Office of the Clerk United States Court of Appeals for the Ninth ...

Molly C. Dwyer

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United States Court of Appeals for the Ninth Circuit Post Office Box 193939

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December 23, 2015

No.: 15-80220

D.C. No.: 3:13-cv-03826-EMC

Short Title: Douglas O'Connor, et al v. Uber Technologies, Inc.

Dear Appellant/Counsel

This is to acknowledge receipt of your Petition for Permission to Appeal under

23(f).

All subsequent letters and requests for information regarding this matter will be

added to your file to be considered at the same time the cause is brought before the

court.

The file number and the title of your case should be shown in the upper right

corner of your letter to the clerk's office. All correspondence should be directed to

the above address pursuant to Circuit Rule 25-1.

Case: 15-80220, 12/23/2015, ID: 9804872, DktEntry: 1-1, of 1

No. 15-_____ _________________________

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT _________________________

DOUGLAS O’CONNOR, THOMAS COLOPY,

MATTHEW MANAHAN, and ELIE GURFINKEL, individually and on behalf of all others similarly situated,

Plaintiffs-Respondents,

v.

UBER TECHNOLOGIES, INC.,

Defendant-Petitioner. _________________________

On Petition for Permission to Appeal from the

United States District Court for the Northern District of California Honorable Edward M. Chen

No. 3:13-cv-03826-EMC _________________________

PETITION OF UBER TECHNOLOGIES, INC. FOR PERMISSION

TO APPEAL PURSUANT TO RULE 23(f) _________________________

Joshua S. Lipshutz GIBSON, DUNN & CRUTCHER LLP 555 Mission Street, Suite 3000 San Francisco, CA 94105-0921 (415) 393-8200

Theodore J. Boutrous, Jr. Theane D. Evangelis GIBSON, DUNN & CRUTCHER LLP 333 South Grand Avenue Los Angeles, California 90071-3197 (213) 229-7000 [email protected]

Counsel for Defendant-Petitioner Uber Technologies, Inc.

Case: 15-80220, 12/23/2015, ID: 9804872, DktEntry: 1-2, Page 1 of 130

CORPORATE DISCLOSURE STATEMENT

Pursuant to Rule 26.1 of the Federal Rules of Appellate Procedure, the

undersigned counsel of record for Defendant-Petitioner Uber Technologies, Inc.

(“Uber”) certifies that Uber has no parent corporation, and there is no publicly held

corporation that owns 10% or more of Uber’s stock.

Dated: December 23, 2015

/s/ Theodore J. Boutrous, Jr. Theodore J. Boutrous Jr.


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TABLE OF CONTENTS Page

INTRODUCTION ..................................................................................................... 1

QUESTION PRESENTED ........................................................................................ 5

STATEMENT OF FACTS ........................................................................................ 5

RELIEF SOUGHT ................................................................................................... 11

STANDARD OF REVIEW ..................................................................................... 11

ARGUMENT ........................................................................................................... 11

A. This Court Should Grant Review Because Class Certification Hinges on Flawed Arbitration Rulings That Are the Subject of Multiple Appeals. ................................................................................ 11

B. The Court Should Also Grant Review Because the District Court’s Ruling That Plaintiffs Satisfied Rule 23 Was Manifestly Erroneous and Implicates Important and Unsettled Questions of Law................................................................................. 17

1. No Classwide Trial Can Fairly and Efficiently Adjudicate the Highly Individualized Claims of 150,000+ Absent Persons. ..................................................................................... 17

2. The Named Plaintiffs Are Neither Typical Nor Adequate. ...... 18

3. The District Court Relieved Plaintiffs of Their Obligation to Prove That Damages Can Be Determined on a Classwide Basis. ........................................................................ 19

CONCLUSION ........................................................................................................ 20


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TABLE OF AUTHORITIES Page(s)

Cases

Am. Express v. Italian Colors Rest., 133 S. Ct. 2304 (2013) .......................................................................................... 17

Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83 (2000) ............................................................................................ 16

AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011) .................................................................................. 3, 4, 11

Avilez v. Pinkerton Gov’t Servs., Inc., 596 F. App’x 579 (9th Cir. 2015) ......................................................................... 18

Baeza v. Superior Court, 201 Cal. App. 4th 1214 (2011) ............................................................................. 16

Birbrower, Montalbano, Condon & Frank v. Superior Court, 17 Cal. 4th 119 (1998) .......................................................................................... 16

Chamberlan v. Ford Motor Co., 402 F.3d 952 (9th Cir. 2005) ................................................................................ 11

Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013) ................................................................................ 4, 19, 20

DIRECTV, Inc. v. Imburgia, 2015 WL 8546242 (U.S. Dec. 14, 2015) ...................................................... 3, 4, 17

Hawkins v. Comparet-Cassani, 251 F.3d 1230 (9th Cir. 2001) .............................................................................. 12

Hilton v. Allcare Med. Mgmt., Inc., 2015 WL 5634742 (Cal. Ct. App. Sept. 25, 2015) ............................................... 15

Iskanian v. CLS Transp. L.A., LLC, 59 Cal. 4th 348 (2014) ................................................................................ 4, 13, 15

Jacobson v. Snap-On Tools Co., 2015 WL 8293164 (N.D. Cal. Dec. 9, 2015) ........................................................ 15


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Levin v. Caviar, Inc., 2015 WL 7529649 (N.D. Cal. Nov. 16, 2015) ..................................................... 15

Lindsey v. Normet, 405 U.S. 56 (1972) ................................................................................................ 18

Marathon Entm’t, Inc. v. Blasi, 42 Cal. 4th 974 (2008) .......................................................................................... 16

MHN Gov’t Servs., Inc. v. Zaborowski, 136 S. Ct. 27 (2015) .................................................................................... 3, 13, 17

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) .................................................................................................. 17

In re Rail Freight Fuel Surcharge Antitrust Litig., 725 F.3d 244 (D.C. Cir. 2013) .............................................................................. 20

S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations, 48 Cal. 3d 341 (1989) ................................................................................. 7, 17, 18

Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425 (9th Cir. 2015) ...................................................... 3, 9, 10, 12, 13, 15

Securitas Sec. Servs. USA, Inc. v. Superior Court, 234 Cal. App. 4th 1109 (2015) ............................................................................. 14

Valdez v. Terminix Int’l Co., 2015 WL 4342867 (C.D. Cal. July 14, 2015) ....................................................... 15

Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) .......................................................................... 4, 17, 18, 19

Statutes

9 U.S.C. § 1 et seq. ..................................................................................... 1, 11, 13, 17

9 U.S.C. § 16(a)(1)(C) ................................................................................................. 7

Cal. Lab. Code § 351 ................................................................................................... 7

Cal. Lab. Code § 2698 et seq. .................................................. 2, 3, 4, 9, 13, 14, 15, 16

Cal. Lab. Code § 2802 ................................................................................................. 7


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Rules

Fed. R. Civ. P. 23 ......................................................................................... 5, 9, 17, 19

Fed. R. Civ. P. 23(b)(3) ........................................................................................ 19, 20

Fed. R. Civ. P. 23(d) .................................................................................................... 7

Fed. R. Civ. P. 23(f) ............................................................................... 5, 9, 11, 13, 17

Other Authorities

Chelsey Dulaney, Uber Ruling Adds More Drivers to Class-Action Suit, Wall St. J., Dec. 9, 2015 ................................................................................. 5

Davey Alba, Many More Drivers Can Now Join the Class Action Suit Against Uber, Wired, Dec. 9, 2015 ........................................................................ 5

The Rise of the Sharing Economy, The Economist, Mar. 9, 2013 ............................... 6


1

INTRODUCTION

The district court certified a class of more than 150,000 individuals across

California who use the Uber app as drivers, nearly all of whom agreed to arbitrate

their claims on an individual basis and not participate in a class action. Through

an unprecedented series of rulings that violate the Federal Arbitration Act

(“FAA”), defy binding precedent, implicate unsettled questions of law currently

before the U.S. Supreme Court and this Court, and are the subject of six as-of-right

appeals already pending before this Court, the district court ran roughshod over

Uber’s arbitration agreements and set this case for an improper class trial in a

matter of months. No matter what the result, such a trial would be the death knell

of more than 150,000 arbitration agreements, forever eliminating the benefits of

arbitration that Uber and drivers expected to obtain.

• First, the court declared Uber’s arbitration agreement an improper

communication with putative class members, even though Uber issued the

agreement before this case had even been filed. The court rewrote Uber’s

arbitration agreement to provide copious, improper warnings about arbitration and

to alter the procedures allowing drivers to opt out of arbitration. The court then

ordered Uber to reissue its arbitration agreements with the new court-drafted

warnings and opt-out procedures, which Uber did in 2014. In forcing Uber to

rewrite its agreements, the court expressed extreme hostility to arbitration, which


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in the court’s view would bar “drivers from . . . benefitting from [a] class action”

and thus would “adversely affect” their “substantive rights.” Dkt. 60 at 9.

• Next, the court struck down both sets of arbitration agreements as

unconscionable, even though it conceded that binding Ninth Circuit precedent

precludes a finding of unconscionability in light of the agreements’ opt-out

provisions, and even though the court took part in drafting the revised agreements.

• The court then announced sua sponte that it was reconsidering its

decision with respect to the revised agreements and that, in fact, the revised

agreements were likely not unconscionable. But the court reversed course again,

deciding that the revised agreements were unenforceable in their entirety because

they include a waiver of representative claims under California’s Labor Code

Private Attorneys General Act (“PAGA”), even though the court could easily sever

or restrict that waiver and enforce the remainder of the arbitration agreement.

• Having disposed of all 150,000+ arbitration agreements, the court

certified a sweeping class that includes most drivers in California, even though it

previously acknowledged that “certifying, noticing, and litigating a class on behalf

of a large number of individuals who may later need to be excluded from the class

does not make sense.” Dkt. 342 at 63 n.37. The court then refused to stay trial

pending appeal, despite finding that Uber raised a “serious legal question” and

would “arguably” suffer irreparable harm if forced to trial. Dkt. 429 at 5–6.


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• And just this afternoon, the district court invalidated yet another

iteration of Uber’s arbitration agreement (in which Uber attempted to fix the

purported deficiencies identified by the court), ordered Uber to rewrite its

agreement and issue a “corrective cover letter,” and imposed a prior restraint on

Uber’s communications with all “new or prospective drivers.” Dkt. 435 at 7–8.

This is not the way that the FAA is intended to work; district courts are not

supposed to embark on seek-and-destroy missions in which they resort to inventing

creative means of obliterating arbitration agreements. The Supreme Court has

repeatedly admonished courts for such “hostility to arbitration agreements.” AT&T

Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1745 (2011). Indeed, Justice

Breyer’s opinion for the Court in DIRECTV, Inc. v. Imburgia again denounced the

intransigence of courts that refuse to enforce arbitration agreements, emphasizing

that they “must follow . . . Concepcion” and “‘give due regard . . . to the federal

policy favoring arbitration.’” 2015 WL 8546242, at *5, 8 (U.S. Dec. 14, 2015).

The district court’s radical arbitration rulings—the lynchpin of its

certification orders—raise important questions about the severability of arbitration

agreements, which is an issue currently pending before the U.S. Supreme Court,

see MHN Gov’t Servs., Inc. v. Zaborowski, 136 S. Ct. 27 (2015), as well as about

the enforceability of waivers of representative PAGA claims that are the subject of

a pending petition for en banc review before this Court, see Sakkab v. Luxottica


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Retail N. Am., Inc., 803 F.3d 425 (9th Cir. 2015). They also conflict with Iskanian

v. CLS Transp. L.A., LLC, 59 Cal. 4th 348 (2014), in which the California Supreme

Court severed a PAGA waiver and sent the remaining claims to arbitration.

The district court’s class-certification orders also pose novel, unsettled, and

fundamentally important questions regarding class-action claims. In its verve to

oversee the “lead case on the issue of the status of Uber drivers in the nation” (Dkt.

429 at 8), the court ignored obvious differences between drivers that render

classwide adjudication impossible; sanctioned numerous shortcuts that will harm

Uber and the very individuals Plaintiffs claim to represent, in violation of Wal-

Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011); and failed to require Plaintiffs

to present a viable classwide damages model—or any damages model at all, for

that matter—in violation of Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013).

In short, after repeating the same error condemned in Concepcion and

Imburgia and shredding with antipathy binding arbitration agreements, the district

court stripped Uber of its rights and contravened Dukes and Comcast to certify

nearly the broadest class possible. And with trial set to begin in June 2016—

before this Court can decide Uber’s six pending appeals of the district court’s

deeply flawed arbitration rulings—the district court will have irreparably nullified

Uber’s right to arbitration of these claims absent this Court’s immediate

intervention. This Court should grant review and halt this runaway class action.


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QUESTION PRESENTED

Whether Rule 23(f) review of the district court’s two class certification

orders should be granted where (1) certification is premised on the invalidity of

arbitration agreements and multiple pending appeals are challenging those rulings,

and (2) the court ruled that Plaintiffs had satisfied Rule 23 even though their

claims cannot be resolved in a single trial, Plaintiffs propose to use shortcuts that

will harm absent class members and Uber, and the court absolved Plaintiffs of their

burden to prove that damages can be calculated on a classwide basis.

STATEMENT OF FACTS

1. This is a closely watched class action that has garnered national media

attention. See, e.g., Chelsey Dulaney, Uber Ruling Adds More Drivers to Class-

Action Suit, Wall St. J., Dec. 9, 2015; Davey Alba, Many More Drivers Can Now

Join the Class Action Suit Against Uber, Wired, Dec. 9, 2015. Indeed, this

litigation has spawned other class-action lawsuits against Uber and many other

companies with similar business models, including Lyft, Postmates, Washio,

Caviar, Handy, and more, in this Circuit and all over the country.

Uber is one of several innovative companies operating online software

platforms that connect buyers with sellers, owners with renters, or, in this case,

drivers with riders. Such technology platforms allow just about anyone to “make

money from underused assets,” “provid[ing] new opportunities for enterprise.”


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The Rise of the Sharing Economy, The Economist, Mar. 9, 2013. Uber exercises

no control over drivers’ schedules or routes. See Dkt. 342 (“Prior Order”) at 32–

33 (attached as Ex. B). Drivers may use the app as much or as little as they want.

Dkt. 300-1 at 200:8–201:10; Dkt. 300-3 at 133:13–134:17. After each ride, riders

(not Uber) provide drivers “star ratings” on a scale of one to five, and Uber

sometimes (but not always) deactivates drivers from the app if they receive

consistently low star ratings. Prior Order at 36–37.

In California alone, over 160,000 people have signed up to use the Uber app

as drivers. Prior Order at 5. A fraction of these 160,000 drivers have decided to

make their entire living by finding passengers through Uber, driving 60 hours or

more every week. E.g., Dkt. 307-1 at 6–9. Others use Uber to build their own

transportation businesses. E.g., Dkt. 307-7 at 652–55; Dkt. 307-11 at 1055–59.

Some have been drivers since long before Uber began and use Uber merely as a

resource for finding more customers. E.g., Dkt. 307-1 at 91–94. In some cases,

drivers are full-time teachers, Dkt. 307-2 at 183–86, scientists, Dkt. 307-11 at

1028–30, or clergymen, Dkt. 307-2 at 148–50, looking to make a little extra cash

in their spare time. Some people use Uber just long enough to save up for a

vacation. E.g., Dkt. 307-4 at 397–98. Others use Uber only a few hours a month,

or less. E.g., Dkt. 307-7 at 686–89.

2. The vast majority of drivers in the class have entered into contracts in


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which they agreed to individual arbitration. See Dkt. 322-15. Shortly after filing

this lawsuit, the named Plaintiffs filed a Rule 23(d) motion asking the district court

to modify Uber’s then-existing agreements (the “pre-2014 arbitration

agreements”), which the court largely granted. Dkt. 4. The court ordered Uber to

issue revised agreements (the “post-2014 arbitration agreements”) containing (1)

even more conspicuous notices about the arbitration provisions, and (2) additional

means for drivers to opt out of arbitration. Dkt. 60, 99; see also Prior Order at 60–

64. Uber appealed these orders. See No. 14-16078.

The district court then refused to enforce any of Uber’s arbitration

agreements or class-action waivers in multiple putative class actions. Uber

appealed those orders as a matter of right under the FAA, 9 U.S.C. § 16(a)(1)(C).

See No. 15-16178; No. 15-16181; No. 15-17420; No. 15-17422; No. 15-17475.

3. Plaintiffs allege that they, along with thousands of class members, are

Uber’s employees under the test set forth in S.G. Borello & Sons, Inc. v. Dep’t of

Indus. Relations, 48 Cal. 3d 341 (1989). They sought class certification of: (1) an

Unfair Competition Law claim for alleged violations of California’s Gratuities

Law, Cal. Lab. Code § 351; and (2) a claim for expense reimbursement under Cal.

Lab. Code § 2802; both require Plaintiffs to prove they are Uber’s employees.

The class representatives are two current drivers who claim to believe they

are Uber’s employees. Dkt. 300-9 at 4; Dkt. 300-10 at 4; Dkt. 300-11 at 4. Unlike


8

the vast majority of absent class members, they opted out of arbitration. Dkt. 302

at 8–10. Uber submitted more than 400 driver declarations demonstrating that

most drivers did not intend to be Uber’s employees. Dkt. 299-10; Dkt. 307.

4. On September 1, 2015, the district court granted in part Plaintiffs’ class-

certification motion. This initial order rejected Plaintiffs’ efforts to certify a

“mega-class” of all California drivers who used the Uber app “because . . . there

would be tremendous (and likely material) variance between those class

members.” Prior Order at 41. The court found that drivers who “held themselves

out as a distinct business” or “contracted to drive for Uber indirectly through a

distinct third-party business” were situated differently than those who did not. Id.

The court further held that individualized inquiries would predominate with

respect to those drivers who had not opted out of Uber’s post-2014 arbitration

agreements, because determining whether those agreements were enforceable

depended on “the individual driver’s economic circumstances.” Id. at 62–63. The

court also refused to certify the expense reimbursement claim, finding that

Plaintiffs’ proposal to waive recovery of certain expenses raised questions “about

the adequacy of representation.” Id. at 26–29.

The court nevertheless certified a class with respect to the gratuities claim

consisting of drivers who had signed up directly with Uber or an Uber subsidiary,

were paid directly by Uber or an Uber subsidiary, and were not bound by Uber’s


9

post-2014 arbitration agreements. Id. at 7. This class included drivers bound by

the pre-2014 arbitration agreements, as the court concluded that those agreements

were “unconscionable and unenforceable” as to all drivers. Id. at 63. The court

invited Plaintiffs to file a supplemental certification motion. Id. at 66–67.

This Court denied Uber’s initial Rule 23(f) petition after Plaintiffs argued it

was “premature” because “the class parameters are unsettled and supplemental

briefing is ongoing.” No. 15-80169, Dkt. 2-1 at 20.

5. On December 9, 2015, the district court granted in significant part

Plaintiffs’ supplemental class-certification motion and reversed its prior decision to

exclude from the class those drivers who had not opted out of Uber’s post-2014

arbitration agreements. See Dkt. 395 (“Order”) at 9–24 (attached as Ex. A). This

ruling, which relied on the initial certification order’s Rule 23 analysis,

dramatically expanded the class, which now covers more than 150,000 drivers—

the very “mega-class” that the court had previously refused to certify.

Based on this Court’s recent decision in Sakkab, the district court

determined that Uber’s post-2014 agreements contained a waiver of representative

PAGA claims that rendered them “unenforceable.” Id. at 9–11. The court

acknowledged that an express severability clause applied to the provision

containing the PAGA waiver, but ruled that the PAGA waiver could not “be

severed without undermining the entire arbitration provision itself.” Id. at 14.


10

The court also reversed itself in certifying Plaintiffs’ expense reimbursement

claims. Id. at 24–31. The court found that Plaintiffs were adequate

representatives, despite their waiver of potentially recoverable expenses, because

they had provided “some evidence” that the expenses they were seeking are the

“majority of any recoverable expenses.” Id. at 27. This “evidence” consisted of a

mere six driver declarations, which the court described as “a small sampling that

lacks statistical significance.” Id.

6. The day after the district court issued its second class-certification order,

Uber moved to compel arbitration as to the newly added absent class members,

and the district court immediately denied that motion (as well as Uber’s previously

filed motion to compel arbitration with respect to absent members of the initial

class). Dkt. 397, 400. Uber appealed that order to this Court under the FAA.

Uber then moved for a stay pending appeal. The court denied this motion

even though it agreed that Uber raised a “serious legal question,” acknowledged

that severability required a “close analysis” and the “possibility of the Ninth

Circuit hearing the Sakkab case en banc,” and found that Uber would “arguably”

suffer “irreparable harm in the form of undergoing the expense of a trial and losing

the anticipated advantages of arbitration.” Dkt. 429 at 5–6. The court indicated it

“will stay entry of judgment with respect to the December 9, 2015 subclass so long

as Uber’s appeals are pending,” but that Uber must still proceed to trial. Id. at 7.


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RELIEF SOUGHT

The Court should grant Rule 23(f) review and, following briefing on the

merits, reverse or vacate the district court’s certification orders.

STANDARD OF REVIEW

Rule 23(f) review should be granted where, as here, (1) “the certification

decision presents an unsettled and fundamental issue of law relating to class

actions, important both to the specific litigation and generally, that is likely to

evade end-of-the-case review,” or (2) the decision is “manifestly erroneous.”

Chamberlan v. Ford Motor Co., 402 F.3d 952, 959 (9th Cir. 2005) (per curiam).

ARGUMENT

A. This Court Should Grant Review Because Class Certification Hinges on Flawed Arbitration Rulings That Are the Subject of Multiple Appeals.

This Court’s review is no longer “premature”—it is urgent and essential.

Uber and the more than 150,000 absent class members agreed to arbitrate disputes

on an individual basis, so as to “‘realize the benefits of private dispute resolution:

lower costs, greater efficiency and speed, and the ability to choose expert

adjudicators to resolve specialized disputes.’” Concepcion, 131 S. Ct. at 1751

(citation omitted). Yet because the district court has refused to enforce these

agreements, these benefits will be lost forever, unless this Court grants review.

1. The certification orders here radiate the very hostility to arbitration that

the FAA forbids. They implicate numerous unsettled and fundamental questions


12

of law, and will not withstand appellate scrutiny.

If Uber succeeds in any one of its multiple pending appeals (which it is

likely to do), the district court’s class-certification rulings will crumble. See

Hawkins v. Comparet-Cassani, 251 F.3d 1230, 1237 (9th Cir. 2001) (a court

“abuses its discretion if its certification order is premised on legal error”). It

makes no sense to proceed with a class trial until those appeals are resolved.

The court’s initial class-certification order, which was centered on the

invalidation of Uber’s pre-2014 arbitration agreements, explicitly defied Ninth

Circuit precedent precluding a finding of unconscionability where an arbitration

agreement contains a meaningful opt-out right. See Prior Order at 63; No. 15-

16178, Dkt. 27-1 at 28–37. The district court’s subsequent class-certification

order, which dramatically expanded the class to include drivers who signed the

post-2014 arbitration agreements, was premised on this Court’s recent 2-1 decision

in Sakkab. See Order at 10–13 & n.8; Sakkab, 803 F.3d at 439. A petition for

rehearing en banc is currently pending in Sakkab, see No. 13-55184, Dkt. 87; it has

attracted significant amicus support, see id., Dkt. 94, 97, 98; and the Court called

for a response to the petition just one day after its filing, see id., Dkt. 88. In

addition, the author of the majority opinion in Sakkab noted at oral argument the

possibility of en banc or Supreme Court review, given the “importance” of that

case. See Sakkab Oral Arg., https://youtu.be/Qe0hD6cISZg, at 1:06:20.


13

Furthermore, the U.S. Supreme Court is currently reviewing this Court’s

decision in Zaborowski, and considering “whether California’s arbitration-only

severability rule is preempted by the FAA.” 2015 WL 3637766, at *i. The

Supreme Court’s decision this Term in Zaborowski may directly impact the

severability analysis that the district court applied here.

Given this deeply unsettled legal landscape, this Court should grant review.

It would be neither fair nor efficient to proceed to trial under these circumstances.

2. Rule 23(f) review is also warranted because the district court manifestly

erred in certifying a class covering drivers who had entered into Uber’s arbitration

agreements. The court’s invalidation of the post-2014 agreements conflicts with

multiple decisions of the California Supreme Court and other courts, and raises

important questions that are likely to recur frequently after Iskanian and Sakkab.

The post-2014 agreements, Dkt. 381-1 to -3, contain an “Arbitration

Provision” that is “intended to apply to the resolution of disputes that otherwise

would be resolved in a court of law or before a forum other than arbitration” and

“requires all such disputes to be resolved only by an arbitrator through final and

binding arbitration on an individual basis only and not by way of court or jury trial,

or by way of class, collective, or representative action.” Order at 13. The district

court ruled that this was a “blanket PAGA waiver” that was unenforceable under

Iskanian and Sakkab. Id. at 12–14. The agreement, however, provides that “in the


14

event any portion of this Arbitration Provision is deemed unenforceable, the

remainder of this Arbitration Provision will be enforceable.” Id.1

The district court nonetheless refused to enforce any part of the arbitration

agreement, despite concluding that the PAGA waiver was expressly severable, on

the ground that it supposedly could not “be severed without undermining the entire

arbitration provision itself.” Id. The court reasoned that “the blanket PAGA

waiver is inextricably linked with the remainder of the arbitration agreement”

because it could not be “linguistically excise[d] . . . from the rest of the

agreement.” Id. at 19. The court also ruled it was not possible to “linguistically”

sever the “arbitration agreement to remove the blanket PAGA waiver” because

doing so would supposedly “remove the heart of the arbitration agreement.” Id. at

15–16. This reasoning—which erroneously elevated the PAGA waiver to the

primary objective of the arbitration agreement—defies common sense and the

agreement itself, which broadly covers any “disputes that otherwise would be

1 A separate section of the agreement provides that the “Arbitrator shall have no authority to consider or resolve any claim or issue any relief on a class, collective, or representative basis.” Order at 13. This restriction on the arbitrator’s authority to adjudicate PAGA claims states that it “shall not be severable” if that “provision is determined to be unenforceable.” Id. The district court correctly ruled that this “non-severability clause is self-contained” and applies only to this provision. Id. at 14. In contrast, “the blanket PAGA waiver” is contained in a “severable provision” of the agreement. Id.; contra Securitas Sec. Servs. USA, Inc. v. Superior Court, 234 Cal. App. 4th 1109, 1125 (2015) (refusing to enforce arbitration agreement that contained an expressly non-severable PAGA waiver).


15

resolved in a court of law or before a forum other than arbitration.” Id. at 13.2

The district court’s reasoning contradicts Iskanian—the very decision that

established, as a matter of California law, the unenforceability of waivers of

representative PAGA claims. In Iskanian, the plaintiff accepted an agreement that

required him to arbitrate “any and all claims” arising out of his employment with

the defendant, and provided that neither party would “assert class action or

representative action claims against the other in arbitration or otherwise.” 59 Cal.

4th at 360–61. Thus, as with Uber’s agreements, the agreement in Iskanian (a)

required arbitration of all claims, and (b) included a waiver of representative

PAGA claims in any forum. Yet rather than invalidate the entire agreement, the

California Supreme Court held that the agreement was enforceable as to non-

PAGA claims. See 59 Cal. 4th at 391 (holding that the plaintiff “must proceed

with bilateral arbitration on his individual damages claims”). Other courts faced

with similar arbitration agreements have followed this same approach.3

2 The court’s ruling was premised on the unenforceability of the PAGA waiver even though there currently is no PAGA claim in this case. Plaintiffs’ belated motion to add a PAGA claim, which Uber has opposed, remains pending below. 3 See, e.g., Hilton v. Allcare Med. Mgmt., Inc., 2015 WL 5634742, at *7–8 (Cal. Ct. App. Sept. 25, 2015) (unpublished); Jacobson v. Snap-On Tools Co., 2015 WL 8293164, at *1, 5–6 (N.D. Cal. Dec. 9, 2015); Levin v. Caviar, Inc., 2015 WL 7529649, at *9 (N.D. Cal. Nov. 16, 2015); Valdez v. Terminix Int’l Co., 2015 WL 4342867, at *8–9 & n.6 (C.D. Cal. July 14, 2015); see also Sakkab, 803 F.3d at 440 (noting that it was “clear that the non-PAGA claims . . . must be arbitrated”).


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The district court’s myopic focus on “linguistically” severing the PAGA

waiver from the agreement also directly conflicts with well-established California

law on severability, which takes a “‘very liberal view of severability, enforcing

valid parts of an apparently indivisible contract where the interests of justice of the

policy of the law would be furthered.’” Baeza v. Superior Court, 201 Cal. App.

4th 1214, 1230 (2011) (citation omitted). Rather than limiting severance to the

narrow set of agreements in which unenforceable provisions can be neatly deleted

using a red pen, the California Supreme Court has repeatedly held that courts

should “restrict” enforcement of indivisible provisions so as to enforce the lawful

aspects of those provisions. See, e.g., Marathon Entm’t, Inc. v. Blasi, 42 Cal. 4th

974, 996–99 (2008); Birbrower, Montalbano, Condon & Frank v. Superior Court,

17 Cal. 4th 119, 135–40 (1998). The district court claimed that any such

restriction of the arbitration agreement would constitute an impermissible

“reformation” of the contract, Order at 14 n.10, even though the California

Supreme Court has explained the distinction. See Armendariz v. Found. Health

Psychcare Servs., Inc., 24 Cal. 4th 83, 125 (2000) (“severance or restriction” is

distinct from “reform[ing]” a contract “by augmenting it with additional terms”).

The district court’s failure to enforce the arbitration agreement to the fullest

extent possible under California law violates the FAA’s command that “any doubts

concerning the scope of arbitrable issues” should be decided “in favor of


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arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,

24–25 (1983). Rather than attempting to save as much of the parties’ agreement as

it could, the court instead deemed the entire agreement unenforceable. This

draconian ruling violates the FAA because it exhibits judicial hostility to

arbitration, and fails to “place arbitration contracts ‘on equal footing with all other

contracts.’” Imburgia, 2015 WL 8546242, at *8 (citation omitted). In fact,

whether the FAA prohibits an arbitration-specific approach to severance is the

issue before the Supreme Court in Zaborowski.

B. The Court Should Also Grant Review Because the District Court’s Ruling That Plaintiffs Satisfied Rule 23 Was Manifestly Erroneous and Implicates Important and Unsettled Questions of Law.

Rule 23 “imposes stringent requirements for certification that in practice

exclude most claims.” Am. Express v. Italian Colors Rest., 133 S. Ct. 2304, 2310

(2013). The district court’s failure to abide these “stringent requirements” in

certifying Plaintiffs’ claims warrants Rule 23(f) review.

1. No Classwide Trial Can Fairly and Efficiently Adjudicate the Highly Individualized Claims of 150,000+ Absent Persons.

Plaintiffs cannot prevail on their gratuities or expense reimbursement claims

unless they are found to be employees under the multi-factor Borello test. Yet as

Uber has previously explained, see No. 15-80169, Dkt. 1-2 at 17–20, this defense

cannot be resolved in “one stroke,” Dukes, 131 S. Ct. at 2545, but instead entails

fact-intensive inquiries specific to each class member.


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For example, under Borello, the court must consider drivers’ individual

beliefs and intentions regarding their relationships with Uber when deciding

whether they are employees. 48 Cal. 3d at 350. Even though Borello described

this factor as “significant,” id. at 358, the district court declared that it is entitled to

“the least weight,” Prior Order at 51. In any event, regardless of the “weight” it is

given, Uber has a due process right to present at trial individualized evidence

regarding its defense. See Dukes, 131 S. Ct. at 2561 (“[A] class cannot be certified

on the premise that [a defendant] will not be entitled to litigate its statutory

defenses to individual claims.”); Lindsey v. Normet, 405 U.S. 56, 66 (1972).

Certifying a class of more than 150,000 drivers deprives Uber of that right.

2. The Named Plaintiffs Are Neither Typical Nor Adequate.

The named Plaintiffs are not typical because they claim to believe they were

employees rather than independent contractors, unlike many other drivers (as

Uber’s 400+ driver declarations established, see Dkt. 299, 307). Further, unlike

the vast majority of the more than 150,000 absent class members, the named

Plaintiffs opted out of arbitration. See Avilez v. Pinkerton Gov’t Servs., Inc., 596

F. App’x 579 (9th Cir. 2015). And given the profound differences in how drivers

use the Uber app—ranging from those who drive for only a few hours a month to

those who do so every day—there is simply no “typical” member of this class.

Moreover, the district court’s adequacy ruling improperly creates a


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“perverse incentive[] for class representatives to place at risk potentially valid

claims for monetary relief” to obtain certification. Dukes, 131 S. Ct. at 2559.

