Douglas O'Connor v. Uber Technologies, Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DOUGLAS O’CONNOR; THOMAS No. 14-16078

COLOPY; DAVID KHAN;

MATTHEW MANAHAN; WILSON D.C. No.

ROLLE, JR.; WILLIAM 3:13-cv-03826-EMC

ANDERSON, individually and on

behalf of all others similarly

situated,

Plaintiffs-Appellees,

v.

UBER TECHNOLOGIES, INC.,

Defendant-Appellant.

DOUGLAS O’CONNOR; THOMAS Nos. 15-17420

COLOPY; MATTHEW MANAHAN; 15-17532

ELIE GURFINKEL, individually

and on behalf of all others D.C. No.

similarly situated, 3:13-cv-03826-EMC

Plaintiffs-Appellees,

v.

UBER TECHNOLOGIES, INC.,

Defendant-Appellant.

2 O’CONNOR V. UBER

HAKAN YUCESOY, on behalf of Nos. 15-17422

himself and all others similarly 15-17534

situated,

Plaintiff-Appellee, D.C. No.

3:15-cv-00262-EMC

v.

UBER TECHNOLOGIES, INC.,

Defendant-Appellant.

RICARDO DEL RIO; TONY No. 15-17475

MEHRDAD SAGHEBIAN,

individually and on behalf of all D.C. No.

others similarly situated, 3:15-cv-03667-EMC

Plaintiffs-Appellees,

v.

UBER TECHNOLOGIES, INC.;

RASIER-CA, LLC, a Delaware

Limited Liability Company,

Defendants-Appellants.

O’CONNOR V. UBER 3

ABDUL KADIR MOHAMED, No. 15-17533

individually and on behalf of all

others similarly situated, D.C. Nos.

Plaintiff-Appellee, 3:14-cv-05200-EMC

3:14-cv-05241-EMC

v. 3:15-cv-03009-EMC

UBER TECHNOLOGIES, INC.,

Defendant-Appellant,

and

RASIER, LLC; HIREASE, LLC,

Defendants.

DOUGLAS O’CONNOR; THOMAS No. 16-15000

COLOPY; MATTHEW MANAHAN;

ELIE GURFINKEL, individually D.C. No.

and on behalf of all others 3:13-cv-03826-EMC

similarly situated,

Plaintiffs-Appellants,

v.

UBER TECHNOLOGIES, INC.,

Defendant-Appellee.

4 O’CONNOR V. UBER

HAKAN YUCESOY, on behalf of No. 16-15001

himself and others similarly

situated, D.C. No.

Plaintiff-Appellant, 3:15-cv-00262-EMC

v.

UBER TECHNOLOGIES, INC.,

Defendant-Appellee.

ABDUL KADIR MOHAMED, No. 16-15035

individually and on behalf of all

others similarly situated; D.C. No.

RONALD GILLETTE; SHANNON 3:14-cv-05200-EMC

WISE; BRANDON FARMER;

MEGHAN CHRISTENSON,

Plaintiffs-Appellants,

v.

UBER TECHNOLOGIES, INC.,

Defendant-Appellee.

O’CONNOR V. UBER 5

DOUGLAS O’CONNOR; THOMAS No. 16-15595

COLOPY; MATTHEW MANAHAN;

ELIE GURFINKEL, individually D.C. No.

and on behalf of all others 3:13-cv-03826-EMC

similarly situated,

Plaintiffs-Appellees,

OPINION

v.

UBER TECHNOLOGIES, INC.,

Defendant-Appellant.

Appeal from the United States District Court

for the Northern District of California

Edward M. Chen, District Judge, Presiding

Argued and Submitted September 20, 2017

Submission Withdrawn September 22, 2017

Re-Submitted September 25, 2018

San Francisco, California

Filed September 25, 2018

Before: Richard C. Tallman, Richard R. Clifton,

and Sandra S. Ikuta, Circuit Judges.

