RESPONDENTS’ NOTICE OF MOTION AND MOTION TO DISMISS AND OPPOSITION TO MOTION TO COMPEL ARBITRATION No. 3:21-cv-09577 (RS) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JENNER & BLOCK LLP 455 Market Street, Suite 2100 San Francisco, CA 94105 Laurie Edelstein (Bar No. 164466) Sophia Cai (Bar No. 327773) JENNER & BLOCK LLP 455 Market Street, Suite 2100 San Francisco, California 94105 Telephone: (628) 267-6800 Facsimile: (628) 267-6859 ledelstein@jenner.com scai@jenner.com Adam Unikowsky (admitted pro hac vice) JENNER & BLOCK LLP 1099 New York Ave., NW Washington, DC 20001 Telephone: (202) 639-6041 Facsimile: (202) 661-4925 aunikowsky@jenner.com Attorneys for Respondents Uber Technologies, Inc. and Uber USA, LLC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION VALERIA HERMOSILLO CHAVEZ, ERIK ESPARZA, JAMAR SMITH, and ANTHONY SIMONEAU, and 7,267 OTHER INDIVIDUALS, Petitioners, v. UBER TECHNOLOGIES, INC. AND UBER USA, LLC Respondents. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) No. 3:21-cv-09577 (RS) RESPONDENTS’ NOTICE OF MOTION AND MOTION TO DISMISS PETITION FOR AN ORDER COMPELLING ARBITRATION AND OPPOSITION TO MOTION TO COMPEL ARBITRATION Date: March 10, 2022 Time: 1:30 p.m. Place: Courtroom 3 – 17th Floor Judge: Hon. Richard Seeborg Case 3:21-cv-09577-RS Document 22 Filed 01/31/22 Page 1 of 32
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`RESPONDENTS’ NOTICE OF MOTION AND MOTION TO DISMISS AND OPPOSITION TO MOTION TO COMPEL ARBITRATION No. 3:21-cv-09577 (RS) 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JENNER & BLOCK LLP 455 Market Street, Suite 2100 San Francisco, CA 94105 NOTICE OF MOTION AND MOTION TO THE COURT, ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on March 10, 2022, at 1:30 p.m., or as soon thereafter as this matter may be heard before the Honorable Richard Seeborg in Courtroom 3, 17th Floor of the United States District Court for the Northern District of California, Phillip Burton Federal Building and United States Courthouse, 450 Golden Gate Avenue, San Francisco, California 94102, respondents Uber Technologies, Inc. and Uber USA, LLC, by and through their counsel of record, will and hereby do respectfully move this Court to dismiss Petitioners’ Petition for an Order Compelling Arbitration. Petitioners seek an order under Section 4 of the Federal Arbitration Act compelling Uber to pay over $10 million to AAA and enjoining a pending New York case. The petition should be dismissed because Section 4 of the FAA requires Petitioners to show that Uber is resisting arbitration, and Uber is not. Uber fully intends to arbitrate every single one of Petitioners’ claims. Petitioners have no interest in the outcome of Uber’s state court suit against AAA, which seeks to resolve a separate commercial dispute over the amount of AAA’s invoice. Furthermore, the FAA does not authorize Petitioners’ requested relief. Basic principles of federalism require this Court to allow the New York court to complete its work rather than overriding a pending case between Uber and a third party. If the Court reaches the merits, it should hold that Uber does not owe the AAA $10 million. Finally, Petitioners are not entitled to relief because they have failed to provide any individualized evidence to support their claims. This motion is based on the memorandum set forth below, any reply defendants may make, such other evidence and argument as may be presented at or prior to the hearing, and all records and files in this action. Dated: January 31, 2022 JENNER & BLOCK LLP By: /s/ Laurie Edelstein Attorneys for Respondents Uber Technologies, Inc. and Uber USA, LLC Case 3:21-cv-09577-RS Document 22 Filed 01/31/22 Page 2 of 32
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`RESPONDENTS’ MOTION TO DISMISS AND OPPOSITION TO MOTION TO COMPEL ARBITRATION No. 3:21-cv-09577 (RS) i 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JENNER & BLOCK LLP 455 Market Street, Suite 2100 San Francisco, CA 94105 TABLE OF CONTENTS Page INTRODUCTION .......................................................................................................................... 1 STATEMENT OF ISSUES TO BE DECIDED ............................................................................. 3 STATEMENT OF FACTS ............................................................................................................. 4 ARGUMENT .................................................................................................................................. 7 I. THE PETITION SHOULD BE DISMISSED BECAUSE UBER HAS AGREED – NOT REFUSED – TO ARBITRATE PETITIONERS’ CLAIMS. ................ 7 II. THE COURT IS NOT AUTHORIZED TO GRANT PETITIONERS’ REQUESTED RELIEF. ...................................................................................................... 9 The Court Does Not Have the Authority to Enjoin the State Court Case. ...................................................................................................................... 10 1. The FAA does not permit the Court to enjoin the state court case. ........................................................................................................... 10 2. The Anti-Injunction Act bars Petitioners’ requested relief. ...................... 11 The Court Should Not Order Uber To Pay the Invoice. ....................................... 14 1. Petitioners’ requested order would violate the Anti-Injunction Act. ............................................................................................................ 14 2. If the Court does not dismiss, it should abstain. ....................................... 