Court Opinion

ID: 4109667
Source: CourtListenerOpinion
Date Created: 2016-12-21 18:01:17.269741+00
Date Added: 2024-06-11T08:45:37.762525
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

ABDUL KADIR MOHAMED,                   No. 15-16178
individually and on behalf of all
others similarly situated,                 D.C. No.
               Plaintiff-Appellee,   3:14-cv-05200-EMC

                v.

UBER TECHNOLOGIES, INC.;
RASIER, LLC,
        Defendants-Appellants,

               and

HIREASE, LLC,
                      Defendant.

RONALD GILLETTE,                       No. 15-16181
           Plaintiff-Appellee,
                                           D.C. No.
                v.                   3:14-cv-05241-EMC

UBER TECHNOLOGIES, INC.,
         Defendant-Appellant.
2           MOHAMED V. UBER TECHNOLOGIES

ABDUL KADIR MOHAMED,                    No. 15-16250
individually and on behalf of all
others similarly situated,                 D.C. No.
               Plaintiff-Appellee,   3:14-cv-05200-EMC

                v.
                                        ORDER AND
UBER TECHNOLOGIES, INC.;                 AMENDED
RASIER, LLC,                              OPINION
                Defendants,

               and

HIREASE, LLC,
          Defendant-Appellant.

       Appeal from the United States District Court
          for the Northern District of California
        Edward M. Chen, District Judge, Presiding

           Argued and Submitted June 16, 2016
                San Francisco, California

               Filed September 7, 2016
              Amended December 21, 2016

    Before: Richard C. Tallman, Richard R. Clifton, and
              Sandra S. Ikuta, Circuit Judges.

                          Order;
                 Opinion by Judge Clifton
              MOHAMED V. UBER TECHNOLOGIES                            3

                           SUMMARY*

 Arbitration / California Private Attorney General Act

    The panel affirmed in part and reversed in part the district
court’s orders denying Uber Technologies, Inc.’s motion to
compel arbitration in actions brought by two former Uber
drivers, Abdul Mohamed and Ronald Gillette, on behalf of
themselves and a proposed class of drivers, and remanded for
further proceedings.

    The district court denied Uber’s motion to compel
arbitration of the plaintiffs’ claims.

     The panel held that the district court erred in assuming the
authority to decide whether the parties’ arbitration
agreements were enforceable. The panel further held that the
question of arbitrability as to all but Gillette’s California
Private Attorney General Act (“PAGA”) claim was delegated
to the arbitrator. The panel also held that under the terms of
the agreement Gillette signed, the PAGA waiver should be
severed from the arbitration agreement and Gillette’s PAGA
claim may proceed in court on a representative basis. The
panel also held that all of plaintiffs’ remaining arguments,
including both Mohamad’s challenge to the PAGA waiver in
the agreement he signed and the challenge by both plaintiffs
to the validity of the arbitration agreement itself, were subject
to resolution via arbitration.

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
4           MOHAMED V. UBER TECHNOLOGIES

    The panel affirmed the district court’s order denying the
motion to compel arbitration filed by Hirease, LLC, an
independent background-check company that Mohamed
named in his complaint alongside Uber. The panel held that
Hirease was not entitled to compel arbitration as Uber’s
agent.

                        COUNSEL

Theodore Boutrous, Jr. (argued), Theane D. Evangelis, and
Brandon J. Stoker, Gibson, Dunn & Crutcher LLP, Los
Angeles, California; Joshua S. Lipshutz and Kevin J. Ring-
Dowell, Gibson, Dunn & Crutcher LLP, San Francisco,
California; Rod M. Fliegel, Littler Mendelson P.C., San
Francisco, California; Andrew M. Spurchise, Littler
Mendelson P.C., New York, New York; for Defendants-
Appellants Uber Technologies, Inc. and Rasier, LLC.

Pamela Devata (argued) and Nicholas R. Clements, Seyfarth
Shaw LLP, San Francisco, California; Timothy L. Hix,
Seyfarth Shaw LLP, Los Angeles, California; for Defendant-
Appellant Hirease, LLC.

Laura Ho (argued), Andrew P. Lee, and William Jhaveri-
Weeks, Goldstein Borgen Dardarian & Ho, Oakland,
California; Robert Ahdoot, Tina Wolfson, and Theodore
Maya, Ahdoot & Wolfson, PC, West Hollywood, California;
Meredith Desautels, Dana Isaac Quinn, and Elisa Della-Piana,
Lawyers’ Committee for Civil Rights of the San Francisco
Bay Area, San Francisco, California; Monique Olivier,
Duckworth Peters Lebowitz Olivier LLP, San Francisco,
California; for Plaintiffs-Appellees.
            MOHAMED V. UBER TECHNOLOGIES                    5

Kevin Ranlett, Archis A. Parasharami, Evan M. Tager, and
Andrew J. Pincus, Mayer Brown LLP, Washington, D.C.;
Warren Postman and Kate Comerford Todd, U.S. Chamber
Litigation Center, Inc., Washington, D.C.; for Amicus Curiae
Chamber of Commerce of the United States.

Matthew C. Koski, National Employment Lawyers
Association, Oakland, California; David H. Seligman,
Towards Justice, Denver, Colorado; Jahan C. Sagafi, Outten
& Golden LLP, San Francisco, California; for Amici Curiae
National Employment Law Project, National Employment
Lawyers Association, National Association of Consumer
Advocates, and Towards Justice.