Opinion by Judge Clifton

6 O’CONNOR V. UBER

SUMMARY*

Class Action / Arbitration

The panel reversed the district court’s denial of Uber

Technologies, Inc.’s motions to compel arbitration, reversed

the district court’s class certification orders, and reversed as

moot and without foundation the district court’s Fed. R. Civ.

P. 23(d) orders in several putative class actions brought by

current and former Uber drivers alleging violations of various

federal and state statutes arising from Uber’s classification of

drivers as independent contractors rather than employees.

In Mohamed v. Uber Technologies, Inc., 848 F.3d 1201,

1206 (9th Cir. 2016), the panel previously considered and

reversed the district court’s orders denying Uber’s motion to

compel arbitration.

The panel rejected plaintiffs’ additional arguments in this

current appeal alleging that the arbitration agreements were

unenforceable. First, the plaintiffs argued that the lead

plaintiffs in the O’Connor case constructively opted out of

arbitration on behalf of the entire class. The panel held this

was unpersuasive because nothing gave the O’Connor lead

plaintiffs the authority to take that action on behalf of and

binding other drivers, and the decision in Bickerstaff v.

Suntrust Bank, 788 S.E.2d 787 (Ga. 2016), was not

instructive where it relied exclusively on state law grounds

and did not discuss the Federal Arbitration Act. Second, the

plaintiffs argued that the arbitration agreements were

*

This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

O’CONNOR V. UBER 7

unenforceable because they contained class action waivers

that violated the National Labor Relations Act of 1935. The

panel held that this argument was rejected by the Supreme

Court in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018).

The panel held that it had jurisdiction to review both the

original class certification order and the December 9, 2015

certification order. The panel held that in the wake of the

decision in Mohamed, the class certification orders must be

reversed because they were premised upon the district court’s

conclusion that the arbitration agreements were not

enforceable. The question whether those agreements were

enforceable was not properly for the district court to answer

because the question of arbitrability was designated to the

arbitrator. The panel held that remand for further proceedings

was appropriate, and leaving the existing class certification

orders in place in the meantime was not appropriate.

The panel held that the district court’s Fed. R. Civ. P.

23(d) orders must be reversed as moot and without

foundation in light of the panel’s reversal of the district

court’s orders denying the motions to compel arbitration and

certifying the class.

8 O’CONNOR V. UBER

COUNSEL

Theodore J. Boutrous Jr. (argued), Theane D. Evangelis, and

Kevin J. Ring-Dowell, Gibson Dunn & Crutcher LLP, Los

Angeles, California; Joshua S. Lipshutz, Gibson Dunn &

Crutcher LLP, San Francisco, California; for Defendants-

Appellants.

Shannon Liss-Riordan (argued) and Adelaide H. Pagano,

Lichten & Liss-Riordan P.C., Boston, Massachusetts, for

Plaintiffs-Appellees.

Jeffery Burritt (argued), Attorney; Kira Dellinger Vol,

Supervisory Attorney; Linda Dreeben, Deputy Associate

General Counsel; John H. Ferguson, Associate General

Counsel; Jennifer Abruzzo, Deputy General Counsel; Richard

F. Griffin Jr., General Counsel; National Labor Relations

Board, Washington, D.C.; for Amicus Curiae National Labor

Relations Board.

Andrew J. Pincus, Evan M. Tager, and Archis A.

Parasharami, Mayer Brown LLP, Washington, D.C.; Jed

Glickstein, Mayer Brown LLP, Chicago, Illinois; Kate

Comerford Todd and Warren Postman, U.S. Chamber

Litigation Center Inc., Washington, D.C.; for Amicus Curiae

Chamber of Commerce of the United States of America.

O’CONNOR V. UBER 9

OPINION

CLIFTON, Circuit Judge:

Current and former Uber drivers filed several putative

class actions alleging on behalf of themselves and other

drivers that Uber Technologies, Inc. and related defendants

(collectively referred to as “Uber”), violated various federal

and state statutes by, among other things, misclassifying

drivers as independent contractors rather than employees.

