Smythe v. Uber Techs., Inc.
Smythe v. Uber Techs., Inc.
Opinion of the Court
*897*329Uber Technologies, Inc. (Uber) appeals from an order denying its motion to compel arbitration of an action brought by Ryan Smythe in his capacity as a driver for Lyft, Inc. (Lyft). Smythe also drives for Uber. The court correctly found the action is beyond the scope of Smythe's arbitration agreement with Uber, so we affirm.
BACKGROUND
During the relevant period Smythe worked as a driver for both Uber and Lyft, Inc., Uber's direct competitor. His complaint alleges that Uber engaged in a *330practice of directing its drivers and others to create and use fake Lyft accounts to request rides, thereby sending Lyft drivers on wild goose chases to pick up nonexistent passengers. According to the complaint, Uber did this to discourage drivers from driving for Lyft and cause Lyft customers to steer their patronage to Uber. The complaint asserted causes of action for unfair business practices and intentional interference with prospective economic damage on behalf of a putative class of Lyft drivers affected by the alleged scheme.
Uber moved to compel arbitration and stay the class claims. According to Uber, when Smythe became a driver on the Uber platform he signed two agreements containing arbitration provisions with Uber-related entities (the Rasier Agreements). The more recent and operative agreement, dated November 2014, states, "[t]his Arbitration Provision applies to any dispute arising out of or related to this Agreement or termination of the Agreement." The agreement goes on to specify that it applies "without limitation, to disputes arising out of or related to this Agreement and disputes arising out of or related to your relationship with the Company, including termination of the relationship. This Arbitration Provision also applies, without limitation, to disputes regarding any city, county, state or federal wage-hour law, trade secrets, unfair competition, compensation, breaks and rest periods, expense reimbursement, termination, harassment and claims arising under the Uniform Trade Secrets Act, Civil Rights Act of 1964, Americans With Disabilities Act, Age Discrimination in Employment Act, Family Medical Leave Act, Fair Labor Standards Act, Employee Retirement Income Security Act (except for claims for employee benefits under any benefit plan sponsored by the Company and covered by the Employee Retirement Income Security Act of 1974 or funded by insurance), Genetic Information Non-Discrimination Act, and state statutes, if any, addressing the same or similar subject matters, and all other similar federal and state statutory and common law claims. [¶] This Agreement is intended to require arbitration of every claim or dispute that lawfully can be arbitrated, except for those claims and disputes which by the terms of this Agreement are expressly excluded from the Arbitration Provision."
The agreement includes a delegation clause specifying that the disputes subject to arbitration "include without limitation disputes arising out of or relating to interpretation or application of this Arbitration Provision, including the enforceability, revocability or validity of the Arbitration Provision or any portion of the Arbitration *898Provision. All such matters shall be decided by an arbitrator and not by a court or judge."
The trial court found Smythe's allegations were beyond the scope of the arbitration agreement and that the delegation provision was unenforceable in *331the context of the claims advanced in Smythe's complaint. "[P]laintiff's claims are independent of the rights and responsibilities conferred upon him under the Rasier agreements. Therefore, no part of the Rasier Agreements, including the delegation clause, can be enforced against plaintiff in this case."
Uber filed this timely appeal from the court's order.
DISCUSSION
Uber asserts the court erred by adjudicating the threshold question of whether the arbitration provision covers Smythe's complaint. In Uber's view, "Because the Arbitration Provision delegates the issues of arbitrability to an arbitrator, this Court should direct the trial court to leave all of Mr. Smythe's arbitrability questions for the arbitrator to decide in the first instance." Alternatively, Uber urges us to reverse the trial court's decision and remand with an instruction to compel arbitration because, it asserts, Smythe's claims fall within the scope of the arbitration provision. We disagree.