15 3. If the Court reaches the merits, Uber should win. .................................... 16 a. The Court should not blindly defer to AAA’s invoice. ................ 17 b. AAA’s invoice violates AAA’s rules and is unlawful. ................. 18 III. PETITIONERS HAVE NOT SUBSTANTIATED THEIR CLAIMS. ............................ 19 IV. PETITIONERS CANNOT OBTAIN RELIEF UNDER STATE LAW........................... 21 The California statutes do not apply by their own terms. ..................................... 21 The California statutes do not apply in federal court. ........................................... 22 1. The California statutes are procedural. ..................................................... 23 2. Even if they are substantive, California’s laws still do not apply. ......................................................................................................... 24 CONCLUSION ............................................................................................................................. 25 Case 3:21-cv-09577-RS Document 22 Filed 01/31/22 Page 3 of 32
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`RESPONDENTS’ MOTION TO DISMISS AND OPPOSITION TO MOTION TO COMPEL ARBITRATION No. 3:21-cv-09577 (RS) ii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JENNER & BLOCK LLP 455 Market Street, Suite 2100 San Francisco, CA 94105 TABLE OF AUTHORITIES Page(s) Cases A.L. Williams & Assocs., Inc. v. McMahon, 697 F. Supp. 488 (N.D. Ga. 1988) ...........................................................................................10 Abadilla v. Uber Techs., Inc., No. 3:18-cv-7343 (N.D. Cal. Jan 14, 2019) .............................................................................11 Allemeier v. Zyppah, Inc., No. CV 18-7437, 2018 WL 6038340 (C.D. Cal. Sept. 21, 2018) ............................................17 Ass’n of Am. Med. Colls. v. United States, 217 F.3d 770 (9th Cir. 2000) ...................................................................................................20 Atl. Coast Line R.R. Co. v. Bhd. of Locomotive Eng’rs, 398 U.S. 281 (1970) .................................................................................................................11 Barbes Rest. Inc. v. ASRR Suzer 218, LLC, 140 A.D.3d 430 (1st Dep’t 2016) ............................................................................................18 Bell v. Hood, 327 U.S. 678 (1946) .................................................................................................................20 Blalock Eddy Ranch v. MCI Telecomms. Corp., 982 F.2d 371 (9th Cir. 1992) ...................................................................................................14 Chick Kam Choo v. Exxon Corp., 486 U.S. 140 (1988) .................................................................................................................13 Circuit City Stores, Inc. v. Najd, 294 F.3d 1104 (9th Cir. 2002) .................................................................................................13 Colo. River Water Conservation Dist. v. United States, 424 U.S. 800 (1976) .................................................................................................................15 Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985) .................................................................................................................23 Dekker v. Vivint Solar, Inc., 479 F. Supp. 3d 834 (N.D. Cal. 2020) .....................................................................................24 Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938) ...................................................................................................................22 G.C. & K.B. Invs., Inc. v. Wilson, 326 F.3d 1096 (9th Cir. 2003) ...........................................................................................13, 14 Case 3:21-cv-09577-RS Document 22 Filed 01/31/22 Page 4 of 32
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`RESPONDENTS’ MOTION TO DISMISS AND OPPOSITION TO MOTION TO COMPEL ARBITRATION No. 3:21-cv-09577 (RS) iii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JENNER & BLOCK LLP 455 Market Street, Suite 2100 San Francisco, CA 94105 Geographic Expeditions Inc. v. Est. of Jason Lhotka, No. C 08-04624 SI, 2010 WL 3516116 (N.D. Cal. Sept. 8, 2010) ..........................................13 Hopper, MD v. Am. Arb. Ass’n, Inc., 708 F. App’x 373 (9th Cir. 2017) ............................................................................................18 Jolly v. Intuit Inc., 485 F. Supp. 3d 1191 (N.D. Cal. 2020) ...............................................................................8, 20 Kag West, LLC v. Malone, No. 15-cv-03827, 2016 WL 3951651 (N.D. Cal. July 22, 2016) ......................................13, 14 Kaiser v. BMW of N. Am., LLC, No. C 12-01311, 2013 WL 100218 (N.D. Cal. Jan. 7, 2013) ..................................................18 Leeson v. Transam. Disability Income Plan, 671 F.3d 969 (9th Cir. 2012) ...................................................................................................20 Montanore Mins. Corp. v. Bakie, 867 F.3d 1160 (9th Cir. 2017) ...........................................................................................15, 16 Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) .....................................................................................................................16 Negrete v. Allianz Life Ins. Co. of N. Am., 523 F.3d 1091 (9th Cir. 2008) ...........................................................................................12, 14 Nordeman v. Dish Network LLC, 525 F. Supp. 3d 1080 (N.D. Cal. 2021) ...................................................................................20 PaineWebber Inc. v. Faragalli, 61 F.3d 1063 (3d Cir. 1995)...................................................................................................7, 9 Quackenbush v. Allstate Ins. Co., 121 F.3d 1372 (9th Cir. 1997) ...........................................................................................11, 13 Sandpiper Vill. Condo. Ass’n., Inc. v. La.