                          ORDER

   The opinion filed on September 7, 2016, is hereby
amended as follows:

    1. On page 18 of the slip opinion, in footnote 6, the last
sentence (and related citations) should be deleted.

       We note that Plaintiffs also raised the
       argument that the class and collective action
       waivers in the arbitration agreements may
       violate the National Labor Relations Act
       (NLRA) for the first time in a sur-reply. That
       untimely submission waived the argument.
       See, e.g., United States v. Dreyer, 804 F.3d
1266, 1277 (9th Cir. 2015) (“Generally, an
       appellee waives any argument it fails to raise
       in its answering brief.”).
6           MOHAMED V. UBER TECHNOLOGIES

    With this amendment, the panel has voted to deny the
petition for rehearing en banc. The Petition for Rehearing En
Banc has been circulated to the full court, and no judge has
requested a vote on whether to rehear the matter en banc. Fed.
R. App. P. 35.

    The petition rehearing en banc is DENIED. No further
petition for rehearing may be filed.

                          OPINION

CLIFTON, Circuit Judge:

    Plaintiff-Appellees Abdul Mohamed and Ronald Gillette,
former Uber drivers, filed an action in district court alleging
on behalf of themselves and a proposed class of other drivers
that Defendants Uber Technologies, Inc., Rasier, LLC, and
Hirease, LLC, violated the Fair Credit Reporting Act (FCRA)
and various state statutes. Gillette has also brought a
representative claim against Uber under California’s Private
Attorneys General Act of 2004 (PAGA) alleging that he was
misclassified as an independent contractor rather than an
employee. The district court denied Uber’s motion to compel
arbitration of the claims. Mohamed v. Uber Technologies,
109 F. Supp. 3d 1185 (N.D. Cal. 2015). Uber argues on
appeal (1) that the district court erroneously considered
whether the arbitration provisions were enforceable when that
question was clearly delegated to an arbitrator, and (2) that
even if the district court properly considered arbitrability, it
erred in concluding that the arbitration provisions were
invalid and in declining to compel arbitration.
              MOHAMED V. UBER TECHNOLOGIES                           7

    We conclude that the district court erred at the first step
and improperly assumed the authority to decide whether the
arbitration agreements were enforceable. The question of
arbitrability as to all but Gillette’s PAGA claims was
delegated to the arbitrator. Under the terms of the agreement
Gillette signed, the PAGA waiver should be severed from the
arbitration agreement and Gillette’s PAGA claims may
proceed in court on a representative basis. All of Plaintiffs’
remaining arguments, including both Mohamed’s challenge
to the PAGA waiver in the agreement he signed and the
challenge by both Plaintiffs to the validity of the arbitration
agreement itself, are subject to resolution via arbitration.

I. Background

    Plaintiff Abdul Mohamed began driving for Uber’s black
car service in Boston in 2012, and for UberX1 around October
2014. Like all Uber drivers, Mohamed used a smartphone to
access the Uber application while driving, which enabled him
to pick up customers.

    In late July 2013, Mohamed was required to agree to two
new contracts with Uber (the “Software License and Online
Services Agreement” and the “Driver Addendum”; jointly,
the “2013 Agreement”) before he was allowed to sign in to
the application. The 2013 Agreement provided that it was
governed by California law. It included an arbitration
provision requiring Uber drivers to submit to arbitration to
resolve most disputes with the company. It also included a

   1
     An Uber black car is a commercially registered livery car that
passengers can access using the Uber smartphone application. UberX is
a lower-cost alternative in which drivers use their own cars to pick up
passengers via the app.
8             MOHAMED V. UBER TECHNOLOGIES

provision requiring drivers to waive their right to bring
disputes as a class action, a collective action, or a private
attorney general representative action. Drivers could opt out
of arbitration by delivering notice of their intent to opt out to
Uber within 30 days either in person or by overnight delivery
service. Mohamed accepted the agreements and did not opt
out.

    Nearly a year later, in June 2014, Uber released an
updated version of the Software License and Online Services
Agreement and the Driver Addendum (jointly, the “2014
Agreement”). The 2014 Agreement also provided that it was
governed by California law. It included an updated
arbitration provision with an easier opt-out procedure that
enabled drivers to opt out via e-mail as well as in person or
by delivery service. It also included a provision requiring all
disputes with the company “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.”
Mohamed accepted these agreements and did not opt out. In
early October 2014, Mohamed accepted a similar agreement
with Rasier, a wholly owned subsidiary of Uber (“Rasier
Software Sublicense & Online Services Agreement” (Rasier
Agreement)).2

   In late October 2014, shortly after he began driving for
UberX, Mohamed’s access to the app was cut off due to

    2
     Except where necessary, this opinion refers to Uber and Rasier
collectively as “Uber.” The Rasier Agreement contained terms similar to
those in the Software License and Online Services Agreement, and neither
party has alleged any arguments specific to the Rasier Agreement. Thus,
we treat it as part of the 2014 Agreement.
            MOHAMED V. UBER TECHNOLOGIES                    9

negative information on his consumer credit report,
effectively terminating his ability to drive for Uber.

