Uber clause requiring that drivers pursue arbitration in the Netherlands is unconscionable, Supreme Court rules — drivers may therefore pursue application to allow class action in Ontario for breach of Employment Standards ActUber Technologies Inc. v. Heller, 2020 SCC 16 (CanLII)
August 7, 2020
An 8-1 majority of the Supreme Court of Canada held that a clause requiring Uber drivers to settle disputes with the multi-national company through commercial arbitration in the Netherlands was void, and that an application to certify a class action against the company could proceed in Ontario. Seven judges agreed with the Ontario Court of Appeal that the arbitration clause was unconscionable. The high up-front cost of arbitration was disproportionate to the value of drivers' likely claims against the company, with the result that the clause represented an improvident bargain that no reasonable driver would have accepted. Further, there was an inequality of bargaining power between the parties, notably because the clause was set out in Uber's standard form contract, which drivers could not reasonably be expected to read or understand. One judge concurred in the result, finding the clause to be void on public policy grounds, while one judge dissented, holding that the principle of freedom of contract required that the arbitration clause be enforced. As a result of the Supreme Court's judgment, the Ontario Superior Court may proceed to consider the class action, which alleges that Uber drivers are entitled to rights conferred on employees under that province's Employment Standards Act.
David Heller, an Uber driver in Ontario, commenced a class action on behalf of all Uber drivers in the province, seeking $400 million in damages and a declaration that Uber drivers are employees who are entitled to benefits, such as minimum wages and overtime pay, under the Ontario Employment Standards Act (ESA).
The ESA sets out minimum standards for employees in Ontario. Section 5(1) states that any agreement or waiver that purports to contract out of an employment standard is void. Under s.96(1), a person alleging that the ESA has been violated may make a complaint to the Ministry of Labour, which is then investigated by an employment standards officer.
Uber carries on a global business, characterizing itself as a vendor of "lead generation services" in the form of software applications for GPS-enabled smartphones, which it sells to transportation providers. Uber Technologies Inc., Uber Canada, Inc., Uber B.V., Rasier Operations B.V., and Uber Portier B.V., are part of a group of companies that have come to be known collectively and individually as Uber. Uber Technologies Inc. is incorporated under the laws of Delaware and does not operate in Canada. Uber B.V., which exploits the intellectual property associated with the Uber apps internationally, is incorporated under the laws of the Netherlands with offices located in Amsterdam, as is Rasier Operations B.V., which licenses the apps. Uber Canada, Inc. is incorporated under the laws of Canada and provides marketing and administrative support to Uber B.V. for the Uber apps in Canada, but has no contractual relationship with the users of the Uber apps.
Under its business model, Uber, which does not own vehicles, licenses a "driver app" to drivers, who download the app and use it to open an account with Uber to become a driver. In turn, consumers request and accept rides from drivers using the rider app, through which they pay and rate the driver's performance. In exchange for providing the app, Uber charges the driver a fee. A similar business model is used for restaurant food delivery through the UberEATS app, which connects customers, restaurants, and drivers providing delivery services for restaurants.
Uber has been in operation in Ontario since February 8, 2012. Drivers in Ontario create an account online and enter into a contractual relationship with Uber B.V. and Rasier Operations B.V. and/or Uber Portier B.V. Under the Service Agreement, a driver is granted a licence to use the driver app and obtain the carriage service, and agrees to pay a service fee and acknowledges that the agreement creates a legal and direct business relationship, but that the parties are not in an employment relationship. To accept the licensing agreement, which is approximately 14 pages in length, the drivers click a hyperlink on the screen of the app stating "I agree," twice. When the Uber companies periodically revise their agreements with drivers, the drivers are required to consider and agree to the revised terms in order to continue accessing the driver app. Service agreements are governed by the law of the Netherlands, where Uber's legal team is located, and contain an arbitration clause, stating in part:
Except as otherwise set forth in this Agreement, this Agreement shall be exclusively governed by and construed in accordance with the laws of The Netherlands, excluding its rules on the conflict of laws. … Any dispute, conflict or controversy[,] howsoever arising out of or broadly in connection with or relating to this Agreement, including those relating to its validity, its construction or its enforceability, shall be first mandatorily submitted to mediation proceedings under the International Chamber of Commerce Mediation Rules ("ICC Mediation Rules"). If such a dispute has not been settled within sixty (60) days after a request for mediation has been submitted under such ICC Mediation Rules, such dispute can be referred to and shall be exclusively and finally resolved by arbitration under the Rules of Arbitration of the International Chamber of Commerce ("ICC Arbitration Rules")…. The place of the arbitration shall be Amsterdam, The Netherlands.