According to the court, class representatives can sacrifice potentially significant

claims of absent class members so long as they forgo less than the “majority” of

potential damages. Order at 27. Plaintiffs’ meager evidence—six driver

declarations, which the district court acknowledged was “a small sampling that

lacks statistical significance,” id.—does nothing to “prove” that they are adequate

representatives. Dukes, 131 S. Ct. at 2551. The district court also ignored Uber’s

unrebutted expert testimony demonstrating that Plaintiffs’ shortcuts would harm

absent class members. See Dkt. 365-13 at 11–18 (explaining that Plaintiffs’ own

evidence shows that they will undercompensate drivers by 40 percent or more).

This is “worlds away” from the “rigorous analysis” that Rule 23 demands and the

“significant proof” it requires. Dukes, 131 S. Ct. at 2551, 2254.

3. The District Court Relieved Plaintiffs of Their Obligation to Prove That Damages Can Be Determined on a Classwide Basis.

The Supreme Court held in Comcast Corp. v. Behrend that a district court

cannot refuse to assess at the class-certification stage whether plaintiffs have

proposed a sound method of calculating damages on a classwide basis. 133 S. Ct.

at 1433. Ruling “at the class-certification stage [that] any method of measurement

is acceptable so long as it can be applied classwide, no matter how arbitrary the

measurements may be” would “reduce Rule 23(b)(3)’s predominance requirement


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to a nullity.” Id. In short, a district court cannot certify a class merely because a

damages model “might . . . be[] sound.” Id. at 1434; see also In re Rail Freight

Fuel Surcharge Antitrust Litig., 725 F.3d 244, 253 (D.C. Cir. 2013) (“No damages

model, no predominance, no class certification.”).

Yet that is exactly what happened here. Plaintiffs failed to provide any

expert testimony whatsoever supporting a viable damages methodology, even

though the Court invited them to do so. Prior Order at 59–60; but see Comcast,

133 S. Ct. at 1433–35 (reversing class certification despite submission of expert

testimony because of flaws in the expert’s damages model). Moreover, in

response to Uber’s argument that Plaintiffs’ proposed approach to damages would

not capture “time for when a driver is on-duty but not actually driving a

passenger”—expenses that Plaintiffs assert they are “not waiving”—the district

court simply punted, holding that whether and how “Plaintiffs can prove these

damages” is “a separate matter” that it would not address at this stage. Order at 28

n.12. Similarly, regarding the calculation of reimbursable phone expenses, the

court concluded only that “at this stage, there may be a number of calculation

methodologies that are reasonable.” Id. at 31 (emphasis added). At no point did

the court identify any damages model that was sound and non-arbitrary.

CONCLUSION

The Court should grant review of the district court’s certification orders.


Dated: December 23, 2015 Respectfully submitted,

/s/ Theodore J. Boutrous, Jr. Theodore J. Boutrous, Jr.

Joshua S. Lipshutz GIBSON, DUNN & CRUTCHER LLP 555 Mission Street, Suite 3000 San Francisco, CA 94105-0921 (415) 393-8200

Theodore J. Boutrous, Jr. Theane D. Evangelis GIBSON, DUNN & CRUTCHER LLP 333 South Grand Avenue Los Angeles, California 90071-3197 (213) 229-7000 [email protected]

Counsel for Defendant-Petitioner Uber Technologies, Inc.


Exhibit A


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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DOUGLAS O'CONNOR, et al.,

Plaintiffs,

v.

UBER TECHNOLOGIES, INC., et al.,

Defendants.

Case No. 13-cv-03826-EMC

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS’ SUPPLEMENTAL MOTION FOR CLASS CERTIFICATION

Docket No. 357

I. INTRODUCTION

Plaintiffs Douglas O‟Connor, Thomas Colopy Matthew Manahan, and Elie Gurfinkel are

current or former drivers who have performed services for Defendant Uber Technologies, Inc.

Docket No. 330 (Second Amended Complaint) (SAC).1 Earlier this year, Plaintiffs moved to

certify a class of approximately 160,000 other “UberBlack, UberX, and UberSUV drivers who

have driven for Uber in the state of California at any time since August 16, 2009.” Docket No.

276-1. Plaintiffs contend that they and all 160,000 putative class members are Uber‟s employees,

as opposed to its independent contractors, and thus are eligible for various protections codified for

employees in the California Labor Code. See SAC at ¶ 21. Specifically, Plaintiffs brought claims

for: (1) expense reimbursement under California Labor Code section 2802 (hereafter, Expense

Reimbursement Claim) and (2) converted tips under California Labor Code section 351 (hereafter,

Tips Claim).

On September 1, 2015, the Court certified the following class (hereafter, September 1,

1 While O‟Connor remains a plaintiff in this action, he is no longer seeking to serve as a class

representative. Thus, for purposes of this motion, the Court refers to Colopy, Manahan, and Gurfinkel collectively as “Plaintiffs.”

Case 3:13-cv-03826-EMC Document 395 Filed 12/09/15 Page 1 of 32 Case: 15-80220, 12/23/2015, ID: 9804872, DktEntry: 1-2, Page 29 of 130

https://ecf.cand.uscourts.gov/cgi-bin/DktRpt.pl?269290

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2015 Class) to pursue the Tips Claim only:

All UberBlack, UberX, and UberSUV drivers who have driven for Uber in the state of California at any time since August 16, 2009, and who (1) signed up to drive directly with Uber or an Uber subsidiary under their individual name, and (2) are/were paid by Uber or an Uber subsidiary directly and in their individual name, and (3) did not electronically accept any contract with Uber or one of Uber‟s subsidiaries which contain the notice and opt-out provisions previously ordered by this Court (including those contracts listed in the Appendix to this Order), unless the driver timely opted-out of that contract‟s arbitration agreement.

Docket No. 342 (Certification Order) at 7. The class as defined excluded all drivers who operated

or drove for a distinct third-party transportation company, as well as any drivers who signed

Uber‟s more recent contracts (i.e., contracts which included the notice and opt-out provisions

previously ordered by this Court) unless the driver timely opted-out of the arbitration agreement.

Id. at 66-67.

The Court permitted Plaintiffs to file supplemental briefing with respect to: (1) certifying a

class to pursue a claim for expense reimbursement under California Labor Code section 2802

(hereafter, Expense Reimbursement Claim), and (2) certifying a subclass of drivers who labored

for distinct third-party transportation companies. Id. at 66. The parties subsequently filed their

briefs on the instant supplemental motion for class certification. Docket No. 359 (Class

Certification Supplemental Briefing) (Cert. Supp.); Docket No. 365 (Class Certification

Supplemental Briefing Opposition) (Cert. Opp.); Docket No. 370-1 (Class Certification

Supplemental Reply) (Cert. Reply).

Plaintiffs‟ supplemental motion for class certification came on for hearing before the Court

on November 24, 2015. For the reasons explained below, the Court will certify the following

subclass of drivers (December 9, 2015 Subclass):

All UberBlack, UberX, and UberSUV drivers who have driven for Uber in the state of California at any time since August 16, 2009, and meet all the following requirements: (1) who signed up to drive directly with Uber or an Uber subsidiary under their individual name, and (2) are/were paid by Uber or an Uber subsidiary directly and in their individual name, and (3) electronically accepted any contract with Uber or one of Uber‟s subsidiaries which contain the


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notice and opt-out provisions previously ordered by this Court, and did not timely opt out of that contract‟s arbitration agreement.

2

Like the September 1, 2015 Class, this subclass may pursue the Tips Claim under Federal Rule of

Civil Procedure 23 (hereafter, Rule 23). Furthermore, both the September 1, 2015 Class and

December 9, 2015 Subclass are certified to pursue the Expense Reimbursement Claim for vehicle-

related and phone expenses.

II. DISCUSSION

The Court assumes the reader‟s familiarity with the procedural and factual background of

this litigation. See generally O’Connor v. Uber Techs., Inc., 82 F. Supp. 3d 1133 (N.D. Cal.

2015), O’Connor v. Uber Techs., Inc., No. 13-cv-3826-EMC, 2014 WL 1760314 (N.D. Cal. may

2, 2014); Mohamed v. Uber Techs., Inc., Case No. 14-5200-EMC, No. 14-5241; 2015 WL

3749716 (N.D. Cal. June 9, 2015); O’Connor v. Uber Techs., Inc., No. 13-cv-3826-EMC, 2015

WL 5138097 (N.D. Cal. Sept. 1, 2015). Hence, the Court does not separately recount such details

here. Instead, any relevant factual or procedural details are included in the body of this Order as

necessary to provide context for the Court‟s discussion of the merits of Plaintiffs‟ supplemental

motion for class certification.

First, the Court will discuss the legal standards under Rule 23 that are applicable to

Plaintiff‟s supplemental motion for class certification. Second, the Court will address the

composition of the class, including whether Uber‟s more recent contracts are enforceable on a

class-wide basis. Finally, the Court will determine whether Plaintiffs‟ Expense Reimbursement

Claim can be pursued by the September 1, 2015 Class and the December 9, 2015 Subclass.

A. Legal Standard (Class Certification)

The “class action is an exception to the usual rule that litigation is conducted by and on

behalf of the individual named parties only.” Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541,

2550 (2011) (citation omitted). For that reason, “a class representative must be part of the class

and possess the same interest and suffer the same injury as [her fellow] class members.” Id. at

2 This sub-class is distinct from the September 1, 2015 Class, as it only includes drivers who

signed the contracts including the Court-ordered notice and opt out provisions and did not opt out of the arbitration agreement. This sub-class also does not include drivers who labored for third-party transportation providers, or drivers who drove under a fictitious or corporate name.


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2550 (citation omitted). Rule 23 thus “ensures that the named plaintiffs are appropriate

representatives of the class whose claims they wish to litigate” by requiring affirmative

compliance with the requirements of both Rule 23(a) and (b). Id. at 2550.

Rule 23(a) permits Plaintiffs to sue as representatives of a class only if:

(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.

Fed. R. Civ. P. 23(a)(1)-(4). If each of these Rule 23(a) requirements is satisfied, the purported

class must also satisfy one of the three prongs of Rule 23(b). Here, Plaintiffs again seek

certification under Rule 23(b)(3), which provides:

(3) the court finds that the question of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other methods for fairly and efficiently adjudicating the controversy.

As previously explained in the Class Certification order, the only question now before the Court is

whether the requirements of Rule 23 are met. See Comcast Corp. v. Behrend, 133 S. Ct. 1426,

1432 (2013). The burden is on the “party seeking class certification [to] affirmatively demonstrate

his compliance with the Rule – that is, he must be prepared to prove that there are in fact

sufficiently numerous parties, common questions of law or fact, etc.” Dukes, 131 S. Ct. at 2551.

The Court must in turn conduct a “rigorous analysis” to ensure that the prerequisites of Rule 23

are met, which may require “prob[ing] behind the pleadings before coming to rest on the

certification question.” Id. (citation omitted).

B. Class Composition

Plaintiffs request certification of the following groups: (1) drivers who drove for Uber

through a distinct third-party transportation company, (2) drivers who used corporate names, e.g.,

Mr. Mark Forester, who is a driver and part owner of a formally incorporated transportation


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company that has hired 34 employee-drivers who all use the Uber application, and (3) drivers who

signed Uber‟s more recent agreements, e.g., the June 21, 2014 Agreement, November 10, 2014

Agreement, and April 3, 2015 Agreement, and did not timely opt out of the arbitration agreement.

The Court denies Plaintiffs‟ request to certify a subclass of drivers who drove for Uber through a

distinct third-party transportation company or who used corporate names. However, the Court

will certify a subclass of drivers who signed Uber‟s more recent agreements even if they did not

timely opt out.

1. Drivers Laboring for a Third-Party Transportation Company

In the class certification order, the Court declined to include drivers who drove for Uber

through a third-party transportation company. Certification Order at 41-45. Specifically, the

Court was concerned that including such drivers would result in material variations that could

defeat predominance as to the Borello secondary factor of whether the one performing services is

engaged in a distinct occupation or business. In so holding, the Court explained that it was not

foreclosing class certification for such drivers, but that “further subclassing might be necessary if

Plaintiffs are to demonstrate that an additional class (or classes) of such drivers can be certified

under Rule 23(b)(3). Id. at 43. For instance, the Court noted that there was evidence of drivers

who drove through third-party transportation companies, but whose clients were made up

primarily or solely of Uber clients. Id. In contrast, other drivers derived a much smaller portion

of their business from Uber. Id. at 44. Thus, while Plaintiffs could certify a subclass of drivers

who, for instance, drove for Uber more than 30 hours a week, the Court concluded that:

Plaintiffs have not met their burden to demonstrate that such a class would be certifiable. Notably, Plaintiffs have not offered a concrete proposal regarding how the members of any such subclass (or classes) could be identified for ascertainability purposes. For example, Plaintiffs have not submitted any proof that they could objectively identify all drivers who drove for Uber more than 30 hours per week. Alternatively, if a subclass were to be defined by the percentage of rides given to Uber customers versus customers obtained from other sources, Plaintiffs have not shown that they could objectively determine whether a driver was more like Ezzikhe or Gebretensia (i.e., drive solely for Uber) or more like Enriquez or Alshara (i.e., drive for Uber about 30% of the time).

Id. at 44-45.


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Despite being given the opportunity, Plaintiffs again fail to meet this burden. Instead,

Plaintiffs have proposed certifying a subclass of all drivers who drove through an intermediary

transportation company, regardless of the number of hours spent driving for Uber. Cert. Supp. at

13. Plaintiffs contend instead that the Court should apply the joint employment test articulated in

Martinez v. Combs, 49 Cal. 4th 35 (2010). There, the California Supreme Court found that for

claims brought under California Labor Code section 1194, the court should look to the Industrial

Welfare Commission‟s (IWC) wage orders. Id. at 64. The IWC‟s wage order defines “employ”

three alternative ways: “(a) to exercise control over the wages, hours or working conditions, or (b)

to suffer or permit to work, or (c) to engage, thereby creating a common law employment

relationship.” Id. Under this broader definition, Plaintiffs contend the entire class of drivers may

be certified.

This Court rejected Plaintiff‟s proposal of applying the IWC test of employment “absent

more definitive guidance from the California Supreme Court or Ninth Circuit indicating that the

Borello [common-law employment] test should not apply here.” Certification Order at 30 n.14.

At present, there is a question of whether a court may use the IWC definition to determine whether

there is a joint employment outside of California Labor Code section 1194. See, e.g., Futrell v.

Payday Cal., Inc., 190 Cal. App. 4th 1419, 1431 (2010). With respect to claims under California

Labor Code Sections 351 and 2802, the state courts have not considered the applicability of the

IWC test of employment to tips claims, and are inconsistent as to expense reimbursement claims.

Contrast Arnold v. Mutual of Omaha Ins. Co., 202 Cal. App. 4th 580, 586-88 (2011) (finding that

Borello’s common law test of employment applied to expense reimbursement claims) with

Dynamex Operations W., Inc. v. Superior Court, 230 Cal. App. 4th 718 (2014) (upholding

certification of a class in which the superior court adopted the IWC test of employment for

expense reimbursement claims), review granted, 182 Cal. Rptr. 3d 644 (2015). Given this

uncertainty in the applicability of the IWC test of employment outside of California Labor Code

section 1194, the Court declines to apply the IWC test.

Even if the IWC‟s test of employment did apply, Plaintiffs provide no evidence that the

test could be adjudicated on a class-wide basis. Instead, Plaintiffs simply argue that “all three sub-


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parts of the test are plainly capable of resolution on a common basis because all of the Borello

factors are capable of resolution on a common basis.” Cert. Supp. at 16. However, the Court

specifically found that for such drivers laboring for third party transportation companies, there are

potentially significant variations – such as the number of hours that a driver drove for Uber clients

versus other clients – that could cause a jury to reach different results under the Borello test.

Certification Order at 42; see also Docket No. 365-13 at 28 (McCrary Dec.) (listing examples of

drivers who owned or drove through a third-party transportation company, showing that the

percentage of drivers‟ income received outside of Uber ranged from 10% to 90%). These

variations are precisely the reason why the Court declined to certify drivers who drove for third-

party transportations companies, and required Plaintiffs to articulate subclasses based on the

number or percentage of hours performed for Uber, and to provide information on how to

ascertain such a subclass.

In their reply, after initially asserting an all or nothing approach, Plaintiffs belatedly

suggest that the Court could limit this proposed subclass to drivers who drove for Uber through

third-party transportation companies for more than 30 hours per week. Cert. Reply at 11.

However, Plaintiffs again submit no proof that they could define and objectively identify all

drivers who drove for Uber more than 30 hours per week. Certification Order at 44-45.3 In other

words, Plaintiffs fail to provide the information that this Court specifically required. See id. at 44-

45. Plaintiffs‟ request to certify a subclass of drivers who drove for a third-party transportation

company is denied.

2. Drivers Using Fictitious or Corporate Names

Next, Plaintiffs contend that the Court erred in excluding all drivers who drove for Uber

under a fictitious or corporate name, and that the Court should instead only exclude drivers who

had others working for them. Cert. Supp. at 17, 18 n.22.4 A similar proposal was rejected in

3 For instance, Plaintiffs offered no explanation as to e.g., whether the hours would include only

driving time or whenever the Uber application was on, and if the latter, whether that would be ascertainable. 4 In its Certification Order, the Court did not permit supplemental briefing on the issue of whether

drivers who drove for Uber under a corporate name could be certified as a subclass. Instead,


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Narayan v. EGL, Inc., 285 F.R.D. 473 (2012). There, the plaintiffs and putative class members

were drivers who entered into written “independent contractor agreements” to provide pick-up and

delivery services for the defendants. Id. at 474. The district court also raised concerns about

whether the Borello factor of “whether the one performing services is engaged in a distinct

occupation or business” could be adjudicated on a class-wide basis, as approximately 127 of the

396 identified putative class members had hired sub-drivers at one time or another. Id. at 477-78.

With respect to a proposed subclass of drivers without sub-drivers, the district court found that

individualized issues would still predominate because:

any driver, even if he sometimes hired sub-drivers, would still be a member of that class for the period of time during which he did not have any sub-drivers. At the hearing, defense counsel also pointed out the reverse problem, in which, for example, the solo driver who hired his brother for three months while on vacation would become a member of the Drivers with Sub-Drivers Sub-Class for that period of time. Thus, even within the sub-classes, the court finds that common questions do not predominate.

Id. at 480-81.

Plaintiffs now belatedly suggest that the Court could certify a sub-class based on “the

Plaintiffs request reconsideration of the Court‟s decision pursuant to Civil Local Rule 7-9. Cert. Supp. at 1 n.1. In general, the Court may grant leave to file a motion for reconsideration only upon a party‟s showing of the following:

(1) That at the time of the motion for leave, a material difference in fact or law exists from that which was presented to the Court before entry of the interlocutory order for which reconsideration is sought. The party also must show that in the exercise of reasonable diligence the party applying for reconsideration did not know such fact or law at the time of the interlocutory order; or (2) The emergence of new material facts or a change of law occurring after the time of such order; or (3) A manifest failure by the Court to consider material facts or dispositive legal arguments which were presented to the Court before such interlocutory order.

Civ. L.R. 7-9(b)(1)-(3). Plaintiffs satisfy none of these requirements, as they do not identify any

material facts or dispositive legal arguments that were previously presented to the Court. For this

additional reason, the Court denies Plaintiffs‟ request to certify a subclass of drivers who drove for

Uber through a corporate name.


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number of hours drivers spent logged into the Uber app to approximate how much of their

business was derived from Uber as opposed to other possible outside sources of riders . . . .” Cert.

Reply at 13. This raises the same problem facing Plaintiffs‟ proposal to certify drivers who drove

for Uber through a third-party transportation company for more than thirty hours a week – namely

that Plaintiffs provide no proof that they would define and determine who would fall into this

category. Nor did Plaintiffs address whether the determination of amount of business derived

from other sources would raise issues as to predominance. Thus, given Plaintiffs‟ belated and

incomplete request, the Court denies Plaintiffs‟ request to certify a subclass of drivers who drove

for Uber under a fictitious or corporate name.5

3. Drivers Bound by the 2014 and 2015 Agreements

In the September 1, 2015 Certification Order, the Court excluded drivers who accepted a

contract containing the Court‟s approved notice and opt-out procedures. Certification Order at 60-

64. In Mohamed, the Court found that these contracts were procedurally unconscionable under

Gentry v. Superior Court, 42 Cal. 4th 443 (2007). In Gentry, the California Supreme Court held

that even a contract with a conspicuous and otherwise meaningful opt-out clause could still have

procedural unconscionability where: (1) the agreement did not adequately disclose the

disadvantages of arbitration, and (2) where the court had reason to suspect that the party accepting

the agreement did not feel free to opt out. See Mohamed, 2015 WL 3749716, at *19-20

(summarizing and applying Gentry); Certification Order at 61-62. This Court found that a

determination of whether a party felt free to opt out would likely require an individualized inquiry

of the economic means of the driver and the circumstances under which he or she accepted the

arbitration agreement. Certification Order at 62. In turn, these individualized issues “on the

applicability of Gentry to a particular driver could seriously undercut predominance with respect

to the arbitration question.” Id. at 62-63.

Since the Court‟s ruling in Mohamed, the California Supreme Court‟s ruling in Sanchez v.

Valencia Holding Co., 61 Cal. 4th 899 (2015), cast doubt on the viability of the aspects of Gentry

5 This is not to say such a showing could not be made as to a defined subclass. Here, however,

Plaintiffs made no attempt to make any such showing.


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on which this Court relied. In Sanchez, the California Supreme Court held that the contract drafter

“was under no obligation to highlight the arbitration clause of its contract, nor was it required to

specifically call that clause to Sanchez‟s attention.” 61 Cal. 4th at 914. “Any state law imposing

such an obligation would be preempted by the [Federal Arbitration Act].” Id. Thus, at the

November 4, 2015 hearing on Plaintiff‟s motion to file a Fourth Amended Complaint, the Court

informed the parties that it was taking a second look at its procedural unconscionability analysis

because Gentry‟s required disclosure of the disadvantages of arbitration was not necessarily

consistent with Sanchez‟s ruling. Docket No. 379 at 8:13-10:23.

In response, Plaintiffs argued that the Gentry and procedural unconscionability issue was

moot in light of the Ninth Circuit‟s ruling in Sakkab v. Luxottica Retail North America, Inc., 803

F.3d 425 (9th Cir. 2015). Plaintiffs contended that Sakkab was not an unconscionability case, but

a straight question of whether a Private Attorney General Act (PAGA) waiver is unlawful and

unenforceable as a violation of public policy. Docket No. 379 at 23:10-12. Thus, an arbitration

agreement containing a non-severable PAGA waiver would be unenforceable without ever

inquiring into whether there is procedural unconscionability. Id. at 23:12-16. The Court requested

further supplemental briefing from the parties on this issue.6

Having reviewed the parties‟ briefing, the Court concludes that the PAGA waiver is

unenforceable on public policy grounds.7 Furthermore, the arbitration agreement in the 2014 and

6 As the Supreme Court recognized in General Telephone Co. of Southwest v. Falcon, “[e]ven

after a certification order is entered, the judge remains free to modify it in the light of subsequent developments in the litigation. For such an order, particularly during the period before any notice is sent to members of the class, is inherently tentative.” 457 U.S. 147, 160 (1982) (citation omitted); see also United Steel Workers v. ConocoPhillips Co., 593 F.3d 802, 809 (9th Cir. 2010). 7 Neither party disputes the Court‟s authority to determine whether the PAGA waiver is void as a

matter of public policy. The Court finds that it, and not the arbitrator, has this authority because the delegation clause is not clear and unmistakable, as is required to rebut the presumption against arbitrability of such issues. See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). Specifically, the governing law provision requires that “any disputes, actions, claims or causes of action arising out of or in connection with this Agreement or the Uber services shall be subject to the exclusive jurisdiction of the state and federal courts located in the City and County of San Francisco, California.” Docket No. 381, Exh. A (June 2014 Agreement) at § 14.1; Exh. B (November 2014 Agreement) at § 15.1; Exh. C (April 2015 Agreement) at § 15.1 (emphasis added). As further discussed in Mohamed, “[t]his language is inconsistent and in considerable tension with the language of the delegation clauses, which provide that „without limitation‟ arbitrability will be decided by an arbitrator.” 2015 WL 3749716, at *10 (citing June 2014


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2015 contracts contain a non-severable PAGA waiver, rendering the entire arbitration agreement

also unenforceable. For these reasons, the Court will certify an additional subclass of UberBlack,

UberX, and UberSUV drivers who signed up to drive directly with Uber or an Uber subsidiary

under their individual name and electronically accepted any contract with Uber or one of Uber‟s

subsidiaries which contain the notice and opt-out provisions previously ordered by this Court (e.g.,

the June 2014, November 2014, or April 2015 agreements) even if they did not timely opt out of

that contract‟s arbitration agreement.

a. PAGA Waivers and Public Policy

Whether an arbitration agreement is unenforceable as a matter of public policy is a distinct

question from whether an arbitration agreement is unenforceable because of unconscionability.

Neither party disputes this. See Abramson v. Juniper Networks, Inc., 115 Cal. App. 4th 638, 666

(2004) (separately analyzing an agreement on public policy grounds and unconscionability, and

concluding that “the agreement [was] both illegal on public policy grounds and unconscionable on

Agreement at § 14.3(i)). In addition, the June 2014 Agreement provides for severance if “any provision of this Agreement is held to be invalid or unenforceable.” The cases cited by Uber in its motions to compel arbitration both here and in Yucesoy v. Uber Technologies, Inc., Case No. 15-cv-262, are distinguishable. Boghos v. Certain Underwriters at Lloyd’s of London concerned a service of suit clause that simply required the defendant to submit to the jurisdiction of the United States. 36 Cal. 4th 495, 503 (2005). Fallo v. High-Tech Institute was an Eighth Circuit case which involved a choice-of-law provision that referred to “court costs.” 559 F.3d 874, 879-80 (8th Cir. 2009). Oracle America, Inc. v. Myriad Group A.G. simply acknowledged that some countries may require the right to seek judicial relief. 724 F.3d 1069, 1075 (9th Cir. 2013). These cases thus concluded that a mere reference to a judicial forum was insufficient to create ambiguity because there are instances in which a party could go to court consistent with arbitration, i.e., to enforce an arbitral award or to seek emergency relief. None of their cases concerned an express requirement (“shall”) that any claims or causes of actions arising out of or “in connection with” the agreement be brought in particular courts which are given “exclusive” jurisdiction over such claims, as is the case here. The vesting of jurisdiction in the courts over a broad range of disputes here is express and not dependent on inference. The closest analog tendered by Uber is Dream Theater, Inc. v. Dream Theater, in which the contract specified that “any action arising out of the agreements may be brought in any state or federal court in Los Angeles having jurisdiction over the dispute . . . .” 124 Cal. App. 4th 547, 556 (2004) (emphasis added). However, even this clause is distinguishable because it is both permissive and narrower in scope than the governing law provision at issue here. See Simula, Inc. v. Autoliv, 175 F.3d 716, 720 (9th Cir. 1999) (finding that “arising in connection with” is broader than “arising out of” or “arising under”). A lay person reviewing Uber‟s governing law provision could very well read a clause stating that any disputes in connection with the agreement shall be subject to the exclusive jurisdiction of the San Francisco courts as requiring judicial review of the enforceability of the arbitration agreement.


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ordinary contractual grounds”). In Iskanian v. CLS Transportation Los Angeles, LLC, the

California Supreme Court determined that “an arbitration agreement requiring an employee as a

condition of employment to give up the right to bring representative PAGA actions in any forum

is contrary to public policy.” 59 Cal. 4th 348, 360 (2014). The California Supreme Court then

determined that a public policy prohibiting a waiver of PAGA claims would not be preempted by

the FAA. Id. at 384. The Ninth Circuit has since agreed that a PAGA waiver is void as a matter

of public policy, and that this Iskanian rule is not preempted by the FAA. Sakkab, 803 F.3d 425,

431-40 (9th Cir. 2015).

Applying Iskanian, the Court of Appeal in Securitas Security Services USA, Inc. v.

Superior Court found that an arbitration agreement with a non-severable PAGA waiver was

unenforceable on public policy grounds. 234 Cal. App. 4th 1109, 1127 (2015). Notably, the

arbitration agreement included a 30-day opt-out period. Id. at 1113. In its analysis, the Court of

Appeal acknowledged that “[t]he fact [that] Edwards was given an opportunity to opt out of the

agreement also may be an indication that dispute resolution agreement was not an adhesion

contract; that it was free from procedural unconscionability.” Id. at 1123. However, whether an

agreement‟s terms are adhesive or unconscionable is “different from the determination of whether

[the plaintiff] entered into a knowing and intelligent waiver of her right to bring a PAGA claim

notwithstanding [her agreement] to arbitrate disputes at the inception of her employment before

any dispute had arisen, or whether Iskanian compels a conclusion that such a waiver is

unenforceable as against public policy.” Id. Thus, because PAGA waivers are unenforceable as a

matter of public policy, procedural unconscionability was not required. Id.

Here, Uber does not dispute that Iskanian and Sakkab determined that a PAGA waiver is

unenforceable on public policy grounds rather than unconscionability, or that an unconscionability

analysis is not required. It instead makes three primary arguments: (1) the arbitration agreement‟s

non-severable PAGA waiver only bans PAGA claims in arbitration, (2) the arbitration agreement

has a meaningful opt-out provision, and (3) Plaintiffs waived their argument about PAGA


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waivers.8

b. Non-Severable PAGA Waiver

Uber‟s primary argument is that Iskanian does not apply in the instant case because an

arbitration agreement is contrary to public policy only where it requires an employee to waive the

right to bring a PAGA claim in any forum. Docket No. 381 at 3. Uber thus contends that the non-

severable PAGA waiver in section 14.3(v)9 does not in fact ban all PAGA claims. Id. at 5.

Instead, Uber argues that this provision only prevents PAGA claims from being arbitrated, and

that the blanket PAGA waiver is contained in section 14.3(i), which is severable. Id.

In relevant part, section 14.3(i) states:

Except as it otherwise provides, this Arbitration Provision is intended to apply to the resolution of disputes that otherwise would be resolved in a court of law or before a forum other than arbitration. This Arbitration Provision requires all such disputes to be resolved only by an arbitrator through final and binding arbitration on an individual basis only and not by way of court or jury trial, or by way of class, collective, or representative action.

(Emphasis in original.)

Section 14.3(v) states:

You and Uber agree to resolve any disputes in arbitration on an individual basis only, and not on a class, collective, or private attorney general representative action basis. The Arbitrator shall have no authority to consider or resolve any claim or issue any relief on any basis other than an individual basis. The Arbitrator shall have no authority to consider or resolve any claim or issue any relief on a class, collective, or representative basis. If at any point this provision is determined to be unenforceable, the parties agree that this provision shall not be severable, unless it is determined that the Arbitration may still proceed on an individual basis only.

8 Uber also argues that Iskanian is preempted by the FAA, despite the Ninth Circuit‟s ruling in

Sakkab. Docket No. 381 at 2. It makes the argument simply to preserve it for appeal. Id. at 2 n.1. Given that the Supreme Court denied review of Iskanian, and that Sakkab is binding on this Court, the Court declines to find that Iskanian is preempted by the FAA. See CLS Transp. L.A., LLC v. Iskanian, 135 S. Ct. 1155 (2015) (denying petition for writ of certiorari). 9 This Order refers to section 14.3 of the June 2014 agreement, which contains the arbitration

provision. The arbitration provision is contained in section 15.3 of the November 2014 and April 2015 agreement. The relevant portions of sections 14.3(i), 14.3(v), and 14.3(ix) are the same as sections 15.3(i), 15.3(v), and 15.3(ix) respectively.


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(Emphasis in original.)

Finally, section 14.3(ix) states:

This Arbitration Provision is the full and complete agreement relating to the formal resolution of disputes arising out of this Agreement. Except as stated in subsection v, above, in the event any portion of this Arbitration Provision is deemed unenforceable, the remainder of this Arbitration Provision will be enforceable.

As drafted, section 14.1(i) is indisputably a blanket PAGA waiver, stating that any claim

(“all disputes”) must be arbitrated (unless otherwise provided) and that a representative action

cannot be brought in court or anywhere else. Nonetheless, the Court also finds that section

14.3(v)‟s non-severability clause is self-contained within section 14.3(v) because it refers to

“provision” (lower-case) whereas the overall arbitration agreement is referred to as “Provision”

(upper-case), as in section 14.3(ix)‟s severance clause. Section 14.3(ix)‟s severance clause also

specifically excepts from its purview section 14.3(v), further evidencing that 14.3(v)‟s non-

severability clause applies only to section 14.3(v). Furthermore, section 14.3(v) is limited to

barring PAGA claims in arbitration only, which is consistent with its heading, “How Arbitration

Proceedings are Conducted.” Thus, to the extent that section 14.3(v) is not severable, it alone

does not prohibit PAGA claims in all forums, unlike section 14.3(i)‟s severable provision which

does contain the blanket PAGA waiver.