    Plaintiff-Appellant Ronald Gillette began driving for Uber
in the San Francisco Bay Area in March 2013. Like
Mohamed, he was required to agree to the 2013 Agreement
before signing into the Uber application in late July 2013.
Also like Mohamed, he did not opt out. In April 2014,
Gillette’s access to the app was cut off because of negative
information on his consumer credit report. This effectively
terminated his relationship with Uber.

    On November 24, 2014, Mohamed filed a class action in
the Northern District of California against Uber, Rasier, and
Hirease, an independent company that conducted background
checks. Mohamed alleged that the use of his consumer credit
report violated the FCRA, the Massachusetts Consumer
Credit Reporting Act (MCCRA), and the California
Consumer Credit Reporting Agencies Act (CCRAA). Two
days later, on November 26, 2014, Gillette filed a separate
lawsuit against Uber, also in the Northern District of
California. Gillette alleged that the company’s use of his
consumer credit report violated the FCRA and the California
Investigative Consumer Reporting Agencies Act (ICRAA).
He also alleged that Uber had misclassified him and other
employees as independent contractors in violation of
California’s PAGA statute.

    Uber moved to compel arbitration in both lawsuits,
arguing that Gillette was bound by the arbitration provision
in the 2013 Agreement and Mohamed by the arbitration
provision in the 2014 Agreement. The district court denied
both motions, Mohamed, 109 F. Supp. 3d at 1190, and Uber
now appeals.
10             MOHAMED V. UBER TECHNOLOGIES

II. Discussion

    We review de novo an order denying a motion to compel
arbitration. Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d
1069, 1072 (9th Cir. 2013).

    Both the 2013 and the 2014 Agreements contained
provisions that provided, using very similar language, that
disputes would be resolved by arbitration and, further, that
any dispute as to arbitrability (with one exception discussed
below) would be resolved by the arbitrator. These provisions
stated:

         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 and not
         by way of court or jury trial.3

         Such disputes include without limitation
         disputes arising out of or relating to
         interpretation or application of this Arbitration
         Provision, including the enforceability,
         revocability or validity of the Arbitration

 3
   In the 2014 Agreement, this sentence read: “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.
             MOHAMED V. UBER TECHNOLOGIES                      11

        Provision or any portion of the Arbitration
        Provision.

The 2014 Agreement continued: “All such matters shall be
decided by an Arbitrator and not by a court or judge.”

    Both the 2013 and 2014 Agreements also contained
provisions that required drivers to waive the right to bring
class, collective, and representative actions (including claims
under the PAGA statute), either in court or in arbitration. The
2013 Agreement, but not the 2014 Agreement, carved out
challenges to these waivers from the general delegation
provision: “Notwithstanding any other clause contained in
this Agreement, any claim that all or part of the Class Action
Waiver, Collective Action Waiver or Private Attorney
General Waiver is invalid, unenforceable, unconscionable,
void or voidable may be determined only by a court of
competent jurisdiction and not by an arbitrator.”

    The district court concluded that the delegation clauses in
both the 2013 and the 2014 Agreements were ineffective
because they were not clear and unmistakable. Mohamed,
109 F. Supp. 3d at 1198–1204. The court also concluded that
even if the delegation clauses were clear and unmistakable,
they were unenforceable because they were unconscionable.
Id. at 1204–16. We disagree. The 2013 Agreement clearly
and unmistakably delegated the question of arbitrability to the
arbitrator except as pertained to the arbitrability of class
action, collective action, and representative claims. The 2014
Agreement clearly and unmistakably delegated the question
of arbitrability to the arbitrator under all circumstances.
Neither delegation provision was unconscionable. Thus, all
of Plaintiffs’ challenges to the enforceability of the arbitration
agreement, save Gillette’s challenge to the enforceability of
12           MOHAMED V. UBER TECHNOLOGIES

the PAGA waiver in the 2013 Agreement, should have been
adjudicated in the first instance by an arbitrator and not in
court.

A. Delegation of the issue of arbitrability

    “[U]nlike the arbitrability of claims in general, whether
the court or the arbitrator decides arbitrability is ‘an issue for
judicial determination unless the parties clearly and
unmistakably provide otherwise.’” Oracle Am., 724 F.3d at
1072 (quoting Howsam v. Dean Witter Reynolds, Inc.,
537 U.S. 79, 83 (2002)). “In other words, there is a
presumption that courts will decide which issues are
arbitrable; the federal policy in favor of arbitration does not
extend to deciding questions of arbitrability.” Id. Clear and
unmistakable evidence of an agreement to arbitrate
arbitrability “might include . . . a course of conduct
demonstrating assent . . . or . . . an express agreement to do
so.” Momot v. Mastro, 652 F.3d 982, 988 (9th Cir. 2011)
(quoting Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 79–80
(2010) (Stevens, J., dissenting)).

