Todd Johnston v. Uber Technologies, Inc.

Background

Todd Johnston filed a class action against Uber Technologies, Inc., asserting one claim under the Worker Adjustment and Retraining Notification Act, known as the WARN Act. He alleged that Uber ended its Austin, Texas operations on May 9, 2016, without giving drivers at least 60 days’ advance notice. Johnston alleged that he and other drivers were Uber employees covered by the Act.

Uber moved to compel arbitration based on arbitration provisions in agreements Johnston accepted through the Uber application. The agreements required covered disputes to be resolved by an arbitrator on an individual basis rather than through a court action or class action. They also allowed drivers to opt out within 30 days; the parties agreed that Johnston did not opt out.

Uber and Johnston disagreed about which issue should be decided first. Uber argued that an arbitrator should decide whether Johnston was an employee or an independent contractor. Johnston asked the court to first decide whether the WARN Act displaced the Federal Arbitration Act’s requirement that arbitration agreements be enforced, which could affect the agreement’s class-action waiver.

Court’s analysis

The court explained that the Federal Arbitration Act generally requires courts to enforce arbitration agreements according to their terms. It also noted that the agreement contained a delegation clause, meaning a provision assigning the arbitrator authority to decide disputes about the arbitration provision’s enforceability, revocability, or validity. The court stated that the Ninth Circuit had already determined that arbitrability under Uber’s agreements was for the arbitrator and that the delegation clause was not unconscionable.

The court recognized that the employee-status question is a threshold issue because the WARN Act applies only to employees, not independent contractors. The court nevertheless concluded that the question also informs whether the WARN Act claim is arbitrable and therefore belonged initially to the arbitrator under the delegation clause.

Although the agreement assigned disputes about the validity of the class-action waiver to a civil court, the court concluded that it could not properly decide the relationship between the WARN Act and the Federal Arbitration Act until it was established that Johnston was an employee protected by the WARN Act.

Disposition

The court granted Uber’s Motion to Compel Arbitration as to the question of whether Johnston is or was an employee or an independent contractor. If the arbitrator finds that Johnston is or was an employee, the matter must return to the court for a determination of the class-action waiver’s validity. If the arbitrator finds that Johnston was an independent contractor, the arbitrator may retain jurisdiction over the rest of the case. The order disposed of Docket No. 110.