Multiple cases were consolidated for appeal to this court.1

Uber appeals the district court’s orders denying Uber’s

motions to compel arbitration, orders granting class

certification in O’Connor, and orders controlling class

communications pursuant to Federal Rule of Civil Procedure

23(d).

We previously considered and reversed the district court’s

orders denying Uber’s motions to compel arbitration in

Mohamed v. Uber Technologies, Inc., 848 F.3d 1201, 1206

(9th Cir. 2016). Plaintiffs offer additional arguments in the

current appeal why the arbitration agreements are

unenforceable, but those arguments are unpersuasive. As the

class certification by the district court was premised on the

district court’s determination that the arbitration agreements

were unenforceable, the class certification must also be

reversed. The Rule 23(d) orders were based on the district

court’s denial of the motions to compel arbitration and its

1

The appeals were from four related actions pending before the same

district court: (1) O’Connor v. Uber Technologies, Inc., 3:13-cv-03826-

EMC; (2) Yucesoy v. Uber Technologies, Inc., 3:15-cv-00262-EMC;

(3) Mohamed v. Uber Technologies, Inc., 3:14-cv-05200-EMC; and (4)

Del Rio v. Uber Technologies, Inc., 3:15-cv-03667-EMC.

10 O’CONNOR V. UBER

granting of class certification. As both of those decisions

must be reversed, there is no longer a basis for the district

court’s restrictions on Uber’s communication with class and

putative class members, so these orders are moot and must be

reversed as well.

I. Background

Two Uber drivers filed a putative class action complaint

against Uber on August 16, 2013, initiating the O’Connor

action. It alleged claims for failure to remit the entire gratuity

paid by customers to drivers in violation of California Labor

Code § 351 (“Tips Claim”), and for misclassifying the drivers

as independent contractors and failing to pay their business

expenses (including vehicles, gas, and maintenance) in

violation of California Labor Code § 2802 (“Expense

Reimbursement Claim”).

Within a week of filing suit, the O’Connor Plaintiffs filed

a motion under Rule 23(d) requesting that the district court

declare the 2013 arbitration agreement unconscionable, or, in

the alternative, requiring Uber to provide enhanced notice and

opportunities for the drivers to opt out of arbitration. On

December 6, 2013, the district court granted the O’Connor

Plaintiffs’ alternative request, enjoined Uber from enforcing

its arbitration agreement against those drivers who entered

into the agreement but did not opt out, required Uber to revise

the agreement to include enhanced notice provisions, and

directed Uber to extend the opt out period for an additional

thirty days once the revised agreements were distributed.

Uber’s updated licensing agreement was issued on June 21,

2014. Uber also sent licensing agreements in November 2014

and April 2015 that were materially identical to the June 2014

agreement (collectively “2014 arbitration agreement”).

O’CONNOR V. UBER 11

Plaintiff Mohamed filed a putative class action complaint

against Uber and Hirease, LLC, an independent company that

conducts background checks, on November 24, 2014,

asserting various federal and California state law claims. We

have already provided background on that case in our

decision in Mohamed, 848 F.3d at 1206–07. Here it is

sufficient to note that the district court denied Uber’s motion

to compel arbitration pursuant to its 2013 and 2014

arbitration agreements, holding, among other things, that the

arbitration provisions were unenforceable because they were

unconscionable. Based on the same reasoning, the district

court also denied Uber’s motions to compel arbitration in

Yucesoy, Del Rio, and O’Connor.

In April 2015, the O’Connor Plaintiffs moved for

certification of a class of approximately 160,000 individuals

who had driven for Uber in the state of California at any time

since August 16, 2009. The district court granted class

certification in part in an order filed on September 1, 2015,

certifying the following class for the Plaintiffs’ Tips Claim:

All UberBlack, UberX, and UberSUV drivers

who have driven for Uber in the state of

California at any time since August 16, 2009,

and who (1) signed up to drive directly with

Uber or an Uber subsidiary under their

individual name, and (2) are/were paid by

Uber or an Uber subsidiary directly and in

their individual name, and (3) did not

electronically accept any contract with Uber

or one of Uber’s subsidiaries which contain

the notice and opt-out provisions previously

ordered by this Court (including those

contracts listed in the Appendix to this Order),

12 O’CONNOR V. UBER

unless the driver timely opted-out of that

contract’s arbitration agreement.