     In Momot, we held that language “delegating to the
arbitrators the authority to determine the validity or
application of any of the provisions of the arbitration clause[]
constitutes an agreement to arbitrate threshold issues
concerning the arbitration agreement.” Id. (quoting Rent-A-
Ctr., 561 U.S. at 68) (internal quotation marks omitted).
Here, both the 2013 and the 2014 Agreements delegated to
the arbitrators the authority to decide issues relating to the
“enforceability, revocability or validity of the Arbitration
Provision or any portion of the Arbitration Provision.” This
language is similar to but more expansive than the language
at issue in Momot, and thus also “clearly and unmistakably
              MOHAMED V. UBER TECHNOLOGIES                            13

indicates [the parties’] intent for the arbitrators to decide the
threshold question of arbitrability.” Id.4

    The district court determined that the delegation
provisions themselves were “unambiguous,” but it
nonetheless held that they conflicted with venue provisions
elsewhere in the 2013 and 2014 Agreements. Mohamed,
109 F. Supp. 3d at 1199. Both venue provisions stated that
“any disputes, actions, claims, or causes of action arising out
of or in connection with this Agreement or the Uber Service
or Software shall be subject to the exclusive jurisdiction of
the state and federal courts located in the City and County of
San Francisco.” The district court concluded that the
language in the venue provisions granting state or federal
courts in San Francisco “exclusive jurisdiction” over “any
disputes, actions, claims or causes of action arising out of or
in connection with this Agreement” was “inconsistent and in
considerable tension with the language of the delegation
clauses, which provide[d] that ‘without limitation’
arbitrability will be decided by an arbitrator.” Id. at 1201.
The court also identified an inconsistency between the
“without limitation” language and the carve-out provision in
the 2013 Agreement granting courts jurisdiction over
challenges to the PAGA waiver. Id. at 1201–02.

     These conflicts are artificial. The clause describing the
scope of the arbitration provision was prefaced with “[e]xcept
as it otherwise provides,” which eliminated the inconsistency

  4
     The arbitration agreements may not have clearly and unmistakably
delegated to the arbitrator the authority to decide the question of waiver
by litigation conduct. See Martin v. Yasuda, No. 15-55696, 2016 WL
3924381, at *5 (9th Cir. July 21, 2016). But that question is not at issue
in this litigation.
14           MOHAMED V. UBER TECHNOLOGIES

between the general delegation provision and the specific
carve-out in the 2013 Agreement. As for the venue provision,
the California Court of Appeal has observed that “[n]o matter
how broad the arbitration clause, it may be necessary to file
an action in court to enforce an arbitration agreement, or to
obtain a judgment enforcing an arbitration award, and the
parties may need to invoke the jurisdiction of a court to
obtain other remedies.” Dream Theater, Inc. v. Dream
Theater, 21 Cal. Rptr. 3d 322, 328 (Cal. Ct. App. 2004), as
modified on denial of reh’g (Dec. 28, 2004). It is apparent
that the venue provision here was intended for these purposes,
and to identify the venue for any other claims that were not
covered by the arbitration agreement. That does not conflict
with or undermine the agreement’s unambiguous statement
identifying arbitrable claims and arguments.

    The delegation provisions clearly and unmistakably
delegated the question of arbitrability to the arbitrator for all
claims except challenges to the class, collective, and
representative action waivers in the 2013 Agreement. In
accordance with Supreme Court precedent, we are required to
enforce these agreements “according to their terms” and, in
the absence of some other generally applicable contract
defense, such as fraud, duress, or unconscionability, let an
arbitrator determine arbitrability as to all but the claims
specifically exempted by the 2013 Agreement. Rent-A-Ctr.,
561 U.S. at 67.

B. The delegation provisions were not unconscionable

   The district court also held that, even if the delegation
provisions were clear and unmistakable, they were both
unenforceable due to unconscionability. Mohamed, 109 F.
Supp. 3d at 1204–16.             Under California law,
            MOHAMED V. UBER TECHNOLOGIES                    15

“‘unconscionability has both a ‘procedural’ and a
‘substantive’ element,’ the former focusing on ‘oppression’
or ‘surprise’ due to unequal bargaining power, the latter on
‘overly harsh’ or ‘one-sided’ results.” Armendariz v. Found.
Health Psychcare Servs., Inc., 6 P.3d 669, 690 (Cal. 2000)
(quoting A & M Produce Co. v. FMC Corp., 186 Cal. Rptr.
114, 121–22 (Cal. Ct. App. 1982)). Both substantive and
procedural unconscionability must be present in order for a
court to find a contract unconscionable, but “they need not be
present in the same degree.” Id. Recently, the California
Supreme Court has emphasized that “unconscionability
requires a substantial degree of unfairness beyond ‘a simple
old-fashioned bad bargain.’” Baltazar v. Forever 21, Inc.,
367 P.3d 6, 12 (Cal. 2016) (quoting Sonic-Calabasas A, Inc.
v. Moreno, 311 P.3d 184, 291 (Cal. 2013)). Rather,
unconscionable contracts are those that are “so one-sided as
to ‘shock the conscience.’” Id. at 11 (quoting Pinnacle
Museum Tower Assn. v. Pinnacle Mkt. Dev. (US), LLC,
282 P.3d 1217, 1232 (Cal. 2012)). When considering an
unconscionability challenge to a delegation provision, the
court must consider only arguments “specific to the
delegation provision.” Rent-A-Ctr., 561 U.S. at 73