-Pac. Corp., 428 F.3d 831 (9th Cir. 2005) ...................................................................................................13 Sibbach v. Wilson & Co., 312 U.S. 1 (1941) .....................................................................................................................24 Vaden v. Discover Bank, 556 U.S. 49 (2009) .......................................................................................................20, 24, 25 Wayans v. BMW of N. Am., LLC, No. CV 19-7319, 2020 WL 2046392 (C.D. Cal. Jan. 7, 2020) ...............................................23 Case 3:21-cv-09577-RS Document 22 Filed 01/31/22 Page 5 of 32
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`RESPONDENTS’ MOTION TO DISMISS AND OPPOSITION TO MOTION TO COMPEL ARBITRATION No. 3:21-cv-09577 (RS) iv 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JENNER & BLOCK LLP 455 Market Street, Suite 2100 San Francisco, CA 94105 Statutes 9 U.S.C. § 4 ............................................................................................................................ passim 22 U.S.C. § 2283 ............................................................................................................................11 28 U.S.C. § 1367 ............................................................................................................................24 42 U.S.C. § 1981 ............................................................................................................4, 20, 24, 25 Cal. Civ. Proc. Code § 1281.2 .......................................................................................................23 Cal. Civ. Proc. Code § 1281.97 ...............................................................................................23, 24 Cal. Civ. Proc. Code § 1281.98 ...................................................................................21, 22, 23, 24 Cal. Civ. Proc. Code § 1281.99 .........................................................................................21, 22, 23 Case 3:21-cv-09577-RS Document 22 Filed 01/31/22 Page 6 of 32
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`Case 3:21-cv-09577-RS Document 22 Filed 01/31/22 Page 7 of 32
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`INTRODUCTION
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`Petitioners ask this Court to enjoin a pending New York state court appeal, which is on
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`an expedited track following the entry of interim relief to Uber, in order to force Uber to pay over
`$10 million that Uber does not owe, while providing zero individualized evidence that they are
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`entitled to any relief. This audacious request should be denied.
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`In 2020, following George Floyd’s murder, Uber temporarily waived certain of its own
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`delivery fees on the Uber Eats platform for food purchased from small- and medium-sized
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`Black-owned restaurants. In response, Consovoy McCarthy PLLC (“Consovoy”) solicited
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`clients on social media to sue Uber. Following its advertising campaign, Consovoy filed more
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`than 31,000 boilerplate arbitration demands with the American Arbitration Association
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`(“AAA”). The claimants all alleged that, during Uber’s promotion, they were charged delivery
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`fees on orders from non-Black-owned restaurants, purportedly violating their civil rights.
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`This claim is riddled with legal defects—but Consovoy gambled that no arbitrator would
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`ever decide it. Uber’s arbitration agreement requires Uber to pay arbitration fees in the first
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`instance. AAA’s standard fee schedule sets forth fees on a per-case basis. If AAA multiplied its
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`standard per-case fees by the total number of boilerplate arbitrations, and ignored its own express
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`commitments to charge reasonable fees to compensate for actual costs, then Uber’s total bill
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`would exceed $100 million. Consovoy’s strategy hinged on two predictions: AAA would
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`mechanically charge its per-case fees for all 31,000+ arbitrations and demand that Uber pay a
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`staggering amount, and Uber would buckle and pay Consovoy a multi-million dollar settlement
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`in lieu of paying an even higher amount to AAA.