A. Legal Principles
We recognize the strong public policy in favor of arbitration and that we resolve any doubts in favor of arbitration. ( Aanderud v. Superior Court (2017)
Qualcomm Inc. v. Nokia Corp. (Fed. Cir. 2006)
But if, on the other hand, "the court concludes that the parties to the agreement did clearly and unmistakably intend to delegate the power to decide arbitrability to an arbitrator, then the court should perform a second, more limited inquiry to determine whether the assertion of arbitrability is 'wholly groundless.' [Citation.] If the court finds that the assertion *899of arbitrability is not 'wholly groundless,' then it should stay the trial of the action pending a ruling on arbitrability by an arbitrator. If the district court finds that the assertion of arbitrability is 'wholly groundless,' then it may conclude that it is not 'satisfied' under [FAA] section 3, and deny the moving party's request for a stay." ( Qualcomm, supra , 466 F.3d at p. 1371 ; Zenelaj v. Handybook Inc. (N.D. Cal. 2015)
The evidence in the trial court was not conflicting, so our review of the trial court's ruling on arbitrability is de novo. ( Aanderud,
B. Analysis
There is no dispute that parties to arbitration agreements are generally free to delegate to an arbitrator, instead of a court, questions regarding the enforceability of their agreement. (See, e.g., Aanderud,
*333We readily conclude the arbitration agreement cannot apply to this action. By its terms, Uber's arbitration provision applies to disputes "arising out of or related to" the Rasier agreements and "disputes arising out of or related to [the driver's] relationship" with Uber. But Smythe's action against Uber has nothing to do with the Rasier agreements or his rights and responsibilities as an Uber driver. To the contrary, Smythe brought his action in his capacity as a driver for Lyft, not Uber, and alleges only that he and other Lyft drivers incurred expenses and lost income when they responded to fraudulent ride requests generated at Uber's instigation. There is no "plausible argument" ( Kubala, supra, 830 F.3d at p. 202 ) that those claims are related to or arise out of the agreements Smythe entered into with Uber "for the purpose of receiving the [Uber] Service" i.e., to access app-based ride requests from Uber passengers. Indeed, the same allegations could just as well be pursued by a Lyft driver who does not drive for Uber. Uber's attempt to cast this as a dispute about Smythe's "dual identity" as a driver with both Lyft and Uber thus misses the mark. This action is premised on Smythe's activities driving for Lyft, and has nothing to do with his "identity" as a driver for Uber. The trial court *900correctly found the arbitration provision in Smythe's agreement with Uber inapplicable in these circumstances.
A Fifth Circuit opinion, Douglas v. Regions Bank (5th. Cir. 2014)
The bank moved to compel arbitration, but to no avail. Applying the test articulated in Qualcomm the Fifth Circuit observed: "what must be arbitrated is a matter of the parties' intent. [Citation.] When Douglas signed the arbitration agreement containing a delegation provision, did she intend to go through the rigmaroles of arbitration just so the arbitrator can tell her in the first instance that her claim has nothing whatsoever to do with her arbitration agreement, and she should now feel free to file in federal court? Obviously not. [¶] ... We conclude that when she agreed to arbitrate 'the validity, enforceability, or scope of this Arbitration provision,' Douglas did not intend to bind herself for life to gateway arbitration for any and all claims that ever might exist between her and Regions. She meant only to bind herself to arbitrate gateway questions of arbitrability if the argument that the dispute falls within the scope of the agreement is not wholly groundless." ( Douglas,
In oral argument, counsel for Uber argued that this case should be governed by Aanderud . We disagree. Aanderud considered whether a delegation clause was unenforceable because it was ambiguous or unconscionable. ( Aanderud,
Uber argues that Mohamed v. Uber Technologies, Inc. (9th Cir. 2016)
Lastly, Uber argues Smythe's complaint is sufficiently related to or "touch[es] matters covered by" the Rasier agreement (see Simula, supra , 175 F.3d at p. 721 ) to require arbitration on the strength of section 4.7 of the agreement. Section 4.7 provides: "No Additional Amounts. You acknowledge and agree that, for the mutual benefit of the parties, through advertising and marketing, Company and its Affiliates may seek to attract new Users to Uber and to increase existing Users' use of Uber's mobile application. You acknowledge and agree such advertising or marketing does not entitle you to any additional monetary amounts beyond the amounts expressly set forth in this Agreement."
DISPOSITION
The order is affirmed.
We concur:
McGuiness, Acting P.J.
Pollak, J.
Section 3 of the FAA provides for a stay of legal proceedings when the issues in dispute are subject to an arbitration agreement. Pursuant to the statutory language, the trial court must stay the trial in favor of arbitration if it is "satisfied" that the dispute is arbitrable. (Qualcomm, supra , at p. 1370 ; Dream Theater Inc. v. Dream Theater (2004)
The agreement defines "user" as "an end user authorized by Uber to use the Uber mobile application for the purpose of obtaining Transportation Services offered by Company's transportation provider customers"-in other words, Uber's passengers.
In the trial court Uber represented this clause as "say[ing] ... that Uber is going to use efforts to recruit drivers, "not passengers."
Retired Presiding Justice of the Court of Appeal, First Appellate District, Division Three, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.