    The district court concluded that the delegation provisions
in both the 2013 and 2014 Agreements were procedurally and
substantively unconscionable. For the 2013 Agreement, the
court concluded that the provision was procedurally
unconscionable because it was “hidden in a prolix printed
form,” Nagrampa v. MailCoups, Inc., 469 F.3d 1257, 1280
(9th Cir. 2006) (en banc) (quoting Flores v. Transamerica
HomeFirst, Inc., 113 Cal. Rptr. 2d 376, 381 (Cal. Ct. App.
2001)), and because there was no meaningful opportunity for
the drivers to reject the contract. Mohamed, 109 F. Supp. 3d
at 1205–06. For the 2014 Agreement, the court concluded
16          MOHAMED V. UBER TECHNOLOGIES

that the delegation provision was procedurally
unconscionable because “the 2014 agreement[] utterly failed
to notify drivers of a specific drawback of the delegation
clause—namely, that drivers may be required to pay
considerable forum fees to arbitrate arbitrability,” and
because employees likely felt at least some pressure not to
opt out of arbitration despite the presence of a clear opt-out
provision. Id. at 1215–16. The court also concluded that
both the 2013 and 2014 Agreements were substantively
unconscionable because they required arbitration costs and
fees to be shared equally between Uber and the driver. Id. at
1206–10, 1216. As a result, it concluded that both delegation
provisions should be invalidated. Id. at 1210, 1216.

    Uber argues that the delegation provisions could not have
been procedurally unconscionable because both agreements
gave drivers an opportunity to opt out of arbitration
altogether. The district court agreed with Uber that, under
Ninth Circuit precedent, “the existence of a meaningful right
to opt-out of [arbitration] necessarily renders [the arbitration
clause] (and the delegation clause specifically) procedurally
conscionable as a matter of law.” Id. at 1212. As to the 2013
Agreement, the court concluded that the right to opt out was
not “meaningful” because drivers were required to opt out
either in person at Uber’s San Francisco offices or by
overnight delivery service, both of which were so
burdensome as to make the opt-out right “illusory.” Id. at
1206. As to the 2014 Agreement, which contained a much
less burdensome opt-out procedure, the court held that our
precedent “failed to apply California law as announced by the
               MOHAMED V. UBER TECHNOLOGIES                              17

California Supreme Court,” and as such, declined to apply it.5
Id. at 1212.

    The district court does not have the authority to ignore
circuit court precedent, and neither do we. “Binding
authority must be followed unless and until overruled by a
body competent to do so.” Hart v. Massanari, 266 F.3d
1155, 1170 (9th Cir. 2001); see Miller v. Gammie, 335 F.3d
889, 899–900 (9th Cir. 2003) (en banc) (identifying the
limited circumstances when a three-judge panel of this court
is not bound by our precedent). In Nagrampa, we determined
that “[t]he threshold inquiry in California’s unconscionability
analysis is ‘whether the arbitration agreement is adhesive.’”
469 F.3d at 1281 (quoting Armendariz, 6 P.3d at 690). In
Circuit City Stores, Inc. v. Ahmed, we held that an arbitration
agreement is not adhesive if there is an opportunity to opt out
of it. 283 F.3d 1198, 1199 (9th Cir. 2002); see also Kilgore
v. KeyBank, Nat. Ass’n, 718 F.3d 1052, 1059 (9th Cir. 2013)
(en banc). Taken together, these two principles compel us to
find that the 2014 Agreement, at least, is not adhesive, which
supports our holding that the delegation provision is not
unconscionable.

    The district court’s conclusion that the right to opt out of
the 2013 Agreement was illusory fares no better. “An

 5
   The district court order cited several of our decisions, culminating with
Kilgore v. Key Bank, Nat’l Ass’n, 718 F.3d 1052 (9th Cir. 2013) (en banc),
acknowledging that they supported Uber’s position. Mohamed, 109 F.
Supp. 3d at 1212. Nonetheless, the order stated that the district court
“cannot follow the Ninth Circuit cases cited by Uber in the face of directly
contradicting California Supreme Court authority.” Id. The California
authority cited in the order preceded our decision in Kilgore, so the court’s
decision to ignore our precedent cannot be explained by any intervening
California authority.
18           MOHAMED V. UBER TECHNOLOGIES

illusory promise is one containing words ‘in promissory form
that promise nothing’ and which ‘do not purport to put any
limitation on the freedom of the alleged promisor.’” Flores
v. Am. Seafoods Co., 335 F.3d 904, 912 (9th Cir. 2003)
(quoting 2 Corbin on Contracts 142 (rev. ed. 1995)). While
we do not doubt that it was more burdensome to opt out of
the arbitration provision by overnight delivery service than it
would have been by e-mail, the contract bound Uber to accept
opt-outs from those drivers who followed the procedure it set
forth. There were some drivers who did opt out and whose
opt-outs Uber recognized. Thus, the promise was not
illusory. The fact that the opt-out provision was “buried in
the agreement” does not change this analysis. Mohamed,
109 F. Supp. 3d at 1205. As we noted in Ahmed, “one who
signs a contract is bound by its provisions and cannot
complain of unfamiliarity with the language of the
instrument.” 283 F.3d at 1200 (quoting Madden v. Kaiser
Found. Hosps., 552 P.2d 1178, 1185 (Cal. 1976)).

