SAN FRANCISCO (CN) - An attorney for a class of California drivers who claim Uber misclassified them as independent contractors told a federal judge Wednesday that Uber's arbitration agreement should be thrown out entirely.
In a hearing on Uber's motion to compel arbitration, Shannon Liss-Riordan told U.S. District Judge Edward Chen that the agreement is unenforceable. She cited a recent Ninth Circuit decision upholding a ban on the very kind of nonseverable waiver in the agreement that Uber requires driver to sign.
In Sakkab v. Luxottica Retail North America, the Ninth Circuit held that a man suing Lenscrafters for wage and hour violations did not have to waive his rights under California's Private Attorney General Act, or PAGA, under which employees can act as state representatives in pursuing legal action for California Labor Code violations.
The Ninth Circuit adopted the California Supreme Court's rule from Iskanian v. CLS Transportation Los Angeles, LLC that PAGA waivers are unenforceable.
Uber's arbitration agreement contains a nonseverable PAGA waiver, therefore the whole thing is unenforceable, Liss-Riordan said.
"None of this should matter after Sakkab. A PAGA waiver is unconscionable, the Ninth has said. Uber has said its PAGA waiver is not severable from the rest of its contract, so the whole agreement goes away, period."
Chen has looked at the agreement through the lens of whether drivers felt forced to agree to the contract. Liss-Riordan argued that the arbitration agreement was procedurally unconscionable because drivers were made to scroll through 17 pages of legalese on their phones before they could start work, and many were not aware of the agreement's opt-out provision.
Chen said Wednesday that whether the opt-out provision was sufficient or not could be irrelevant.
"We're no longer in the realm of procedural v. substantive unconscionably," he said. "Now I'm being told that all of that is irrelevant."
He asked Uber attorney Theodore Boutrous to brief the waiver issue in the next week.
Liss-Riordan also asked Chen on Wednesday to amend his September class certification order to include drivers who accepted Uber's 2014 arbitration agreement and those who contracted with Uber under corporate names, arguing that this would stem the flow of litigation into state court.
"Their claims are not going away," she said. "They will be adjudicated. Would the court in its discretion prefer to keep them all within the same proceeding, or have them all flood the state court system? This whole litigation is going to be much less manageable than keeping them in this courtroom."
Boutrous was livid.
"Counsel and the named plaintiffs keep trying to look for all of these shortcuts, that we can ignore the class action rules and the jurisdiction rules," he said. "If we keep adding all these bells and whistles and this court's orders, that is not helping manage the case."
Chen seemed to agree that allowing drivers excluded from a class to join individually would complicate matters.
"It seems to me that would dramatically change the scope and nature of this case. I don't see how there's not significant prejudice and disruption," the judge said.
Liss-Riordan proposed that Chen break the case into two parts. In the first, the already-certified class's claims could move forward, while the second half would address the individuals' claims.
Chen doubted it. "We went through this whole manageability analysis," he said. "It's like mixing apples and oranges: the apples are going to get in the way of the oranges. My initial visceral reaction is it just doesn't seem to me appropriate to have class certification of a certain group and have everyone outside that group join in an individual mass action."
He said he would defer ruling until the end of the month.