Under the Ontario International Commercial Arbitration Act, 2017 (ICAA), and the Ontario Arbitration Act, 1991 (AA), where a matter is required to be arbitrated under an arbitration agreement, and a party brings court proceedings in respect of that matter, the court must stay the proceedings in favour of arbitration. However, a court may refuse to grant a stay in certain circumstances, including where the arbitration agreement is invalid.
David Heller entered into an agreement with Rasier Operations B.V. on June 7, 2016, and another agreement with Uber Portier B.V. on December 15, 2016, and worked as a restaurant delivery driver using Uber apps, earning approximately $400 to $600 a week, or $20,800-$31,200 per year, before taxes and expenses, for a 40- to 50-hour workweek.
On January 19, 2017, Heller commenced a class action against Uber on behalf of Uber drivers in Ontario, seeking, among other things, a declaration that Uber drivers are denied benefits under the ESA and an award of $400 million in damages for the class. However, before the class action was certified by the courts — a requisite step in proceeding to a trial on the merits — Uber moved for an order staying Heller's proposed class action in favour of arbitration in the Netherlands. In a judgment dated January 30, 2018, 2018 ONSC 718 (CanLII), reported in Lancaster's Employment Standards Law, July 12, 2018, eAlert No. 116, Justice Paul Perell of the Ontario Superior Court granted Uber's motion and stayed the class action proceeding. He noted that it was well-established that courts are required to enforce arbitration agreements, in the absence of legislative language indicating a contrary intention, and that the ESA does not restrict the ability of parties to agree to resolve disputes through arbitration. Perell also rejected Heller's argument that the arbitration clause was unconscionable, notably because most potential disputes between Uber and its drivers could be resolved through "readily available" mechanisms in Ontario, with only the more substantial disputes requiring arbitration in the Netherlands.
Heller appealed the Superior Court's decision to the Ontario Court of Appeal. In a unanimous decision dated January 2, 2019, 2019 ONCA 1 (CanLII), reported in Lancaster's Headlines, February 7, 2019, the Court of Appeal set aside the stay. Justice Ian Nordheimer, with whom Justices Kathryn Feldman and Gladys Pardu agreed, held that the arbitration clause amounted to an unlawful attempt to contract out of the right to bring a complaint to the Ontario Ministry of Labour under the provincia ESA, and was therefore void.
Turning to the question of unconscionability, Nordheimer acknowledged uncertainty as to the applicability of the four-part test for unconscionability set out in Titus v. William F. Cooke Enterprises Inc., 2007 ONCA 573 (CanLII), reported in Lancaster's Wrongful Dismissal and Employment Law, October 12, 2007, eAlert No. 198, which requires: (1) a grossly unfair or improvident transaction; (2) the victim's lack of independent legal advice; (3) an overwhelming imbalance in bargaining power, caused, for example, by ignorance of the business context; and (4) knowingly taking advantage of the victim's vulnerability. In Douez v. Facebook, Inc., 2017 SCC 33 (CanLII), a minority of the Supreme Court of Canada applied a two-part test requiring only unfairness and inequality of bargaining power. Regardless of the applicable test, the Court of Appeal held, the arbitration clause was unconscionable, notably because it was an unfair bargain that had been inserted into the agreement by Uber in order to take advantage of drivers' inferior bargaining position, and Heller had taken no legal advice before entering into the agreement.