    The delegation provisions were not procedurally
unconscionable in either the 2013 or the 2014 Agreements.
Because the agreements were not procedurally
unconscionable, and because both procedural and substantive
unconscionability must be present in order for an agreement
to be unenforceable, see Armendariz, 6 P.3d at 690, we need
not reach the question whether the agreements here were
substantively unconscionable. The district court should have
ordered the parties to arbitrate their dispute over arbitrability
(with a narrow exception for the argument over the PAGA
              MOHAMED V. UBER TECHNOLOGIES                          19

waiver in the 2013 Agreement, as discussed below), and we
remand with instructions that it do so.6

C. The effective vindication doctrine

    Plaintiffs also argue that even if the delegation provisions
are otherwise enforceable, they are invalid because both the
2013 and 2014 Agreements contain a fee term requiring
drivers to split the costs of arbitration equally with Uber and
thus preclude drivers from effectively vindicating their
federal statutory rights. Effective vindication provides courts
with a means to “invalidate, on ‘public policy’ grounds,
arbitration agreements that ‘operat[e] . . . as a prospective
waiver of a party’s right to pursue statutory remedies.’” Am.
Exp. Co. v. Italian Colors Rest., 133 S. Ct. 2304, 2310 (2013)
(quoting Mitsubishi Motors Corp. v. Soler Chrysler-
Plymouth, Inc., 473 U.S. 614, 637 n. 19 (1985)). In Italian
Colors, the Supreme Court stated that effective vindication
may “cover filing and administrative fees attached to
arbitration that are so high as to make access to the forum
impracticable.” Id. at 2310–11; see also Chavarria v. Ralphs
Grocery Co., 733 F.3d 916, 927 (9th Cir. 2013) (finding that
the effective vindication doctrine was implicated when
“administrative and filing costs, even disregarding the cost to
prove the merits, effectively foreclose pursuit of the claim”).
Evidence submitted by the Plaintiffs suggests that the costs of
arbitration in this case may exceed $7,000 per day.

  6
    We note that Plaintiffs also raised the argument that the class and
collective action waivers in the arbitration agreements may violate the
National Labor Relations Act (NLRA) for the first time in a sur-reply.
That untimely submission waived the argument. See, e.g., United States
v. Dreyer, 804 F.3d 1266, 1277 (9th Cir. 2015) (“Generally, an appellee
waives any argument it fails to raise in its answering brief.”).
20           MOHAMED V. UBER TECHNOLOGIES

    However, Uber has committed to paying the full costs of
arbitration. So long as Uber abides by this commitment, the
fee term in the arbitration agreement presents Plaintiffs with
no obstacle to pursuing vindication of their federal statutory
rights in arbitration. As a result, we decline to reach the
question of whether the fee term would run afoul of the
effective vindication doctrine if it were enforced as written.

D. The PAGA waiver

    Plaintiffs argue that the arbitration provisions in the 2013
and 2014 Agreements were invalid under California law
because they both contained unenforceable, unseverable
waivers of Plaintiffs’ claims under the California PAGA
statute. Because we conclude that the district court should
not have reached the question of whether the arbitration
agreements were enforceable in the first place, it is not
necessary to address this argument pertaining to the 2014
Agreement. Plaintiffs’ challenges to the enforceability and
severability of the PAGA waiver in the 2014 Agreement fall
to the arbitrator to decide.

    As noted above, however, the 2013 Agreement
specifically required the district court, and not the arbitrator,
to consider certain challenges to the arbitration provision,
including challenges to the enforceability of the PAGA
waiver. Because of that carve-out, it remains for us to
consider on the merits whether the PAGA waiver in that
agreement is enforceable, and what effect the waiver has on
the arbitration provision as a whole.

    The district court concluded that the arbitration provision
in the 2013 Agreement was procedurally unconscionable
because it was adhesive, oppressive, and a surprise to drivers
             MOHAMED V. UBER TECHNOLOGIES                     21

who accepted the agreement, and that it was substantively
unconscionable because it contained a PAGA waiver that was
unenforceable under California law. Mohamed, 109 F. Supp.
3d at 1217–18. The district court also concluded that the
PAGA waiver was unseverable from the remainder of the
agreement and that “the entirety of the arbitration agreement
fails because the PAGA waiver fails.” Id. at 1218. For the
reasons stated above, the district court’s holding on
unconscionability was erroneous.

    Perhaps recognizing that the district court’s
unconscionability analysis ran counter to existing Ninth
Circuit precedent, Plaintiffs argue on appeal that even if the
district court erred in finding that the arbitration provision in
the 2013 Agreement was unconscionable, the PAGA waiver
was still invalid under California law and unseverable from
the remainder of the arbitration provision under the terms of
the contract. Plaintiffs argue that the invalid PAGA waiver
thus dooms the entire arbitration provision, such that claims
governed by that agreement (i.e., all of Gillette’s claims)
must be litigated in court. Although we agree that the PAGA
waiver in the 2013 Agreement was invalid under California
law, we conclude that it is severable from the remainder of
the 2013 agreement.

    In Iskanian v. CLS Transp. L.A., LLC, 327 P.3d 129 (Cal.
2014), the California Supreme Court held that where “an
employment agreement compels the waiver of representative
claims under the PAGA, it is contrary to public policy and
unenforceable as a matter of state law.” Id. at 149. We have
held that the Federal Arbitration Act does not preempt this
rule. Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425,
427 (9th Cir. 2015). Uber attempts to distinguish this case
from Iskanian because drivers were able to opt out of the
22          MOHAMED V. UBER TECHNOLOGIES

2013 Agreement, but its effort is unavailing. Drivers
presented with the 2013 Agreement were required to make
the decision whether or not to opt out within 30 days of
receipt, and Iskanian made clear that, while employees “are
free to choose whether or not to bring PAGA actions when
they are aware of Labor Code violations,” it is “contrary to
public policy for an employment agreement to eliminate this
choice altogether by requiring employees to waive the right
to bring a PAGA action before any dispute arises.” 327 P.3d
at 313. Because the PAGA waiver in the 2013 Agreement
required employees to make a decision as to whether or not
they would preserve their right to bring PAGA claims before
they knew any such claims existed, it is unenforceable under
Iskanian and Sakkab.

