The panel affirmed the district court’s order compelling arbitration in a putative class action requesting a preliminary injunction prohibiting Uber from classifying drivers in Massachusetts as independent contractors and an order directing Uber to classify its drivers as employees and comply with Massachusetts wage laws.
Plaintiffs, Massachusetts residents who have worked as Uber drivers since at least May 2016, filed a putative class action in the District Court for the District of Massachusetts on behalf of all “individuals who have worked as Uber drivers in Massachusetts who have not released all of their claims against Uber.” When they signed up to become Uber drivers, Plaintiffs agreed to Uber’s 2015 Technology Services Agreement, which advised Plaintiffs of a mandatory arbitration agreement (“Arbitration Provision”), governed by the Federal Arbitration Act (“FAA”).
Uber moved to compel arbitration, stay proceedings pending arbitration, and transfer the case to the District Court for the Northern District of California pursuant to a forum selection clause in Uber’s driver agreements. The Massachusetts district court granted Uber’s motion to transfer the action to the California district court, including the pending Emergency Motion and Motion to Compel Arbitration. The California district court denied Plaintiffs’ request for a preliminary injunction and granted Uber’s Motion to Compel Arbitration.
Plaintiffs asserted that they are exempt from mandatory arbitration under Section 1 of the FAA because they are a class of workers engaged in foreign or interstate commerce. The panel disagreed. Rather, the panel joined the growing majority of courts holding that Uber drivers as a class of workers do not fall within the interstate commerce exemption from the FAA.
Section 1 of the Act exempts from its coverage contracts of employment of three categories of workers: seamen, railroad employees, and a residual category comprising any other class of workers engaged in foreign or interstate commerce. The panel noted that the Supreme Court has instructed that this last residual category must be afforded a narrow construction to further the FAA’s purpose to overcome judicial hostility to arbitration agreements.
The panel first held that in light of the text of the FAA and Supreme Court precedent, the relevant class of workers here, Uber drivers, needed to be assessed at the nationwide level, rather than confined to any limited geographic region. Limiting the relevant class of workers to a specific geographic area would undermine the very purpose of the FAA, by which Congress sought to create a national policy favoring arbitration.
The panel concluded that Uber drivers, as a nationwide class of workers, are not engaged in foreign or interstate commerce and are therefore not exempt from arbitration under the FAA. Here, the district court’s unchallenged factual findings compelled the conclusion that Uber’s service was primarily local and intrastate in nature. Only 2.5% of all trips fulfilled using the Uber Rides marketplace in the United States between 2015 and 2019 started and ended in different states. Moreover, only 10.1% of all trips taken in the United States in 2019 began or ended at an airport, not all of which involved interstate travel. Plaintiffs did not (and likely could not) point to any evidence that Uber drivers were sufficiently engaged in interstate commerce to fall under the Section 1 exemption.
The panel next concluded that the district court properly addressed the motion to compel arbitration prior to adjudicating Plaintiffs’ preliminary injunction motion. Because Plaintiffs’ claims and requested injunctive relief were arbitrable by the terms of the arbitration agreement and Plaintiffs’ requested injunctive relief would have upended the status quo rather than maintained it, the panel determined that the district court properly addressed the motion to compel arbitration first.
The panel further held that the district court properly concluded that the proposed injunction against Uber’s current driver classification as independent contractors was not one for public injunctive relief. Plaintiffs argued that a claim for public injunctive relief could not be waived contractually under Massachusetts law. The panel held that even assuming class-wide public injunctive relief, as conceptualized in McGill v. Citibank, N.A., 393 P.3d 85 (Cal. 2017), were available under Massachusetts law and that such relief could not be contractually waived, the requested injunctive relief here could not be remotely characterized as public injunctive relief as this court or any other court has recognized it.
Because the panel agreed with the district court that Plaintiffs’ requested injunctive relief did not constitute public injunctive relief, the panel also agreed that Plaintiffs could not evade the Class Action Waiver in Uber’s Arbitration Provision, even assuming Massachusetts law provided for such non-waivable relief. Likewise, because Plaintiffs’ request for injunctive relief regarding their classification was properly a matter for the arbitrator, the district court did not err by declining to reach the merits of Plaintiffs’ request for a preliminary injunction under Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 20 (2008).