Uber appealed the Court of Appeal's judgment to the Supreme Court of Canada.
Uber argued that the Ontario proceedings should be stayed in favour or arbitration in the Netherlands. This was a commercial agreement to which the ICAA applied, it submitted. Moreover, courts were not permitted to consider questions of arbitral jurisdiction where there was a prima facie case that the matter was properly before the arbitrator, unless the jurisdictional question was either a pure question of law or a question of mixed fact and law that required only a superficial consideration of the evidence. As neither of those exemptions applied in this case, the question of jurisdiction should be decided by the arbitrator. Further, Uber contended, under both the ICAA and the AA, courts were required to give effect to arbitration agreements in the absence of an express legislative direction to the contrary. No such direction was set out in the ESA. Regarding unconscionability, Uber maintained that a stringent four-part test applied, and the Court of Appeal erred in concluding without supporting evidence that Uber had knowingly taken advantage of drivers' vulnerability and that the arbitration agreement represented an improvident bargain. In this respect, it had failed to consider other aspects of the arrangements between the parties that were favourable to drivers, including the flexibility of their work schedules and their right to take up employment with competitors.
Heller argued that the arbitration clause was unenforceable. The AA, rather than the ICAA, applied to the agreement between the parties, Heller contended, asserting that the civil courts had jurisdiction to consider the validity of the arbitration clause, as the interaction between that clause and the ESA was a pure question of law. Similarly, in the instant case, the question of unconscionability could be answered from superficial review of the evidence. Accordingly, the courts were not required to defer the question of jurisdiction to the arbitrator. In Heller's submission, the Court of Appeal had correctly determined that the arbitration clause represented an unlawful contracting-out of the ESA, as the clause sought to prevent employees from enforcing minimum employment standards through the procedures contemplated in the legislation. The Court of Appeal's conclusion that the clause was unconscionable was also correct, in light of the grossly unfair requirement that drivers pursue arbitration in the Netherlands, the up-front cost of which ($14,500) was out of all proportion to the value of potential claims. Further, it was reasonable to infer that Uber knew that the agreement was one-sided, allowing the company to take advantage of its superior position vis-à-vis the drivers.
An 8-1 majority of the Supreme Court of Canada held that the arbitration clause was void, with seven judges agreeing with the Court of Appeal that the clause was unconscionable.
Justices Rosalie Abella and Malcolm Rowe, with whom Chief Justice Richard Wagner and Justices Michael Moldaver, Andromache Karakatsanis, Sheilah Martin, and Nicholas Kasirer agreed, held that as the dispute between the parties related to employment, the applicable arbitration legislation was the AA, rather than the ICAA, which was not intended to apply to questions concerning an individual's employment status or other employment disputes.
Although the AA generally required courts to stay proceedings to which an arbitration agreement applied, under s.7(2) a court was permitted to decline to stay proceedings where the arbitration agreement was invalid. As the Supreme Court held in Dell Computer Corp. v. Union des consommateurs, 2007 SCC 34 (CanLII), challenges to an arbitrator's jurisdiction must normally be referred to the arbitrator, unless the challenge raises a question of law or a question of mixed law and fact that may be decided based on a superficial review of the evidence. Abella and Rowe agreed with Heller that, in the instant case, the validity of Uber's arbitration clause was capable of being determined through a superficial examination of the evidence. However, they also took the view that the general rule in Dell that an arbitrator should decide questions of jurisdiction did not apply in cases where (1) there is a genuine challenge to arbitral jurisdiction and (2) if a stay of the civil proceedings is granted, there is a real prospect that the jurisdictional issue may never be resolved by the arbitrator. Heller's challenge to the arbitration clause was genuine and, in light of the high up-front costs of arbitration, there was a real prospect that, if the stay sought by Uber was granted, Heller's challenge might never be decided. Accordingly, it was appropriate for the civil courts to "cut this Gordian Knot" by ruling on the validity of the arbitration clause.