However, as explained below, the Court disagrees with Uber‟s assertion that section

14.3(i)‟s blanket PAGA waiver can be severed without undermining the entire arbitration

provision itself.

i. Inability to Linguistically Sever Without Reformation

The fundamental problem with the arbitration agreements at issue is that section 14.3(i)

acts as a predicate to section 14.3(v), requiring “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.” June 2014 Agreement at § 14.3(i). Thus,

because a PAGA claim is not expressly excluded,10

section 14.3(i) requires that the PAGA claim

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Because the arbitration agreement is completely silent as to explicitly permitting a PAGA claim from being brought in court (see, e.g., § 14.3(ii) (listing types of claims that shall not be subject to


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must go to arbitration, at which point section 14.3(v)‟s non-severable prohibition on PAGA claims

in arbitration applies to bar the PAGA claim. In other words, section 14.3(i) prevents a PAGA

claim from being brought anywhere but in arbitration, and section 14.3(v) operates to prevent the

PAGA claim from being brought in arbitration. The provisions are inextricably tied – section

14.3(v) is not effective without section 14.3(i).

Because sections 14.3(i) and 14.3(v) are so inextricably linked, it is impossible to

grammatically or linguistically sever the PAGA claims waiver without completely undermining

arbitration itself. If, for example, the Court was to remove the requirement that the driver is not

permitted to bring representative actions, section 14.3(i) would still require that all claims (except

those expressly excluded)11

be brought in arbitration, including a PAGA claim. The driver would

then be unable to bring his or her PAGA claim in arbitration under section 14.3(v), leaving a

driver with no forum to bring their PAGA claim. Thus, the PAGA claims would be waived, and

Iskanian would apply to find that the PAGA waiver is unenforceable as a matter of public policy,

causing the entire agreement to fail. The only way a driver would not be required to bring their

PAGA claim in arbitration would be to remove the requirement that all claims must be brought in

arbitration except for those claims that “are expressly excluded from the Arbitration Provision.”

June 2014 Agreement at § 14.3(i). But to remove that requirement would be to remove the heart

the requirement to arbitrate)), to read such a possibility in would require reforming the contract, which the Court is not permitted to do. See Kolani v. Gluska, 64 Cal. App. 4th 402, 407-08 (“Generally, courts reform contracts only where the parties have made a mistake (1 Witkin Summary of California Law (9th ed.1987), Contracts, § 382, p. 347), and not for the purpose of saving an illegal contract. (Id., § 386, p. 350). Illegal contracts are void.”); Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83, 124-25 (2000) (“in the case of the agreement‟s lack of mutuality, such permeation is indicated by the fact that there is no single provision a court can strike or restrict in order to remove the unconscionable taint from the agreement. Rather, the court would have to, in effect, reform the contract, not through severance or restriction, but by augmenting it with additional terms. Civil Code section 1670.5 does not authorize such reformation by augmentation . . . . Because a court is unable to cure this unconscionability through severance or restriction, and is not permitted to cure it through reformation and augmentation, it must void the entire agreement.”). 11

Section 14.3(ii) specifically identifies the disputes and claims that “shall not be subject to arbitration and the requirement to arbitrate set forth in Section 14.3 of this Agreement.” These disputes include claims for workers‟ compensation, state disability insurance and unemployment insurance benefits, and intellectual property rights. June 2014 Agreement at § 14.3(ii).


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of the arbitration agreement and not require any arbitration at all.

At the hearing, Uber provided the Court with its suggested edits to section 14.3(i) so that

the arbitration agreement would be enforceable. For example, Uber suggests the following edit to

section 14.3(i):

Except as it otherwise provides, this Arbitration Provision is intended to apply to the resolution of disputes that otherwise would be resolved in a court of law or before a forum other than arbitration. This Arbitration Provision requires all such disputes to be resolved only by an arbitrator through final and binding arbitration on an individual basis only and not by way of court or jury trial, or by way of class, collective, or representative action.

This leaves the following sentence: “This Arbitration Provision requires disputes to be resolved on

an individual basis and not by way of class, collective action.” Several problems arise from this

suggested edit. First, it still requires that disputes be resolved on an individual basis, thus

preventing an individual from bringing a representative action in any forum. Nothing in the edited

language would authorize representative actions to be brought in court. Second, and far more

significantly, this edited sentence no longer requires disputes to be resolved in arbitration, in short

eviscerating the central purpose of the arbitration agreement. The operative predicate to § 14.3(v)

would be missing.

Granted, Uber‟s suggested edit does retain the later paragraph stating that, “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.” But again, while this paragraph does require

arbitration, it would also require arbitration of the PAGA claim (as part of “every claim”); PAGA

claims are not expressly excluded from the Arbitration Provision. However, because of the non-

severable section 14.3(v), the PAGA claim cannot be brought in arbitration, resulting in a driver

having no forum in which to bring their PAGA claims. Uber‟s proposed edits only highlight the

impossibility of linguistically severing the arbitration agreement in order to remove the blanket

PAGA waiver, while maintaining the arbitration process.

ii. Indivisible Contract

Uber urges the Court to apply California Civil Code section 1599, which states: “Where a


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contract has several distinct objects, of which one at least is lawful, and one at least is unlawful, in

whole or in part, the contract is void as to the latter and valid as to the rest.” Uber argues that

under this provision, even if linguistic severance is not feasible, the Court can restrict enforcement

of the arbitration agreement to deem part of it void while preserving the remainder of the

agreement, and cites the California Supreme Court‟s decisions in Birbower, Montalbano, Condon

& Frank v. Superior Court, 17 Cal. 4th 119 (1998) and Marathon Entertainment, Inc. v. Blasi, 42

Cal. 4th 974 (2008) in support. See Docket No. 392 at 49:21-50:17.

In general, section 1599 applies to what may be termed divisible contracts, or a contract

that “is in its nature and purpose susceptible of division and apportionment, having two or more

parts, in respect to matters and things contemplated and embraced by it, not necessarily dependent

upon each other nor intended by the parties to be so.” Filet Menu, Inc. v. C.C.L. & G, Inc., 79 Cal.

App. 4th 852, 860 (2000) (citation omitted); see also Pacific Wharf & Storage Co. v. Standard

Am. Dredging Co., 184 Cal. 21, 25 (1920) (“The rule is well settled that, where several things are

to be done under a contract, if the money consideration to be paid is apportioned to each of the

items to be performed, the covenants are ordinarily regarded as severable and independent”). As

the California Supreme Court explained in Keene v. Harling, “[w]hether a contract is entire or

separable depends upon its language and subject-matter, and this question is one of construction to

be determined by the court according to the intention of the parties. If the contract is divisible, the

first part may stand, although the latter is illegal.” 61 Cal. 2d 318, 320 (1964). Similarly, with

respect to the severability of partially illegal contracts, “a contract is severable if the court can,

consistent with the intent of the parties, reasonably relate the illegal consideration on one side to

some specified or determinable portion of the consideration on the other side.” Id. at 321.

However, “[i]f the court is unable to distinguish between the lawful and unlawful parts of the

agreement, „the illegality taints the entire contract, and the entire transaction is illegal and

unenforceable.‟” Birbower, 17 Cal. 4th at 138 (quoting Keene, 61 Cal. 2d at 321)).

Thus, in Birbower, the California Supreme Court found that a fee agreement could be

enforced to the extent that services were legally performed by the plaintiff. Id. at 124. There, an

out-of-state law firm which was not licensed to practice law in California entered into an


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agreement to perform legal services in California for a California-based client. Id. The California

Supreme Court found that the firm could not recover fees for services provided in California, but

that it could recover fees for services it performed exclusively in New York under the agreement

because those services did not involve the practice of law in California. Id. at 137. In particular,

the California Supreme Court explained that “[t]he fee agreement between [the firm] and [the

client] became illegal when [the firm] performed legal services in violation of section 6125.” Id.

at 138 (emphasis added). But “notwithstanding an illegal consideration, courts may sever the

illegal portion of the contract from the rest of the agreement.” Id. The California Supreme Court

thus found that “the portion of the fee agreement between [the firm] and [the client] that includes

payment for services rendered in New York may be enforceable to the extent that the illegal

compensation can be severed from the rest of the agreement,” and required the trial court to

determine if it could “sever the illegal portion of the consideration (the value of the California

services) from the rest of the fee agreement.” Id. at 139. In other words, it appeared possible to

allocate and separate the consideration between its component parts.

Likewise, in Marathon Entertainment, Inc., the plaintiff and defendant entered into an oral

contract where the plaintiff was to serve as the defendant‟s personal manager. 42 Cal. 4th at 981.

Plaintiff‟s services included both legal personal manager services and illegal procurement of

employment for the defendant without a talent agency license. Id. at 982. Citing Birbower, the

California Supreme Court explained that severance was available “to partially enforce contracts

involving unlicensed services.” Id. at 993. Thus, a court was to consider the central purpose of

the contract, and “[i]f the illegality is collateral to the main purpose of the contract, and the illegal

provision can be extirpated from contract by means of severance or restriction, then such

severance and restriction are appropriate.” Id. at 996.

In both Birbower and Marathon Entertainment, Inc., the illegal portion of the

consideration was independent of the legal consideration, and could therefore be easily severed

from the remainder of the contract. In other words, although the contract itself did not distinguish

between the illegal services (unlawful practice of law in California, procurement of acting jobs

services without a talent agency license) and the legal services (lawful practice of law in New


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York, legitimate personal manager services), such services were separate from each other and the

consideration therefor could be apportioned to each. Birbower and Marathon Entertainment, Inc.

thus involved divisible contracts where the illegal portion of the contract (performance and

consideration therefor) could easily be severed.

The same cannot be said of the arbitration agreements at issue here. As explained above,

the blanket PAGA waiver is inextricably linked with the remainder of the arbitration agreement,

such that the operation of the arbitration agreement – including the non-severable section 14.3(v) –

is dependent on section 14.3(i). This is emphasized by the inability of this Court to linguistically

excise the unenforceable PAGA waiver from the rest of the agreement. Moreover, the central

purpose of the arbitration agreement is to funnel all disputes, except those expressly excluded by

the arbitration agreement, into arbitration, which can then only be conducted on an individual

basis. This singular purpose is emphasized by the preamble, which states that “[t]his arbitration

provision will require you to resolve any claim that you may have against Uber on an individual

basis” and precludes a driver from bringing a representative action. June 2014 Agreement at 12-

13. Likewise, the non-severable section 14.3(v) prohibits representative actions in arbitration.

This purpose is not collateral to or distinguishable from the blanket PAGA waiver, but directly

dependent upon it, as the arbitration agreement is designed to prevent PAGA claims from ever

being brought. Thus, unlike Birbower and Marathon Entertainment, Inc., the arbitration

agreement here is not divisible, with the illegal portion being easily separable from the legal

portion. The blanket PAGA waiver is instead an integral part of Uber‟s goal of requiring

individual arbitration of all claims, and therefore cannot be severed per Civil Code section 1599.

The instant arbitration agreement at bar is similar to cases where the courts have declined

to sever – where the illegal object is “[t]he very essence and mainspring of the agreement.” Santa

Clara Valley Mill & Lumber Co. v. Hayes, 76 Cal. 387, 393 (1888). In Hayes, the parties entered

into a contract where the defendants agreed not to manufacture any lumber except for that to be

sold to the plaintiff under the contract. Id. at 389. The sole purpose of this contract was to

increase the price of lumber by limiting the amount to be manufactured, and give the plaintiff the

control of all lumber manufactured in the area. Id. When the plaintiff sued sought damages based


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on the defendants‟ non-delivery of lumber under the contract, the California Supreme Court found

that the contract as a whole was void as being against public policy. Id. at 392. The Court

explained that the contract was not divisible because the illegal purpose of increasing the price of

lumber was “the inducement to the agreement, and the sole object in view,” which “cannot be

separated and leave any subject-matter capable of enforcement.” Id. at 393.

Like Hayes, the overarching purpose here – to require all disputes (except those expressly

excluded) be resolved solely by individual arbitration to the exclusion of all PAGA representative

actions – violates public policy; the encompassed waiver of PAGA claims cannot be separated.

Accordingly, severance of the blanket PAGA waiver is not appropriate under Civil Code section

1599.

iii. Equity

Finally, as an additional reason, the Court finds that as a matter of equity, severance is not

permitted in the instant case. Generally, “severance is not mandatory and its application in an

individual case must be informed by equitable considerations.” Marathon Entm’t, 42 Cal. 4th at

992. Severance is favored in order “to prevent parties from gaining undeserved benefit or

suffering undeserved detriment as a result of voiding the entire agreement – particularly when

there has been full or partial performance of the contract.” Armendariz, 24 Cal. 4th at 123-24; see

also Marathon Entm’t, 42 Cal. 4th at 992 (“Civil Code section 1599 grants courts the power, not

the duty, to sever contracts in order to avoid an inequitable windfall or preserve a contractual

relationship where doing so would not condone illegality.”).

Here, the equitable considerations do not favor severance. This is not a case where there

has been performance, and voiding the contract will result in one party receiving an unfair

windfall. E.g., Marathon Entm’t, Inc., 42 Cal. 4th at 992. Severance would not be a tool to

effectuate the equivalence of quantum meruit as it was in cases such as Marathon Entertainment

and Birbower. See also Pacific Wharf & Storage Co., 184 Cal. at 24 (“it would be inequitable to

allow [the defendant] to retain and enjoy the dredge and successfully resist payment” on the

ground that the contract also included an illegal covenant not to compete). Instead, Uber has

drafted a contract that deters ab initio drivers from bringing representative actions. Any driver


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who reads the arbitration agreement will be misled into believing that they have no right to bring a

PAGA claim, as the arbitration agreement not only outright prohibits representative actions, but

requires that all disputes be arbitrated on an individual basis. The preamble so states. See June

2014 Agreement at § 14.3 (“This provision will preclude you from bringing any class, collective,

or representative action against Uber.”). This is misleading in light of Iskanian and Sakkab, a

legal subtlety that would be lost on the average lay person. Applying principles of equity,

severance pursuant to Civil Code section 1599 is not warranted for this reason as well.

Because the unenforceable PAGA waiver cannot be severed from the arbitration

agreement, the arbitration agreement as a whole is unenforceable on public policy grounds. See

Securitas, 234 Cal. App. 4th at 1126-27; Chalk v. T-Mobile USA, Inc., 560 F.3d 1087, 1098 (9th

Cir. 2009) (finding arbitration agreement as a whole was unenforceable where an unenforceable

class waiver was non-severable by the terms of the agreement).

c. Opt-Out Provision

Uber next argues that the PAGA waiver is not mandatory because there is a meaningful

opportunity to opt-out. Docket No. 381 at 10. The Court previously rejected this argument in

Mohamed, relying on the California Court of Appeal‟s decision in Securitas. Mohamed, 2015 WL

3749716, at *35. In Securitas, the dispute resolution agreement gave employees 30 days to opt

out of the agreement. 234 Cal. App. 4th at 1113. Based on this opt-out option, the defendant

argued that “Iskanian did not apply to voluntary agreements to arbitrate PAGA claims

individually. It maintained that because [the plaintiff] was not compelled to agree to the dispute

resolution agreement but voluntarily did so by not opting out, Iskanian did not govern, requiring

enforcement of the dispute resolution agreement in its entirety.” Id. at 1114. The Court of Appeal

disagreed, explaining that while Iskanian did not preclude the possibility of a PAGA waiver, a

valid PAGA waiver can only occur “where an employer and an employee knowingly and

voluntarily enter into an arbitration agreement after a dispute has arisen.” Id. at 1122 (citation

omitted) (original emphasis). This is because in a case “when an employee is faced with a dispute

with his or her employer, employees are free to determine what trade-offs between arbitral

efficiency and formal procedural protections best safeguard their statutory rights.” Id. (citation


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omitted) (original emphasis). As applied, the court:

decline[d] to conclude that [the plaintiff‟s] mere opportunity to opt out of the dispute resolution agreement or obtain counsel‟s advice on it at the inception of her employment and before any dispute arose, without more evidence of her knowledge, gave her a sufficient understanding of the relevant circumstances and likely consequences of forgoing her right to bring a PAGA representative action. Thus, we hold that on this record, [the plaintiff‟s] opportunity to opt out of the agreement did not take this case outside of Iskanian.

Id.

In so finding, the Court of Appeal distinguished the Ninth Circuit‟s decision in

Johnmohammadi v. Bloomingdale’s, Inc., in which the Ninth Circuit found that a plaintiff who did

not opt out within the opt-out period became bound by the terms of the arbitration agreement. Id.

(citing 755 F.3d 1072, 1074 (9th Cir. 2014)). The Court of Appeal explained that

Johnmohammadi did not address a PAGA waiver or Iskanian, and that “it otherwise does not

convince us to change the conclusion we have reached.” Id. at 1123. Thus, the Court of Appeal

concluded that the trial court properly declined to compel to arbitration the representative PAGA

claim. Id.; see also Williams v. Superior Court, 237 Cal. App. 4th 642, 647-48 (2015) (rejecting

an employer‟s argument that a PAGA waiver in an arbitration agreement was not a condition of

employment because the employee could opt out without adverse consequences). 237 Cal. App.

4th 642, 647-48 (2015).

Uber does not challenge the reasoning of Securitas, only arguing that “there is no

California Supreme Court decision on point.” Docket No. 381 at 10 n.10. Absent California

authority to the contrary, the Court concludes that the PAGA waiver is an unenforceable pre-

dispute waiver despite the opt-out provision. While the opt-out provision may determine whether

there is procedural unconscionability, it does not mean that an individual entered into a “knowing

and intelligent waiver” of his or her right to bring a PAGA claim. Securitas, 234 Cal. App. 4th at

1123. As a valid waiver can only be made after a dispute has arisen, the PAGA waivers contained

in the 2014 and 2015 agreements are unenforceable against the subclass of drivers that the Court

will certify in this Order.


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d. Waiver

Finally, Uber argues that Plaintiffs have waived the argument that a PAGA waiver is void

on public policy grounds. First, Uber argues that Plaintiffs never raised the argument that the

arbitration agreement is unenforceable as a matter of public policy until the November 4 hearing,

as Plaintiffs instead focused solely on unconscionability. Docket No. 381 at 11. Uber cites no

authority that a party can “waive” an argument of unenforceability on public policy grounds.

Uber‟s citation to GPNE Corp. v. Apple, Inc., which concerned the failure to raise a claim

construction issue until the second week of trial, is unpersuasive. No. 12-cv-2885-LHK, 2015 WL

3629716, at *8 (N.D. Cal. June 9, 2015). Not only does GPNE Corp. not involve a public policy

claim, but the district court noted that two years had passed between the court‟s claim construction

order and the second week of trial. Id. Here, the enforceability of the 2014 and 2015 arbitration

agreements was not at issue until the class certification motion earlier this year (and more

reasonably the motion to compel arbitration of absent class members, filed on September 10,

2015). Thus, even if one could waive a public policy claim, Plaintiffs did not unduly delay in

raising the argument that the PAGA waiver is void as a matter of public policy.

Second, Uber contends that Plaintiffs waived this argument by not asserting a PAGA claim

earlier in this case. Docket No. 381 at 12. Whether or not Plaintiffs bring a PAGA waiver is

irrelevant to the analysis of whether the PAGA waiver is unenforceable as a matter of public

policy. This Court has already rejected this argument and found that a PAGA waiver is

unenforceable regardless of whether the plaintiff brings or even can bring a PAGA claim.

Mohamed, 2015 WL 3749716, at *34-35. The Court must look at whether “the arbitration

agreement as written is unconscionable and contrary to public policy.” Armendariz, 24 Cal. 4th at

125 (2000). After all:

the purpose of analyzing unconscionability at the time an agreement is drafted is to deter drafters from including such unconscionable terms in their agreements in the first instance: “An employer will not be deterred from routinely inserting such . . . illegal clause[s] into the arbitration agreement it mandates for its employees if it knows that the worst penalty for such illegality is the severance of the clause after the employee has litigated the matter.”

Mohamed, 2015 WL 3749716, at *34 (quoting Armendariz, 24 Cal. 4th at 124 n.13).


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For these reasons, the Court concludes that Plaintiffs have not waived the argument that

the non-severable PAGA waiver is unenforceable as a matter of public policy. Moreover,

Plaintiffs have sought to amend the complaint to add a PAGA claim (a request still under

submission).

e. Conclusion

The Court concludes that per Iskanian and Sakkab, section 14.3(i)‟s blanket PAGA waiver

is unenforceable as a matter of public policy. Although the arbitration agreement contains an opt-

out provision, the arbitration agreement still requires that the driver sign a pre-dispute PAGA

waiver, which is contrary to Iskanian. See Securitas, 234 Cal. App. 4th at 1122-23. Moreover,

the PAGA waiver cannot be severed from the remainder of the arbitration agreement, whether

through literal severance or under Civil Code section 1599‟s enforcement severance principles.

Because the PAGA waiver cannot be severed, the arbitration agreement as a whole is

unenforceable.

Because the arbitration agreements are unenforceable as a matter of public policy, a

procedural unconscionability analysis is no longer required. Thus, the Court will not need to

perform an individualized inquiry to determine if a driver was subject to general economic

pressures per Gentry to find procedural unconscionability even assuming Gentry remains good

law after Sanchez. An individualized inquiry will therefore not predominate for drivers who did

not opt out of Uber‟s more recent arbitration clauses. For that reason, the Court will certify the

following December 9, 2015 subclass, which again includes:

All UberBlack, UberX, and UberSUV drivers who have driven for Uber in the state of California at any time since August 16, 2009, and meet all the following requirements: (1) who signed up to drive directly with Uber or an Uber subsidiary under their individual name, and (2) are/were paid by Uber or an Uber subsidiary directly and in their individual name, and (3) electronically accepted any contract with Uber or one of Uber‟s subsidiaries which contain the notice and opt-out provisions previously ordered by this Court, and did not timely opt out of that contract‟s arbitration agreement.

C. Expense Reimbursement Claim

In its Certification Order, the Court declined to certify the September 1, 2015 Class for the

Expense Reimbursement Claim, finding that Plaintiffs had not demonstrated that they were


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adequate class representatives. Certification Order at 26-29. The Court was particularly

concerned that by seeking only to recover vehicle operation expenses using the IRS standard

mileage allowance, Plaintiffs were “waiv[ing] other elements of damage on behalf of the class in

order to facilitate class certification . . . .” Id. at 28. Specifically:

Plaintiffs here did not make any attempt to demonstrate that the monetary value of the other types of expenses that they had previously sought to recover for absent class members in this litigation, and now would be waiving in order to obtain class certification (e.g., water bottles, gum and mints for passengers, clothing, etc…), were not so substantial as to create a conflict of interest between the class representatives and class members. That is, Plaintiffs have not demonstrated (or even tried to demonstrate) that it is in the best interests of the class members to waive their claims for reimbursement of all their actual expenses (including actual vehicle operation expenses) that are not captured by the IRS mileage rate formula.

Id. at 28-29. The Court acknowledged that Plaintiffs could make such a showing by, for example,

“submit[ting] an expert report or other evidence that shows that absent class members will be well

served receiving the IRS mileage rate rather than receiving their actual damages.” Id. at 29.

However, on the basis of the record then before the Court, there was insufficient information for

the Court “to be reasonably assured that what Plaintiffs purport to be giving up on behalf of the

class members they seek to represent is not of such value to absent class members that the interests

of those class members would be at odds with those of the named Plaintiffs.” Id.

Plaintiffs now request that the Court certify the Expense Reimbursement Claim with

respect to drivers‟ vehicle-related and telephone expenses. Cert. Supp. at 5. As explained below,

the Court finds that Plaintiffs are not rendered inadequate by their failure to seek the recovery of

“other expenses,” i.e., mints, water bottles, car washes, dry cleaning, etc. The Court also

concludes that Plaintiffs‟ proposed methodology for vehicle-related expenses and phone expenses

is sufficient to permit certification under Rule 23(b), especially in light of the Ninth Circuit‟s

repeated pronouncement that “damage calculations alone cannot defeat class certification.”

Pulaski & Middleman, LLC v. Google, Inc., 802 F.3d 979, 987 (9th Cir. 2015); see also Leyva v.

Medline Indus. Inc., 716 F.3d 510, 513 (9th Cir. 2013).


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1. Adequacy

Uber contends that Plaintiffs have not addressed the Court‟s adequacy concerns because by

seeking only vehicle-related and phone expenses, Plaintiffs are essentially splitting a single cause

of action across different forms of relief. Cert. Opp. at 7. This raises the specter of res judicata,

and the possibility that class members will never be able to recover expenses other than those

certified here. Thus, Uber argues that Plaintiffs are inadequate because they seek to “cast aside

potentially valuable expense reimbursement claims.” Id.

In support, Uber cites Tasion Communications, Inc. v. Ubiquiti Networks, Inc., in which

this Court denied class certification based on the adequacy of the class representative. 308 F.R.D.

630, 643 (N.D. Cal. 2015). There, the plaintiffs alleged that defendant falsely advertised that its

product, TOUGHCable (TC), was built to withstand harsh outdoor environments. Id. at 632. In

seeking class certification, the plaintiffs limited the damages sought to just one kind of damage:

the direct labor costs to replace TC. Id. at 641. In short, the plaintiffs were forgoing all other

possible elements of damages, including replacement cables and cable connectors, damaged

radios, travel-related costs, downtime, lost connectivity, compensation to customers, lost profits,

and lost customers. There was no evidence that “the abandoned damages would be small or

insignificant such that it would be fair for Plaintiffs to forego them in order to prosecute a class

action;” in fact, the Court recognized that these damages were “likely to exceed by many times the

direct replacement labor cost Plaintiffs now seek.” Id. at 641, 642 (emphasis added). Because the

plaintiffs were willing to abandon significant, indeed dominant, damages claims, the Court

concluded that the plaintiffs were not adequate representatives. Id. at 643.

Unlike Tasion and the other cases raised by Uber, this is not a case in which Plaintiffs seek

to waive damages that are likely to “exceed by many times” the damages sought. See, e.g.,

Sanchez v. Wal-Mart, No. Civ. 2:06-CV-02573-JAM-KJM, 2009 WL 1514435, at *3 (E.D. Cal.

May 28, 2009) (finding inadequacy where the plaintiff alleged that a stroller was defective due to

a dangerous pinch point, creating unreasonable potential for harm, but only sought to recover the

cost of the stroller while waiving all personal injury damages); Drimmer v. WD-40 Co., No. 06-

CV-900 W(AJB), 2007 WL 2456003, at * (S.D. Cal. Aug. 24, 2007) (finding inadequacy where


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the plaintiff alleged the product was not safe for plumbing, but only sought to recover the

product‟s purchase price while waiving damages from replacing the tank parts, paying higher

water bills, or hiring a plumber). Instead, this case is more comparable to In re Universal Service

Fund Telephone Billing Practices Litigation, in which the plaintiffs abandoned their common law

fraud claim but continued to pursue all of their other claims for compensatory damages, treble

damages, and injunctive relief. 219 F.R.D. 661, 669 (D. Kan. 2004). In finding adequacy, the

district court explained:

This is not a case where the class representatives are pursuing relatively insignificant claims while jeopardizing the ability of class members to pursue far more substantial, meaningful claims. Rather, here the named plaintiffs simply decided to pursue certain claims while abandoning a fraud claim that probably was not certifiable. . . . While the court can certainly appreciate the fact that a named plaintiff‟s failure to assert certain claims of the absent class members might give rise to a conflict of interest when the named plaintiff is advancing his or her own interests at the expense of the class, the mere fact that a named plaintiff elects not to pursue one particular claim does not necessarily create such a conflict.

Id. at 669-70.

Here, Plaintiffs have made a reasonable judgment call to pursue vehicle-related and phone

expenses in this litigation, and have presented some evidence that these expenses will comprise

the majority of any recoverable expenses. Specifically, Plaintiffs have provided six declarations

which show that the majority of expenses are vehicle-related expenses. See Cert. Supp. at Exh. 2

¶¶ 4, 6 (Meade Dec.); Exh. 3 ¶¶ 4, 6 (F. Merchant Dec.); Exh. 4 ¶¶ 4, 6 (Gottlieb Dec.); Exh. 5 ¶¶

4, 6 (J. Merchant Dec.); Exh. 6 ¶¶ 4, 6 (Dunn Dec.); Exh. 7 ¶¶ 4, 6 (Arzumanyan Dec.); see also

McCrary Dec. at 14 (Table 1A). The declarations estimate vehicle-related and other expenses for

three “sample” months, and show that vehicle-related expenses encompassed 74-86.4% of all

expenses. When including phone expenses, this percentage further increases. While this is

admittedly a small sampling that lacks statistical significance, the Court finds that it is sufficient

where, as here, it seems self-evident that vehicle-related and phone expenses will likely comprise

the majority of any recoverable expenses from performing a transportation service and Uber has


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presented no persuasive evidence to the contrary.12

Moreover, Plaintiffs‟ decision to pursue expenses that are common to all drivers, while not

seeking other potentially recoverable expenses, is reasonable in light of the potential difficulties of

proving recovery of those other expenses on a class-wide common basis (or perhaps even on an

individual basis given documentation issues that may arise for such items). As recognized in In re

Universal Service Fund, a decision to abandon a claim that may not be certifiable does not

automatically render a plaintiff inadequate, particularly when they seek the majority of the claims.

See 219 F.R.D. at 669. Thus, this case is a far cry from those in which the courts found

inadequacy, as Plaintiffs are not “pursuing relatively insignificant claims while jeopardizing the

ability of class members to pursue far more substantial, meaningful claims.” Id. The claims

pursued here are significant, substantial, and meaningful. The Court concludes that Plaintiffs are

adequate representatives, and that a conflict of interest is not created by Plaintiffs‟ decision to limit

certification to only vehicle-related and phone expenses.

2. Vehicle-Related and Phone Expenses

The Court finds that certifying vehicle-related and phone expenses will not cause

individualized issues to predominate. As an initial matter, the Ninth Circuit has recognized, “[i]n

calculating damages . . . California law „requires only that some reasonable basis of computation

of damages be used, and the damages may be computed even if the result reached is an

approximation.‟” Pulaski & Middleman, LLC, 802 F.3d at 989 (quoting Marsu, B.V. v. Walt

Disney Co., 185 F.3d 932, 938-39 (9th Cir. 1999)). Thus, “„[t]he fact that the amount of damage

may not be susceptible of exact proof or may be uncertain, contingent or difficult of ascertainment

does not bar recovery.‟” Id. (quoting Marsu, 185 F.3d at 939)).

In Leyva, the Ninth Circuit reversed a denial of class certification in part because “damages

could feasibly and efficiently be calculated once the common liability questions are adjudicated.”

12

At the hearing, Uber argued that Plaintiffs were not seeking all vehicle-related expenses, such as time for when a driver is on-duty but not actually driving a passenger, i.e., driving to an airport to pick a passenger up or driving to a gas station. Docket No. 392 at 16:9-16. However, Plaintiffs asserted that they were not waiving these expenses. Id. at 17:25-18:6. Whether or not Plaintiffs can prove these damages is a separate matter; the fact that Plaintiffs are seeking such damages also supports a finding of adequacy at the class certification stage.


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716 F.3d at 514. There, the plaintiff alleged that the defendant had improperly rounded its

employees‟ start times in 29-minute increments, such that “workers who clocked-in between 7:31

a.m. and 8:00 a.m. would be paid only from 8:00 a.m. onward even though they began work

beforehand.” Id. at 512. The district court denied certification, finding that individual questions

about the amount of pay owed would predominate over common questions. Id. at 513. The Ninth

Circuit reversed, explaining that “damages determinations are individual in nearly all wage-and-

hour class actions,” but that “the amount of damages is invariably an individual question and does

not defeat class action treatment.” Id. at 513, 514 (citation omitted). The Ninth Circuit noted that

the defendant had estimated its liability in the Notice of Removal by multiplying each employee‟s

hourly rate by the number of workweeks he/she was employed by the defendant during the

applicable period. Id. at 514. Based on this Notice of Removal, the Ninth Circuit found that there

was a feasible and efficient method of calculating damages once liability was adjudicated.

Here, Uber challenges Plaintiffs‟ use of the IRS reimbursement method to calculate

drivers‟ vehicle expenses, arguing that this method will “not come close to approximating the

actual expenses they claim to have incurred.” Cert. Opp. at 14. The IRS reimbursement method

takes into account vehicle-related expenses, including fuel, maintenance, repairs, depreciation,

tires, and insurance. See https://www.irs.gov/Credits-&-Deductions/Individuals/Standard-

Mileage-Rates-Glance (last accessed December 1, 2015). This Court has previously certified a

class action on behalf of drivers who sought reimbursement of vehicle operation expenses using

the IRS reimbursement method as the common damages model. Stuart v. RadioShack Corp., No.

