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Rimel v. Uber Technologies, Inc.

United States District Court, M.D. Florida, Orlando Division

March 31, 2017

ROBERT RIMEL, Plaintiff,
v.
UBER TECHNOLOGIES, INC and RASIER LLC, Defendant.

          ORDER

          CARLOS E. MENDOZA, UNITED STATES DISTRICT JUDGE

         THIS CAUSE is before the Court on Defendant Uber Technologies, Inc. and Rasier LLC's Motion to Compel Arbitration and Strike Class Action Allegations (“Motion to Compel, ” Doc. 23). United States Magistrate Judge Karla R. Spaulding submitted a Report and Recommendation (“R&R, ” Doc. 61), in which she recommends that the Motion be granted. Plaintiff filed an Objection (Doc. 62), to which Defendants filed a Response (Doc. 66). After an independent de novo review of the record, the R&R will be adopted and confirmed.

         I. Factual Background

         Defendant Uber Technologies, Inc. (“Uber”) is a Delaware corporation with its principal place of business in San Francisco, California. (Am. Compl., Doc. 7, ¶ 7). Uber is the creator of a passenger transportation service that connects riders and drivers through a cellular phone application (the “App”). (Id.; Colman Decl., Doc. 23-1, ¶ 3). When a rider uses the App to request transportation services, the customer's request is routed to an available Uber driver to pick up and transport the customer to their desired destination. (Doc. 7 ¶ 7; Doc. 23-1 ¶ 3). The customer then pays a fare through the App, and the Uber driver is paid directly by Uber for eighty percent of the fare collected from the customer. (Doc. 7 ¶ 14, 29).

         Defendant Rasier, LLC is a Delaware limited liability company and Uber's wholly-owned subsidiary. (Id. ¶ 8; Doc. 23-1 ¶ 2).[1] Rasier contracts with Uber drivers in Florida using the UberX platform. (Doc. 23-1 ¶ 2). Any individual who wishes to access the UberX platform must first enter into the Rasier Software Sublicense & Online Services Agreement (the “Services Agreement, ” Ex. C to Coleman Decl., Doc. 23-1). (Id. ¶ 5). To enter into the Services Agreement and gain access to the platform, the individual must first login to the App using a unique username and password. (Id. ¶ 6). After completing the sign-up process, they are able to review the Services Agreement by clicking a hyperlink presented on the screen within the App. (Id. ¶ 7). The individual is free to spend as much time as they wish reviewing the Services Agreement. (Id.).

         To advance past the screen with the hyperlink to the document, the individual is required to click “YES, I AGREE” to the Services Agreement. (Id.). After clicking “YES, I AGREE, ” they are prompted to confirm acceptance a second time. (Id.). After clicking “YES, I AGREE” a second time, the individual can access the App, and the Services Agreement is automatically and immediately in the individual's Driver Portal[2] where he or she can access it at any time. (Id. ¶ 8). When a new version of a Services Agreement is issued, an Uber driver cannot gain access to the UberX platform unless he or she affirmatively accepts the new version of the Services Agreement in the manner discussed above. (Colman's Supp. Decl., Doc. 49-1, ¶ 2).

         The Services Agreement contains an arbitration provision (“Arbitration Provision”) that requires Uber drivers to arbitrate, on an individual basis, all disputes arising out of or related to their relationship with Uber. (Doc. 23-1 at 22). Importantly, the Arbitration Provision contains a delegation clause (“Delegation Clause”), which purports to delegate any threshold arbitrability issues to an arbitrator. (Id.). If an Uber driver does not wish to arbitrate his or her claim against Uber, he or she can opt out of the Arbitration Provision within thirty days of accepting the Services Agreement. (Id. at 25).

         In November 2014, Plaintiff Robert Rimel, a citizen of Orange County, Florida, became an UberX driver. (Doc. 7 ¶¶ 6, 16; Doc. 23-1 ¶ 10). He alleges that Uber exploits “hard-working drivers” like him who “are the lifeblood of the company” by: (1) deceiving drivers regarding the amount of money they can earn, (2) misappropriating tips that customers allocate to the drivers, and (3) misclassifying drivers as independent contractors rather than employees. (Doc. 7 ¶¶ 1-4, 14-43). Therefore, Plaintiff filed a putative class action against Uber asserting state law claims for: tortious interference with prospective business relations (Count I), breach of contract (Count II), unjust enrichment (Count III), conversion (Count IV), unfair competition (Count V), fraudulent misrepresentation (Count VI), and violations of the Florida Minimum Wage Act, Fla. Stat. § 448.110 (Count VII). (Id. ¶¶ 54-91).