Abella and Rowe then turned to the arguments relating to unconscionability, taking the view that this doctrine provided the most appropriate basis for addressing the potential unfairness posed by an arbitration clause in a standard form contract. While the prevailing theory of contract law was that courts should enforce freely-negotiated bargains agreed between the parties, the equitable doctrine of unconscionability provides relief from unfair agreements resulting from an inequality of bargaining power. The Court explained the justifications underlying the doctrine as follows:
The classic paradigm underlying freedom of contract is the "freely negotiated bargain or exchange" between "autonomous and self-interested parties"… . At the heart of this theory is the belief that contracting parties are best-placed to judge and protect their interests in the bargaining process… . It also presumes equality between the contracting parties and that "the contract is negotiated, freely agreed, and therefore fair"… .
Courts have never been required to take the ideal assumptions of contract theory as "infallible empirical proposition[s]". Equitable doctrines have long allowed judges to "respond to the individual requirements of particular circumstances … humaniz[ing] and contextualiz[ing] the law's otherwise antiseptic nature"… . Courts, as a result, do not ignore serious flaws in the contracting process that challenge the traditional paradigms of the common law of contract, such as faith in the capacity of the contracting parties to protect their own interests. The elderly person with cognitive impairment who sells assets for a fraction of their value…; the ship captain stranded at sea who pays an extortionate price for rescue…; the vulnerable couple who sign an improvident mortgage with no understanding of its terms or financial implications… — these and similar scenarios bear little resemblance to the operative assumptions on which the classic contract model is constructed.
In these kinds of circumstances, where the traditional assumptions underlying contract enforcement lose their justificatory authority, the doctrine of unconscionability provides relief from improvident contracts. When unfair bargains cannot be linked to fair bargaining … courts can avoid the inequitable effects of enforcement without endangering the core values on which freedom of contract is based….
This Court has often described the purpose of unconscionability as the protection of vulnerable persons in transactions with others…. We agree. Unconscionability, in our view, is meant to protect those who are vulnerable in the contracting process from loss or improvidence to that party in the bargain that was made…. [emphasis in original]
Noting that "[u]nconscionability is widely accepted in Canadian contract law, but some questions remain about the content of the doctrine," the majority rejected Uber's argument that unconscionability was governed by the four-part test set out in Titus, which unduly narrowed the scope of the doctrine. Rather, consistent with the test in Douez, unconscionability is established where: (1) there is inequality of bargaining power between the parties, such as where the weaker party is dependent on the stronger party and would therefore be inclined to agree to unfair terms, or where the weaker party is incapable of understanding the meaning of the contract; and (2) an improvident bargain exists at the time the contract is formed, viewed in the context of the surrounding circumstances.
With respect to the first element of the test, requiring an inequality of bargaining power between the parties, the Court justified the requirement as follows:
An inequality of bargaining power exists when one party cannot adequately protect their interests in the contracting process ….
There are no "rigid limitations" on the types of inequality that fit this description… . Differences in wealth, knowledge, or experience may be relevant, but inequality encompasses more than just those attributes….
In many cases where inequality of bargaining power has been demonstrated, the relevant disadvantages impaired a party's ability to freely enter or negotiate a contract, compromised a party's ability to understand or appreciate the meaning and significance of the contractual terms, or both….
One common example of inequality of bargaining power comes in the "necessity" cases, where the weaker party is so dependent on the stronger that serious consequences would flow from not agreeing to a contract. This imbalance can impair the weaker party's ability to contract freely and autonomously. When the weaker party would accept almost any terms, because the consequences of failing to agree are so dire, equity intervenes to prevent a contracting party from gaining too great an advantage from the weaker party's unfortunate situation. …
... Other situations of dependence also fit this mould, including those where a party is vulnerable due to financial desperation, or where there is "a special relationship in which trust and confidence has been reposed in the other party"….