C-07-4499 EMC, 2009 WL 281941, at *18 (N.D. Cal. Feb. 5, 2009); see also Dalton v. Lee

Publ’ns, Inc., 270 F.R.D. 555, 564 (S.D. Cal.). Indeed, the California Supreme Court has

specifically upheld the use of the IRS reimbursement method in Gattuso v. Harte-Hanks Shoppers,

Inc., 42 Cal. 4th 554, 569 (2007) (explaining that the IRS reimbursement rate is considered a

generally permissible measure of vehicle operation expenses for purposes of California Labor

Code section 2802). Thus, the Court finds that the IRS reimbursement method is not arbitrary but

a “reasonable basis of computation” of vehicle-related expenses. See Pulaski & Middleman, LLC,

802 F.3d at 989 (reversing denial of class certification in part because proposed method of


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calculating damages was not arbitrary, but targeted to remedying the alleged unfair practice and

harm).

Next, Uber argues that liability for phone expenses requires an individualized inquiry. For

example, Uber suggests that there is no basis for the assumption that phone expenses are necessary

and in direct consequence of performing a driver‟s duties, as required by section 2802. Cert. Opp.

at 15. The Court rejects this argument. To even access the Uber app, a smart phone and data plan

is required. Thus, like a vehicle, phone expenses are plainly required for every Uber driver, as it

would be impossible to be an Uber driver without these items. Liability for phone expenses can

thus be adjudicated on a class-wide basis.

Uber next contends that it should be able to contest any claim for reimbursement of phone

expenses where an expense was not actually incurred, i.e., when a driver has an unlimited data

plan or where a driver received phone expenses paid by a third-party employer. Cert. Opp. at 15.

This precise argument was rejected in Cochran v. Schwan’s Home Service, Inc., in which the

Court of Appeal held that “when employees must use their personal cell phones for work-related

calls, Labor Code section 2802 requires the employer to reimburse them. Whether the employees

have cell phone plans with unlimited minutes or limited minutes, the reimbursement owed is a

reasonable percentage of their cell phone bills.” 228 Cal. App. 4th 1137, 1140 (2014). “To show

liability under section 2802, an employee need only show that he or she was required to use a

personal cell phone to make work-related calls, and he or she was not reimbursed.” Id. at 1145.

Thus, even if an employee does not incur an extra expense that he or she would not have

otherwise incurred absent the job, reimbursement is still required. “Otherwise, the employer

would receive a windfall because it would be passing its operating expenses on the employee.” Id.

at 1144.

To the extent that Uber argues that Cochran permits recovery even if there were no

expenses actually incurred, Uber misreads its holding. See Cert. Opp. at 15. Cochran explained

that while a driver with an unlimited data plan is not incurring an extra expense for use of their

smart phone, he or she is still actually incurring a work expense because the driver is using their

personal phone for work purposes. 228 Cal. App. 4th at 1143-45. If an employer is not required


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to pay a percentage of the bill to reflect that usage, the employer is able to shift their operating

costs to the employee, relying on the data plans of their employees rather than having to pay for

data plans on their own. Cochran, 228 Cal. App. 4th at 1144. Thus, whether Uber‟s failure to pay

phone expenses creates liability under section 2802 is a common question and subject to a

formulaic determination. See Richie v. Blue Shield of Cal., No. C-13-2693 EMC, 2014 WL

6982943, at *17 (N.D. Cal. Nov. 9, 2014) (finding that the legal question of whether Blue Shield‟s

uniform policy of reimbursing work-related telephone expenses incurred by telecommuting claims

processors are common to the class and subject to class-wide proof).

Finally, Uber argues that Plaintiffs have failed to provide a reasonable method of

calculating phone expenses. As recognized by Cochran, the calculation of damages “raises issues

that are more complicated.” 228 Cal. App. 4th at 1145. Plaintiffs suggest that phone expenses can

be reasonably calculated because “[m]any drivers have leased their phone from Uber, and thus

these damages would be easily ascertainable because Uber‟s records reflect changes for leasing a

cellphone from Uber.” Cert. Supp. at 12. As for drivers who used their own personal cell phones,

Plaintiffs propose that the Court use Uber‟s records to estimate cell phone expenses “based on the

amount of time a given driver was online, or by simply using the amounts paid by other drivers

who leased their phones directly from Uber as a reasonable estimate.” Id. at 13 n.15. The Court

finds that at this stage, there may be a number of calculation methodologies that are reasonable.

Compare with Leyva, 716 F.3d at 514. Thus, like the vehicle expenses, the Court finds that

individualized issues will not predominate with respect to determining liability and damages for

phone expenses. As the Ninth Circuit has long held, “damage calculations alone cannot defeat

certification.” Yokoyama v. Midland Nat’l Life Ins. Co., 594 F.3d 1087, 1094 (9th Cir. 2010); see

also Leyva, 716 F.3d at 513; Blackie v. Barrack, 524 F.2d 891, 905 (9th Cir. 1975) (“The amount

of damages is invariably an individual question and does not defeat class action treatment.”).

Because the Court concludes that the named Plaintiffs are adequate representatives and that

liability for vehicle-related and phone expenses can be adjudicated on a class-wide basis, the Court

will certify the September 1, 2015 class and December 8, 2015 subclass to pursue their vehicle-

related and phone expenses.


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III. CONCLUSION

The Court hereby certifies a subclass of the following individuals to pursue their Tips

Claim and Expense Reimbursement Claim:

All UberBlack, UberX, and UberSUV drivers who have driven for Uber in the state of California at any time since August 16, 2009, and meet all the following requirements: (1) who signed up to drive directly with Uber or an Uber subsidiary under their individual name, and (2) are/were paid by Uber or an Uber subsidiary directly and in their individual name, and (3) electronically accepted any contract with Uber or one of Uber‟s subsidiaries which contain the notice and opt-out provisions previously ordered by this Court, and did not timely opt out of that contract‟s arbitration agreement.

The original class certified on September 1, 2015 may also pursue the Expense

Reimbursement Claim.

In view of this revised class definition, the parties are ordered to meet-and-confer

regarding the contents and logistics of class notice and other relevant procedural details in advance

of the next case management conference, which is scheduled for December 17, 2015, at 10:30 a.m.

This order disposes of Docket No. 357.

IT IS SO ORDERED.

Dated: December 9, 2015

______________________________________

EDWARD M. CHEN United States District Judge


Exhibit B


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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DOUGLAS O’CONNOR, et al.,

Plaintiffs,

v.

UBER TECHNOLOGIES, INC.,

Defendant.___________________________________/

No. C-13-3826 EMC

AMENDED ORDER GRANTING INPART AND DENYING IN PARTPLAINTIFFS’ MOTION FOR CLASSCERTIFICATION

[Footnote 3 amended]

(Docket No. 276)

Case3:13-cv-03826-EMC Document342 Filed09/01/15 Page1 of 68 Case: 15-80220, 12/23/2015, ID: 9804872, DktEntry: 1-2, Page 62 of 130

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2

TABLE OF CONTENTS

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

II. DISCUSSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

A. Legal Standard (Class Certification) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

B. Legal Standard (California’s Borello Test for Employment) . . . . . . . . . . . . . . . . . 10

C. The Rule 23(a) Criteria Are Satisfied For Plaintiffs’ Tip Claim . . . . . . . . . . . . . . . 13

1. Ascertainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

2. Numerosity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

3. Commonality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

4. Typicality And Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

D. Plaintiffs Have Not Met Their Burden to Prove Adequacy With Respect to Their

Expense Reimbursement Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

E. The Rule 23(b)(3) Requirement of Predominance is Satisfied . . . . . . . . . . . . . . . . 29

1. Whether Class Members Are Employees or Independent Contractors . . . . 30

a. Uber’s Control Over Driver Schedules . . . . . . . . . . . . . . . . . . . . . . 32

b. Uber’s Control Over Driver Routes or Territories . . . . . . . . . . . . . . 33

c. Pay Set Unilaterally By Uber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

d. Use of Third-Party Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

e. Star Ratings, Monitoring of Driver’s Performance and Compliance

With Uber’s Training “Requirements” or “Suggestions” . . . . . . . . 36

f. Uber’s Right to Terminate Without Cause . . . . . . . . . . . . . . . . . . . 37

g. Borello’s Secondary Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

i. Whether The One Performing Services is Engaged in a Distinct

Occupation or Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

ii. The Kind of Occupation, With Reference to Whether, in the

Locality, The Work is Usually Done Under The Direction of

the Principal or by a Specialist Without Supervision . . . . . 45


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iii. The Skill Required in The Particular Occupation . . . . . . . . 46

iv. Whether The Principal or the Worker Supplies the

Instrumentalities, Tools, And The Place of Work For The

Person Doing The Work . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

v. The Length of Time For Which Services Are to

be Performed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

vi. The Method of Payment, Whether by Time or by The Job . 49

vii. Whether or Not The Work is a Part of The Regular Business of

The Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

viii. Whether or Not The Parties Believe They Are Creating The

Relationship of Employer-Employee . . . . . . . . . . . . . . . . . . 50

ix. The Alleged Opportunity For Profit or Loss Depending on His

Managerial Skill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

x. The Alleged Employee’s Investment in Equipment or

Materials Required for His Task, or His employment of

Helpers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

xi. Whether The Service Rendered Requires a Special Skill . . 55

xii. The Degree of Permanence of The Working Relationship . 55

xiii. Whether The Service Rendered is an Integral Part of The

Alleged Employer’s Business . . . . . . . . . . . . . . . . . . . . . . . 56

xiv. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

2. Plaintiffs’ Tip Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

F. Individualized Inquiries May Predominate For Drivers Who Did Not Opt-Out of

Uber’s Most Recent Arbitration Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

G. Superiority Test is Satisfied For Plaintiffs’ Tips Claim . . . . . . . . . . . . . . . . . . . . . 64

H. Plaintiffs’ Counsel Will Fairly And Adequately Represent The

Interests of The Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

I. The Remainder of Plaintiffs’ Motion is Denied Without Prejudice . . . . . . . . . . . . 66


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III. CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68


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1 While O’Connor remains a plaintiff in this action, he is no longer seeking to serve as aclass representative. Thus, for the purpose of this motion, the Court refers to Colopy, Manahan, andGurfinkel collective as “Plaintiffs.”

5

I. INTRODUCTION

Plaintiffs Douglas O’Connor, Thomas Colopy, Matthew Manahan, and Elie Gurfinkel are

current or former drivers who have performed services for Defendant Uber Technologies, Inc.

Docket No. 330. (Second Amended Complaint) (SAC). They are prosecuting this lawsuit against

Uber on behalf of themselves and a putative class of approximately 160,000 other “UberBlack,

UberX and UberSUV drivers who have driven for Uber in the state of California at any time since

August 16, 2009.”1 Docket No. 276 (Class Cert. Mot.) (Mot.), Ex. 1; see also Docket No. 298 (Opp.

Br.) at 1. Plaintiffs contend that they and all 160,000 putative class members are Uber’s employees,

as opposed to its independent contractors, and thus are eligible for various protections codified for

employees in the California Labor Code. See SAC at ¶ 21. Specifically, Plaintiffs allege that Uber

has uniformly failed to reimburse its drivers “for all necessary expenditures or losses incurred by the

employee in direct consequence of the discharge of his or her duties,” in violation of California

Labor Code section 2802, and uniformly failed to pass on the entire amount of any tip or gratuity

“that is paid, given to, or left for an employee by a patron.” Cal. Lab. Code § 351.

Pending before the Court is Plaintiffs’ motion for class certification. The merits of the case

are not currently at issue. Rather, the Court needs to consider only two questions at this juncture;

whether the case can properly proceed as a class action, and, if so, how. While answering both of

those questions necessarily requires the Court to perform a rigorous analysis of a number of legal

issues, the parties correctly recognize that one threshold issue is of paramount importance to the

success or failure of Plaintiffs’ class certification motion: as to whether drivers are Uber’s

employees or independent contractors under California’s common-law test of employment, will

“questions of law or fact common to class members predominate over any questions affecting only

individual members” of the proposed class? Fed. R. Civ. P. 23(b)(3); see also Ayala v. Antelope

Valley Newspapers, Inc., 59 Cal. 4th 522, 533 (2014). That is, are the drivers’ working relationships

with Uber sufficiently similar so that a jury can resolve the Plaintiffs’ legal claims all at once? This


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6

question is of cardinal importance because if the Plaintiffs’ worker classification cannot be

adjudicated on a classwide basis, then it necessarily follows that Plaintiffs’ actual substantive claims

for expense reimbursement and conversion of gratuities cannot be adjudicated on a classwide basis

either.

Uber contends that the drivers’ employment classification cannot be adjudicated on a

classwide basis. According to Uber, both its right of control over its drivers, as well as the day-to-

day reality of its relationship with them, are not sufficiently uniform across the proposed class to

satisfy the requirements of Federal Rule of Civil Procedure 23 (hereafter Rule 23). As other courts

weighing certification of employment misclassification claims have recognized, however, there is

inherent tension between this argument and Uber’s position on the merits: on one hand, Uber argues

that it has properly classified every single driver as an independent contractor; on the other, Uber

argues that individual issues with respect to each driver’s “unique” relationship with Uber so

predominate that this Court (unlike, apparently, Uber itself) cannot make a classwide determination

of its drivers’ proper job classification. See In re Wells Fargo Home Mortgage Overtime Pay Litig.,

571 F.3d 953, 957 (9th Cir. 2009) (holding that “[a]n internal policy that treats all employees alike

for exemption purposes suggests that the employer believes some degree of homogeneity exists

among the employees. This undercuts later arguments that the employees are too diverse for

uniform treatment”); see also Norris-Wilson v. Delta-T Group, Inc., 270 F.R.D. 596, 602 (S.D. Cal.

2010) (explaining that “it may be that [Defendant] believes its workers are in fact independent

contractors for reasons unique to each individual, but it’s more likely the case [Defendant] believes

the independent contractor classification is universally appropriate. That runs at cross-purposes with

the reason for objecting to class certification, which is that it’s impossible to reach general

conclusions about the putative class as a whole”) (emphasis omitted). It appears that at least one of

these arguments cannot be entirely accurate, and for the purposes of resolving this motion the Court

concludes that a number of Uber’s class certification arguments are problematic.

For the reasons explained below, and further for the reasons stated on the record at the

lengthy hearing on this matter, Plaintiffs have met their burden to show that a class can be certified

on both the threshold employment classification question and their claim for converted tips under


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Labor Code section 351 (hereafter, Tips Claim). Specifically, the Court will certify the following

class to pursue the Tips Claim under Rule 23(b)(3):

All UberBlack, UberX, and UberSUV drivers who have driven forUber in the state of California at any time since August 16, 2009, andwho (1) signed up to drive directly with Uber or an Uber subsidiaryunder their individual name, and (2) are/were paid by Uber or an Ubersubsidiary directly and in their individual name, and (3) did notelectronically accept any contract with Uber or one of Uber’ssubsidiaries which contain the notice and opt-out provisionspreviously ordered by this Court (including those contracts listed inthe Appendix to this Order), unless the driver timely opted-out of thatcontract’s arbitration agreement.

Plaintiffs’ request to certify a class under California Labor Code section 2802 is denied

without prejudice for the reasons stated herein, as is Plaintiffs’ request to certify other possible

classes or subclasses of Uber drivers.

II. DISCUSSION

The Court assumes the reader’s familiarity with the procedural and factual background of

this increasingly complicated litigation. See generally O’Connor v. Uber Techs., Inc., -- F. Supp. 3d

--, 2015 WL 1069092 (N.D. Cal. 2015); O’Connor v. Uber Techs., Inc., No. 13-cv-3826-EMC, 2014

WL 1760314 (N.D. Cal. May 2, 2014); Mohamed v. Uber Techs., Inc., -- F. Supp. 3d --, 2015 WL

3749716 (N.D. Cal. 2015). Hence, the Court does not separately recount such details here. Instead,

any relevant factual or procedural details are included in the body of this Order as necessary to

provide context for the Court’s discussion of the merits of Plaintiffs’ class certification motion.

This Order proceeds as follows. First, the Court discusses the legal standards under Rule 23

that are applicable to Plaintiffs’ request for class certification. Next, the Court describes the legal

standard that will be applied at trial to determine whether the class members are Uber’s employees

or independent contractors under California law. For while the Court will not decide the merits of

Plaintiffs’ case at this juncture, the Court can only be assured that the Rule 23 criteria are satisfied

by previewing the merits of Plaintiffs’ claims, and, particularly, the types of proof (whether common

or individualized) that will be offered at trial.

After laying out the relevant legal standards, the Court will then apply the Rule 23(a) criteria

to the Plaintiffs’ claim that they are/were Uber’s employees, rather than independent contractors.


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2 Because there is no private right of action to bring a claim under Labor Code section 351,the Plaintiffs are pursuing this claim through California’s Unfair Competition Law (UCL). No partyhas argued that this procedural detail in any way impacts the class certification analysis, and thus theCourt simply refers to the claim as the Tips Claim (or section 351 claim) without reference to theUCL.

8

Because the Court concludes that the Rule 23(a) criteria are satisfied on the threshold

misclassification question, the Court will then further consider whether Rule 23(a) is satisfied with

respect to Plaintiffs’ substantive law claims. Ultimately, while the Court concludes that Plaintiffs

satisfy all of the Rule 23(a) criteria for their Tips Claim,2 the Court is not currently convinced the

Plaintiffs have established adequacy with respect to their expense reimbursement claim.

The Court will then consider whether Plaintiffs have met their burden under Federal Rule of

Civil Procedure 23(b)(3) to prosecute their Tips Claim on a classwide basis. This requires that the

Court first determine whether the employment classification question can be resolved with reference

to predominately common proof. The Court concludes that the predominance requirement is

satisfied with respect to whether the class members are properly classified as independent

contractors or employees. The Court similarly concludes that class members’ substantive Tips

Claim can be litigated on a classwide basis because common questions predominate over

individualized issues. However, the Court will not certify the claims of any driver who accepted one

of the driver contracts listed in the Appendix to this Order, and who did not timely opt-out of an

arbitration clause in those contracts, because the Court finds that individualized issues as to whether

Uber’s more recent arbitration clauses are enforceable against class members will predominate over

questions common to all putative class members regarding arbitration. Finally, the Court concludes

its analysis by finding that a class action is a superior method for adjudicating class members’ Tips

Claims, and further finds that Plaintiffs’ counsel will fairly and adequately represent the interests of

the class.

A. Legal Standard (Class Certification)

Class actions have long been an integral part of the legal landscape. And while expressly

authorized by Rule 23, it must be recognized that the “class action is an exception to the usual rule

that litigation is conducted by and on behalf of the individual named parties only.” Wal-Mart


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Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2550 (2011). “In order to justify departure from that rule, a

class representative must be part of the class and possess the same interest and suffer the same injury

as [her fellow] class members.” Id. (internal quotation marks omitted).

Accordingly, before certifying a class, this Court “must conduct a ‘rigorous analysis’ to

determine whether the party seeking certification has met the prerequisites of Rule 23.” Mazza v.

Am. Honda Motor Co., Inc., 666 F.3d 581, 588 (9th Cir. 2012) (citation omitted). The Supreme

Court has made it clear that Rule 23 “does not set forth a mere pleading standard.” Comcast Corp.

v. Behrend, 133 S. Ct. 1426, 1432 (2013). Rather, the party seeking certification must “affirmatively

demonstrate” her compliance with the requirements of both Rule 23(a) and 23(b). See Dukes, 131 S.

Ct. at 2551.

Rule 23(a) of the Federal Rules of Civil Procedure permits Plaintiffs to sue as representatives

of a class only if:

(1) the class is so numerous that joinder of all members isimpracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical ofthe claims or defenses of the class; and

(4) the representative parties will fairly and adequately protect theinterests of the class.

Fed. R. Civ. P. 23(a)(1)-(4). The purpose of these Rule 23(a) requirements is largely to “ensure[]

that the named plaintiffs are appropriate representatives of the class whose claims they wish to

litigate,” and to “effectively limit the class claims to those fairly encompassed by the named

plaintiff’s claims.” Dukes, 131 S. Ct. at 2550 (internal quotation marks and citations omitted).

If each of the Rule 23(a) requirements are satisfied, the purported class must also satisfy one

of the three prongs of Rule 23(b). Here Plaintiffs seek certification under Rule 23(b)(3) which

provides:

(3) the court finds that the questions of law or fact common to classmembers predominate over any questions affecting only individualmembers, and that a class action is superior to other available methodsfor fairly and efficiently adjudicating the controversy.


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As noted previously, the underlying merits of the case, while admittedly relevant at the class

certification stage, should not overly cloud the Court’s certification analysis – the only question

presently before the Court is whether the requirements of Rule 23 are met. See Comcast Corp., 133

S. Ct. at 1432. The fact that certain elements of proof may favor the defendant on the merits does

not negate class certification; the issue is whether the proof is amenable to class treatment.

Moreover, “[n]either the possibility that a plaintiff will be unable to prove his allegations, nor the

possibility that the later course of the suit might unforeseeably prove the original decision to certify

the class wrong, is a basis for declining to certify a class which apparently satisfies the Rule.”

Blackie v. Barrack, 524 F.2d 891, 901 (9th Cir. 1975). Indeed, even “after a certification order is

entered, the judge remains free to modify it in the light of subsequent developments in the

litigation.” Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982). Ultimately, whether or not to

certify a class is within the discretion of the Court. United Steel, Paper & Forestry, Rubber, Mfg.

Energy, Allied Indus. & Serv. Workers Int’l Union, AFL-CIO CLC v. ConocoPhilips Co., 593 F.3d

802, 810 (9th Cir. 2010); see also Levya v. Medline Indus. Inc., 716 F.3d 510, 513 (9th Cir. 2013).

B. Legal Standard (California’s Borello Test For Employment)

This Court has previously written at length about the common-law test of employment in

California. See O’Connor, 2015 WL 1069092, at *4-6 (N.D. Cal. 2015). Applying that test at the

summary judgment stage, the Court determined that because Uber drivers “render service to Uber,”

they are Uber’s presumptive employees as a matter of law. Id. at *9. Thus, the Plaintiffs have

proved their prima facie case, although the ultimate question of their employment status will need to

be decided by a jury. Id. at *10-12. The burden will be on Uber at trial to “disprove an employment

relationship.” Id. at *10.

For the purpose of determining whether a presumptive employer can rebut a prima facie

showing of employment, the California Supreme Court’s seminal opinion in Borello “enumerated a

number of indicia of an employment relationship.” Narayan v. EGL, Inc., 616 F.3d 895, 901 (9th

Cir. 2010). The “most significant consideration” is the putative employer’s “right to control work

details.” S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations (Borello), 48 Cal. 3d 341, 350

(1989) (internal quotation marks omitted). Formulated somewhat differently, the “‘principal test of


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an employment relationship is whether the person to whom service is rendered has the right to

control the manner and means of accomplishing the result desired.’” Alexander v. FedEx Ground

Package Sys., Inc., 765 F.3d 981, 988 (9th Cir. 2014) (quoting Borello, 48 Cal. 3d at 350). The

putative employer’s right of control need not extend to every possible detail of the work. See

Narayan, 616 F.3d at 904 (explaining that a truck driver’s “ability to determine a driving route is

‘simply a freedom inherent in the nature of the work and not determinative of the employment

relation’”) (quoting Toyota Motor Sales U.S.A., Inc. v. Super. Ct., 220 Cal. App. 3d 864, 876

(1990)). Rather, the relevant question is whether the presumptive employer retains “all necessary

control” over the worker’s performance. Borello, 48 Cal. 3d at 357 (emphasis in original).

Critically for the purposes of this motion, the Supreme Court has further stressed that the

pertinent question under California’s right-of-control test is “not how much control a hirer [actually]

exercises, but how much control the hirer retains the right to exercise.” Ayala, 59 Cal. 4th at 533

(emphases in original) (citation omitted). Or, as the Supreme Court stated the issue nearly a century

ago, “‘[i]t is not a question of interference, or non-interference, not a question of whether there have

been suggestions, or even orders, as to the conduct of the work; but a question of the right to act, as

distinguished from the act itself or the failure to act.’” Id. (quoting Hillen v. Indus. Accident

Comm’n., 199 Cal. 577, 581-82 (1926)); see also Air Couriers Int’l v. Emp’t Dev. Dep’t, 150 Cal.

App. 4th 923, 933 (2007) (explaining that if the employer has the authority to exercise control,

“‘whether or not that right is exercised with respect to all details, an employer-employee relationship

exists’”) (quoting Empire Star Mines Co. v. Cal. Emp’t Comm’n, 28 Cal. 2d 33, 43 (1946))).

No one consideration “is dispositive when analyzing employee/independent contractor

status” under the Borello test. O’Connor, 2015 WL 1069092, at *5. Indeed, as this Court

previously explained, the case law clearly indicates that the ultimate outcome of the classification

inquiry turns on the specific details of the service relationship under consideration, rather than a

mechanical checking-off of various factors. See id. at *5-6; see also Alexander, 765 F.3d at 989.

For instance, in some cases an independent contractor relationship has been found where, among

many other considerations, there is evidence that the putative employer did not control its hirees’

work hours. See, e.g., Mission Ins. Co. v. Workers’ Comp. App. Bd., 123 Cal. App. 3d 211, 216


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(1981). But other cases have found that on the whole, a service relationship was one of employment

even where the hiree had full control over his or her own work schedule. See Air Couriers Int’l, 150

Cal. App. 4th at 926; see also O’Connor, 2015 WL 1069092, at *5-6.

Still, while no one factor is dispositive, some factors are considered to be more important in

ascertaining the extent of the putative employer’s right to control. For example, when evaluating the

extent of a presumptive employer’s right to control, the Supreme Court has stressed that an

employer’s “right to discharge at will, without cause” is “strong evidence in support of an

employment relationship.” Borello, 48 Cal. 3d at 350 (citations omitted); see also Ayala, 59 Cal. 4th

at 531 (characterizing the right to discharge without cause as “[p]erhaps the strongest evidence of

the right to control”); Narayan, 616 F.3d at 900 (characterizing the right to discharge at will as the

“most important” factor for determining whether an employment relationship exists). This is

because the “power of the principal to terminate the services of the agent” without cause “gives him

the means of controlling the agent’s activities.” Ayala, 59 Cal. 4th at 531 (citations omitted). The

“worker’s corresponding right to leave is similarly relevant: ‘An employee may quit, but an

independent contractor is legally obligated to complete his contract.’” Id. at 531 n. 2 (quoting

Perguica v. Indus. Accident Comm’n, 29 Cal. 2d 857 (1947)).

The putative employer’s right to control work details, while the primary factor, is not the

only relevant consideration under Borello, however, and the control test cannot be “applied rigidly

and in isolation.” Borello, 48 Cal. 3d at 350. Thus, the Supreme Court has also embraced a number

of “secondary indicia” that may be relevant to the employee/independent contractor determination.

Id. These additional factors include:

(a) whether the one performing services is engaged in a distinctoccupation or business; (b) the kind of occupation, with reference towhether, in the locality, the work is usually done under the direction ofthe principal or by a specialist without supervision; (c) the skillrequired in the particular occupation; (d) whether the principal or theworker supplies the instrumentalities, tools, and the place of work forthe person doing the work; (e) the length of time for which theservices are to be performed; (f) the method of payment, whether bythe time or by the job; (g) whether or not the work is a part of theregular business of the principal; and (h) whether or not the partiesbelieve they are creating the relationship of employer-employee.


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Id. at 351. Borello also “approvingly cited” five additional factors (some overlapping or closely

related to those outlined immediately above), taken from the federal test of employment under the

Fair Labor Standards Act (FLSA), that may help shed light on a putative employee’s proper job

classification. Narayan, 616 F.3d at 900. These additional factors are:

(i) the alleged employee’s opportunity for profit or loss depending onhis managerial skill; (j) the alleged employee’s investment inequipment or materials required for his task, or his employment ofhelpers; (k) whether the service rendered requires a special skill; (l)the degree of permanence of the working relationship; and (m)whether the service rendered is an integral part of the allegedemployer’s business.

Borello, 48 Cal. 3d at 355 (citing Driscoll Strawberry Assoc., Inc., 603 F.2d 748, 754 (9th Cir.

1979)). While the Supreme Court has explained that each of the above “secondary indicia” are

helpful in determining a putative employee’s job status, as noted above, “the considerations in the

multi-factor test are not of uniform significance.” Ayala, 59 Cal. 4th at 539. “Some, such as the

hirer’s right to fire at will and the basic level of skill called for by the job, are often of inordinate

importance,” while “[o]thers, such as the ‘ownership of the instrumentalities and tools’ of the job,

may be of only evidential value relevant to support an inference that the hiree is, or is not, subject to

the hirer’s direction and control.” Id. (internal quotation marks, citations, and modifications

omitted). Finally, it is clear that the “label placed by the parties on their relationship is not

dispositive, and subterfuges are not countenanced.” Alexander, 765 F.3d at 989 (quoting Borello, 48

Cal. 3d at 349) (internal modifications omitted).

C. The Rule 23(a) Criteria Are Satisfied For Plaintiffs’ Tips Claim

1. Ascertainability

Before analyzing numerosity under Rule 23(a)(1), courts typically require a showing that the

class to be certified is ascertainable. See Daniel F. v. Blue Shield of Cal., 305 F.R.D. 115, 121-22

(N.D. Cal. 2014); 7A Charles Alan Wright et al., Federal Practice and Procedure § 1760 at 142-47

(3d ed. 2005). To be ascertainable, the definition of the class must be “definite enough so that it is

administratively feasible for the court to ascertain whether an individual is a member” before trial,

and by reference to “objective criteria.” Daniel F, 305 F.R.D. at 122 (citations omitted); see also


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3 Again, the class being certified is defined as follows: All UberBlack, UberX, andUberSUV drivers who have driven for Uber in the state of California at any time since August 16,2009, and who (1) signed up to drive directly with Uber or an Uber subsidiary under their individualname, and (2) are/were paid by Uber or an Uber subsidiary directly and in their individual name, and(3) did not electronically accept any contract with Uber or one of Uber’s subsidiaries which containthe notice and opt-out provisions previously ordered by this Court (including those contracts listedin the Appendix to this Order), unless the driver timely opted-out of that contract’s arbitrationagreement.

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Newton v. Am. Debt Servs., Inc., No. 11-cv-3228-EMC, 2015 WL 3614197, at *5-6 (N.D. Cal. June

9, 2015) (discussing ascertainability requirement). Put differently, the Court must ensure that the

class is precisely and objectively defined because defining the class with the requisite precision

allows the Court to identify “the persons (1) entitled to relief, (2) bound by a final judgment, and (3)

entitled under Rule 23(c)(2) to the ‘best notice practicable’ in a Rule 23(b)(3) action.” Daniel F,

305 F.R.D. at 121 (quoting Manual for Complex Litigation, Fourth § 21.222 (2004)).

Membership in the class being certified here3 is objectively ascertainable from Uber’s

business records. Uber does not dispute that it maintains business records with respect to each of its

drivers, nor is there any dispute that those records will reveal: (1) whether the driver signed up with

Uber or an Uber subsidiary using his individual (as opposed to a fictional/corporate) name, (2) is

paid directly by Uber or an Uber subsidiary with payments made to the driver in his individual (as

opposed to a fictional/corporate) name, (3) whether the driver electronically accepted a certain

contract with either Uber or one of Uber’s subsidiaries, and (4) whether a driver timely opted-out of

arbitration. See, e.g., Docket No. 299 (Evangelis Decl.), Ex. 3 (chart recognizing the difference

between those drivers who are “direct partners with Uber” versus those who work with third-party

companies that partner with Uber); Case No. 14-cv-5200-EMC, Docket. No. 28-2 (Colman Decl.) at

¶¶ 7-14. Thus, the ascertainability requirement is satisfied here.

2. Numerosity

A plaintiff satisfies the numerosity requirement if “the class is so large that joinder of all

members is impracticable.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998) (citation

omitted). While no court has set the precise number of class members that are needed to satisfy the

numerosity requirement, there is general recognition that Rule 23(a)(1) is at least satisfied when the

proposed class contains one hundred or more members. See, e.g., Wang v. Chinese Daily News, 231


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F.R.D. 602, 607 (C.D. Cal. 2005) (recognizing there is a presumption of numerosity where the

proposed class contains one hundred or more members), reversed on other grounds by 737 F.3d 538

(9th Cir. 2013); Ikonen v. Hartz Mountain Corp., 122 F.R.D. 258, 262 (S.D. Cal. 1998) (finding a

proposed class of forty members sufficient to satisfy numerosity). While the Court does not

currently know the exact number of class members in the certified class, the Court has no doubt that

at least one hundred of the roughly 160,000 individuals who drove for Uber in California since

August 2009 will meet the class definition here. Notably, neither party has even suggested that

numerosity is not satisfied here. And there is sufficient evidence in the record to suggest that the

class being certified will number at least into the hundreds. For instance, in other litigation, Uber

has alleged that “several hundred” drivers have opted out of the arbitration agreements listed in the

Appendix, and further claimed that at least 269 drivers have opted-out of its earlier 2013 contracts.

