California driver wins new round in Uber dispute

September 22, 2015 08:58
Uber has been told by a San Francisco state judge that its arbitration mechanism is unenforceable. Photo: Internet

A former Uber Technologies Inc. driver has won another round in her fight to fend off arbitration.

A San Francisco state judge sided with the driver on Monday, saying Uber’s arbitration clause is unenforceable, Bloomberg reports.

The ruling came after California’s labor commissioner said she should have been considered an employee.

The decision echoed a federal judge’s ruling preserving a class action lawsuit on behalf of thousands of Uber drivers.

Uber is appealing the San Francisco federal court decision in a case that might force the startup to change its business model and erode its US$50 billion valuation.

While Monday’s ruling isn’t binding on other state judges, it will guide them in similar cases against Uber, said James Evans, a lawyer who drafts arbitration agreements for companies and helps enforce them.

"It’s persuasive authority that other drivers will be able to rely on in urging other courts to find that Uber’s arbitration agreement should not be enforced," Evans said in a phone interview.

San Francisco Superior Court Judge Ernest Goldsmith said Uber’s contract with drivers is “flatly inconsistent” because it says in one provision that a private arbitrator decides whether a dispute should be resolved in arbitration and says in another that the choice is to made by a judge.

Uber will will ask a state appeals court to review the ruling, Uber spokeswoman Jessica Santillo said.

“The Uber partner in this case agreed to resolve disputes of this nature through arbitration when she joined the platform last year,” Santillo said.

“The right to arbitrate disputes has been confirmed multiple times by the Supreme Court.”

An appeal will take 18 months to two years, and "the passage of time is helpful to Uber", Evans said.

US Supreme Court decisions that generally support the enforcement of arbitration agreements are at odds with some California decisions that have produced a "mixed bag" of results, Evans said.

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