The second common example of an inequality of bargaining power is where, as a practical matter, only one party could understand and appreciate the full import of the contractual terms, creating a type of "cognitive asymmetry"… . This may occur because of personal vulnerability or because of disadvantages specific to the contracting process, such as the presence of dense or difficult to understand terms in the parties' agreement. In these cases, the law's assumption about self-interested bargaining loses much of its force. Unequal bargaining power can be established in these scenarios even if the legal requirements of contract formation have otherwise been met….
These examples of inequality of bargaining power are intended to assist in organizing and understanding prior cases of unconscionability. They provide two examples of how weaker parties may be vulnerable to exploitation in the contracting process. Regardless of the type of impairment involved, what matters is the presence of a bargaining context "where the law's normal assumptions about free bargaining either no longer hold substantially true or are incapable of being fairly applied"… . In these circumstances, courts can provide relief from a bargain that is improvident for the weaker party in the contracting relationship.
As to the second element of the test requiring the existence of an "improvident bargain," the Court offered the following explanation:
A bargain is improvident if it unduly advantages the stronger party or unduly disadvantages the more vulnerable….
Improvidence must be assessed contextually… . In essence, the question is whether the potential for undue advantage or disadvantage created by the inequality of bargaining power has been realized. An undue advantage may only be evident when the terms are read in light of the surrounding circumstances at the time of contract formation, such as market price, the commercial setting or the positions of the parties… .
For a person who is in desperate circumstances, for example, almost any agreement will be an improvement over the status quo. In these circumstances, the emphasis in assessing improvidence should be on whether the stronger party has been unduly enriched….
Where the weaker party did not understand or appreciate the meaning and significance of important contractual terms, the focus is on whether they have been unduly disadvantaged by the terms they did not understand or appreciate.…
Because improvidence can take so many forms, this exercise cannot be reduced to an exact science. When judges apply equitable concepts, they are trusted to "mete out situationally and doctrinally appropriate justice"… . Fairness, the foundational premise and goal of equity, is inherently contextual, not easily framed by formulae or enhanced by adjectives, and necessarily dependent on the circumstances.
Rejecting Uber's argument that the Court should abandon what the majority referred to as the "classic two-part approach to unconscionability," and "adopt a stringent test consisting of four requirements," the Court stated as follows:
We reject this approach. This four-part test raises the traditional threshold for unconscionability and unduly narrows the doctrine, making it more formalistic and less equity-focused. Unconscionability has always targeted unfair bargains resulting from unfair bargaining. Elevating these additional factors to rigid requirements distracts from that inquiry.
In our view, the requirements of inequality and improvidence, properly applied, strike the proper balance between fairness and commercial certainty. Freedom of contract remains the general rule. It is precisely because the law's ordinary assumptions about the bargaining process do not apply that relief against an improvident bargain is justified.
Applying the two-part test and these underlying principles to Uber's arbitration clause, Abella and Rowe readily concluded that the relationship between Uber and Heller was characterized by unequal bargaining power:
The arbitration agreement was part of a standard form contract. ... Heller was powerless to negotiate any of its terms. His only contractual option was to accept or reject it. There was a significant gulf in sophistication between ... Heller, a food deliveryman in Toronto, and Uber, a large multinational corporation. The arbitration agreement, moreover, contains no information about the costs of mediation and arbitration in the Netherlands. A person in ... Heller's position could not be expected to appreciate the financial and legal implications of agreeing to arbitrate under ICC Rules or under Dutch law. Even assuming that ... Heller was the rare fellow who would have read through the contract in its entirety before signing it, he would have had no reason to suspect that behind an innocuous reference to mandatory mediation "under the International Chamber of Commerce Mediation Rules" that could be followed by "arbitration under the Rules of Arbitration of the International Chamber of Commerce", there lay a US$14,500 hurdle to relief. Exacerbating this situation is that these Rules were not attached to the contract, and so ... Heller would have had to search them out himself.