See Yucesoy v. Uber Techs., Inc., No. 15-cv-262-EMC, Docket No. 107 at 7 n.5; Gillette v. Uber

Techs., Inc., No. 14-cv-5241-EMC, 2015 WL 4481706, at *4 (N.D. Cal. Jul. 22, 2015) (Uber’s

counsel alleged that “roughly 270 drivers” successfully opted-out of earlier versions of arbitration

provision). Thus, the Court finds that the numerosity requirement is satisfied.

3. Commonality

In order to satisfy Rule 23(a)(2)’s commonality requirement, a plaintiff must “affirmatively

demonstrate” that their claims depend upon at least one common contention the truth or falsity of

which “will resolve an issue that is central to the validity” of each one of the class members’ “claims

in one stroke.” Dukes, 131 S. Ct. at 2551. That is, the lawsuit must call upon the court or jury to

decide at least one factual or legal question that will generate a common answer “apt to drive the

resolution of the litigation.” Id.; see also id. at 2556 (holding that “even a single common question”

will suffice to satisfy Rule 23(a)) (citation and internal modifications omitted).

Despite Uber’s argument to the contrary, there are numerous legally significant questions in

this litigation that will have answers common to each class member that are apt to drive the

resolution of the litigation. Most notably, the common legal issue of whether all class members

should be classified as employees or independent contractors is one whose answer would not only be

“apt to drive the resolution of the litigation,” but could in fact be outcome determinative. See Guifu


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Li v. A Perfect Franchise, Inc., No. 10-cv-1189-LHK, 2011 WL 4635198, at *7 (N.D. Cal. Oct. 5,

2011) (Koh, J.). As Judge Koh properly noted when certifying a class action alleging worker

misclassification under California law, if, “for example, Plaintiffs have been properly classified as

independent contractors, the Court need not consider the additional claims that Plaintiffs have

raised.” Id. (certifying Rule 23(b)(3) class of massage therapists who had been classified as

independent contractors by their putative employer, and who sought relief under various provisions

of California Labor Code, including for converted gratuities under Labor Code section 351). Should

the jury determine that the class members here are not Uber’s employees, this class action will have

reached its end. Should the jury determine they are Uber’s employees, as discussed in greater detail

below, they are likely to be entitled to relief as a class at least with respect to the California Tips

law.

Indeed, given the threshold and determinative nature of the employment classification

question, it should come as no surprise that district courts “throughout this circuit have found that

commonality is met when the proposed class of plaintiffs asserts that class members were

improperly classified as independent contractors instead of employees.” Giufu Li, 2011 WL

4635198, at *7 (collecting cases); see also Villalpando v. Exel Direct Inc., 303 F.R.D. 588, 606

(N.D. Cal. 2014) (finding commonality established solely because “Plaintiffs assert there is a

threshold issue as to all of their claims, namely, whether they are independent contractors or

employees of Exel”); Bowerman v. Field Asset Servs., Inc. (Bowerman II), No. 13-cv-0057, 2015

WL 1321883, at *14 (N.D. Cal. Mar. 24, 2015) (Orrick, J.) (“Commonality is satisfied here. The

key legal issue underlying this case is whether putative class members were misclassified under

California law as independent contractors instead of employees . . . . [T]his is a common question

that is capable of resolution for the class.”); Norris-Wilson, 270 F.R.D. at 604 (holding “that whether

workers are properly classified as employees or independent contractors is, by itself, a factual and

legal issue that satisfies Rule 23(a)”).

To be sure, it may be argued that the commonality requirement of Rule 23(a) must be

examined at a level of greater specificity, and not rest solely on the general legal question of whether

Uber’s drivers are employees or independent contractors. Indeed, the Supreme Court has recognized


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that Rule 23(a)(2)’s commonality requirement is “subsumed under, or superseded by, the more

stringent Rule 23(b)(3) requirement that questions common to the class ‘predominate over’ other

questions.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 609 (1997). Thus, the Court notes that

its predominance analysis, conducted below, is also relevant to its determination that Rule 23(a)(2)’s

“rigorous” commonality standard is met here. Dukes, 131 S. Ct. at 2551. That discussion of

predominance examines in greater detail whether the specific factors which inform the Borello

analysis are susceptible to common and classwide proof. As noted in that discussion, the worker

classification claim presents a common issue capable of classwide adjudication because all (or

nearly all) of the individual elements of the Borello test themselves raise common questions which

will have common answers. Thus, even if the authorities stated above did not establish the

commonality requirement of Rule 23(a) is met by the overarching common question of driver status

as employee or independent contractor, commonality at a more specific level is satisfied here for the

reasons discussed in the predominance analysis below.

Furthermore, the class claims here raise numerous other common questions that will have

common answers apt to drive the resolution of the litigation. For instance, to prevail on their Tips

Claim, Plaintiff will be required to show that Uber included a tip or gratuity in the fares it charged to

its riders, but that Uber never paid these tips to its drivers. Thus, one common question important to

resolving Uber’s liability for the Tips Claim on a classwide basis is whether Uber ever actually

remitted tips to its drivers. Importantly, Uber has stipulated that “[a] tip has never been part of the

calculation of fares for either UberBlack or UberX in California,” and thus admits that a common

question has a common (and conceded) answer that will help establish Uber’s potential classwide

liability for Tips Law violations: Uber has never paid gratuities to any of its drivers. See Docket

No. 313-16 at 33:22-24. Rule 23(a)(2)’s commonality requirement is therefore satisfied for this

reason as well.

4. Typicality And Adequacy

Rule 23(a)(3) requires that “the [legal] claims or defenses of the representative parties [be]

typical of the claims or defenses of the class.” Fed. R. Civ. P. 23(a)(3). Representative claims are

“typical” if they are “reasonably co-extensive with those of absent class members; they need not be


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4 As will be discussed below, the typicality and commonality requirements also tend tomerge together in certain ways. See Newberg on Class Actions § 3:31 (5th ed. 2015) (explainingthat “[b]oth commonality and typicality measure the degree of interrelatedness between the claims ina class action”).

18

substantially identical.” Hanlon, 150 F.3d at 1020. Thus, the “‘test of typicality is whether other

members have the same or similar injury, whether the action is based on conduct which is not unique

to the named plaintiffs, and whether other class members have been injured by the same course of

conduct.’” Bowerman II, 2015 WL 1321883, at *15 (quoting Hanon v. Dataproducts Corp., 976

F.2d 497, 508 (9th Cir. 1992)). Moreover, courts may evaluate whether a named plaintiff is typical

by determining whether she is “subject to unique defenses which threaten to become the focus of the

litigation.” Id. (citation omitted). “Class certification should not be granted if there is a danger that

absent class members will suffer if their representative is preoccupied with defenses unique to

[her].” Id. (internal modification and citation omitted).

Rule 23(a)(4) imposes a closely related requirement to typicality – namely that the putative

class representative must “fairly and adequately protect the interests of the class.” Fed. R. Civ. P.

23(a)(4). A named plaintiff satisfies the adequacy test if the individual has no conflicts of interest

with other class members and if the named plaintiff will prosecute the action vigorously on behalf of

the class. See Ellis v. Costco Wholesale Corp., 657 F.3d 970, 985 (9th Cir. 2011).

As other courts and commentators have noted, the typicality and adequacy inquiries tend to

significantly overlap. See, e.g., Newberg on Class Actions § 3:32 (5th ed. 2015) (“Due to the related

nature of the two requirements and the frequency with which they are challenged on the same

grounds, many courts address the typicality and adequacy requirements in a single inquiry.”).4 For

instance, a named plaintiff who is subject to unique defenses (i.e., may not satisfy typicality) may

also have a conflict of interest with her fellow class members (i.e., be an inadequate class

representative). In light of this overlap, and because Uber and the parties largely treat the two issues

together in their briefs, the Court will do the same when analyzing the representative Plaintiffs’

ability to represent their fellow class members (as the class is defined above) with respect to their

Tips Claims. The Court evaluates the Plaintiffs’ adequacy to pursue expense reimbursement claims

under California Labor Code section 2802 in the next section.


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5 As discussed below, the class as defined excludes all drivers who operated or drove for adistinct transportation businesses that contracted to perform services for Uber, thereby eliminatingany class variance on this Borello factor.

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Uber principally argues that the named Plaintiffs’ claims are atypical of their fellow class

members’ because there is “no typical Uber driver.” Opp. Br. at 35. For instance, Uber argues that

“Plaintiffs, who were onboarded in San Francisco, Los Angeles, and San Diego, are not typical of

drivers from other cities, or even of drivers in their own cities who were ‘onboarded’ at different

points in time or by different people.” Opp. Br. at 36. Uber also argues that the representative

Plaintiffs are not typical of fellow class members with respect to certain secondary elements of the

common law Borello test. For example, Uber notes that none of the named Plaintiffs ever operated

their own distinct transportation company, while other Uber drivers (but, importantly, no class

members) have operated distinct transportation companies which contract with Uber directly.5 Id. at

37; see also Uber’s Demonstrative Hearing Slides at 4. This argument fails for at least two reasons.

First, to the extent that Uber’s “no typical Uber driver” contention is focused on legally

relevant differences between drivers under the Borello test (e.g., whether or not they operate a

distinct transportation business), the argument is really a commonality or predominance argument

masquerading as a typicality argument: If legally material differences between class members are

so substantial that the predominance or commonality tests cannot be satisfied, then the typicality test

likely cannot be satisfied either. As discussed below, however, the Court finds that the

predominance test is satisfied with respect to the specific class defined above because there are not

significant material legal differences between the claims and defenses of the class members and

those of the named Plaintiffs. See Section II.E, infra.

As for the remainder of Uber’s “no typical driver” argument, it fails because Uber focuses on

legally irrelevant differences between the named Plaintiffs and class members. Rule 23(a)(3)’s test

of typicality is not whether there are any differences between the representative plaintiffs and the

class members they seek to represent. For example, the named Plaintiffs may all be left-handed and

drive Hondas, while numerous class members are right-handed and drive Toyotas. But these

differences do not demonstrate that the named Plaintiffs are not typical class representatives under


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6 For instance, Uber seems to argue that a driver who received in-person training could notrepresent a person who watched training videos online because their experiences with Uber aresomehow not typical of each other. But if the form of training received is in no way material to themerits of the case, then a difference between class members on this factor cannot destroy (or evenimpact) typicality. See Bowerman II, 2015 WL 1321883, at *15 (“test of typicality is whether othermembers have the same or similar injury, whether the action is based on conduct which is not uniqueto the named plaintiffs, and whether other class members have been injured by the same course ofconduct.”) (citation omitted). As discussed below, it is not the precise content or style of trainingthat informs the Borello analysis; rather, it is Uber’s right to control that training and to monitordrivers’ compliance with its “rules” or “suggestions.” For the reasons discussed below, that right tocontrol is common with respect to class members, and hence typicality is met here.

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Rule 23.6 Instead, the typicality requirement simply measures whether the named Plaintiffs’ legal

claims all arise from essentially the same conduct underlying their fellow class members’ claims and

whether the named Plaintiffs and their fellow class members suffered the same legal injury. As one

district court noted in rejecting an argument similar to Uber’s with respect to typicality:

‘The test of typicality is whether other members have the same orsimilar injury, whether the action is based on conduct which is notunique to the named plaintiffs, and whether other class members havebeen injured by the same course of conduct.’ The entire class allegesan identical injury, namely that they were wrongfully classified asindependent contractors by DTG and, as a result, denied a panoply ofwork-related benefits that are afforded to employees under Californialabor laws. The injuries alleged – a denial of various benefits – andthe alleged source of those injuries – a sinister classification by anemployer attempting to evade its obligations under labor laws – are thesame for all members of the putative class. DTG has no real rebuttalto this. The typicality requirement is therefore satisfied.

Norris-Wilson, 270 F.R.D. at 605 (quoting Hanon, 976 F.2d at 508). Indeed, as with commonality,

typicality is almost universally found in employment cases like this one where the representative

class plaintiffs allege that they, along with every other member of the class, were wrongfully

misclassified as independent contractors rather than an employees. See, e.g., Giufu Li, 2011 WL

4635198, at *8 (“The typicality requirement is met here because Plaintiffs have alleged an identical

injury, namely that the proposed class members were improperly classified as independent

contractors and as a result they were denied a host of work-related benefits provided by California

labor laws.”); Bowerman II, 2015 WL 1321883, at *15 (holding typicality was satisfied because the

named plaintiffs’ “claims arise from the same conduct that provides the basis for all class members’

claims – namely, FAS’s alleged misclassification of vendors as independent contractors and


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7 Apparently, Uber was paying referral bonuses to existing Uber drivers, like Manahan, whosuccessfully recruited Lyft drivers to drive for Uber. Both the referred driver and the referee wouldreceive a bonus as long as the new driver completed a minimum number of rides (e.g., 20) for Uberwithin a certain period of time. See Manahan Depo. Tr. at 282:3-13.

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consequent failure to pay overtime wages and indemnify costs”); Breeden v. Benchmark Lending

Group, Inc., 229 F.R.D. 623, 629 (N.D. Cal. 2005) (typicality met where class representatives’

misclassification claims are “precisely the same as the claims of the other class members”); Dalton

v. Lee Publ’ns Inc., 270 F.R.D. 555, 560 (S.D. Cal. 2010) (explaining that the class representatives

“performed nearly identical work as the class members. They were all classified as independent

contractors, not employees. They have allegedly suffered damages similar to the class members in

the form of unpaid wages and improper deductions and expenses, among other things. The named

plaintiffs’ claims are therefore typical of the class”).

Uber’s next typicality argument fares no better. Uber claims that named Plaintiff Manahan is

subject to a unique defense because he “conceded” at his deposition that he “fraudulently

manipulated Uber’s driver referral program,” thereby wrongfully obtaining $25,000 from Uber.

Opp. Br. at 33. In a footnote, Uber then argues that “Manahan’s fraudulent conduct . . . exposes him

to a unique counterclaim for breach of contract and a unique affirmative defense of unclean hands.”

Id. at 33 n.21. This argument is flawed for a multitude of reasons. First, Uber has not actually

pleaded a counterclaim for breach of contract against Manahan, despite the fact that his deposition

was completed over a year ago. Docket No. 300 (Lipshutz Decl.), Ex. B. (Manahan Depo).

Moreover, Manahan’s deposition testimony is far less damning than Uber’s brief implies. At best,

Manahan testified that on one occasion he requested multiple rides from a Lyft driver whom he had

referred to drive for Uber so that the driver would meet his necessary ride quota, and the two of

them would thereby receive their respective referral bonuses from Uber.7 See Manahan Depo. Tr. at

276:6-288:1. While Manahan paid Uber (and thus his referred driver) for the rides he booked,

Manahan did not actually ride in the car with the driver. Id. at 286:1-13. Even if this activity could

constitute fraud, which Uber has not nearly established (and Manahan denies), there appears to be no

evidence in the record that Manahan engaged in such activity more than once. Thus, Manahan is not

likely subject to a “unique defense” that will “become the focus of the litigation.” Hanon, 976 F.2d


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8 Uber also argued that Colopy would be an inadequate class representative. This point isnot currently ripe. Because Colopy drove for independent transportation companies rather thanUber directly as an individual, he is not a member of the certified class and similarly cannotrepresent members of that class. Whether he might be an adequate representative of a subclassPlaintiffs may seek to certify as discussed below is not an issue currently before the Court.

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at 508; see also Yucesoy v. Uber Techs., Inc., No. 15-cv-262-EMC, 2015 WL 4571547, at *3 (N.D.

Cal. Jul. 28, 2015) (recognizing that “the general rule . . . is that unrelated unethical or even criminal

conduct is not sufficient to support a finding of inadequacy”) (citation omitted).

Of course, while Uber likely cannot prove that Manahan actually committed fraud, it could

conceivably use Manahan’s deposition testimony about the referral program to attack his credibility

should he testify at trial. Indeed, Uber argues that both Manahan and Gurfinkel8 have

“demonstrated a severe lack of credibility and trustworthiness regarding the material issues of this

case and their relationships with Uber.” Opp. Br. at 33. As this Court has previously recognized,

“credibility may be a relevant consideration with respect to the adequacy analysis,” because “an

untrustworthy plaintiff could reduce the likelihood of prevailing on the class claims.” Harris v.

Vector Mktg. Corp., 753 F. Supp. 2d 996, 1015 (N.D. Cal. 2010) (citations and internal quotations

omitted). “That being said, credibility problems do not automatically render a proposed class

representative inadequate.” Id. (internal modifications, quotation marks, and citations omitted).

Rather, “[o]nly when attacks on the credibility of the representative party are so sharp as to

jeopardize the interests of absent class members should such attacks render a putative class

representative inadequate.” Id. (citation omitted). Thus, a finding of inadequacy based on the

representative plaintiff’s credibility problems is only appropriate where the representative’s

credibility is seriously “questioned on issues directly relevant to the litigation or there are confirmed

examples of dishonesty, such as a criminal conviction for fraud.” Id. (citation omitted).

None of the named Plaintiffs’ putative credibility problems are sufficiently severe so as to

undermine their ability to serve as class representatives. For instance, Uber states that Colopy

provided “contradictory responses” in discovery; however, the Court reviewed the cited discovery

responses and found no contradiction at all. Other claimed credibility problems also appear

relatively minor. For instance, in a request for admission (RFA), Manahan denied that “UBER has


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9 Admittedly in the deposition excerpts provided by Uber, Gurfinkel apparently did not specifically identify the expense reimbursement claim being prosecuted by Plaintiffs under LaborCode section 2802. But unlike in Richie, Gurfinkel was never asked directly whether he wasbringing a reimbursement claim, and thus there is no proof that Gurfinkel would have “disavowedany intent to pursue a claim for mileage reimbursement” had he been asked. Richie, 2014 WL6982943, at *19. Moreover, it is at least reasonably plausible that a lay person like Gurfinkel couldbelieve that his answer that he was seeking to be declared an employee of Uber would alsoadequately describe his rights and remedies as an employee under the Labor Code, which includesexpense reimbursement under section 2802.

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not established any schedule for when YOU must use the UBER APP,” but later testified at his

deposition that while Uber “encourag[ed] me to work busier times,” Uber had never actually “set

[his] schedule.” Manahan Depo. Tr. at 308:20-309:1. This and other apparent contradictions

between Manahan’s and Gurfinkel’s RFA responses and their later deposition testimony are not

sufficiently serious to support a finding of inadequacy.

Uber additionally argues that Gurfinkel is an inadequate class representative because he

testified at his November 2014 deposition that he does not “have any understanding as to what [his]

responsibilities would be to the extent this case were to be certified as a class,” did not know the

name of the presiding judge, did not know precisely who the other named plaintiffs are, nor knew

what motions had been filed to that point in this case. See Lipshutz Decl., Ex. D (Gurfinkel Depo.)

at 33:11-17, 143:1-22. But a putative class representative will only be deemed inadequate “if she is

startlingly unfamiliar with the case,” and specifically lacks a “general understanding of the claims

asserted.” See Richie v. Blue Shield of Cal., No. 13-cv-2693-EMC, 2014 WL 6982943, at *18 (N.D.

Cal. Dec. 9, 2014) (emphasis added) (citations omitted). Thus in Richie, this Court found a class

representative inadequate because the putative representative could not “articulate the basic harm on

which she has filed suit to recover.” Id. at *19. Here, however, Gurfinkel was able to articulate the

basic elements of his claim, testifying that the claims alleged in this lawsuit involve “an employer-

employee relationship” and the request for payment of tips.9 Gurfinkel Depo. Tr. at 144:2-22. Nor

has Uber shown that Gurfinkel’s purported ignorance at his deposition nearly a year ago has

persisted to the present day.

Finally, Uber vigorously argues that the named Plaintiffs are neither adequate nor typical of

the putative class members they seek to represent because they “seek a remedy – an employment


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10 Indeed, a significant percentage of the 400 declarations submitted by Uber appear to befrom drivers who likely will not be members of the certified class. See, e.g., Evangelis Decl., Ex. 3(listing numerous declarants who did not partner directly with Uber); Ex. 6 (listing numerousdeclarants who own their own transportation services company). Thus, it is safe to assume that ofthe roughly 150 declarations submitted by individuals who would prefer to remain independentcontractors, a significant number of these individuals will similarly not be actual class members.

11 Uber submitted a copy of the scripts its attorneys used to solicit these declarations. Docket No. 319-3. The scripts only suggest generically that class members might be entitled torestitution of tips or reimbursement of certain expenses – no possible dollar figure is mentioned. Moreover, Uber did not submit evidence of what it told drivers once they agreed to be interviewedfor the purpose of submitting a declaration. Rather, the very end of the script reads “Ok, let’s beginthe interview . . . .” The Court has no idea what Uber’s attorneys actually told the drivers duringtheir interviews.

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relationship with Uber – that irreconcilably conflicts with the interests of countless drivers . . . .”

Opp. Br. at 30; see also id. at 3 (arguing that “Plaintiffs are taking positions directly contrary to the

desires of many of the very people they claim to represent – who do not want to be employees and

view Uber as having liberated them from traditional employment”). The Court rejects this

argument. First, while Uber claims that “countless drivers” hail the firm as a “liberator” from

traditional employment, Uber has only submitted evidence of the beliefs of a small fraction of its

California drivers: 400 out of 160,000 (i.e., 0.25%). Notably, even out of these 400 declarations,

Uber identified only about 150 where the driver actually stated that she prefers to remain an

independent contractor. See Evangelis Decl., Ex. 10 (chart listing roughly 150 “Drivers Who Want

To Be Treated As Independent Contractors With Uber”). There is simply no basis in the record

supporting Uber’s claim that some innumerable legion of drivers prefer to remain independent

contractors rather than become employees.

Moreover, not only are the expressed views of these 400 drivers a statistically insignificant

sample of the views of their fellow drivers and class members, there is nothing to suggest (and Uber

does not contend) that these 400 drivers were randomly selected and constitute a representative

sample of the driver population.10 Nor is there evidence that the responses of these drivers were free

from the taint of biased questions. Nothing suggests, for instance, that they were told that were the

Plaintiffs to prevail, they might be entitled to thousands of dollars.11

More fundamentally, the views expressed have little probative value to the question at hand.

As the Court noted at the hearing on Plaintiffs’ motion, it has doubts that most Uber drivers or


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declarants correctly understand the pertinent legal differences between being an employee and an

independent contractor, or the potential consequences of this lawsuit. See, e.g., Docket No. 336

(Oral Arg. Tr.) at 16:19-17:25. Indeed, Plaintiffs submitted five counter-declarations from drivers

who had previously provided declarations for Uber that indicate that the declarants did not

understand when they provided their initial declarations that they would be entitled to expense

reimbursement or other employee-only benefits if the Plaintiffs prevail on their claims here. See,

e.g., Docket No. 314-1 (Beltran Decl). at ¶¶ 5-7. Furthermore, the Court’s independent review of

the 400 declarations seems to indicate that most (if not all) Uber drivers who reported a desire to

remain independent contractors are operating under the assumption that they would lose all

“flexibility” in their working relationship with Uber if they are reclassified as employees. See Oral

Arg. Tr. at 16:19-17:25. But Uber has not definitely established that all (or even much) of this

“flexibility” would necessarily be lost, nor has Uber even established that a victory for Plaintiffs in

this lawsuit would require Uber to use “less flexible” work schedules going forward. See Smith v.

Cardinal Logistics Mgmt. Corp., No. 07-cv-2104-SC, 2008 WL 4156364, at *7 (N.D. Cal. Sept. 5,

2008) (“Plaintiffs, however, are not seeking to outlaw the employment relationship of an

independent contractor. Rather, Plaintiffs are alleging that the current system, as operated by

Cardinal, violates California law by attempting to label Cardinal delivery drivers as independent

contractors when such drivers are employees as a matter of law. Even if Plaintiffs were to

eventually prevail on this claim, there would be nothing to stop Cardinal, at that point, from

employing actual independent contractors, so long as such an arrangement complied with California

law.”). Indeed, even if Uber loses this case, it will be free to restructure its relationship with its

drivers in such a way that the drivers would actually be bona fide independent contractors.

Furthermore, even if Uber had demonstrated some real tension between the goals of the class

representatives and some statistically significant percentage of the class members, courts have

refused to find inadequacy on these grounds. As one district judge correctly explained, “the

conflicts that Rule 23(a) is concerned about are conflicts between the class representatives and other

members of the putative class, not between those who do and don’t think a lawsuit is a good idea in

the first place. Just because potential class members disagree with the spirit of an action doesn’t


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mean it shouldn’t be certified. It will almost always be the case that some putative class members

are happy with things as they are.” Norris-Wilson, 270 F.R.D. at 606 (citations omitted); see also

Guifu Li, 2011 WL 4635198, at *9 (holding that the fact that “some potential class members may

prefer their current employment situation[] is not sufficient to defeat adequacy”); Smith, 2008 WL

4156364, at *7. Indeed, as Judge Conti correctly explained in Smith, where putative employees seek

to invoke the protections afforded under California labor laws, the Court “must be mindful” of the

fact that “‘the protections conferred by [these laws] have a public purpose beyond the private

interests of the workers themselves.’” Smith, 2008 WL 4156364, at *7 (quoting Borello, 48 Cal. 3d

at 358); see also Department of Labor Administrator’s Interpretation No. 2015-1, 2015 WL

4449086, at *1 (July 15, 2015) (noting as a public policy matter that “[m]isclassification also results

in lower tax revenues for government and an uneven playing field for employers who properly

classify their workers”). “It would be antithetical” to the public interest embodied in California’s

Labor Code to permit a statistically insignificant portion of Uber’s workforce “to frustrate the

attempt by others to assert rights under California labor law solely because [they] are satisfied with

their current jobs.” Smith, 2008 WL 4156364, at *7. Moreover, if there really are class members

who truly object to the goals of this lawsuit, they are always free to opt-out of this class action. See

Dalton, 270 F.R.D. at 560-61.

In conclusion, the Court finds that Manahan’s and Gurfinkel’s Tips Claims are typical of

their fellow class members’ claims, and that both representative Plaintiffs are adequate class

representatives.

D. Plaintiffs Have Not Met Their Burden to Prove Adequacy With Respect to Their Expense

Reimbursement Claim

By contrast, Plaintiffs have not demonstrated that they are adequate class representatives

with respect to their expense reimbursement claim under Labor Code section 2802. That provision

provides, as relevant here, that:

An employer shall indemnify his or her employee for all necessaryexpenditures or losses incurred by the employee in direct consequenceof the discharge of his or her duties . . . .


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Cal. Lab. Code § 2802(a) (emphases added). As this Court has previously recognized, expense

reimbursement claims under section 2802 can sometimes be problematic to certify as class actions

because “there may be substantial variance as to what kind of expenses were even incurred by [the

putative employees] in the first place.” Harris, 753 F. Supp. 2d at 1022; see also Giufu Li, 2011 WL

4635198, at *14 (denying certification of section 2802 claim where plaintiffs did not narrow their

“claim to any specific expenses or category of expenses, and as a result, Plaintiffs claim

reimbursement over a wide and divergent range of items”). Moreover, depending on the case, it

may be challenging to determine on a classwide basis whether a particular expense (or type of

expense) was “necessary” or incurred in “direct consequence” of the employee’s duties. See Harris,

753 F. Supp. 2d at 1022; Giufu Li, 2011 WL 4635198, at *14 (holding that it would be difficult to

determine on a class wide basis whether massage therapists’ expenses for various items like

uniforms, sheets, oil, paper, and flyer fees were “necessary” or incurred in “direct consequence” of

their duties).

That is not to say, of course, that a class action can never be certified under section 2802.

The opposite is clearly true. See, e.g., Dalton, 270 F.R.D. at 563-64 (certifying Rule 23 class action

that included expense reimbursement claim under section 2802); Stuart v. Radioshack Corp., No.

07-cv-4499-EMC, 2009 WL 281941 (N.D. Cal. Feb. 5, 2009) (same); Shepard v. Lowe’s HIW, Inc.,

No. 12-cv-3893-JSW, 2013 WL 4488802 (N.D. Cal. Aug. 19, 2013) (same). But certification of

such claims typically requires the Plaintiff to identify “specific expenses or categor[ies] of expenses”

that were incurred uniformly (or are calculable based on a common formula) on a classwide basis,

and that the answers to section 2802’s “necessity” and “direct consequence” inquiries will similarly

be subject to common proof across the class. See Giufu Li, 2011 WL 4635198, at *14

Plaintiffs seemed to suggest in their papers, and again at the hearing, that the “main thing

that we’re seeking” is reimbursement for vehicle operating expenses, such as gas, maintenance and

wear and tear. See Oral Arg. Tr. at 92:24-25. And Plaintiffs further suggested that the Court could

utilize the Internal Revenue Service’s (IRS) mileage reimbursement rate to easily determine


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12 The IRS mileage reimbursement rate is calculated by the IRS “based on an annual studyof the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs,tires, maintenance, gas and oil.” Seehttp://www.irs.gov/uac/Newsroom/New-Standard-Mileage-Rates-Now-Available;-Business-Rate-to-Rise-in-2015, last accessed August 18, 2015.

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damages on a classwide basis for their section 2802 claim.12 Such a class might be certifiable –

indeed, this Court has previously certified a class action on behalf of drivers who sought

reimbursement of vehicle operation expenses using the IRS reimbursement rate as the common

damages model. Stuart, 2009 WL 281941, at *18; see also Dalton, 270 F.R.D. at 564 (certifying

class action on behalf of newspaper delivery drivers where damages would be determined on

classwide basis using IRS standard mileage allowance); Gattuso v. Harte-Hanks Shoppers, Inc., 42

Cal. 4th 554, 569 (2007) (explaining that the IRS reimbursement rate is considered a generally

permissible measure of vehicle operation expense for purposes of Labor Code section 2802).

However, when the named plaintiffs seek to waive other elements of damage on behalf of the class

in order to facilitate class certification, the Court must determine whether representation is adequate.

In particular, the Court must examine, inter alia, the relative magnitude of the damage elements

sought to be waived; where elements of damages for the class sought to be waived are substantial,

questions may be raised about the adequacy of representation. See Tasion Commc’n, Inc. v. Ubiquiti

Networks, Inc., -- F.R.D. --, 2015 WL 4734935, at *10 (N.D. Cal. 2015) (finding an “adequacy

problem” where “[p]laintiffs have failed to give any real explanation as to why they are willing to

abandon other kinds of compensable damages” where the value of the forgone damages is “likely to

exceed by many times” the measure of damages the plaintiffs actually sought); Drimmer v. WD-40

Co., No. 06-cv-900 W(AJB), 2007 WL 2456003, at *5 (S.D. Cal. Aug. 24, 2007) (“A class

representative is not an adequate representative when the class representative abandons particular

remedies to the detriment of the class.”); Thompson v. Am. Tobacco Co., Inc., 189 F.R.D. 544, 550

(D. Minn. 1999).

Plaintiffs here did not make any attempt to demonstrate that the monetary value of the other

types of expenses that they had previously sought to recover for absent class members in this

litigation, and now would be waiving in order to obtain class certification (e.g., water bottles, gum


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13 While it is somewhat unclear, it is possible that the Plaintiffs are not willing to waiverecovery of all other types of expenses not encompassed in the IRS mileage rate. See Oral Arg. Tr.at 93:1-24. If that is the case, however, the Plaintiffs did not even begin to explain how the Courtcould certify such a class (or classes). Indeed, a significant flaw pervades many aspects ofPlaintiffs’ class certification papers: Rather than providing detailed proposals of how this Courtmight certify or try different class claims from the one Plaintiffs asked to be certified, Plaintiffssimply state without explanation that the Court could “use subclasses” or “employ” certain trialmanagement techniques. That is, Plaintiffs put the burden on this Court to figure out precisely whatclaims (or portions of claims) might be certifiable. That is not an acceptable practice. The Court,facing a motion for class certification, must determine the nature of this proof and whether it isamenable to class treatment in adjudicating the motion, rather than deferring the question until trial. Nor does Plaintiff’s trial plan, even if relevant, submitted for the first time at the hearing, cure thisdeficiency. First, the plan was untimely – Plaintiffs’ motion for class certification was filed in April2015. That was the time to submit detailed trial proposals and define possible subclasses, not on theday of the hearing. Moreover, Plaintiff’s trial plan is still not sufficiently detailed regarding how orwhy this Court should engage in the types of subclassing or employ the various trial proceduresPlaintiffs suggest.

