On September 7, 2016, the Ninth Circuit Court of Appeals in Mohamed v. Uber Technologies, Inc. largely overturned the District Court’s ruling which had held Uber’s arbitration agreements to be unenforceable. Last year, the District Court had held that the arbitration agreements were unconscionable due to the inclusion of a waiver of claims brought under California’s Private Attorneys General Act (“PAGA”). The decision invalidated nearly 250,000 arbitration agreements between Uber and independent drivers, allowing the case against Uber to proceed as a class action in civil court.
Uber appealed the decision, arguing that the District Court should have simply severed the PAGA waiver pursuant to the agreement’s severability provision rather than invalidating the entire agreement. The Court of Appeals agreed, ruling that the PAGA waivers are severed from the arbitration agreements and the agreements are otherwise enforceable. This decision will allow drivers to pursue their PAGA claims in court, but will allow Uber to compel individual arbitration on all other claims.