    The PAGA waiver is severable from the remainder of the
arbitration provision in the 2013 Agreement, however. In
Section 14.1, the agreement provided that “[i]f any provision
of the Agreement is held to be invalid or unenforceable, such
provision shall be struck and the remaining provisions shall
be enforced to the fullest extent under law.” In Section
14.3(v), the agreement further provided:

       There will be no right or authority for any
       dispute to be brought, heard, or arbitrated as a
       private attorney general representative action
       (“Private Attorney General Waiver”). The
       Private Attorney General Waiver shall not be
       severable from this Arbitration Provision in
       any case in which a civil court of competent
       jurisdiction finds the Private Attorney General
       Waiver is unenforceable. In such instances
       and where the claim is brought as a private
       attorney general, such private attorney general
            MOHAMED V. UBER TECHNOLOGIES                     23

       claim must be litigated in a civil court of
       competent jurisdiction.

While this provision is hardly a model of clarity, the third
sentence stated explicitly that PAGA claims are subject to
litigation in court, contrary to the district court’s conclusion
that the PAGA waiver was unseverable from the remainder of
the agreement. Finally, in Section 14.3(ix), the agreement
provided that “[e]xcept 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.” Reading these ambiguous provisions
together, we conclude that in stating that the PAGA waiver
and the arbitration provision are not severable, the contract
provides that, if the PAGA waiver turned out to be invalid,
the arbitration provision would also be invalid as to any
PAGA representative claim. Thus, while Plaintiffs’ PAGA
claim must be litigated in court, the PAGA waiver does not
invalidate the remainder of the arbitration provision in the
2013 Agreement, and it should be enforced according to its
terms.

E. Hirease cannot compel arbitration

    Plaintiff Mohamed (but not Gillette) named independent
background-check company Hirease in his complaint
alongside Uber. Hirease moved to join Uber’s motion to
compel Mohamed into arbitration, though Hirease was not
identified as a party or a signatory to the agreement between
Uber and the drivers. The district court denied Hirease’s
joinder in Uber’s motion to compel on the same grounds that
it denied Uber’s motion, without separately discussing the
question of whether Hirease was covered by the arbitration
provisions. Mohamed, 109 F. Supp. 3d at 1237.
24          MOHAMED V. UBER TECHNOLOGIES

    On appeal, Hirease argues that it should be covered by the
arbitration agreement because: (1) Mohamed has alleged an
agency relationship between Hirease and Uber, see, e.g.,
Murphy v. DirecTV, Inc., 724 F.3d 1218, 1232–33 (9th Cir.
2013); (2) Hirease and Uber share an “identity of interest,”
see, e.g., Jones v. Jacobson, 125 Cal. Rptr. 3d 522, 537 n.9
(Cal. Ct. App. 2011); and (3) the cause of action alleged
against Hirease is “intimately founded in and intertwined
with” underlying contract obligations, Murphy, 724 F.3d at
1229 (quoting Kramer v. Toyota Motor Corp., 705 F.3d 1122,
1128 (9th Cir. 2013)).

    Hirease’s first argument rests on the wording of
Mohamed’s complaint, which alleged generally that
Defendants—defined to include Hirease, Uber, Rasier, and
unknown Does—knowingly violated the FCRA, MCRA, and
CCRAA by failing to provide job applicants and employees
with adequate notice regarding the use of their consumer
credit reports for employment purposes. The complaint also
included allegations that “each named Defendant and DOES
1–50 were the employees, agents, or representatives of each
other” and that “[e]ach Defendant has ratified and approved
the acts of its agents.” Hirease argues that under California
law, “a plaintiff’s allegations of an agency relationship
among defendants is sufficient to allow the alleged agents to
invoke the benefit of an arbitration agreement executed by
their principal even though the agents are not parties to the
agreement.” Thomas v. Westlake, 139 Cal. Rptr. 3d 114, 121
(Cal. Ct. App. 2012).

    As the California Court of Appeal has noted elsewhere,
however, “[c]omplaints in actions against multiple defendants
commonly include conclusory allegations that all of the
defendants were each other’s agents or employees and were
              MOHAMED V. UBER TECHNOLOGIES                         25

acting within the scope of their agency or employment.”
Barsegian v. Kessler & Kessler, 155 Cal. Rptr. 3d 567, 571
(Cal. Ct. App. 2013). If Hirease were correct that such
allegations were sufficient to establish an agency relationship
for the purpose of compelling arbitration, “in every multi-
defendant case in which the complaint contained such
boilerplate allegations of mutual agency, as long as one
defendant had entered into an arbitration agreement with the
plaintiff, every defendant would be able to compel arbitration,
regardless of how tenuous or nonexistent the connections
among the defendants might actually be.” Id. As such,
generalized allegations of an agency relationship made in a
complaint are not, by themselves, a sufficient ground on
which to compel arbitration when “the mutual agency of all
defendants is not a judicially admitted fact.” Id. at 573.
There has been no such judicial admission here.

