unconscionable because: (1) the arbitration

agreement forces each party to be responsible for their own

costs of arbitration; and (2) the arbitration agreement is

unenforceable because it contains a class arbitration waiver.

In making these arguments, Plaintiff fails to even reference the

delegation provision provided in the 2020 PAA. Accordingly, it

is evident Plaintiff is not attacking the delegation clause

itself.

“Arbitration is a matter of contract and a party cannot be

required to submit to arbitration any dispute which he has not

agreed so to submit.” Murray v. Manorcare-West Deptford of

Paulsboro NJ, LLC, No. 5460-16, 2018 N.J. Super. Unpub. LEXIS

1269, at *10 (App. Div. May 31, 2018) (quoting Bernetich,

Hatzell & Pascu, LLC v. Med. Records Online, Inc., 455 N.J.

Super. 173, 180 (App. Div. 2016) (quoting AT&T Technologies,

Inc. v. Communications Workers of America, 475 U.S. 643, 648

(1986))). “State law governs not only whether the parties formed

a contract to arbitrate their disputes, but also whether the

parties entered an agreement to delegate the issue of

arbitrability to an arbitrator.” Id. (citing Morgan v. Sanford

Brown Inst., 225 N.J. 289, 303 (2016) (citing First Options of

Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995))). “A party

opposing a motion to compel arbitration ‘must mount a specific

challenge to the validity of a delegation clause.’” Id.

(quoting Morgan, 225 N.J. at 305 (citing Rent-A-Center, W., Inc.

v. Jackson, 561 U.S. 63, 72 (2010))); see also Goffe v. Foulke

Management Corp., 238 N.J. 191, 211 (2019) (“Our Court has

acknowledged the legitimacy and applicability of the Rent-A-

Center holding to delegation provisions in New Jersey

arbitration agreements.”). A party cannot avoid arbitration of

the clause’s enforceability simply by attacking the arbitration

clause. “[C]ontesting the validity of an arbitration agreement

as a whole, without specifically disputing the delegation clause

contained therein, is not sufficient to challenge the delegation

provision.” MacDonald v. CashCall, Inc., 883 F.3d 220, 223,

(citing Rent-A-Center, 561 U.S. at 70-75). Instead, the party

must contest the enforceability of the delegation provision by

“challeng[ing] the delegation provision specifically.” Rent-A-

Center, 561 U.S. at 70.

The Third Circuit has held “unless the party opposing

arbitration challenges ‘the delegation provision specifically,’

the district court ‘must treat it as valid’ and ‘must enforce

it’ by sending ‘any challenge to the validity of the underlying

arbitration agreement to the arbitrator.” MXM Constr. Co. v.

N.J. Bldg. Laborers Statewide Benefit Funds, 974 F.3d 386, 399

(3d Cir. 2020) (quoting Rent-A-Center, 561 U.S. at 71-72).

Moreover, the Ninth Circuit has already held that a delegation

clause providing the same carve-out for challenges to the

enforceability of class activity waivers is clear and

unmistakable. Mohamed v. Uber Techs., Inc., 848 F.3d 1201, 1209

(9th Cir. 2016). For the foregoing reasons and pursuant to the

delegation provision, the Court may not address Plaintiff’s

argument that the arbitration argument may not be enforced

because the agreement purportedly forces each party to be

responsible for their own costs of arbitration.

However, the second attack on the arbitration agreement is

directly connected to the supposed unenforceability of class

action waivers under New Jersey law. Accordingly, given the

carve-out in the delegation provision and the 2020 PAA’s class

action waiver provision, which directs questions of

enforceability of the class action waiver to the court, the

Court will determine whether a class action waiver is

enforceable. Plaintiff argues class arbitration waivers are

impermissible under New Jersey law. This Court agrees with Uber

that New Jersey has declined to impose any per se rule against

such waivers. In fact, the New Jersey Supreme Court recently

made clear that the mere inclusion of a class-action waiver is

not impermissible under New Jersey law. Instead, the Court

affirmed the Appellate Division’s decision to distinguish a

matter before it from Muhammad v. County Bank of Rehoboth Beach,

DE, 189 N.J. 1, 15-16 (2006), where the New Jersey Supreme Court

“found unconscionable a class-arbitration waiver embedded in a

consumer contract of adhesion.” Arafa v. Health Express Corp.,

233 A.3d 495, 509 (N.J. 2020); see also Gras v. Assocs. First

Capital Corp., 346 N.J. Super. 42, 57, 786 A.2d 886 (App. Div.

2001) (affirming an order enforcing arbitration and a waiver of

rights, including any right to proceed as a class against

defendant). Here, the Court finds the language of the 2020 PAA,

which is not a consumer contract of adhesion, is a clear and

unambiguous waiver of the Plaintiff’s rights to proceed as a

class against Uber and rejects Plaintiff’s argument that

Muhammad applies here. For the foregoing reasons, the Court

will compel arbitration pursuant to New Jersey law.

CONCLUSION

For the reasons stated above, the Court will grant Uber’s

Motion to Compel Arbitration and Stay Action. An appropriate

Order will be entered.

Date: June 30, 2021 s/ Noel L. Hillman

At Camden, New Jersey NOEL L. HILLMAN, U.S.D.J.