Moreover, assessed against the surrounding context at the time the parties entered into the agreement, the arbitration clause represented a manifestly improvident bargain, in which drivers were left effectively unable to enforce any of their rights under the broader agreement:
The mediation and arbitration processes require US$14,500 in up-front administrative fees. This amount is close to ... Heller's annual income and does not include the potential costs of travel, accommodation, legal representation or lost wages. The costs are disproportionate to the size of an arbitration award that could reasonably have been foreseen when the contract was entered into. The arbitration agreement also designates the law of the Netherlands as the governing law and Amsterdam as the "place" of the arbitration. This gives ... Heller and other Uber drivers in Ontario the clear impression that they have little choice but to travel at their own expense to the Netherlands to individually pursue claims against Uber through mandatory mediation and arbitration in Uber's home jurisdiction. Any representations to the arbitrator, including about the location of the hearing, can only be made after the fees have been paid.
... Effectively, the arbitration clause makes the substantive rights given by the contract unenforceable by a driver against Uber. No reasonable person who had understood and appreciated the implications of the arbitration clause would have agreed to it.
The arbitration clause was therefore unconscionable and void. Having concluded that the arbitration clause was unconscionable, there was no need address the arguments relating to the ESA.
In concurring reasons, Justice Russell Brown agreed that the appeal should be dismissed on the basis that the arbitration clause was invalid. However, in his view, the invalidity of the clause flowed from public policy concerns, and not from the doctrine of unconscionability. A contractual provision that rendered enforcement of the contract practically impossible impaired access to justice and, ultimately, offended the rule of law, both of which were constitutionally-recognized principles. Although courts must generally enforce arbitration clauses, such a clause will be void where it "imposes undue hardship and acts as an effective bar to adjudication." Such was the case with Uber's arbitration clause, which entailed an up-front cost of US$14,500, an amount that was "grossly disproportionate" in light of the nature of the disputes that drivers were likely to raise against the company.
In Brown's view, the majority had unduly expanded he doctrine of unconscionability by eliminating the requirement that the party with superior bargaining power must be aware, constructively or otherwise, of the weaker party's vulnerability. Further, unconscionability requires a particular vulnerability on the part of the weaker party, rather than mere inequality of bargaining power. Finally, the majority's approach focused too narrowly on the arbitration clause and failed to examine the entire bargain, which offered benefits for drivers including the ability to earn income.
In a lengthy dissent, Justice Suzanne Côté held that the appeal should be allowed and the stay granted, on the condition that Uber advance the funds required to initiate the arbitration proceedings. In Côté's view, primacy must be accorded to the principles of freedom of contract and party autonomy, which favoured giving effect to the arbitration clause. Canada's legislatures had, since the 1980s, adopted an increasingly welcoming environment for commercial arbitration, as a result of which the courts' former hostility to arbitration was replaced by a "hands-off" attitude that recognized arbitration as a legitimate means of dispute resolution. By contrast, the approach adopted by Abella, Rowe, and Brown would undermine Canada's position as "a world leader in arbitration." Côté agreed with Perell that the ICAA applied in the instant case, on the basis that the relationship between the parties was commercial and international in nature. Applying the rule in Dell, it was for the arbitrator, rather than the civil courts, to determine whether the arbitration clause was valid, particularly in light of the nature and volume of evidence that would be required in order to determine whether the clause was unconscionable. Further, it was inappropriate for the majority to have created a new accessibility-based exception to the general rule in Dell of "systemic referral" of questions of jurisdiction to the arbitrator for determination.