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and mints for passengers, clothing, etc...),13 were not so substantial so as to create a conflict of

interest between the class representatives and class members. That is, Plaintiffs have not

demonstrated (or even tried to demonstrate) that it is in the best interests of the absent class members

to waive their claims for reimbursement of all their actual expenses (including actual vehicle

operation expenses) that are not captured by the IRS mileage rate formula.

To be clear, the Court does not conclude that Plaintiffs could not make such a showing. For

instance, Plaintiffs could submit an expert report or other evidence that shows that absent class

members will be well served receiving the IRS mileage rate rather than receiving their actual

damages. On the current record, however, the Plaintiffs have not provided the Court with sufficient

information for it to be reasonably assured that what Plaintiffs purport to be giving up on behalf of

the class members they seek to represent is not of such value to absent class members that the

interests of those class members would be at odds with those of the named Plaintiffs. Thus,

Plaintiffs have not established adequacy with respect to their expense reimbursement claim, and the

claim cannot be certified at this time.

E. The Rule 23(b)(3) Requirement of Predominance is Satisfied

Having satisfied the Rule 23(a) criteria for their Tips Claim, the Plaintiffs must next

demonstrate that the proposed class claim meets the requirements of Rule 23(b)(3), which tasks the

Court with determining whether common questions of law and fact predominate over individualized


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14 Plaintiffs suggest that this Court could apply an alternate test of employment under theCalifornia Supreme Court’s decision in Martinez v. Combs, 49 Cal. 4th 35, 64 (2010). Reply Br. at1 n.1. The Court declines to do so at this juncture absent more definitive guidance from theCalifornia Supreme Court or Ninth Circuit indicating that the Borello test should not apply here.

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issues, and whether class adjudication is superior to individual litigation of the Plaintiffs’ claims.

Fed. R. Civ. P. 23(b)(3) (providing a court may certify a (b)(3) class if it “finds that the questions of

law or fact common to the class members predominate over any questions affecting only individual

members, and that a class action is superior to other available methods for fairly and efficiently

adjudicating the controversy”). “The predominance test of Rule 23(b)(3) is ‘far more demanding’

than the commonality test under Rule 23(a)(2).” Villalpando, 303 F.R.D. at 607 (quoting Amchem

Prods., Inc. v. Windsor, 521 U.S. 591, 624 (1997)). Only where “common questions present a

significant aspect of the case and they can be resolved for all members of the class in a single

adjudication [is] there clear justification for handling the dispute on a representative rather than

individual basis.” Hanlon, 150 F.3d at 1022 (citations omitted); see also Edwards v. First Am.

Corp., -- F. 3d. --, 2015 WL 4999329, at *7 (9th Cir. Aug. 24, 2015).

Here, the Court must actually perform the predominance analysis twice. First, the Court

considers whether common questions predominate over individualized issues with respect to the

employment misclassification claim. “If they do not, then the inquiry ends there and class

certification should be denied.” Giufu Li, 2011 WL 4635198, at *12. “If, however, common

questions predominate the classification inquiry,” the Court then considers Plaintiffs’ individual

substantive claim “to determine whether [it] also pass[es] the predominance test.” Id.; see also

Norris-Wilson, 270 F.R.D. at 606 (following same analytical protocol); Villalpando, 303 F.R.D. at

608 (same); Soto v. Diakon Logistics (Del.), Inc., No. 08-cv-33-L(WMC), 2013 WL 4500693, at *8

(S.D. Cal. Aug. 21, 2013) (same).

1. Whether Class Members Are Employees or Independent Contractors

The question of whether class members are employees or independent contractors under

California law turns on the application of the common-law test from Borello.14 As discussed above,

the Borello analysis proceeds in roughly two stages. First, the fact-finder considers “the putative


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employer’s right to control work details.” Borello, 48 Cal. 3d at 350. Then the fact-finder considers

the various “secondary indicia” enumerated by the Supreme Court. Id.

Recently, the California Supreme Court issued an comprehensive opinion clarifying what

putative class plaintiffs must show to demonstrate that the Borello test can be adjudicated on a

classwide basis. Ayala, 59 Cal. 4th 522. While the Ayala Court was considering the issue under

California’s state-law class action rules, the predominance requirement discussed at length in Ayala

appears essentially identical to the predominance requirement under Rule 23(b)(3). Compare Ayala,

59 Cal. 4th at 530, 532-33 with Fed. R. Civ. P. 23(b)(3). Indeed, the California Supreme Court has

“stated that in determining whether a class action proponent has demonstrated a predominance of

common issues and manageability of the class, ‘we may look to the procedures governing federal

class actions under rule 23 of the Federal Rules of Civil Procedure for guidance.’” Lockheed Martin

Corp. v. Super. Ct., 29 Cal. 4th 1096, 1121 (2003) (quoting Washington Mutual Bank, FA v.

Superior Court, 24 Cal. 4th 906, 922 (2001)); see also Green v. Obledo, 29 Cal. 3d 126, 145-46

(1981) (explaining that it is “well established that in the absence of relevant state precedents our trial

courts are urged to follow the procedures prescribed in rule 23 of the Federal Rules of Civil

Procedure for conducting class actions”) (citations omitted). Thus, while Ayala’s considered

discourse on the application of the predominance requirement in misclassification cases is not

binding on this Court, it is persuasive authority that has been followed carefully by other federal

courts. See, e.g., Villalpando, 303 F.R.D. at 608; Bowerman II, 2015 WL 1321883 at *9.

As the Supreme Court explained in Ayala, when evaluating predominance with respect to

California’s common-law test of employment, the court “must determine whether the elements

necessary to establish liability [here, employee status] are susceptible to common proof or, if not,

whether there are ways to manage effectively proof of any elements that may require individualized

evidence.” Ayala, 59 Cal. 4th at 533 (alteration in original). “Consequently, at the certification

stage, the relevant inquiry is not what degree of control [Uber actually] retained over the manner and

means” of its drivers’ performance. Id. While under Borello, the question as to the extent of the

employer’s right to control (as distinct from actual control) is one which goes to the merits (see

Alexander, 765 F.3d at 989; Ruiz v. Affinity Logistics Corp., 754 F.3d 1093, 1101-03 (9th Cir.


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15 Uber’s expert, Professor Justin McCrary, goes on at length about how some Uber driversdrive only part-time while others drive full-time, etc. What the Professor does not acknowledge,however, is that this is irrelevant for the class-certification analysis under Borello. The relevantquestion is Uber’s right to control its drivers’ schedules. Because it uniformly has no such control,it is not surprising that there are significant differences between class members with respect to theactual number of hours they spend driving for Uber.

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2014)), the question currently before the Court on class certification is “one step further removed: Is

[Uber]’s right of control over its [drivers], whether great or small, sufficiently uniform to permit

classwide assessment?” Ayala, 59 Cal. 4th at 533 (emphasis added). Put differently, “is there a

common way to show that [Uber] possessed essentially the same legal right of control with respect

to each of its [drivers]?” Id. Or, viewing the issue from the flip side of the same coin, did Uber’s

right to control its drivers “vary substantially, such that it might subject some [drivers] to extensive

control as to how they [performed], . . . while as to others it had few rights and could not have

directed their manner of [performance] even had it wanted, with no common proof able to capture

these differences.” Id. at 533-34. Thus, “[f]or class certification under the common law test, the key

question is whether there is evidence a hirer possessed different rights to control with regard to its

various hirees, such that individual mini-trials would be required.” Id. at 536 (emphasis in original);

see also Villalpando, 303 F.R.D. at 608-09; Bowerman II, 2015 WL 1321883, at *9.

a. Uber’s Control Over Driver Schedules

Whether a putative employer has the power to dictate its hirees’s work schedule is highly

relevant to the right of control test. See, e.g., Alexander, 765 F.3d at 989-990; Arnold v. Mutual of

Omaha Ins. Co., 202 Cal. App. 4th 580, 589 (2011). Here, both parties agree that Uber does not

control any of its drivers’s schedules – all Uber drivers are free to work as much or as little as they

like so long as UberBlack drivers give at least one ride every thirty days, and UberX drivers give at

least one ride every 180 days. See Evangelis Decl, Ex. 46; see also Opp. Br. at 23 (“All drivers

decide, based on their own preferences and availability, when and how much to work.”) (emphasis

added); Docket No. 319-3 (Uber Attorney Script) (internal document prepared by Uber’s lawyers

confirms that “Uber never sets drivers’ schedules, [and] never requires them to log into the Uber

App for any minimum amount of time”) (emphases added); Docket No. 301 (McCrary Report) at ¶¶

120-122.15 Uber does not address this point in its papers, simply noting that “evidence that Uber


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does not control drivers’ schedules might weigh heavily in favor of a finding of independent

contractor status.” Opp. Br. at 19. But while Uber is correct that this factor will likely weigh in its

favor on the merits, the fact that Uber admits that it exercises a uniform amount of control over its

drivers’ work schedules (i.e., none) benefits Plaintiffs at the class certification stage because it

proves that this factor can be adjudicated on a classwide basis.

b. Uber’s Control Over Driver Routes or Territories

Uber similarly does not dispute that it uniformly exercises no control over where its drivers

work or what routes they take. See McCrary Report at ¶¶ 119-127; Uber Attorney Script (admitting

that Uber “never assigns [drivers] a territory”); Docket No. 210-4 (Uber SJ. Mot.) at 20 (arguing that

it is “undisputed that” Uber “did not assign [Plaintiffs] a territory”). While this fact may support

Uber’s position on the merits, it supports Plaintiffs’ position at class certification because this factor

can be adjudicated on a classwide basis.

c. Pay Set Unilaterally by Uber

As a number of courts have recognized, bona fide independent contractors typically have the

power to set their own compensation or at least “negotiate for higher rates.” Ruiz, 754 F.3d at 1101.

By contrast, where the putative employer maintains a unilateral right to control the hiree’s “salary,”

this supports a finding of employee status. See id.

Here, Uber argues that some of its drivers have negotiated to receive higher fares from Uber,

but this is false. As discussed in this Court’s summary judgment order, the evidence is clear that

Uber sets its drivers’ pay without any input or negotiation from the drivers. O’Connor, 2015 WL

1069092, at *7; see also Docket No. 313-5 (Coleman Depo.) at 165:2-21 (Uber 30(b)(6) deponent

testified that he is “not aware of any negotiations that may have happened” between Uber and its

drivers regarding prices); id. at 168:3-7 (“Uber sets the prices that are offered to riders and offered to

drivers as well. It’s certainly within either of their rights to use the system or not use the system to

get connected with one another.”). Indeed, Uber’s own expert recognizes that “Uber is at liberty to

charge the referral rate it deems appropriate.” McCrary Report at ¶ 169. Uber’s arguments to the

contrary, therefore, are wholly without merit.


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16 Exhibit 15 to the Evangelis Declaration lists certain declarants who have “accepted lessthan the maximum fare,” but most of these drivers stated that they have turned off the meter earlyonce or a handful of times, and most stated that they did so because they had made a “mistake,” suchas taking a wrong turn, and thus the fare amount otherwise would have been too high.

17 Uber also seems to suggest that drivers negotiate their fares with Uber because Uberallows them to request “fare adjustments (e.g., to reflect multiple stops on a route).” Opp. Br. at 24. Even assuming this is true, Uber does not argue that it permits some drivers to request fareadjustments while prohibiting others from doing so (i.e., exercises a different right of control overdifferent drivers). Thus Uber’s argument is not well-taken at the class certification stage.

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Uber suggests that it “uses ‘surge pricing’ as a form of negotiation to bid up compensation

and entice drivers to log in and accept ride requests.” Opp. Br. at 24. Even if true, this is not

evidence that Uber does not unilaterally maintain the right to control it drivers’ compensation, or

that drivers can actually negotiate over their compensation with Uber. The evidence is undisputed

that, as with its “normal fares,” the “surge pricing” fare is unilaterally set by Uber, not by individual

drivers – there is no “negotiation” between Uber and Uber drivers over fares. If Uber wants to raise

prices, it raises prices. If Uber wants to lower prices, it lowers prices. Put simply, it is Uber that

sets the price, and drivers either accept Uber’s offered piece rate or do not. See McCrary Report at ¶

140 (Uber’s expert notes that all drivers “earn money piece rate when they take driving jobs”).

Uber’s alternative suggestion similarly misses the mark. Uber suggests that drivers have the

power to negotiate their own fares with riders because they can turn off the Uber application before

a ride is complete. As Professor McCrary put it, quoting from one of Uber’s 400 driver declarations,

certain Uber drivers may be “‘very soft-hearted and [] will give people a few miles for free. I will

turn off the app and let them have a few free miles if I’ve enjoyed the conversation and we’ve had a

nice time.’” McCrary Report at ¶ 143. Of course, Uber does not submit proof to indicate how many

of its drivers are “very soft-hearted,” or how many regularly turn off the meter early as some sort of

price negotiation.16 In any event, to suggest that Uber drivers’ alleged right to turn off the meter

before a ride is over – which right, by the way, Uber seems to admit is uniformly possessed by all

Uber drivers – is proof of the drivers’ power to negotiate their compensation with Uber is incorrect:

The fact that an Uber driver can theoretically negotiate with her passenger to accept a lower fare

than that passenger would otherwise be charged says nothing about that driver’s power to negotiate

fares with her putative employer – Uber.17 There can simply be no dispute that Uber does not let any


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18 In passing, Uber suggested that certain of its contracts purport to forbid drivers from usingthe Uber application and competitor applications “simultaneously.” Opp. Br. at 6. This is hard tosquare with Uber’s own contentions elsewhere that it “never restricts [drivers] from simultaneoususe of other apps like Lyft and Sidecar.” Uber Attorney Script at 1. Indeed, Uber argued in itsearlier summary judgment motion that it is “undisputed that, consistent with [their contracts],Defendants . . . . did not restrict [named Plaintiffs] from using other similar lead generation servicessimultaneously with the Uber App, and did not restrict them from engaging in any other occupationor business.” Uber SJ. Mot. at 20. Notably, at least two of the named Plaintiffs (Manahan andGurfinkel) whose claims were at issue at the summary judgment stage were bound to versions ofUber’s contracts that Uber now tries to suggest actually did “restrict them from using other similarlead generation services simultaneously.” Id.; see also id. at 1 (“Transportation providers may usethe Uber App as much or as little as they like, while continuing to service their regular clients orpassengers acquired from any other source – including from competing services like Sidecar andLyft . . . .”) (emphasis omitted). Uber cannot have it both ways. The Court finds that [there is noevidence] that Uber has actually maintained or exercised a right to control its drivers to prevent themfrom driving for other third-party transportation providers. Rather, as Uber itself has repeatedlyargued, Uber uniformly maintains no control over whether its drivers can use competingapplications. Although there were some contracts which prohibit “simultaneous use” of competitorapplications, Uber has presented no evidence that Uber has ever enforced these provisions.

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of its drivers negotiate their compensation – fares are unilaterally determined by Uber. See also

Opp. Br. at 24 (admitting that Uber does not allow drivers to charge more than the “maximum [fare]

set by the App”). Uber’s uniform and unilateral right to control its drivers’ compensation is

important common proof that bears directly on the class members’ work status.

d. Use of Third-Party Applications

Uber claims in its opposition brief that “Uber does not limit drivers’ ability to seek and

obtain employment with third-party employers . . . .” Opp. Br. at 7. Indeed, in the script Uber’s

attorneys used to solicit driver declarations, Uber admitted that it “never restricts [drivers] from

engaging in another occupation or business, and never restricts them from simultaneous use of other

apps like Lyft and Sidecar.”18 Uber Attorney Script at 1 (emphases added). If true, this would

support an independent-contractor determination on the merits. See, e.g., Ali v. U.S.A. Cab Ltd., 176

Cal. App. 4th 1333, 1349 (2009) (recognizing that a putative employee’s right to work for other

firms is indicative of an independent contractor relationship). For the purposes of class certification,

however, what is relevant is that Uber acknowledges that it retains the exact same right of control

over all of its drivers with respect to their ability to work for other companies like Lyft and Sidecar –

none. Thus, this factor can easily be adjudicated on a classwide basis.


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e. Star Ratings, Monitoring of Driver’s Performance And Compliance With

Uber’s Training “Requirements” or “Suggestions”

The evidence shows that Uber provides its drivers with various training materials when they

first sign up to become drivers during a process Uber calls “onboarding.” Uber admits that all

drivers “must attend” some onboarding training “before they begin to use the Uber App,” Opp. Br.

at 5, but claims that the content of these training sessions has varied considerably from city to city

and over time. Thus, Uber claims that determining what “suggestions” it has given its drivers

regarding how to perform well as an Uber driver cannot be manageably analyzed on a classwide

basis. This argument misses the point, however. As the California Supreme Court has made clear,

whether Uber “varied in how it exercised control does not answer whether there were variations in

its underlying right to exercise that control . . . .” Ayala, 59 Cal. 4th at 534 (emphasis in original).

The fact that some Uber drivers in 2009 may have been trained to drive with their radio set to NPR

or smooth jazz, while in 2013 others were told (or, as Uber prefers, “suggested”) to drive with their

radio off or set to a classical music station, does not determine whether Uber uniformly maintained

the right and power to actually monitor and enforce its drivers’ compliance with whatever

“requirements” or “suggestions” Uber gave, regardless of their precise content. See, e.g., Docket

No. 223-6 (undated Uber SF Onboarding Script including statements such as “[m]ake sure the radio

is off or on soft jazz or NPR,” and “You should NOT contact the client for any reason AFTER the

trip, except for lost items”); Docket No. 223-20 (undated Uber training materials stating, among

other things, “no papers in visor,” “front seat forward,” “rims are spotless,” and telling drivers not to

“forget to shower”). In any event, there is evidence in the record of Uber promulgating some

consistent and significant rules that have applied to all drivers throughout the class period. See, e.g.,

Docket No. 223-13 at 8 (Uber prohibits “client solicitation” or otherwise asking an Uber “client to

become a client of your private car service business”).

Uber’s right to control its drivers’ actual performance can be evaluated on a common basis

by considering Uber’s uniform ability to monitor that performance. Uber does not dispute that it

collects extensive performance data regarding all of its drivers, and asks riders to rank all drivers’

performance after each ride on a one-to-five scale. See, e.g., Coleman Decl., Ex. K at § 11.2


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(contract providing Uber the right to “collect, use, and share precise geo-location data” of its drivers

for the “analytical, marketing and commercial purposes of Uber”); id. at § 4.3.3 (contract providing

that “Uber utilizes a five-star rating system designed to allow the Users of its Software to provide

feedback on the level of service provided” by its drivers and stating that “there is a minimum star-

rating Drivers must maintain to continue receiving access” to the Uber application). Uber does not

claim that only some of its drivers are subject to such monitoring while others are not – rather, all

Uber drivers are subject to being monitored via star ratings and Uber’s application data. Such

evidence of employee monitoring is relevant to the “right to control” inquiry, see Alexander, 765

F.3d at 990, and the fact that Uber has a uniform right to monitor its drivers’ performance supports

adjudicating the misclassification question on a classwide basis. Ayala, 59 Cal. 4th at 536.

There can be no dispute – Uber maintains a uniform ability to monitor certain aspects of its

drivers’ performance, principally through the star rating system and other rider feedback provided to

Uber through the application, and the evidence further shows that Uber actually uses this

information to reprimand or terminate drivers who do not meet Uber’s standards. See, e.g., Docket

No. 238-2, Ex. 23 (Uber spreadsheet listing drivers who received performance warnings or were

deactivated from the Uber application because of low star ratings or as a result of other complaints

Uber received from riders through the application); Docket No. 238-5, Ex. 27 (email from Uber

terminating driver, and explaining that Uber makes its termination decision “based heavily on

feedback from our customers. Unfortunately, with a rating of 4.1 stars, your account is in the

bottom 5% of our active drivers, and with a number of outstanding client issues we had no choice

but to deactivate [your account]”); Docket No. 223-24 (email from Uber threatening driver with

termination for accepting cash tips). Thus, common evidence probative of Uber’s right to monitor

and control driver’s performance weighs in favor of class certification.

f. Uber’s Right to Terminate Without Cause

As noted above, a putative employer’s right to discharge a hiree at will, without cause, is

“[p]erhaps the strongest evidence of the right to control.” Ayala, 59 Cal. 4th at 531. Here, Plaintiffs

contend that Uber has uniformly retained the right to discharge all of its drivers at will, citing

provisions in Uber’s contracts with its drivers that purport to give Uber that very right. To the


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19 Uber argues that contracts which provide a mutual right to terminate at will are “evidenceof an independent-contractor” relationship and thus are somehow distinguishable from contracts thatonly provide the employer with a right to terminate at will, which contracts would indicate anemployment arrangement. Uber is incorrect. The driver’s right to terminate at will is indicative ofemployee status. The California Supreme Court in Ayala recognized that a bona fide independentcontractor cannot terminate the agreement at will – if he was truly a contractor he would have tofinish out his contract or pay damages to Uber for early termination. Ayala, 59 Cal. 4th at 531 n.2. Thus, the fact that some Uber agreements expressly provide that a driver has the right to quit at will,while others are silent on this issue does not suggest there is any real variation in driver’s rights.There is no contractual provision restricting a driver’s right to quit or imposing any penalty therefor.Uber has presented no evidence that it has ever sought contract damages from a driver who stoppeddriving for Uber, or that it has even contemplated doing so.

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extent that Uber has uniformly retained a right to discharge its drivers at will in its standardized

form contracts, this factor weighs heavily in favor of class certification. See Ayala, 59 Cal. 4th at

534 (explaining evidentiary importance of form employment contracts); Villalpando, 303 F.R.D. at

608 (recognizing that “uniform contracts are a significant focus of the ‘right to control’ inquiry”)

(citing Alexander, 765 F.3d at 989-94 and Ruiz, 754 F.3d at 1102).

Uber argues that Plaintiffs cannot manageably show that Uber retained a uniform right to

terminate its drivers at will for at least two reasons. First, Uber argues that there are simply too

many contracts – seventeen different versions in all – that could have possibly governed the

relationship between Uber and the class members. See Opp. Br. at 14. More importantly, however,

Uber claims that the various provisions of these 17 agreements changed materially over time. For

instance, Uber claims that in eight of the seventeen contracts, the parties “reserve a mutual right to

terminate for both Uber and the driver,”19 while in “other agreements” Uber solely “reserve[s] a right

to terminate for specific misconduct and require[s] a minimum amount of notice,” while “[s]till

others provide Uber a unilateral right to terminate at will.” Opp. Br. at 16 (emphasis in original).

Uber’s characterization of its contracts with its drivers is inaccurate.

Of the seventeen contracts, fifteen have been promulgated since 2013. Careful review of

these contracts shows that each one contains at an at-will termination clause, although the precise

language employed is somewhat different between some of the contracts. For instance, the July

2013 Software License and Online Services Agreement provides that “[t]his Transportation

Company Agreement shall commence on the date this Agreement is accepted, for an indefinite

period of time, unless terminated by either party by written notice with due observance of a notice


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2820 Uber does not argue or cite any authority indicating that this difference is somehow

material to the employment classification question under either Borello or Ayala. It is not.

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period of seven (7) calendar days.” Coleman Decl., Ex. D at § 9.1; see also id. at Ex. H at §

9.1(same language in December 2013 version of contract); Id., Ex. K at § 9.1 (same language in

June 21, 2014, version of contract); id., Ex. P at § 12.2 (November 2014 Rasier agreement providing

that either party may terminate “without cause at any time upon seven (7) days prior written

notice”); id., Ex. Q at § 12.2 (same language in April 2015 Uber agreement). Similarly, various

Rasier “Transportation Provider Service Agreements” provide that the contract may be terminated

“[b]y either party without cause upon thirty (30) days’ prior written notice to the other party.” Id.,

Ex. C at 10; see also id., Ex. F at 9 (same); id., Ex. G at 9 (same); id., Ex. J at 9 (same); id., Ex. M at

10 (same). Thus, for eleven of the seventeen potential contracts, Uber clearly retained a uniform

right to unilaterally terminate its drivers without cause, the only difference being whether Uber was

required to give seven or thirty days notice of its unilateral termination decision.20

Uber similarly retained a unilateral termination right in its four “driver addenda.” Three of

these driver addenda provide that “Uber reserves the right, at all times and at Uber’s sole discretion,

to reclaim, prohibit, suspend, limit or otherwise restrict the Subcontractor from accessing or using

the Driver App or the Device if the Transportation Company or its Drivers fail to maintain the

standards of appearance and service required by the users of the Uber Software.” Colman Decl., Ex.

E at § 2.1 (emphasis added); id., Ex. I at § 2.1 (same); id., Ex. L at at § 2.1 (same). And the fourth

driver addendum similarly provides Uber the right to unilaterally terminate drivers without cause,

providing that a “[d]river may be deactivated or otherwise restricted from accessing or using” the

Uber application for any “reason at the reasonable discretion of Uber.” Id., Ex. O at at § 2.3. Put

simply, the driver addenda permit Uber – in either its “sole” or “reasonable” (but either way

unreviewable) discretion – to terminate a driver with no notice whatsoever.

At bottom then, fifteen of the seventeen potentially applicable contracts in this case (and all

of the contracts issued to drivers from roughly February 2013 onwards) contain express language

that provides Uber with a right to terminate any and all drivers without cause. The only variation

between the contracts is immaterial under the “right-of-control” test – whether Uber can fire its


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21 Other evidence in the record supports the Court’s conclusion that Uber has alwaysmaintained a uniform right to fire its drivers without cause. For instance, as noted above, Uber’sformer CEO testified that he is unaware of any system that would permit Uber to determine what itscontractual duties are vis-á-vis termination with respect to any individual driver. Graves Depo. at185:25-186:8. Moreover, Plaintiffs have submitted evidence that indicates Uber has actuallyexercised its right to terminate at will. See, e.g., O’Connor, 2015 WL 1069092, at *7 (citing

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drivers at will without notice, with only seven days notice, or with thirty days notice. See Shepard,

2013 WL 4488802, at *4 (noting that while there were “minor differences among the contracts for

the types of installers and . . . [provisions which] changed over time, the variations do not effect the

issue of Defendant’s right to control”) (citation and internal quotation marks omitted). And even if

these differences were somehow potentially material, Plaintiffs have presented evidence that Uber

does not in practice differentiate between contracts in terminating drivers. See Docket No. 313

(Liss-Riordan Decl.), Ex. 3 (Graves Depo.) at 185:25-186:8 (testimony of Uber’s former CEO that

he is not aware of Uber having any method to ascertain which of its seventeen contracts applies to a

given driver in order to determine “whether or not that driver can be deactivated in Uber’s

discretion”). The fifteen contracts the Court has discussed are therefore probative common proof

that Uber has maintained a uniform right to unilaterally terminate its drivers without cause

throughout much of the class period.

This leaves for consideration only the two additional contracts that were in place between

Uber and its drivers until early 2013. See Colman Decl., at Exs. A and B. Uber notes that these

contracts are entirely silent as to whether Uber had the right to unilaterally terminate its drivers. See

Evangelis Decl., Ex. 53 (conceding that these contracts do not say one way or another whether Uber

could terminate a driver without cause). This is not helpful to Uber, however, because California

law is clear that there is a “statutory presumption of at-will employment” where an agreement is

otherwise silent as to whether the employer can only terminate with cause. See Guz v. Bechtel Nat.

Inc., 24 Cal. 4th 317, 335 (2000) (describing California’s statutory presumption); Cal. Lab. Code §

2922 (“An employment, having no specified term, may be terminated at the will of either party on

notice to the other.”). Neither of Uber’s pre-2013 contracts contain a for-cause termination

requirement, and neither have a “specified term.” See Colman Decl., at Exs. A and B. Thus, Uber

retained a uniform right to terminate all of its drivers at will under these contracts as well.21


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evidence); Docket No. 238-3; Docket No. 238-5; Docket No. 238-2. Uber, by contrast, has notpresented even a scintilla of evidence showing that it has ever been (or even felt) constrained in itsright to terminate at will.

22 The Court does not find that there is any individual variation with respect to the “distinctoccupation” portion of the first Borello secondary factor. The Court has already held that Uber is inthe transportation business as a matter of law, and it is similarly beyond dispute that its drivers are inthe transportation business as well. Thus there can be no doubt that the “one performing services”here is not “engaged in a distinct occupation” from Uber, and that this answer is common for allclass members. This is different than having a “distinct business.”

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In sum, all seventeen of Uber’s contracts provide Uber with the right to unilaterally terminate

its drivers without cause. This common proof will allow this important factor in the Borello test to

be analyzed on a classwide basis without individualized inquires. Thus, this factor weighs heavily

in favor of class certification.

g. Borello’s Secondary Factors

Uber also argues that analysis of the Borello secondary factors is not possible on a classwide

basis. Uber is wrong. In fact, it appears every single Borello secondary factor can be adjudicated on

a classwide basis using common proof.

i. Whether The One Performing Services is Engaged in a Distinct

Occupation or Business

Uber strenuously argues that a class cannot be certified here because the very first Borello

factor is not subject to resolution with common proof across the class. Uber’s argument is correct

up to a point. The Plaintiffs’ original proposed “mega-class” of all Uber drivers who have ever

driven for Uber since 2009 likely cannot be certified because, as Uber persuasively argues, there

would be tremendous (and likely material) variance between those class members who held

themselves out as a distinct business – or contracted to drive for Uber indirectly through a distinct

third-party business that had itself contracted with Uber to provide driving services – and those who

did not.22 For instance, Uber rightly argues that putative class member Mark Forester and named

Plaintiffs Manahan and Gurfinkel are very differently situated with respect to the first Borello factor.

While Manahan and Gurfinkel signed up to be UberX drivers directly with Uber, are paid directly by

Uber for their services, and do not hold themselves out as distinct business entities, Forester is a

driver and part owner of a formally incorporated transportation company that has hired 34


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23 That is not to say that Forester or those who subcontracted with him to perform drivingservices for Uber cannot be Uber’s employees. Cf. Martinez, 49 Cal. 4th at 72-74 (explaining thatwhere a contractor is a firm’s employee, there is a “strong possibility, generally speaking, that thecontractor and its employer jointly employ the contractor’s employees”) (citation omitted). Whatthe Court decides today is simply that Plaintiffs have failed to establish sufficient commonality ofproof to adjudicate the claims of these subcontracted drivers with the claims of those drivers whocontracted directly with Uber to perform services. Should Plaintiffs still seek to certify an additionalclass or subclasses that includes drivers like Forester and his subcontractors, the parties shouldproperly address the issue of joint employment and how that might impact the class certificationanalysis.

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“employee-drivers who operate a fleet of 12 vehicles” who all use the Uber application. See Uber

Hearing Slides at 4. The Court cannot conclude that a jury would necessarily reach the same result

under the common-law test of employment with respect to Uber drivers like Mr. Forester and drivers

like Mananhan and Gurfinkel.23 See, e.g., Bowerman v. Field Asset Servs., Inc., No. 13-cv-0057-

WHO, 2014 WL 4676611, at *10 (N.D. Cal. Sept. 17, 2014) (Bowerman I) (initially denying class

certification for want of predominance, and remarking that “[i]t is critical to me” that some proposed

class members “have independent businesses and do not work full time for [Defendant]”); Sotelo v.

MediaNews Group, Inc., 207 Cal. App. 4th 639, 657-68 (2012) (affirming denial of class

certification where the trial court had found a materially significant difference between proposed

class members with respect to the “distinct business” Borello factor).

Nor can the Court say with confidence that a driver like putative named Plaintiff Colopy –

who is not actually a member of the class being certified herein – is sufficiently similar to Gurfinkel

and Manahan to conclude that the first Borello test would have a common answer between these

three drivers. Colopy drove for Uber through two different independent limousine companies that

had themselves contracted to provide services to Uber. He did not drive exclusively Uber – Colopy

also provided transportation services to the limousine companies’ clients. See Colopy Depo. Tr. at

59:16-60:16. By contrast, Manahan and Gurfinkel contracted directly with Uber and are paid

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24 The Court finds that there is a material difference under Borello between drivers whodrove as subcontractors for firms that themselves contracted directly with Uber to providetransportation services for Uber, and drivers who individually contracted with Uber and have alsoindividually contracted with Uber’s competitors such as Lyft or Sidecar. While drivers in the formercategory at least initially appear to be engaged in a “distinct business” that is selling its services toUber (and potentially other clients), drivers in the later category more closely resemble individualworkers who simply labor for two or more entities. To use a hypothetical, drivers like Colopy maymore closely resemble workers who labor for a catering company and are assigned jobs with thecatering company’s clients. Drivers like Manahan and Gurfinkel, however, more closely resemblefast-food workers who may work shifts at both Burger King and McDonald’s. In contrast to anindividual who holds two jobs, one having a distinct business, such as a consulting firm, that servesmany clients (as opposed to a single putative client), is a factor utilized by courts and agencies underboth California law and in other contexts when considering independent contractor status. CompareBowerman I, 2014 WL 4676611, at *11 (finding that distinct business factor under Borellomaterially varied where “[s]ome vendors have many clients; some only FAS”) with Bowerman II,2015 WL 1321883, at *10-11 (granting class certification where revised class only included“vendors who work for FAS at least 70 percent of the time” and thus “are substantially dependent onFAS for their revenue”). See also Department of Labor Administrator’s Interpretation No. 2015-1,2015 WL 4449086, at *4-5, 8 (noting that “courts have described independent contractors as thoseworkers with economic independence who are operating a business of their own” and further notingthat “[a]n independent contractor typically makes investments that support a business as a businessbeyond any particular job”); Brock v. Super. Care, Inc., 840 F.2d 1054, 1059 (2d Cir. 1988)(explaining that under the FLSA test, which was partially incorporated into the California law test inBorello, the “ultimate concern is whether, as a matter of economic reality, the workers depend uponsomeone else’s business for the opportunity to render service or are in business for themselves”).