The district court excluded drivers who worked for a distinct

third-party transportation company, or who contracted or

were paid under corporate or fictitious names, out of concern

that individualized issues would predominate if they were

included. The district court, in addition, excluded any drivers

who signed the Uber contracts that included enhanced notice

and opt-out provisions previously ordered by the district

court, unless the driver timely opted-out of the arbitration

agreement. The district court declined to certify the

O’Connor Plaintiffs’ Expense Reimbursement Claim at that

time because it was uncertain whether the O’Connor

Plaintiffs could determine whether a particular expense was

“necessary” on a classwide basis.

In response to a supplemental motion for class

certification by the O’Connor Plaintiffs, the district court, on

December 9, 2015, certified an additional subclass of Uber

drivers including those who accepted arbitration agreements

in 2014 and 2015:

All UberBlack, UberX, and UberSUV drivers

who have driven for Uber in the state of

California at any time since August 16, 2009,

and meet all the following requirements:

(1) who signed up to drive directly with Uber

or an Uber subsidiary under their individual

name, and (2) are/were paid by Uber or an

Uber subsidiary directly and in their

individual name, and (3) electronically

accepted any contract with Uber or one of

Uber’s subsidiaries which contain the notice

O’CONNOR V. UBER 13

and opt-out provisions previously ordered by

this Court, and did not timely opt out of that

contract’s arbitration agreement.

In the same order the district court also certified the original

class and subclass to pursue the Expense Reimbursement

Claim based on the O’Connor Plaintiffs’ proposal to rely on

the Internal Revenue Service’s mileage reimbursement rate,

which approximates a driver’s necessary business expenses.

Uber issued a new arbitration agreement to all of its

drivers on December 11, 2015. Plaintiffs in O’Connor,

Mohamed, and Yucesoy filed separate motions to enjoin Uber

from distributing and enforcing this new agreement and to

enjoin any further communications by Uber to class and

putative class members. The district court granted the motion

in part on December 23, 2015, citing its authority under

Federal Rule of Civil Procedure 23(d) to control

communications by Uber to the class members and putative

class members. Although the district court did not prohibit

Uber from sending out arbitration agreements in the future

(except to members of the O’Connor certified class), it ruled

that: (1) the December 11, 2015 agreement shall have no

effect on the rights of certified class members to pursue the

claims certified in O’Connor; (2) its arbitration provision was

not enforceable against non-class member drivers who had

already agreed to it; (3) Uber had to issue a new version of

the agreement with enhanced notice and opt out provisions

and provide drivers with 30-days to decide to opt out or not;

and (4) during the pendency of the Uber cases, all cover

letters, notices and arbitration provisions given to new or

prospective drivers had to be approved by the district court.

14 O’CONNOR V. UBER

In Mohamed, 848 F.3d at 1210–12, we reversed the

district court’s denial of Uber’s motion to compel arbitration.2

We held that the relevant provisions in the respective

agreements delegated the threshold question of arbitrability

to the arbitrator, that the delegation provisions were not

adhesive pursuant to California law and were therefore not

procedurally unconscionable, and that the provisions

permitting drivers to opt-out of arbitration were not illusory

but provided the drivers with a meaningful opportunity to opt

out. Id. at 1207–12.

In response to Mohamed, the district court terminated its

December 23, 2015 Rule 23(d) order, and stated that “Uber

is permitted to issue the December 2015 Agreement to new

drivers without satisfying the enhanced notice provisions

required by the Court” and current drivers as well. The

district court refused to vacate the order retroactively,

however, explaining that “it will not deem the December

2015 Agreement effective as to drivers who did not timely

opt out of the arbitration agreement during the pendency of

the Rule 23(d) orders,” from December 10, 2015 to August

18, 2016.

