Uber lost a bid to force arbitration in a lawsuit brought by its drivers, as a U.S. judge ruled the smartphone-based taxi service’s 2013 and 2014 employment contracts dealing with arbitration from were “unconscionable, and therefore unenforceable.”
The ruling, from U.S. District Judge Edward Chen in San Francisco on Tuesday, allows the lawsuits over driver background checks to continue in federal court. Arbitration is generally viewed as a more friendly forum for corporate defendants.
The decision is the latest in a host of legal and regulatory challenges facing Uber. Earlier this year, the same judge rejected Uber’s bid to deem its drivers independent contractors, which would have prohibited them from recovering a range of expenses. Chen said a jury would decide that question.
In a statement on Wednesday, Uber said it disagreed with the arbitration ruling and plans to appeal.
Plaintiff Ronald Gillette sued Uber late last year after he was told something surfaced in his consumer background report, and he was terminated. The lawsuit is a proposed class action alleging violations of fair credit reporting laws, among other claims.
In the ruling this week, Chen said drivers’ right to opt out of arbitration was “illusory” because the language was buried on the second-to-last page of the 2013 agreement.
Andrew Lee, an attorney for Gillette, said they are pleased and look forward to litigating the merits of the case. The ruling could make it possible for more drivers to join other class actions currently pending against Uber, Lee said.
The case in U.S. District Court, Northern District of California is Ronald Gillette et al. vs. Uber Technologies et al., 14-5241.
(Reporting by Dan Levine; Editing by David Gregorio and Cynthia Osterman)
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