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directly by Uber.24 While the Court will not prejudge the issue, it seems at least plausible that a jury

could find this type of variation in circumstances material to the Borello analysis.

That is not to say that the Court is necessarily foreclosing class certification for drivers who

drove for third-party transportation companies, although further subclassing might be necessary if

Plaintiffs are to demonstrate that an additional class (or classes) of such drivers can be certified

under Rule 23(b)(3). For instance, Uber has submitted evidence that some portion of its drivers who

drive through third-party transportation companies only render service to Uber clients, or service

substantially more Uber clients than clients obtained through other sources. See, e.g., Docket No.

307 at 394 (Ezzikhe Decl.) (indicating that “100% of my business comes from leads generated

through the Uber App”); id. at 452 (Gebretensia Decl.) (same); id. at 470 (Girma Decl.) (“The Uber

app makes up about 90% of my business”); id. at 286 (Collins Decl.) (same). While such drivers

technically drive for distinct businesses, in reality they appear to be largely (if not entirely)

economically dependent on Uber for their livelihoods. See, e.g., Messenger Couriers Ass’n of Am.

v. California Unemployment Ins. Appeals Bd., 175 Cal. App. 4th 1074, 1092 (2009) (suggesting that


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25 To be clear, the Court is also not holding that differences between class membersregarding the “distinct business” Borello factor will always be sufficiently material to theclassification analysis to derail class certification in every case. As noted elsewhere in this Order,the Borello factors must be considered on a case-by-case basis. The fact that in this specific case theCourt finds that this Borello secondary factor may well have a significant impact on the merits andthus informs the scope of the class to be certified does not require a similar finding by a differentcourt faced with different facts.

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the Borello analysis requires the court to consider “criteria such as the economic dependence of the

worker” on the putative employer). By contrast, other Uber drivers who work for third-party

transportation companies may derive a much smaller portion of their business from Uber. See, e.g.,

Docket No. 307 at 378 (Enriquez Decl.) (“I would say that 30% of my revenue comes from Uber.”);

id. at 45 (Alshara Decl.) (same). While the Court is not currently willing to certify these drivers as a

group as class members, it is possible Plaintiffs could demonstrate that some such drivers could

participate in a class action via an appropriately defined subclass or subclasses where there are no

material variations within such subclass. At this point in the litigation, the Court is simply holding

that drivers who drove for third-party transportation companies cannot as a group be members of the

same class as Uber drivers who contracted with Uber directly, and did not operate or work for a

distinct business entity while driving for Uber.25

At the hearing, Plaintiffs belatedly proposed certain subclasses that they claim could

eliminate any predominance issues with respect to drivers who serve Uber clients through third-

party transportation companies. For instance, Plaintiffs suggested that the Court could certify a

subclass of all drivers who operated or worked for a third-party transportation company and who

performed services for Uber full-time (e.g., 30 or more hours per week). While it is conceivable that

a group of such drivers who drive essentially full time (however that is defined) for Uber may

present a subclass that meets commonality and predominance requires (see Bowerman II, 2015 WL

1321883, at *1, 10-11), the Court today denies Plaintiffs’ request to certify such a subclass (or other

possible subclasses) without prejudice. Plaintiffs have not met their burden to demonstrate that such

a class would be certifiable. Notably, Plaintiffs have not offered a concrete proposal regarding how

the members of any such subclass (or classes) could be identified for ascertainability purposes. For

example, Plaintiffs have not submitted any proof that they could objectively identify all drivers who


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2826 I.e., they signed up for Uber and/or are paid in a fictitious/corporate name, instead of as

an individual.

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drove for Uber more than 30 hours per week. Alternatively, if a subclass were to be defined by the

percentage of rides given to Uber customers versus customers obtained from other sources, Plaintiffs

have not shown that they could objectively determine whether a driver was more like Ezzikhe or

Gebretensia (i.e., drive solely for Uber) or more like Enriquez or Alshara (i.e., drive for Uber about

30% of the time).

Importantly, the possible predominance problems identified immediately above do not affect

the class certification analysis for the class the Court is actually certifying herein. Specifically, the

class as defined does not present a predominance problem with respect to the “distinct business”

factor because all drivers who operated or drove for a third-party transportation company – as

opposed to driving directly for Uber itself or one of its wholly-owned subsidiaries – are currently

excluded from the class defined in this order. Clearly, there can be no material classwide variation

with respect to the “distinct business” Borello factor to the extent that all drivers who signed up to

drive for Uber as a “distinct business,”26 or who drove as purported subcontractors for a distinct

business entity that contracted directly with Uber, are not members of the class. The members of the

class consist solely of those who do not operate a distinct business in their relationship with Uber.

Thus, with respect to the class actually being certified, the Court finds that the first Borello factor

can be proved with common proof, and Rule 23(b)(3)’s predominance requirement is met.

ii. The Kind of Occupation, With Reference to Whether, in The Locality,

The Work is Usually Done Under The Direction of The Principal or by

a Specialist Without Supervision

There can be no question that the answer to this Borello secondary factor will be common to

all class members. Here, the “kind of occupation” at issue (i.e., driver) is the same for every class

member. And Uber has presented no evidence that drivers in some locations are typically

supervised while they drive, while drivers in other locations are “specialists” who can drive without

supervision. Indeed, Uber argued at summary judgment that each named Plaintiff was a specialist

who drove passengers without supervision. Uber SJ. Mot. at 24. The named Plaintiffs drove for


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Uber in San Francisco, Los Angeles, and San Diego, respectively. Uber essentially concedes it does

not believe that the second Borello factor varies by location; it certainly has presented no evidence

of such variation. The second Borello factor will have a common answer to all class members. See

Ayala, 59 Cal. 4th at 538 (“In a case where every class member performs the same tasks, some

factors will always be common, such as the kind of occupation and the skill it requires.”) (emphasis

added) (citation omitted).

iii. The Skill Required in The Particular Occupation

The third Borello factor will also have a common answer for all class members. All Uber

drivers share the same occupation (driver), and Uber does not argue that the “skill required” of its

drivers varies from driver to driver or location to location. Nor is there evidence in the record that

the level of skill required of Uber drivers varies between class members. For instance, Uber does

not require a special type of license for any of its drivers. This factor can be adjudicated on a

classwide basis.

iv. Whether The Principal or The Worker Supplies The Instrumentalities,

Tools, And The Place of Work For The Person Doing The Work

The fourth Borello secondary factor can be adjudicated on a classwide basis. There is no

dispute that all drivers have to provide their own vehicles. See, e.g., McCrary Report at ¶ 151

(“Uber does not provide drivers with a vehicle.”). Similarly, there is no dispute that Uber does not

provide a “place of work” for its drivers. Uber drivers work in the cars that they themselves

provide.

Indeed, the only equipment Uber offers to its drivers is a smartphone to access the Uber

application. McCrary Report at ¶ 151. Not all Uber drivers take Uber up on this offer – some

provide their own phones, while others lease a phone through Uber. Id. On the current record, it is

unclear whether the number of Uber drivers who lease a smartphone from Uber is large (e.g., 50% of

the class) or small (e.g., 1% of the class). If it is the latter, any individual variation would have

minimal impact on class certification. Moreover, the fact that some drivers lease the phone from

Uber does not mean that Uber is providing the phone; if the driver has to pay for the use of the

phone, as a financial matter, it is the driver, not Uber that is supplying the phone. And even if there


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were significant classwide variation as to who actually provides a driver’s smartphone, this issue

simply is not sufficiently material to be an impediment to class certification. See Ayala, 59 Cal. 4th

at 539 (holding that “[w]hen the issue of common law employment is involved,” the weighing of

Borello’s secondary indicia “must be conducted with an eye to the reality that the considerations in

the multi-factor test are not of uniform significance . . . . The proper course, if there are individual

variations in parts of the common law test, is to consider whether they are likely to prove material”).

As the cases make clear, the real heart of the inquiry under the fourth Borello secondary

factor is the relative investment in equipment as between the putative employer and the laborer. See

Alexander, 765 F.3d at 995 (finding that this Borello factor favored FedEx because drivers provided

the more costly equipment, such as delivery trucks, while FedEx made significantly less expensive

equipment available to drivers, such as package scanners); Borello, 48 Cal. 3d at 346, 355, 357

(requiring the Court to consider the “employee’s investment in equipment or materials required for

his task,” and noting in that specific case that the sharefarmers “invest nothing but personal service

and hand tools,” whereas the putative employer made significant investments in land, transportation

of crops to market, and the like); Restatement (Second) of Agency § 220 cmt. k (noting that “if the

worker is using his employer’s tools or instrumentalities, especially if they are of substantial value, .

. . this indicates that the owner is a master”) (emphasis added); see also Department of Labor

Administrator’s Interpretation No. 2015-1, 2015 WL 4449086, at *7-8 (explaining that courts in the

analogous FLSA context “consider the nature and extent of the relative investments of the employer

and the worker”). Here, the relative investment in tools and equipment is reasonably discernable on

a classwide basis – all drivers invest considerably more in tools and equipment by obtaining their

own vehicle than Uber does by arguably providing certain of its drivers with a smartphone. Thus,

the Court finds that the fourth Borello factor can be adjudicated on a classwide basis.

v. The Length of Time For Which Services Are to be Performed

Uber argues that this Borello factor cannot be adjudicated on a classwide basis because

“[d]rivers’ usage of the Uber App varies dramatically. Some rarely use the App . . . [while] [o]thers

use the Uber App more than 60 hours per week.” Opp. Br. at 4. This argument is meritless with

respect to this factor for at least two reasons.


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27 It is also inconsistent with Uber’s previous position at the summary judgment stage, whereUber acknowledged that it signs “long-term or indefinite contract[s]” with its drivers, but arguednevertheless that this Borello factor “either supports independent contractor status or is neutral.” Uber SJ. Mot. at 25-26.

28 Moreover, as noted above, it is undisputed that Uber uniformly relinquishes control overall of its worker’s hours – thus individual variation between drivers with respect to whether theydrive full-time or part-time for Uber cannot defeat class certification because Uber’s right to control(or not control) this aspect of the drivers’ work is uniform across the class. See Ayala, 59 Cal. 4th at533-34.

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First, it is irrelevant.27 This Borello factor does not ask whether a hiree’s shift is long or

short (i.e., whether the average hiree works 5 hours per week or 75); rather the focus is on whether

the duration of the putative employment relationship is extended and open-ended, or short and

specified. See Alexander, 765 F.3d at 996; Narayan, 616 F.3d at 903. The fifth Borello factor asks

the fact-finder to evaluate the “length of time for which services are to be performed,” not the length

of time for which services are performed within a given day or workweek. Indeed, as the Ninth

Circuit recently explained in commenting on this Borello factor, it is the:

length and indefinite nature of the plaintiff Drivers’ tenure with EGL[that] point[s] toward an employment relationship . . . . This was not acircumstance where a contractor was hired to perform a specific taskfor a defined period of time. There was no contemplated end to theservice relationship at the time that the plaintiff Drivers beganworking for EGL.

Narayan, 616 F.3d at 903. Whether some Uber drivers work longer days than others is simply not

relevant to this determination.28

Second, even if Uber had made (and substantiated) the correct argument with respect to this

factor – that some of its drivers only remain Uber drivers for a relatively short period of time (i.e.,

give a couple of rides and then quit) while others (like the named Plaintiffs) drive with the company

for years – it would make no material difference relative to this Borello factor. It is undisputed that

Uber’s contracts provide that the relationship between Uber and its drivers is open-ended and could

have an infinite duration. See, e.g., Coleman Decl., Ex. D at § 9.1 (“This Transportation Company

Agreement shall commence on the date this Agreement is accepted, for an indefinite period of time,

unless terminated by either party . . . .”); id., Ex. F at 9 (no set duration to relationship between

driver and Uber); id., Ex. Q at § 12.1 (same); Uber SJ. Mot. at 25-26 (conceding that Uber’s


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29 Admittedly, some of Uber’s contracts require drivers to accept at least one ride requestfrom Uber every 30 or 180 days to remain active on the Uber application. This is not particularlyinformative, however. As long as the driver meets this minimal requirement, the contractscontemplate that the relationship between the parties will last indefinitely. There is no specific timeframe for which Uber drivers are hired, nor specific end dates in any of the contracts.

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contracts with drivers are “long-term or indefinite”). And there is no evidence in the record that,

contrary to the contract rights, Uber actually terminates any of its drivers after some specified term

has expired, or otherwise restricts its drivers’ ability to use the Uber application after some specific

set period of time has elapsed.29 This factor is therefore capable of adjudication on a classwide

basis.

vi. The Method of Payment, Whether by Time or by The Job

This Borello secondary factor will have an answer common to the class, and is thus capable

of classwide resolution. There is no dispute that all Uber drivers are paid by the job, as Uber’s own

expert admits. See McCrary Report at ¶ 140 (“Drivers contracting with Uber earn money piece rate

when they take driving jobs.”). Uber’s only response is contained in the following sentence from its

opposition brief: “Drivers are generally compensated on a per-ride basis by Uber, but others may

have different terms depending on their relationship with Uber partners and whether the partners

provide vehicles and cover the drivers’ expenses.” Opp. Br. at 23. This is immaterial to this

Borello secondary factor as to the class certified herein. The class as currently defined only includes

drivers who were paid directly by Uber, and all drivers who are paid directly by Uber are paid on a

per-job basis.

vii. Whether or Not The Work is a Part of The Regular Business of The

Principal

As this Court has already found, Uber’s business is the business of transportation. See

O’Connor, 2015 WL 1069092, at *6 (holding that “it is clear that Uber is most certainly a

transportation company”). It is equally clear that Uber drivers are also in the transportation

business. This factor has a common answer – the drivers’ work is part of the regular business of

Uber – and thus this factor can be adjudicated on a classwide basis.


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30 Nor has the Court identified any such declaration in Uber’s voluminous filing.

31 Of course, that is not to say that drivers were not actually Uber’s employees. Whether ornot Uber misclassified its drivers is the central issue to be decided in this case. For the purposes ofthis particular Borello factor, however, the question is not whether the drivers thought they shouldbe employees, or even whether after some contemplation they now think that they are employees,but whether they believed they were signing on to be Uber’s employee when the relationshipbetween the parties was first “created.” See, e.g., Department of Labor Administrator’sInterpretation No. 2015-1, 2015 WL 4449086, at *4 (“Likewise, workers who are classified asindependent contractors may receive a Form 1099-MISC from their employers. This form simplyindicates that the employer engaged the worker as an independent contractor, not that the worker isactually an independent contractor . . . .”).

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viii. Whether or Not The Parties Believe They Are Creating The

Relationship of Employer-Employee

Uber argues that the eighth Borello factor cannot be adjudicated on a classwide basis because

its drivers likely had different subjective expectations as to whether they were creating an

employment or independent contractor relationship with Uber when they first signed up to drive for

the company. Opp. Br. at 22. The Court disagrees. Notably, Uber has provided no evidence that

any of its drivers actually had varying subjective expectations regarding their employment status at

the time of contracting. For instance, while Uber provided the court with a chart listing every one of

its 400 declarants who “intended to create an independent contractor relationship with Uber,” the

company submitted no corresponding chart indicating that even a single one of its declarants

“intended to create an employment relationship with Uber.”30 See Evangelis Decl., Ex. 11.

Indeed, the evidence overwhelmingly indicates that all Uber drivers likely understood

themselves to be agreeing to be independent contractors when they first signed up to drive for Uber.

Most probatively, every version of Uber’s contracts with its drivers states clearly and expressly that

the parties intend to form an independent contractor relationship; not an employment relationship.

See, e.g., Coleman Decl., Ex. A. at 9574 (disclaiming any employment relationship in Uber’s first

driver contract); id., Ex. Q at § 13.1 (disclaiming any employment relationship in Uber’s most recent

driver contract). Moreover, Uber has previously admitted that it “never provided” drivers with “any

employment benefits, and never reported their earnings on a Form W-2.” Uber SJ Mot. at 2. Thus,

all drivers were confronted with the same set of circumstances when they signed up with Uber.31

These circumstances apply even in the case of the two named Plaintiffs when they first signed up to


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be Uber drivers. See, e.g., Gurfinkel Depo. Tr. at 51:3-53:15 (acknowledging that he filed his taxes

as an independent contractor and certified his independent contractor status to the IRS); Manahan

Depo. Tr. at 186:25-187:6 (same); see also Uber SJ. Mot. at 13 (arguing that the named Plaintiffs

acknowledged their alleged independent contractor status because none of them “ever reported to the

IRS that they had earned any wages from [Uber] or Rasier. Instead, each filed their taxes as self-

employed, reporting business income and taking advantage of various deductions they would not

have been able to take as employees”). What is important under this Borello factor is not the

particular legal label attached (expressly or implicitly) by the parties to the relationship (cf.

Alexander, 765 F.3d at 989; Borello, 48 Cal. 3d at 349), rather, it is their understanding as to the

nature of that relationship as a matter of fact (e.g., the amount of control Uber had a right to exercise

and the other Borello factors). This factor is subject to proof common for the class.

Moreover, the California Supreme Court in Ayala cautioned that the relevant inquiry with

respect to this particular Borello factor may depend not just on the subjective beliefs of the parties,

but on “general custom with respect to the nature of the work.” Ayala, 59 Cal. 4th at 538. The

Court explained:

It is not determinative that the parties believe or disbelieve that therelation of master and servant exists, except insofar as such beliefindicates an assumption of control by the one and submission ofcontrol by the other. However, community custom in thinking that akind of service, such as household service, is rendered by servants, isof importance.

Id. (citation omitted). Community custom is likely informed by facts commonly applicable to the

class.

Finally, even if there were individual variance with respect to this factor, it would still not

defeat class certification because this particular Borello secondary factor is entitled to the least

weight of all of the various factors. As the Borello opinion itself makes clear, “[t]he label placed by

the parties on their relationship is not dispositive, and subterfuges are not countenanced.” Borello,

48 Cal. 3d at 349. Indeed, in Alexander the plaintiffs formally admitted that they all “intended to

enter into an independent contractor relationship” with FedEx when they were first hired, and

nevertheless the Ninth Circuit held that they were employees as a matter of law. See Alexander, 765


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32 Whether a reasonable juror would consider such decisions to be examples of a driver’s“managerial skill” is significantly open to doubt. But at the class certification stage that is of nomoment, because the answer to that question will be the same for all class members.

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F.3d at 996-97; see also JKH Enters., Inc. v. Dep’t of Indus. Relations, 142 Cal. App. 4th 1046,

1064 (2006) (recognizing that “neither JKH’s nor the drivers’ own perception of their relationship as

one of independent contracting” is dispositive or particularly important when balanced with the

remaining Borello factors); Grant v. Woods, 71 Cal. App. 3d 647, 654 (1977) (“[T]he belief of the

parties as to the legal effect of their relationship is not controlling if as a matter of law a different

relationship exists.”). Because this factor is typically not entitled to significant weight, Uber could

not defeat class certification even if it had established that some of its drivers had a different

subjective understanding of the parties’ relationship than others.

ix. The Alleged Opportunity For Profit or Loss Depending on His

Managerial Skill

Uber argues that this Borello secondary factor cannot be adjudicated on a classwide basis

because some Uber drivers employ “driving strategies” in an effort to maximize profits, while others

do not. Opp. Br. at 23-24. For instance, Uber notes that some drivers “target geographic regions

that tend to have higher demand, drive during hours when demand is at its peak, or drive when

‘surge pricing’ is available. On the other hand, some drivers . . . drive when and where they are

available, regardless of demand or surge pricing.”32 Id. at 23. This argument fails. Notably, the

factor asks whether the drivers have an “opportunity for profit or loss depending on . . . managerial

skill.” Borello, 48 Cal. 3d at 355 (emphasis added). Uber, however, once again erroneously focuses

on the “variations in the actual exercise of control” rather than the relevant “right to control.” Ayala,

59 Cal. 4th at 536. Uber does not claim that it prohibits some drivers from driving in certain

“geographic regions that tend to have higher demand” while permitting others to drive in these more

profitable areas. Nor does Uber dictate whether only some drivers can drive during surge pricing.

All Uber drivers have the exact same “opportunity” to earn profits or losses depending on their

alleged “managerial skill.”


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x. The Alleged Employee’s Investment in Equipment or Materials

Required for His Task, or His Employment of Helpers

As noted above, class members’ investment in equipment or materials is the same on a

classwide basis – there is no dispute that all drivers provide their own equipment, including

vehicles, with the possible exception of some unspecified portion of class members who might lease

a smartphone from Uber. And even in that instance, it appears that it is the driver who is the party

providing the phone because the driver pays to lease it from Uber. The Court finds that any such

variation is either non-existent or immaterial to the class-certification analysis, and that common

questions predominate with respect to investment in equipment or materials. See Section II.E.1.g.iv,

supra.

Uber argues, however, that there is still considerable variance among class members with

respect to this Borello secondary factor because a number of Uber drivers employ helpers (i.e., hire

subcontractors), while others do not. Uber argues that this difference is highly material to the class

certification analysis, and that variance on this Borello factor defeats predominance. The Court

disagrees.

First, it is important to note that Uber purports to allow all of its drivers to hire

subcontractors. There is no evidence in the record that Uber permits some drivers to hire helpers,

while prohibiting others from doing so. Thus, Uber’s right to control class members’ employment

of helpers is uniform across the class.

More importantly, however, the fact there may be variance as to whether class members

actually employ helpers is immaterial to the weighing of the Borello factors in this specific case.

The law is clear that where the principal retains the right to “approve all helpers, this [is] indicative

of control of the details of the drivers’ performance under California law.” Alexander, 765 F.3d at

994 (citing Narayan, 616 F.3d at 902). That is, the tenth Borello factor may weigh in favor of

finding employee status even if a putative employee has hired subcontractors, so long as the

subcontractors hired were subject to the principal’s approval and control. As the Ninth Circuit

explained in Alexander, citing other recent Ninth Circuit case law:


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In Narayan, we concluded that, where drivers ‘retained the right toemploy others to assist in performing their contractual obligations,’but the company had to approve all helpers, this was indicative ofcontrol of the details of the drivers’ performance under California law. 616 F.3d at 902. And in Ruiz, we found that drivers were employeeswhere the company ‘retained ultimate discretion to approve ordisapprove of those helpers and additional drivers.’ 754 F.3d at 1102. ‘Approval was largely based upon neutral factors, such as backgroundchecks required under federal regulations,’ but the drivers nonethelessdid not have an unrestricted right to choose these persons, which is an‘important right that would normally inure to a self-employedcontractor.’ Id. [further citations omitted]. Further, ‘any additionaldrivers were subject to the same degree of control exerted by Affinityover the drivers generally.’ Id.

Alexander, 765 F.3d at 994. (internal modifications omitted).

As the above-cited cases make clear, a worker’s right to hire subcontractors (or the worker’s

actual utilization of subcontractors) is only indicative of a bona fide independent contractor

relationship where the putative employer does not retain the right to approve the worker’s choice of

subcontractors and where the putative employer does not retain the right to subject the worker’s

chosen subcontractors to the “same degree of control” as the worker herself. See Alexander, 765

F.3d at 994.

The evidence here demonstrates that Uber maintains a uniform right to approve its drivers’

chosen subcontractors. And it is undisputed that Uber maintains the very same right to control the

performance of its drivers’ chosen subcontractors as it does over the drivers themselves. See, e.g.,

Uber SJ. Mot. at 9 (stating that the “Licensing Agreements expressly provide that: . . . [t]he

transportation companies’ employees and subcontractors are bound by the terms of the Licensing

Agreements”) (emphasis added). For instance, the record shows that drivers are flatly prohibited

from “[a]llowing someone else to drive under your Uber account,” which is characterized as a “zero

tolerance” event. Docket No. 223-13 at 8; see also Docket No. 238-1 at 2 (“[Y]our account has been

deactivated permanently due to receiving reports that you have been sharing your account with other

drivers. This is not an acceptable practice, as all of our drivers must go through the application

process for safety reasons.”) (emphasis added). Moreover, Uber’s contracts with its drivers mandate

that any driver/entity who wants to hire a subcontractor must have that subcontractor sign one of

Uber’s “Driver Addenda,” which contracts state that the subcontractor must bind herself to the very


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same contract with Uber as the “hiring” driver/entity. See, e.g., Coleman, Decl., Ex. D. at § 1.8

(“‘Driver Addendum’ means the applicable terms and conditions that Transportation Company is

required to enter into with all Drivers prior to allowing access to the Software and Uber Services . . .

By consenting to this agreement, You are consenting to the Driver Addendum.”); id., Ex. E (Driver

Addendum) at § 1 (“As a condition of receiving trip requests though the Service, Subcontractor

hereby acknowledges and agrees to be bound by the Software License and Online Services

Agreement between Transportation Company and Uber . . . .”); see also id. at § 2.1 (providing Uber

with the right to fire subcontractors in its “sole discretion” if the subcontractor does not meet

standards set by Uber). Uber exercises a veto right over all subcontractors, and subjects all

subcontractors to the exact same level of control as all of its other drivers. Under such

circumstances, therefore, whether a class member actually employs helpers or not will likely have

no impact on the Borello analysis – either the class member does not hire helpers or the class

member does hire helpers who must be approved and are monitored by Uber; in either case, this

Borello factor would appear to weigh in favor of a finding of employee status. More importantly,

whatever its probative value on the merits, there are no material variances in this factor which defeat

predominance.

xi. Whether The Service Rendered Requires a Special Skill

The answer to this Borello factor will be common to all class members. Either the jury will

decide that all Uber drivers require special skills to drive for Uber, or not. See Ayala, 59 Cal. 4th at

538 (“In a case where every class member performs the same tasks, some factors will always be

common, such as the kind of occupation and the skill it requires.”) (emphasis added) (citation

omitted). Uber has not argued to the contrary. Because there will be no variation between class

members with respect to this factor, it supports class certification.

xii. The Degree of Permanence of The Working Relationship

As noted above in subsection (e), Uber’s contracts and course of dealing indicate that this

factor can be resolved uniformly on a classwide basis – Uber drivers are not hired to work for

specific terms. Rather, they are hired for an unspecified and indefinite period. See, e.g., Coleman


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Decl., Ex. D at § 9.1 (“This Transportation Company Agreement shall commence on the date this

Agreement is accepted, for an indefinite period of time, unless terminated by either party . . . .”).

xiii. Whether The Service Rendered is an Integral Part of The Alleged

Employer’s Business

The last of Borello’s secondary factors will also have a common answer, and it is one that is

already known. As this Court previously found as a matter of law, “Uber’s drivers provide an

‘indispensable service’ to Uber, and the firm ‘could no more survive without them’ than it could

without a working smartphone app. Or, put more colloquially, Uber could not be ‘Everyone’s

Private Driver’ without the drivers.” O’Connor, 2015 WL 1069092, at *8. Even if the jury were

permitted to reach its own conclusion on this factor, there can be no dispute that the question admits

no individual variation. The question is not whether a particular driver is an integral part of Uber’s

business, but whether the “service rendered” by the drivers (i.e., driving) is integral to Uber’s

business. This factor can be adjudicated on a classwide basis.

xiv. Conclusion

At bottom, it appears that common questions will substantially predominate over individual

inquiries with respect to class members’ proper employment classification under the Borello test.

Indeed, every (or nearly every) consideration under the California common-law test of employment

can be adjudicated with common proof on a classwide basis. Some may favor Plaintiffs’ position on

the merits, while others support Uber’s. But all favor certification. Thus, this portion of the Rule

23(b)(3) inquiry weighs strongly in favor of class certification.

2. Plaintiffs’ Tips Claim

Because the threshold question of class members’ employment status can be adjudicated on a

classwide basis, the Court must next consider whether class members’ substantive claim for

withheld/converted tips under Labor Code section 351 is susceptible to classwide adjudication. The

Court concludes that it is.

Labor Code section 351 provides that “[n]o employer or agent shall collect, take, or receive

any gratuity or a part thereof that is paid, given to, or left for an employee by a patron . . . .” Cal.

Lab. Code § 351. Determining Uber’s liability under section 351 will require the jury to consider


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33 All of the cited statements were apparently made by Uber on either its website or inpromotional materials intended for riders who were new to using the Uber application. The Courtalso notes that Uber made similar representations regarding gratuities to its drivers. See, e.g.,Docket No. 223-6 at 7 (onboarding script: “Remember, fare includes gratuity and so if the clientoffers you a tip tell them that the fare includes the tip. There should be no confusion about that!);Docket No. 223-24 (threatening driver with termination for accepting cash tip and informing driverthat Uber has “calculated the average fare with tip for drivers in Los Angeles and have ALREADYadjusted our fares to compensate you accordingly . . . .”).

34 Uber could not possibly have remitted a tip to drivers that it did not even calculate oractually include in its fares.

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two issues. First, did Uber “take, or receive any gratuity” from its riders? And second, if Uber has

“taken or received” such gratuities, has Uber “paid” or “given” the full amount of those tips to its

drivers? Here, both questions can be answered by common proof, and thus Rule 23(b)(3)’s

predominance test is met.

Plaintiffs have cited extensive evidence that Uber has consistently and uniformly advertised

to customers that a tip is included in the cost of its fares (i.e., evidence that Uber “takes or receives”

a gratuity). See, e.g., Docket No. 277, Ex. 12 (November 2011: “When the ride is over, Uber will

automatically charge your credit card on file. No cash is necessary. Please thank your driver, but tip

is already included.”) (emphasis added); Ex. 16 (November 2011: “All Uber fares include the tip . . .

.”) (emphasis added); Ex. 13 (May 2012: “There’s no need to hand your driver any payment, and the

tip is included.”) (emphasis added); Ex. 14 (January 2013: “With UberBlack, SUV, and UBERx

there is no need to tip. With Uber TAXI we’ll automatically add 20% gratuity for the driver.”)

(emphasis added); Ex. 15 (April 2015: “payment is automatically charged to a credit card on file,

with tip included”) (emphasis added).33 Uber does not even contest this fact in its papers.

Moreover, Uber has stipulated for the purposes of this litigation that, despite its

representations that a “tip is included,” a “tip has never been part of the calculation of fares for

either UberBlack or UberX in California.” See Docket No. 313-16 (emphasis added). That is, Uber

essentially admits that despite making allegedly consistent and uniform representations to customers

that a tip was included in all of its fares, Uber never actually calculated such a tip, and clearly never

segregated and remitted any tip amount to drivers.34 Or, put differently, Uber has stipulated that it

kept the entire amount of any tip that might be “included” in its fares. These facts, if proven at trial,


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will likely establish Uber’s uniform and classwide liability for violating California’s Tips Law. See

Reply Br. at 14-15 (arguing correctly that “Plaintiffs have evidence that Uber has uniformly charged

a tip to passengers but has not actually distributed a tip to its drivers. Should the drivers be

employees, those facts establish violation of Cal. Labor Code § 351”); see also Guifu Li, 2011 WL

4635198, at *15 (certifying class claims brought pursuant to section 351 because common proof was

available to prove that employer had consistently converted class members’ gratuities).

Uber argues otherwise, but as Plaintiffs rightly point out, Uber’s arguments are all premised

on a fundamental misunderstanding of section 351 and Plaintiffs’ Tips Claim. For instance, Uber

argues that “[t]o the extent some drivers would not have received tips – regardless of Uber’s

‘policies’ – those drivers have suffered no injury and have no Article III standing.” Opp. Br. at 26.

Under Plaintiffs’ theory, however, no such drivers exist; Uber’s alleged practice was to charge every

rider for a tip (“tip is included”) on every ride. Plaintiffs’ claim is that after charging every rider for

a tip, Uber then failed to pay any of those gratuities to the drivers. See Reply Br. at 15 (explaining

that Plaintiffs’ theory is that all passengers “actually paid tips (because they were labeled as such),

but they were never remitted to drivers”). The fact that some drivers, but for Uber’s alleged forced

tipping practice, might not have been tipped by a particular rider left to his or her own devices is

immaterial to Plaintiffs’ claim.