Approximately a dozen appeals arising from these cases

were filed with this court. They were consolidated for appeal,

and supplemental consolidated briefing was ordered and

received.

2

In addition, we affirmed the district court’s order as to the 2013

agreement’s delegation of California’s Private Attorneys General Act

(“PAGA”) claims to the arbitrator but noted that it was severable from the

rest of the agreement and did not invalidate the rest of the arbitration

provision. Mohamed, 848 F.3d at 1212–14.

O’CONNOR V. UBER 15

II. Motions to Compel Arbitration

An order denying a motion to compel arbitration is

reviewed de novo. See Kilgore v. KeyBank, Nat’l Ass’n,

718 F.3d 1052, 1057 (9th Cir. 2013) (en banc). Underlying

factual findings are reviewed for clear error. See Cape

Flattery Ltd. v. Titan Mar., LLC, 647 F.3d 914, 917 (9th Cir.

2011). “[Q]uestions of arbitrability must be addressed with

a healthy regard for the federal policy favoring arbitration.”

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,

460 U.S. 1, 24 (1983).

Based on our decision in Mohamed, the district court’s

orders denying Uber’s motions to compel arbitration must be

reversed. Plaintiffs do not dispute the application of

Mohamed regarding the issues our previous decision

discussed to the other cases consolidated in the current

appeal, but they argue that the arbitration agreements are

unenforceable for two other reasons.

The first reason is that even if the arbitration agreements

would otherwise be enforceable, Plaintiffs argue they are

irrelevant here because the lead plaintiffs in O’Connor

constructively opted out of arbitration on behalf of the entire

class. The sole authority offered by Plaintiffs for this

proposition is a Georgia Supreme Court decision, Bickerstaff

v. Suntrust Bank, 788 S.E.2d 787 (Ga. 2016). The argument

is unpersuasive for multiple reasons. Nothing gave the

O’Connor lead plaintiffs the authority to take that action on

behalf of and binding other drivers. Nor did Bickerstaff hold

that individuals in the lead plaintiffs’ position had the

authority to make such an election for others. Perhaps more

importantly, Plaintiffs provide no federal case law that has

relied on Bickerstaff, nor could they. That decision rested

16 O’CONNOR V. UBER

exclusively on state law grounds and did not discuss the

Federal Arbitration Act (“FAA”), 9 U.S.C. § 2.

Section 2 of the FAA “requires courts to enforce

agreements to arbitrate according to their terms,”

CompuCredit Corp. v. Greenwood, 565 U.S. 95, 98 (2012),

in order “to place an arbitration agreement upon the same

footing as other contracts . . . and to overrule the judiciary’s

longstanding refusal to enforce agreements to arbitrate,”

Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 219–20

(1985) (internal quotation marks and citation omitted). To

that end, section 2 declares that “a contract evidencing a

transaction involving commerce to settle by arbitration a

controversy thereafter arising out of such contract or

transaction . . . shall be valid, irrevocable, and enforceable,

save upon such grounds as exist at law or in equity for the

revocation of any contract.” 9 U.S.C. § 2. An arbitration-

specific rule, such as the one set forth in Bickerstaff, would be

preempted by the FAA. See AT&T Mobility LLC v.

Concepcion, 563 U.S. 333, 341–43 (2011). Plaintiffs’ new

argument provides no support for the district court’s orders

denying the motions to compel arbitration.

The second alternative argument offered by Plaintiffs is

that the arbitration agreements are unenforceable because

they contain class action waivers that violate the National

Labor Relations Act of 1935 (“NLRA”), 29 U.S.C.

§§ 151–169. After oral argument, we withdrew submission

of this consolidated appeal pending resolution by the

Supreme Court of another case that posed a similar question.

The Court answered that question and rejected Plaintiffs’

O’CONNOR V. UBER 17

argument in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612

(2018).3

In sum, the district court’s orders denying Uber’s motions

to compel arbitration in O’Connor, Yucesoy, and Del Rio

must be reversed.