         Uber contends that Plaintiff's claims are subject to the Arbitration Provision contained in Uber's November 2014 Services Agreement. Therefore, Uber moves for the entry of an order dismissing this action, or alternatively, staying all proceedings unless and until Plaintiff fulfills his contractual obligation to arbitrate his individual claims. (Doc. 62 at 7-12). Additionally, Uber moves to strike Plaintiff's class action allegations from the Complaint. (Id. at 12-14). Plaintiff mounts several arguments in opposition to Uber's Motion to Compel.

         Plaintiff does not dispute that he initially entered into Uber's November 2014 Services Agreement and that he failed to opt out of the Arbitration Provision within thirty days. Instead, Plaintiff argues that he entered into Uber's superseding Services Agreement on December 11, 2015, and that he exercised his right to opt out of the Arbitration Provision within thirty days. (Resp. to Mot. to Compel, Doc. 28, at 4-5). Plaintiff further argues that the Arbitration Provision is governed by California law and that: (1) the Delegation Clause is not clear and unmistakable; (2) the Arbitration Provision and Delegation Clause are procedurally and substantively unconscionable; and (3) the Arbitration Provision is unenforceable because the prohibition against private attorney general actions violates California public policy. (Id. at 6-22).

         Upon review of the record, the Magistrate Judge concluded that Plaintiff had accepted only the June 2014 Services Agreement and failed to opt out of the Arbitration Provision within thirty days. (R&R at 6-9). The Magistrate Judge further concluded that: (1) Florida law, not California law, applies to the Arbitration Provision (id. at 9-10); (2) the Arbitration Provision and the Delegation Clause are not unconscionable (id. at 10-14); (3) the terms of the Delegations Clause are clear and unmistakable (id. at 14-15); and (4) the class action waiver in the Arbitration Provision should be enforced (id. at 16). As such, the Magistrate Judge recommends that the Court grant Uber's Motion. (R&R at 16-17). Plaintiff objects to the Magistrate Judge's recommendation.

         II. Legal Standards

         A. Objections to a Report and Recommendation

         Pursuant to 28 U.S.C. § 636(b)(1), when a party makes a timely objection, the Court shall review de novo any portions of a magistrate judge's report and recommendation concerning specific proposed findings or recommendations to which an objection is made. See also Fed. R. Civ. P. 72(b)(3). De novo review “require[s] independent consideration of factual issues based on the record.” Jeffrey S. v. State Bd. of Educ. of State of Ga., 896 F.2d 507, 513 (11th Cir. 1990). The district court “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1).

         B. Motion to Compel Arbitration

         In general, the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., governs the enforceability of arbitration provisions in contracts involving transactions in interstate commerce. Hill v. Rent-A-Center, Inc., 398 F.3d 1286, 1288 (11th Cir. 2005). Under the FAA, “courts must rigorously enforce arbitration agreements according to their terms.” Am. Express Co. v. Italian Colors Rest., 133 S.Ct. 2304, 2309 (2013) (quotation omitted). Arbitration agreements are presumptively valid and enforceable. See 9 U.S.C. § 2. However, arbitration under the FAA is ultimately “a matter of consent, not coercion, ” Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989), and parties opposing arbitration can challenge the formation and validity of a contract containing an arbitration clause. It is well-settled, however, that “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.” AT & T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 648 (1986) (quotation omitted). Therefore, in determining whether to compel arbitration, courts engage in a limited review to determine whether the dispute is arbitrable. Senti v. Sanger Works Factory, Inc., No. 6:06-cv-1903-Orl-22DAB, 2007 WL 1174076, at *4-5 (M.D. Fla. Apr. 18, 2007).

         Importantly, “parties are generally free to structure their arbitration agreements as they see fit.” Volt, 489 U.S. at 479. Parties may decide, for instance, to delegate “threshold determinations to an arbitrator, such as whether an arbitration agreement is enforceable.” Parnell v. CashCall, Inc., 804 F.3d 1142, 1146 (11th Cir. 2015). “The Supreme Court has upheld these so-called delegation provisions as valid, and explained that they are severable from the underlying agreement to arbitrate.” Id. (internal quotations and citation omitted). “When an arbitration agreement contains a delegation provision and the plaintiff raises a challenge to the contract as a whole, the federal courts may not review his claim because it has been committed to the power of the arbitrator.” Id. “[A]bsent a challenge to the delegation provision itself, the federal courts must treat the delegation provision as valid . . . and must enforce it . . ., leaving any challenge to the validity of the [a]greement as a whole for the arbitrator.” Id. at 1146-47 (quotation omitted). Courts should not, however, “assume that the parties agreed to arbitrate arbitrability unless there is clear and unmistakable evidence that they did so.” Id. at 1147 (quotation omitted).

         III. Analysis

         In his Objection, Plaintiff does not challenge the Magistrate Judge's finding that the Arbitration Provision and Delegation Clause are enforceable under Florida Law.[3] Instead, Plaintiff contends that the Delegation Clause and the Arbitration Provision are unenforceable under California law and that the Magistrate Judge erred ...


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