Similarly, Uber’s argument that some drivers receive/received cash tips from passengers (in

addition to those allegedly collected by Uber) is irrelevant to either the class certification analysis or

the merits of Uber’s liability under section 351. Under Plaintiffs’ theory of the case (and more

importantly, under the language of section 351 itself) any cash tips that were paid to drivers would

simply be an additional gratuity that the customer provided to the driver over and above the tip that

Uber already charged to the rider (i.e., the tip that Uber allegedly advertised was “included” in the

fare). Nowhere in the language of section 351 did the Legislature provide that an employer can

withhold a portion of an employee’s gratuity that was paid directly to the employer as some sort of

set-off against an additional gratuity that the patron paid to the employee directly. See Cal. Lab.

Code § 351 (“No employer or agent shall collect, take, or receive any gratuity or a part thereof that

is paid, given to, or left for an employee by a patron, or deduct any amount from wages due an


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employee on account of a gratuity, or require an employee to credit the amount, or any part thereof,

of a gratuity against and as part of the wages due the employee from the employer. Every gratuity is

hereby declared to be the sole property of the employee or employees to whom it was paid, given, or

left for.”) (emphasis added).

Uber relatedly contends that class certification is not appropriate on the Tips Claim because a

jury cannot determine damages without conducting a host of individualized inquires. Specifically,

Uber argues that class certification is inappropriate because the precise amount of any gratuity that a

rider would have paid his driver varies dramatically from ride-to-ride depending on driver

performance and other variables. Opp. Br. at 26. This argument misses the mark for a few reasons.

First, Uber fails to recognize that it has never given riders the ability to change the amount of the

“included” tip that Uber allegedly charges passengers. Rather, if one credits the Plaintiffs’ evidence,

Uber tells riders that some unspecified tip is being unilaterally imposed by Uber, and riders have no

power to change this amount for any reason. Because the tip is unilaterally set by Uber without any

possible input from riders, there is no reason to suspect that the “included tip” amount would vary

from ride-to-ride based on driver performance or any other factor. A poor performing Uber driver

would receive the exact same tip as a high-performing driver because Uber has never given riders

the ability to actually vary the tip amount it charges them.

Moreover, Uber cannot defeat class certification simply because individualized damages

might be difficult to calculate. See Levya, 716 F.3d at 513-14 (confirming that even after Dukes and

Comcast, “the presence of individualized damages cannot, by itself, defeat class certification under

Rule 23(b)(3)”). In any event, damages will be very easy to calculate on a classwide basis here.

Again, Plaintiffs’ theory is not that Uber unlawfully stole (or prevented drivers from obtaining)

additional tips that riders would have given to drivers in unknown amounts at their individual

discretion. Rather, the theory is that drivers did not receive the [singular] tip that Uber actually

“included” in the fare and which tip was unilaterally charged to riders’ credit cards in some

unspecified amount. Assuming for a moment that the jury finds Uber liable for violating section

351, it will then be tasked with determining what portion of the fares charged actually was the tip.

This the jury can likely do from its own common experience, or, perhaps, with the aid of expert


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35 For instance, the jury could determine that the average customer (or driver, or both) wouldexpect that any advertised “included gratuity” would be 15% of the total fare charged. Once the jurydetermined the gratuity amount that Uber actually charged (and admittedly withheld from drivers),the damages calculation is mechanical. For instance, assume that the jury does conclude that Uberviolated the Tips Law, and uniformly withheld a customary 15% gratuity on each ride. If a driverperformed a ride that cost the customer $10, then $1.50 of that fare amount would have been the“tip” that Uber was required to remit to the driver free and clear. Thus, Uber would only have beenpermitted to charge its own 20% “service fee per ride” on the remaining $8.50 of the fare. In such acase, Uber’s fee would have been $1.70. If the jury determines that Uber actually took 20% of theentire $10 ride amount, Uber will have received a $2.00 fee when it should have only charged thedriver $1.70. In this circumstance the driver would be entitled to a damages award of 30 cents. There is no reason classwide damages could not easily be discerned using simple arithmetic andUber’s own business records.

36 There is no reason to suspect that this damages inquiry would be different for differentdrivers (e.g., there is no evidence that drivers in San Diego would customarily receive 12% tips,while San Francisco drivers typically earn 25% tips).

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testimony. In any event, the jury could assess damages based on common formula or mathematic

approach that applies uniformly to the class.35 There is no indication that any individualized

assessments would be required to calculate damages.36 Thus, Rule 23(b)(3)’s predominance

requirement is satisfied with respect to class members’ claims for violations of California’s Tips

Law.

F. Individualized Inquiries May Predominate For Drivers Who Did Not Opt-Out of Uber’s

Most Recent Arbitration Clauses

Before considering the final Rule 23(b)(3) requirement, superiority, the Court notes that the

class as certified excludes all drivers who “electronically accepted any contract with Uber or one of

Uber’s subsidiaries that is listed in the Appendix to this Order, unless the driver timely opted-out of

that contract’s arbitration agreement.” The arbitration agreements listed in the Appendix are those

that include this Court’s mandated opt-out notice and procedures. See O’Connor, 2013 WL

6407583; O’Connor, 2014 WL 1760314. All of these agreements contain class action waivers that

purport to prevent the drivers from participating in any class action lawsuit against Uber. See

Colman Decl., Exs. K-Q. Instead, the contracts purport to require the drivers to pursue any claims

they might have against Uber in individual arbitration. Id.

As this Court has explained at length both in this case and in the related Mohamed litigation,

the Court previously exercised its power under Federal Rule of Civil Procedure 23(d) to assert


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control over class communications in this action in order to “protect the integrity of the class and the

administration of justice.” O’Connor, 2014 WL 1760314, at *3; see also Mohamed, 2015 WL

3749716, at *4 (describing the Court’s prior orders in this litigation vis-á-vis arbitration).

Specifically, after Uber issued new contracts in 2013 to putative class members that contained

“inconspicuous” arbitration agreements with class action waivers, and which contracts permitted

drivers to opt-out of arbitration only by complying with “extremely onerous” and essentially illusory

opt-out protocols, this Court required Uber to send corrective notices to its drivers that were

intended to insure that (1) all drivers were “given clear notice of the arbitration provision” in Uber’s

contracts, and (2) provide drivers with a reasonable means of opting out of the arbitration provision.

See O’Connor, 2013 WL 6407538, at *7. Uber complied with the Order, and since early 2014, the

Court understands that all of Uber’s contracts with its drivers have included the Court’s approved

corrective notice and opt-out procedures. See Colman Decl., Exs. K-Q.

Earlier this year, the Court ruled on a motion to compel arbitration brought by Uber in a

related case. See Mohamed, 2015 WL 3749716. In the Court’s order, it considered the

enforceability of certain of Uber’s contracts with its drivers that contained the Court’s approved

notice and opt-out procedures, described above. Id. The Court noted that “it would be hard to draft

a more visually conspicuous opt-out clause even if the Court were to aid in the drafting process,

which it actually did.” Id. at *17. The Court similarly noted that Uber’s revised contracts provide

drivers a “reasonable means of opting out” of arbitration. Id. Nevertheless, the Court, applying

Gentry v. Super. Ct., 42 Cal. 4th 443 (2007), found that there was a modicum of procedural

unconscionability under the contracts and therefore concluded that further inquiry into substantive

unconscionability was warranted. Because the agreements at issue also contained a substantively

unconscionable and non-severable Private Attorneys General Act (PAGA) waiver, the Court

ultimately concluded that Uber could not compel the Plaintiffs’ claims in Mohamed to arbitration

pursuant to the 2014 version of the agreements. See Mohamed, 2015 WL 3479716, at *32-36.

As the California Supreme Court explained in Gentry, even a contract that contains a

conspicuous and otherwise meaningful opt-out clause will not be found to be entirely lacking in

procedural unconscionability where the agreement (1) does not adequately call attention to specific


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substantively unconscionable or otherwise unfavorable terms in the agreement, and (2) where the

Court has reason to suspect that the party accepting the agreement (i.e., the party who did not draft

the agreement) would not have “felt free to opt-out.” See Mohamed, 2015 WL 3749716, at *19-20

(summarizing and applying Gentry). The Court found both factors present in Uber’s revised

contracts, although the Court acknowledged that it is “an extremely close question” whether the

Plaintiffs in Mohamed were subject to the “same general economic pressures” not to opt-out of the

arbitration agreement “that concerned the Court in Gentry.” Id. at *20. Because the Court

concluded that the specific Plaintiffs before it were “lower-level laborer[s]” without much economic

clout, however, the Court found that the Gentry test was met. Id.

Uber argues persuasively that determining whether any individual class member may benefit

from this Court’s ruling in Gentry (and thus may participate in this class action) could well require

an “individualized inquiry that turns on . . . the economic means of the driver and the circumstances

under which he or she accepted the arbitration agreement.” Opp. Br. at 39. As noted, the plaintiffs

in Mohamed were relatively poor unskilled laborers who depended on Uber for their incomes. See,

e.g., Mohamed Docket No. 37-3 (Gillette Decl.) at ¶ 11 (indicating that Uber was Plaintiff’s sole

source of income). Uber has presented evidence, however, that some reasonably sizeable portion of

its drivers may not face the same “general economic pressures” to obtain employment as the

plaintiffs in Mohamed. For instance, Christopher Armentrout is an UberX driver with a full-time job

who normally drives for Uber “less than five hours a week,” typically on weekend evenings. Docket

No. 307 at 78. Lee Samantha Faelnar Te similarly drives for UberX only a few hours a week when

she is not working at her full-time job for California Credit Union. Docket No. 307 at 397; see also

Evangelis Decl., Ex. 13. A credible argument could be made that such drivers would not have felt

the same general economic pressure to assent to Uber’s arbitration agreement as drivers who appear

more economically dependent on Uber for their livelihoods. See, e.g., Docket No. 307 at 6

(Abousleiman Decl.) (drives for UberX ten to twelve hours a day, six days a week, with no outside

employment); Docket No. 307 at 269 (Chu Decl.) (drives for UberX “between 2:00 p.m. and 2:00

a.m. six days a week” with no other employment). Any substantial variation on the applicability of


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37 This Court’s Gentry ruling could also present a superiority problem if the class were toinclude individuals who are otherwise bound to one of the relevant arbitration provisions. TheCourt’s Order denying Uber’s motion to compel arbitration pursuant to its latest agreements iscurrently being appealed to the Ninth Circuit. As this Court has recently recognized, “the proprietyof its application of Gentry’s procedural unconscionability rule at least presents a ‘serious issue’ onappeal” because “the proper application of Gentry appears to remain an issue of first impression inthe Ninth Circuit.” Mohamed v. Uber Techs., Inc., -- F. Supp. 3d --, 2015 WL 4483990, at *4 (N.D.Cal. 2015). “Moreover, the application of Gentry is undoubtedly important to the ultimateresolution of the validity of the 2014 Agreements’ arbitration provisions. If the Ninth Circuitexpressly refuses to follow Gentry . . . then this Court’s procedural unconscionability finding isunlikely to survive appellate review, and the 2014 arbitration provisions would likely be enforcedunder California law.” Id. Given that there is a chance that the Ninth Circuit might reverse thisCourt’s order with respect to Gentry, certifying, noticing, and litigating a class on behalf of a largenumber of individuals who may later need to be excluded from the class does not make sense as amatter of judicial efficiency. Of course, once the Ninth Circuit definitively rules on these issues,depending on its ruling, it is possible that a class consisting of individuals who agreed to thesecontracts could possibly be certified.

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Gentry to a particular driver could seriously undercut predominance with respect to the arbitration

question.37

The Court will not definitely decide the Gentry issue now, as the current class certified

herein only includes those drivers who are not bound to one of Uber’s more recent contracts, unless

the driver timely exercised his opt-out rights. Uber has not argued that individualized issues

regarding the validity or applicability of any arbitration clause will predominate with respect to

those drivers who are only bound to its earlier pre-2014 contracts. Some of these contracts do not

even contain a class action waiver or arbitration provision. See, e.g., Colman Decl., Exs. A-B. And

for those earlier contracts that do contain class action waivers and arbitration provisions (i.e., certain

2013 agreements), but that do not contain this Court’s corrective notice and opt-out procedure, the

Court has concluded that such arbitration provisions are unconscionable and unenforceable

regardless of the individual driver’s economic circumstances or any other possible differences

between signatories. See Mohamed, 2015 WL 3749716, at *21-31. Moreover, the Court has

concluded that Uber’s likelihood of success on appeal of this Court’s determination that the

arbitration provisions in these contracts are unenforceable is exceedingly low. See Gillette, 2015

WL 4481706, at *2-7. Simply put, the Court concludes that there are no individualized issues to

resolve with respect to whether drivers bound to such earlier agreements may participate in this class

action lawsuit, and thus Rule 23(b)(3) permits all drivers who are bound only to Uber’s pre-2014


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agreements (or those who opted-out of its later agreements listed in the Appendix) to be members of

the class.

G. Superiority Test is Satisfied For Plaintiffs’ Tips Claim

Finally, in addition to satisfying all four requirements of Rule 23(a) and the predominance

requirement of Rule 23(b)(3), the Plaintiffs must also show that “a class action is superior to other

available methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3).

With respect to the Court’s “superiority” analysis, the Federal Rules suggest that the Court should

consider:

(A) the class members’ interests in individually controlling theprosecution or defense of separate actions;

(B) the extent and nature of any litigation concerning the controversyalready begun by or against class members;

(C) the desirability or undesirability of concentrating the litigation ofthe claims in the particular forum; and

(D) the likely difficulties in managing a class action.

Fed R. Civ. P. 23(b)(3)(A)-(D).

Uber does not even contest the superiority element, and it appears easily satisfied. First, as

discussed above, because common issues predominate with respect to every aspect of the common-

law test for employment, it will “be far more efficient to resolve the question of employment status

on a class-wide, rather than individual, basis.” Dalton, 270 F.R.D. at 565; see also Estrada v. FedEx

Ground Package Sys., Inc., 154 Cal. App. 4th 1, 14 (2007). Similarly, efficiency counsels in favor

of litigating the merits of class members’ substantive Tips Claims on a classwide basis, as both

liability and damages under section 351 can easily be adjudicated in one proceeding. To the extent

that class members have an interest in individually controlling the prosecution of their own action

for conversion of gratuities, they are free to opt-out of the class. See id. In any event, there is no

evidence that any class members’ claims are expected to be so valuable that a significant number of

class members would have an interest in separately prosecuting their own actions under section 351.

See Breeden, 229 F.R.D. at 630 (holding that even for “those members of the putative class who

could potentially submit the largest claims for damages – those who were relatively high wage


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38 Notably, Uber is located in San Francisco, so as between the two actions, it appears atleast minimally more convenient to litigate the class claims in this forum rather than in Los Angeles.

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earners and who are able to substantiate claims of significant [damages] . . . are nonetheless unlikely

to present the court with the kinds of multi-million dollar claims frequently at issue in Rule 23 class

actions”).

Nor is there extensive ongoing litigation pending regarding these claims. The Court is aware

of one action pending in Los Angeles Superior Court (Price v. Uber Techs., No. BC554512 (L.A.

Superior Court) that involves similar California Labor Code claims to those asserted here. A review

of the docket in Price shows that the case has not advanced as far as this litigation. No motion has

yet been filed therein. Hence, the parallel nature of the Price action does not counsel in favor of

putting off class certification in this case.38 Nor is there any reason to suspect that this class action

will become so unmanageable that it would be more efficient to litigate thousands of separate

misclassification and gratuities lawsuits. For the reasons explained above, not only are common

questions likely to predominate with respect to the class claims, it appears this litigation may only

contain common questions with common answers. Given the extent of predominance of common

questions in this litigation, the Court cannot foresee any manageability issues at trial. Thus

resolving the class members’ claims through one adjudication rather than thousands of separate suits

is clearly the superior method of resolving these cases for the Plaintiffs, Uber, and the Court.

H. Plaintiffs’ Counsel Will Fairly And Adequately Represent The Interests of The Class

Federal Rule of Civil Procedure 23(g) mandates that if this Court certifies a class it “must

appoint class counsel.” Fed. R. Civ. P. 23(g)(1). In making this appointment, the Court must

principally evaluate the adequacy of class counsel to fairly represent the interests of the class, see

Fed. R. Civ. P. 23(g)(4), which requires the Court to consider such factors as the work counsel has

done to-date in the action, her experience handling class actions and other complex litigation, her

knowledge of the applicable law, and the resources counsel will bring to bear in prosecuting the

action. See Fed. R. Civ. P. 23(g)(1)(A)(i)-(iv).


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Uber hardly attempts to argue that Plaintiffs’ current attorney, Ms. Shannon Liss-Riordan, is

inadequate to serve as class counsel in this matter. Indeed, Uber does not even argue that Ms. Liss-

Riordan is unqualified to represent these Plaintiffs, and any such argument would be without merit.

The Court knows Ms. Liss-Riordan to be a capable advocate, and further notes that she is a leading

practitioner in the field of employment misclassification both in this District and nationwide.

Nevertheless, Uber professes concern that Ms. Liss-Riordan is inadequate to serve as class

counsel here because she is overextended given all of the multitude of cases she is currently

prosecuting against Uber and similar firms. The Court shares Uber’s concern at least in theory, and

advises Ms. Liss-Riordan to focus considerable time and attention on this case now that it has been

certified. That said, the Court has not witnessed anything in Ms. Liss-Riordan’s performance in this

case (or in any of the many others she is currently prosecuting before this Court) to date that would

cause the Court to be concerned that Ms. Liss-Riordan and her colleagues will not prosecute this

action vigorously and with skill on behalf of the class members. Ms. Liss-Riordan is adequate, will

fairly represent the interests of the class members, and is therefore appointed class counsel in this

matter.

I. The Remainder of Plaintiffs’ Motion is Denied Without Prejudice

As noted above, the Court has denied certain of Plaintiffs’ requests for class certification.

Notably, the Court denied Plaintiffs’ request to certify their substantive law claims under Labor

Code section 2802 principally because Plaintiffs thus far have failed to satisfy Rule 23(a)’s

adequacy requirement to the extent Plaintiffs seek to fulfill the tests of commonality and

predominance by using IRS reimbursement rates as the exclusive measure of damages for class

members. The Court has also denied Plaintiffs’ request to certify additional classes or subclasses of

drivers, such as drivers who labored for distinct third-party transportation companies. These denials

are without prejudice, however, as Plaintiffs may be capable of making a sufficient showing to

warrant certification of certain additional claims and/or subclasses. See Bowerman I, 2014 WL

4676611, at *1, 13 (denying class certification motion without prejudice to renewal within 45 days).

If Plaintiffs wish to attempt to make such a showing, they shall file an appropriate supplemental

brief within thirty-five (35) days of the date of this order. Uber may file an appropriate response


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within twenty-one (21) days of the date Plaintiffs serve their supplemental brief, if any. The Court

will set further hearing if deemed necessary. Absent further certification of any subclass(es) or

claims, the Court will proceed towards trial on the merits based on the class certified herein.

III. CONCLUSION

The Court hereby certifies a class action on behalf of the following individuals to pursue

their claim that Uber has violated California’s Unfair Competition Law by violating Section 351 of

the Labor Code:

All UberBlack, UberX, and UberSUV drivers who have driven forUber in the state of California at any time since August 16, 2009, andwho (1) signed up to drive directly with Uber or an Uber subsidiaryunder their individual name, and (2) are/were paid by Uber or an Ubersubsidiary directly and in their individual name, and (3) did notelectronically accept any contract with Uber or one of Uber’ssubsidiaries which contains the notice and opt-out provisionspreviously ordered by this Court (including those contracts listed inthe Appendix to this Order), unless the driver timely opted-out of thatcontract’s arbitration agreement.

The parties are ordered to meet-and-confer regarding the contents and logistics of class

notice and other relevant procedural details in advance of the next case management conference,

which is scheduled for October 22, 2015 at 10:30 a.m. At that conference, the parties shall be

prepared to discuss any proposal regarding further class certification.

This order disposes of Docket No. 276.

IT IS SO ORDERED.

Dated: September 1, 2015

_________________________EDWARD M. CHENUnited States District Judge


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APPENDIX

1. June 21, 2014, Uber Software License and Online Services Agreement (Exhibit K to ColmanDeclaration)

2. June 21, 2014, Driver Addendum Related to Uber Services (Exhibit L to ColmanDeclaration)

3. June 21, 2014, Rasier Software Sublicense & Online Services Agreement (Exhibit M toColman Declaration)

4. November 10, 2014, Uber Logistik, LLC Software License and Online Services Agreement(Exhibit N to Colman Declaration)

5. November 10, 2014 Driver Addendum to Software License And Online Services Agreement(Exhibit O to Colman Declaration)

6. November 10, 2014 Raiser [sic], LLC/Rasier-CA, LLC/Rasier-PA, LLC Software Licenseand Online Services Agreement (Exhibit P to Colman Declaration)

7. April 3, 2015 Uber USA, LLC Software License And Online Services Agreement (Exhibit Qto Colman Declaration)


CERTIFICATE OF SERVICE

I hereby certify that on December 23, 2015, the foregoing Petition of Uber

Technologies, Inc. for Permission to Appeal Pursuant to Rule 23(f) was served by

e-mail and by commercial carrier for next-day delivery upon the following:

Shannon Liss-Riordan Adelaide Pagano

LICHTEN & LISS-RIORDAN, P.C. 729 Boylston Street Boston, MA 02116

Matthew Carlson

CARLSON LEGAL SERVICES 100 Pine Street, Suite 1250 San Francisco, CA 94111

/s/ Theodore J. Boutrous, Jr.

Theodore J. Boutrous, Jr.


UNITED STATES COURT OF APPEALS for the NINTH CIRCUIT

Office of the Clerk

After Opening a Case – Counseled Cases(revised January 2015)

Court Address – San Francisco Headquarters

Mailing Address for U.S. Postal Service

Mailing Address forOvernight Delivery(FedEx, UPS, etc.)

Street Address

Office of the ClerkJames R. BrowningCourthouseU.S. Court of AppealsP.O. Box 193939San Francisco, CA94119-3939

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Court Addresses – Divisional Courthouses

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The Court’s website contains the Court’s Rules and General Orders, informationabout electronic filing of documents, answers to frequently asked questions,directions to the courthouses, forms necessary to gain admission to the bar of theCourt, opinions and memoranda, recordings of oral arguments, links to practicemanuals, and an invitation to join our Pro Bono Program.


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Electronic Filing - CM/ECF

The Ninth Circuit’s CM/ECF (Case Management/Electronic Case Files) system ismandatory for all attorneys filing in the Court, unless they are granted anexemption. All non-exempted attorneys who appear in an ongoing case arerequired to register for and to use CM/ECF. Registration and information aboutCM/ECF is available on the Court’s website at www.ca9.uscourts.gov underElectronic Filing–CM/ECF. Read the Circuit Rules, especially Ninth Circuit Rule25-5, for guidance on CM/ECF, including which documents can and cannot befiled electronically.

After Opening a Case – Counseled Appeals Page 2


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http://www.ca9.uscourts.gov/rules/

Rules of Practice

The Federal Rules of Appellate Procedure (Fed. R. App. P.), the Ninth CircuitRules (9th Cir. R.) and the General Orders govern practice before this Court. Therules are available on the Court’s website at www.ca9.uscourts.gov under Rules.

Practice Resources

The Appellate Lawyer Representatives’ Guide to Practice in the United StatesCourt of Appeals for the Ninth Circuit is available on the Court’s websitewww.ca9.uscourts.gov at Guides and Legal Outlines > Appellate Practice Guide. The Court provides other resources in Guides and Legal Outlines.

Admission to the Bar of the Ninth Circuit

All attorneys practicing before the Court must be admitted to the Bar of the NinthCircuit. Fed. R. App. P. 46(a); 9th Cir. R. 46-1.1 & 46-1.2.

For instructions on how to apply for bar admission, go to www.ca9.uscourts.govand click on the Attorneys tab > Attorney Admissions > Instructions.

Notice of Change of Address

Counsel who are registered for CM/ECF must update their personal information,including street addresses and email addresses, online at:https://pacer.psc.uscourts.gov/pscof/login.jsf 9th Cir. R. 46-3.

Counsel who have been granted an exemption from using CM/ECF must file awritten change of address with the Court. 9th Cir. R. 46-3.

Motions Practice

Following are some of the basic points of motion practice, governed by Fed. R.App. P. 27 and 9th Cir. R. 27-1 through 27-14.

• Neither a notice of motion nor a proposed order is required. Fed. R. App. P.27(a)(2)(C)(ii), (iii).

• Motions may be supported by an affidavit or declaration. 28 U.S.C. § 1746.




cdn.ca9.uscourts.gov/datastore/general/2014/08/29/Final_2014_ALR_Practice_Guide_82514.pdf

cdn.ca9.uscourts.gov/datastore/general/2014/08/29/Final_2014_ALR_Practice_Guide_82514.pdf



https://pacer.psc.uscourts.gov/psco/cgi-bin/cmecf/ea-login.pl%20

• Each motion should provide the position of the opposing party. CircuitAdvisory Committee Note to Rule 27-1(5); 9th Cir. R. 31-2.2(b)(6).

• A response to a motion is due 10 days from the service of the motion. Fed. R.App. P. 27(a)(3)(A). The reply is due 7 days from service of the response. Fed.R. App. P. 27(a)(4); Fed. R. App. P. 26(c).

• A response requesting affirmative relief must include that request in the caption. Fed. R. App. P. 27(a)(3)(B).

• A motion filed after a case has been scheduled for oral argument, has beenargued, is under submission or has been decided by a panel, must include on theinitial page and/or cover the date of argument, submission or decision and, ifknown, the names of the judges on the panel. 9th Cir. R. 25-4.

Emergency or Urgent Motions

All emergency and urgent motions must conform with the provisions of 9th Cir. R.27-3. Note that a motion requesting procedural relief (e.g., an extension of time tofile a brief) is not the type of matter contemplated by 9th Cir. R. 27-3. CircuitAdvisory Committee Note to 27-3(3).

Prior to filing an emergency motion, the moving party must contact an attorney inthe Motions Unit in San Francisco at (415) 355-8020.

When it is absolutely necessary to notify the Court of an emergency outside ofstandard office hours, the moving party shall call (415) 355-8000. Keep in mindthat this line is for true emergencies that cannot wait until the next business day(e.g., an imminent execution or removal from the United States).

Briefing Schedule

The Court issues the briefing schedule at the time the appeal is docketed.

Certain motions (e.g., a motion for dismissal) automatically stay the briefingschedule. 9th Cir. R. 27-11.

The opening and answering brief due dates are not subject to the additional timedescribed in Fed. R. App. P. 26(c). 9th Cir. R. 31-2.1. The early filing ofappellant’s opening brief does not advance the due date for appellee’s answeringbrief. Id.



Extensions of Time to File a Brief

Streamlined RequestSubject to the conditions described at 9th Cir. R. 31-2.2(a), you may request onestreamlined extension of up to 30 days from the brief’s existing due date. Submityour request via CM/ECF using the “File Streamlined Request to Extend Time toFile Brief” event on or before your brief’s existing due date. No form or writtenmotion is required.

Written Extension Requests for extensions of more than 30 days will be granted only upon a writtenmotion supported by a showing of diligence and substantial need. This motionshall be filed at least 7 days before the due date for the brief. The motion shall beaccompanied by an affidavit or declaration that includes all of the informationlisted at 9th Cir. R. 31-2.2(b).

The Court will ordinarily adjust the schedule in response to an initial motion. Circuit Advisory Committee Note to Rule 31-2.2. The Court expects that the briefwill be filed within the requested period of time. Id.

Contents of Briefs

The required components of a brief are set out at Fed. R. App. P. 28 and 32, and9th Cir. R. 28-2, 32-1 and 32-2.

Excerpts of Record

The Court requires Excerpts of Record rather than an Appendix. 9th Cir. R. 30-1.1(a). Please review 9th Cir. R. 30-1.3 through 30-1.6 to see a list of the specificcontents and format. For Excerpts that exceed 75 pages, the first volume mustcomply with 9th Cir. R. 30-1.6(a). Excerpts exceeding 300 pages must be filed inmultiple volumes. 9th Cir. R. 30-1.6(a).

Appellee may file supplemental Excerpts and appellant may file further Excerpts. 9th Cir. R. 30-1.7 and 30-1.8. If you are an appellee responding to a pro se briefthat did not come with Excerpts, then your Excerpts need only include the contentsset out at 9th Cir. R. 30-1.7.



Excerpts must be submitted in PDF format on CM/ECF on the same day the filersubmits the brief, unless the Excerpts contain sealed materials. If the Excerptscontain sealed materials, please electronically submit only the unsealed volumes. The filer shall serve a paper copy of the Excerpts on any party not registered forCM/ECF.

After electronic submission, the Court will direct the filer to file 4separately-bound excerpts of record with white covers in paper copy.

Mediation Program

Mediation Questionnaires are required in all civil cases except cases in which theappellant is proceeding pro se, habeas cases (28 U.S.C. §§ 2241, 2254 and 2255)and petitions for writs (28 U.S.C. § 1651). 9th Cir. R. 3-4.

The Mediation Questionnaire is available on the Court’s website atwww.ca9.uscourts.gov under Forms. The Mediation Questionnaire should be filedwithin 7 days of the docketing of a civil appeal. The Mediation Questionnaire isused only to assess settlement potential.

If you are interested in requesting a conference with a mediator, you may call theMediation Unit at (415) 355-7900, email [email protected] ormake a written request to the Chief Circuit Mediator. You may requestconferences confidentially. More information about the Court’s mediationprogram is available at http://www.ca9.uscourts.gov/mediation.

Oral Hearings

Notices of the oral hearing calendars are distributed approximately 10 weeksbefore the hearing date.

The Court will change the date or location of an oral hearing only for good cause,and requests to continue a hearing filed within 14 days of the hearing will begranted only upon a showing of exceptional circumstances. 9th Cir. R. 34-2.

Oral hearing will be conducted in all cases unless all members of the panel agreethat the decisional process would not be significantly aided by oral argument. Fed.R. App. P. 34(a)(2).



http://www.ca9.uscourts.gov.

http://www.ca9.uscourts.gov/mediation

Ninth Circuit Appellate Lawyer RepresentativesAPPELLATE MENTORING PROGRAM

1. Purpose

The Appellate Mentoring Program is intended to provide mentoring on avoluntary basis to attorneys who are new to federal appellate practice or wouldbenefit from guidance at the appellate level. In addition to general assistanceregarding federal appellate practice, the project will provide special focus on twosubstantive areas of practice - immigration law and habeas corpus petitions. Mentors will be volunteers who have experience in immigration, habeas corpus,and/or appellate practice in general. The project is limited to counseled cases.

2. Coordination, recruitment of volunteer attorneys, disseminating informationabout the program, and requests for mentoring

Current or former Appellate Lawyer Representatives (ALRs) will serve ascoordinators for the Appellate Mentoring Program. The coordinators will recruitvolunteer attorneys with appellate expertise, particularly in the project's areas offocus, and will maintain a list of those volunteers. The coordinators will ask thevolunteer attorneys to describe their particular strengths in terms of mentoringexperience, substantive expertise, and appellate experience, and will maintain arecord of this information as well.

The Court will include information about the Appellate Mentoring Programin the case opening materials sent to counsel and will post information about it onthe Court's website. Where appropriate in specific cases, the Court may alsosuggest that counsel seek mentoring on a voluntary basis.

Counsel who desire mentoring should contact the court [email protected], and staff will notify the program coordinators. Thecoordinators will match the counsel seeking mentoring with a mentor, taking intoaccount the mentor's particular strengths.

3. The mentoring process

The extent of the mentor's guidance may vary depending on the nature of the case,the mentee's needs, and the mentor's availability. In general, the mentee shouldinitiate contact with the mentor, and the mentee and mentor should determine


mailto:[email protected]

together how best to proceed. For example, the areas of guidance may range frombasic questions about the mechanics of perfecting an appeal to more sophisticatedmatters such as effective research, how to access available resources, identificationof issues, strategy, appellate motion practice, and feedback on writing.

4. Responsibility/liability statement

The mentee is solely responsible for handling the appeal and any otheraspects of the client's case, including all decisions on whether to present an issue,how to present it in briefing and at oral argument, and how to counsel the client. By participating in the program, the mentee agrees that the mentor shall not beliable for any suggestions made. In all events, the mentee is deemed to waive andis estopped from asserting any claim for legal malpractice against the mentor.

The mentor's role is to provide guidance and feedback to the mentee. Thementor will not enter an appearance in the case and is not responsible for handlingthe case, including determining which issues to raise and how to present them andensuring that the client is notified of proceedings in the case and receivesappropriate counsel. The mentor accepts no professional liability for any advicegiven.

5. Confidentiality statement

The mentee alone will have contact with the client, and the mentee mustmaintain client confidences, as appropriate, with respect to non-public information.


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