III. Class Certification

We have jurisdiction under 28 U.S.C. § 1292(e) and

Federal Rule of Civil Procedure 23(f) to review the district

court’s class certification orders in O’Connor. Uber timely

petitioned for and received permission to appeal both orders.

As a preliminary matter, Plaintiffs contend that our

review should be limited to the December 9, 2015

certification order, arguing that the motions panel which

granted permission to appeal in Appeal No. 15-80220 did not

grant review of the original class certification order. We can

and will review both certification orders. See Rivera v.

NIBCO, Inc., 364 F.3d 1057, 1063 (9th Cir. 2004) (the “court

may address any issue fairly included within” an interlocutory

order). The December 9, 2015 order incorporated the Rule 23

analysis that the district court previously conducted in its

September 1, 2015 order and expanded the class as a result of

supplemental briefing related to issues raised in the earlier

certification order.

3

Following the Supreme Court’s decision in Epic Systems, we

obtained supplemental briefing from the parties. Plaintiffs acknowledged

that the Court’s decision extinguished their argument that the arbitration

agreements were not enforceable under the NLRA.

18 O’CONNOR V. UBER

“[W]e first review a class certification determination for

legal error under a de novo standard, and if no legal error

occurred, we will proceed to review the decision for abuse of

discretion.” Sali v. Corona Reg’l Med. Ctr., 889 F.3d 623,

629 (9th Cir. 2018) (alteration incorporated and internal

quotation marks omitted). A district court that applies “the

correct legal standard abuses its discretion only if it (1) relies

on an improper factor, (2) omits a substantial factor, or

(3) commits a clear error of judgment in weighing the correct

mix of factors.” Id. (internal quotation marks omitted). The

district court’s findings of fact are reviewed for clear error,

and will be reversed “only if they are (1) illogical,

(2) implausible, or (3) without support in inferences that may

be drawn from the record.” Id. (internal quotation marks

omitted).

In the wake of our decision in Mohamed, the class

certification orders must be reversed. Certification of the

class by the district court, notably the court’s determinations

that the requirements of Rule 23 were satisfied, was premised

upon the district court’s conclusion that the arbitration

agreements were not enforceable. The class as certified

includes drivers who entered into agreements to arbitrate their

claims and to waive their right to participate in a class action

with regard to those claims. As we held in Mohamed, the

question whether those agreements were enforceable was not

properly for the district court to answer. The question of

arbitrability was designated to the arbitrator. Mohamed,

848 F.3d at 1208–12.

In their most recent supplemental brief, Plaintiffs do not

dispute that the basis for the class certification orders

previously entered by the district court has been undermined

by Mohamed and Epic Systems, among other decisions.

O’CONNOR V. UBER 19

Plaintiffs argue that we should not disturb the existing class

certification orders and should instead simply remand these

cases to the district court for further consideration, so that it

could consider certification of a class that might be defined

differently based on some new analysis. Remand for further

proceedings is appropriate, but leaving the existing class

certification orders in place in the meantime is not. Those

orders are reversed.

IV. Rule 23(d) Orders

Reversing the class certification orders also leads us to set

aside the Rule 23(d) orders. They were based on the district

court’s conclusion that a class could be certified and its desire

to limit the effect of any new arbitration agreement on class

or putative class members. As we have concluded that the

district court’s orders denying the motions to compel

arbitration and certifying the class must both be reversed, the

Rule 23(d) orders are moot and without foundation. They

must be reversed as well.

V. Conclusion

The district court’s denial of Uber’s motions to compel

arbitration in O’Connor, Yucesoy, and Del Rio must be

reversed, based on Mohamed. Because the arbitration

agreements are enforceable, the district court’s class

certification orders in O’Connor must also be reversed. The

orders entered by the district court under Rule 23(d) orders

are moot and are thus reversed as well.

REVERSED AND REMANDED.