    There is no specific indication of an actual agency
relationship between Uber and Hirease, either in the
complaint or elsewhere in the record. An agency relationship
“requires that the principal maintain control over the agent’s
actions.” Murphy, 724 F.3d at 1232. Mohamed did not
allege any facts suggesting that Uber maintained control over
Hirease’s actions, or vice versa. Indeed, while the complaint
stated four causes of action, Hirease was named in only one
of them, for a violation of the MCRA. This claim alleged
(1) that Hirease failed to deliver a copy of the consumer
report to Plaintiff and other members of the MCRA class as
required by Massachusetts General Laws (MGL) ch. 93 § 60,7

  7
    MGL ch. 93 § 60 requires consumer reporting agencies under certain
circumstances to:
26             MOHAMED V. UBER TECHNOLOGIES

and (2) that Defendants failed to advise members of the
putative MCRA class of their rights under MGL ch. 93 § 62.8
Hirease’s alleged violation of MGL ch. 93 § 60 was
predicated on its own failure to act, and there is nothing in the
complaint to suggest that failure was influenced or controlled
by Uber. Nor is there any indication that Hirease had any
role in or control over the alleged failure to advise members
of the putative MCRA class of their rights under MGL ch. 93
§ 62, which applies to “user[s] of . . . consumer credit
reports” such as Uber. Because Hirease “has presented no
evidence, on appeal or before the district court, that [Uber]
controlled its behavior in ways relevant to [Mohamed’s]
allegations,” Hirease is not entitled to compel arbitration as
Uber’s agent. Murphy, 724 F.3d at 1233.

         notify the consumer of the fact that public record
         information is being reported by the consumer reporting
         agency, together with the name and address of the
         person to whom such information is being reported; or
         maintain strict procedures designed to insure that
         whenever public record information which is likely to
         have an adverse effect on a consumer’s ability to obtain
         employment is reported it is complete and up to date.

It also requires consumer reporting agencies to “enter into an agreement
with the user of such consumer report which provides that no consumer
report may be requested by the user until and unless the user has provided
written notice to the employee or prospective employee that a consumer
report regarding the employee will be requested.” Id.
  8
     MGL ch. 93 § 62 provides in relevant part that “[w]henever . . .
employment involving a consumer is denied or terminated . . . because of
information contained in a consumer report from a consumer reporting
agency, the user of the consumer report shall . . . notify such consumer in
writing against whom such adverse action has been taken.”
            MOHAMED V. UBER TECHNOLOGIES                    27

    In the same vein, there is no indication in the complaint
that Uber and Hirease share an identity of interest, which
Black’s Law Dictionary defines as “[a] relationship between
two parties who are so close that suing one serves as notice to
the other.” (10th ed. 2014). Because Hirease’s liability stems
from its own alleged violation of Massachusetts law,
independent of any actions Uber may or may not have taken,
there is no such relationship here.

    Finally, the allegations Mohamed leveled against Hirease
were not “intimately founded in and intertwined with” the
underlying contract obligations established in the 2014
Agreement. Murphy, 724 F.3d at 1229 (quoting Kramer,
705 F.3d at 1128). The rule requiring enforcement of an
arbitration agreement under such circumstances “reflects the
policy that a plaintiff may not, ‘on the one hand, seek to hold
the non-signatory liable pursuant to duties imposed by the
agreement, which contains an arbitration provision, but, on
the other hand, deny arbitration’s applicability because the
defendant is a non-signatory.’” Id. (quoting Goldman v.
KPMG LLP, 92 Cal. Rptr. 3d 534, 543 (Cal. Ct. App. 2009)).
Non-signatories can enforce arbitration agreements when they
are being sued “for ‘claims that are based on the same facts
and are inherently inseparable from arbitrable claims,’” id. at
1231 (quoting Metalclad Corp. v. Ventana Envtl. Org.
P’Ship, 1 Cal. Rptr. 3d 328, 334 (Cal. Ct. App. 2003)), but

       [m]ere allegations of collusive behavior
       between signatories and non[-]signatories to
       a contract are not enough to compel
       arbitration between parties who have not
       agreed to arbitrate: those allegations of
       collusive behavior must also establish that the
       plaintiff’s claims against the nonsignatory are
28             MOHAMED V. UBER TECHNOLOGIES

          intimately founded in and intertwined with the
          obligations imposed by the contract
          containing the arbitration clause.Id. (quoting
          Goldman, 92 Cal. Rptr. 3d at 545). Here, the
          claims against Hirease arise under the MCRA
          and not out of obligations imposed by the
          2014 Agreement. Therefore, the rule that an
          arbitration agreement can be enforced by a
          non-signatory when the allegations against the
          non-signatory are intimately founded in and
          intertwined with underlying contract
          obligations does not apply.

III.      Conclusion

   We affirm in part and reverse the district court’s order
denying Uber’s motions to compel arbitration and remand for
proceedings consistent with this opinion.

    We affirm the district court’s order denying Hirease’s
joinder in the motion to compel.

       All parties shall bear their own costs.

  AFFIRMED in part, REVERSED in part, and
REMANDED.