Turning to the question of unconscionability, Côté agreed with Brown that the majority had unnecessarily expanded the scope of the doctrine. However, in her view, even the majority's less stringent two-part test for unconscionability was not satisfied on the facts of this case. There was no basis for concluding that Heller would have been incapable of understanding that there were likely to be significant costs attached to dispute resolution under his contract with Uber. As to the nature of the bargain between the parties, it was unreasonable to assume that Heller would be required to travel to Amsterdam to participate in arbitration, given the arbitral tribunal's powers under the applicable rules to ensure that the proceedings are conducted in an efficient and cost-effective manner. In any event, the US$14,500 fee for initiating arbitral proceedings applied to both parties, undermining the majority's conclusion that the arrangements were unfairly weighted in Uber's favour. Côté also rejected Heller's argument that the arbitration clause was inconsistent with the ESA, notably because there was no express prohibition on recourse to arbitration under that legislation.
For Côté, because the arbitration clause was valid, the courts were required to stay Heller's class action. However, the courts had the authority under s.106 of the Ontario Courts of Justice Act to attach such conditions as it considered to be just to any stay. In the instant case, because Heller could not afford the arbitration fee, it was appropriate to require Uber to advance the arbitration fee. The question of which party would ultimately be liable to pay that fee would be for the arbitral tribunal to decide.
In this decision, the majority of the Supreme Court adopted a two-part test for unconscionability, requiring the plaintiff to establish an improvident bargain and an inequality of bargaining power. Uber's arbitration clause met this test. The unequal bargaining relationship was evidenced by the fact that Uber, a multinational corporation, had drafted the clause; it was not reasonable to expect Heller to appreciate its consequences. Further, Heller's effective inability to enforce any rights against the company underlined the unfair nature of the clause. The case will now return to the Ontario Superior Court to consider Heller's application for certification of a class action.
Abella and Rowe acknowledged that their judgment would have repercussions for standard form contracts generally. They recognized that the mere presence of a standard form contract, drafted without input from one of the parties, did not necessarily drive the conclusion that parties were unequal or that the agreement was unconscionable. However, in light of the test for unconscionability set out in the judgment under review, businesses will be encouraged "to make [standard form contracts] more accessible to the other party or to ensure that they are not so lop-sided as to be improvident, or both."
Following the judgment, Uber told the CBC that it would be amending its standard form contracts. "Going forward, dispute resolution will be more accessible to drivers, bringing Uber Canada closer in line with other jurisdictions," the company said in a statement.
The United Food and Commercial Workers Canada (UFCW), which intervened in the appeal, welcomed the judgment. "This decision confirms what our union has been arguing all along — that Uber consistently prevents drivers from exercising their rights as employees of the company," Paul Meinema, UFCW's national president, said in a statement. "Uber's completely inaccessible arbitration process is just one example of how the company regularly stifles the rights of its workers, and we are pleased that the Supreme Court has rendered this process invalid."
In contrast to the Canadian courts' view that Uber's arbitration clause is unenforceable, the U.S. Ninth Circuit Court of Appeals reached the opposite conclusion in O'Connor v. Uber, No. 14-16078 (9th Cr. 2018) (2018 U.S. App. LEXIS 27343). In 2013, a number of drivers launched a class action against Uber, alleging that they had been misclassified as independent contractors and claiming numerous remedies under California's employment standards legislation. The lower court dismissed Uber's argument that the drivers were required to arbitrate their claims, concluding that the arbitration agreement was unconscionable and unenforceable. However, on May 21, 2018, in Epic Systems Corp. v. Lewis, a majority of the United States Supreme Court ruled that, where an employee has signed an agreement providing for the resolution of workplace disputes through individualized arbitration, the employee is precluded from participating in collective or class action lawsuits against an employer (for a more detailed discussion of these cases, see Lancaster's Labour Law News, July 11, 2018, eAlert No. 434). Citing Epic Systems, the Ninth Circuit Court's September 2018 decision reversed the class action certification in the O'Connor case, holding that Uber could compel individual arbitration of drivers' claims and the issue of whether the arbitration agreements were unenforceable was for the arbitrator to determine. As a result, U.S. employees' claims against the technology giant have to be arbitrated on an individual basis, unless Uber agrees otherwise.