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`Consovoy got the first prediction mostly right, but the second wrong. AAA discounted
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`its filing fees in recognition of the efficiencies in administering boilerplate claims, but stated its
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`intention to stick to its standard case management and arbitrator fees. This would yield a bill
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`exceeding $90 million, notwithstanding AAA’s contractual obligation to charge only a
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`reasonable fee. But Uber did not buckle and has underscored that it is ready to arbitrate all
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`31,000+ claims. Uber paid AAA’s filing fee for every single claimant. Uber has also paid all of
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`San Francisco, CA 94105
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`455 Market Street, Suite 2100
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`JENNER & BLOCK LLP
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`RESPONDENTS’ MOTION TO DISMISS AND OPPOSITION
`TO MOTION TO COMPEL ARBITRATION
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`1
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`No. 3:21-cv-09577 (RS)
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`RESPONDENTS’ MOTION TO DISMISS AND OPPOSITION TO MOTION TO COMPEL ARBITRATION No. 3:21-cv-09577 (RS) 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JENNER & BLOCK LLP 455 Market Street, Suite 2100 San Francisco, CA 94105 AAA’s fees (reduced filing fees, as well as non-reduced case management fees and arbitrator fees) for nearly 1,000 claimants, and those arbitrations are moving forward without delay. This case concerns one fee for a subset of Consovoy’s clients. Petitioners are 7,271 of the 31,000+ claimants. Uber has paid filing fees in full for all 7,271 Petitioners. But AAA has now sent Uber a separate invoice for over $10 million in undiscounted case management fees for those same Petitioners, and has also made known that it will eventually invoice Uber for undiscounted case management fees for all 31,000+ claimants. AAA’s invoice is unlawful for several reasons, and to obtain relief from that invoice, Uber immediately sued AAA in New York state court. In those expedited proceedings, Uber made clear that its goal was not to avoid arbitration, but to ensure that the arbitrations would occur without AAA illegally obtaining a massive windfall. To that end, Uber immediately offered to place the invoice amount in escrow and to pay amounts necessary to continue the arbitrations. Certain Petitioners sought to intervene in the state court suit, but the state court denied intervention, concluding they will arbitrate their claims no matter what and they have no interest in how much Uber pays AAA. Petitioners were, however, permitted to be heard as amici, and they did not appeal the court’s intervention decision. After the New York trial court denied Uber’s motion for a preliminary injunction, Uber promptly filed an emergency appeal. Following argument before a single justice, the appellate court granted Uber’s motion for injunction pending appeal and temporarily delayed the payment deadline for AAA’s massive invoice, subject to Uber’s payment of $700,000 to continue the arbitrations, which Uber immediately paid. That interim relief was subsequently affirmed by a five-justice panel on the same terms. Pursuant to the court’s order, Uber has perfected the appeal on an expedited basis for March 2022. Consovoy is now concerned that Uber might win the New York suit, which could reduce the fee Uber owes AAA and hence reduce Consovoy’s leverage in extorting a settlement. Consequently, Petitioners have now submitted a filing styled as a “petition to compel arbitration,” asking this Court to enjoin the New York suit and order Uber to pay the $10 million. Case 3:21-cv-09577-RS Document 22 Filed 01/31/22 Page 8 of 32
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`RESPONDENTS’ MOTION TO DISMISS AND OPPOSITION TO MOTION TO COMPEL ARBITRATION No. 3:21-cv-09577 (RS) 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JENNER & BLOCK LLP 455 Market Street, Suite 2100 San Francisco, CA 94105 The petition should be dismissed for several reasons. First, Uber is not refusing to arbitrate. Petitioners invoke Section 4 of the FAA, which permits a court to compel arbitration when a litigant refuses to arbitrate. Here, however, Uber fully intends to arbitrate every single case and has paid filing fees for every single one of Petitioners’ cases, plus $700,000 in additional fees to cover the costs of continuing the proceedings as the New York court directed. Second, Petitioners are not entitled to the relief they seek. Principles of federalism require that the Court defer to the New York case rather than enjoin that case and nullify the injunction currently in effect. Alternatively, if the Court reaches the merits, Uber should win. AAA’s $10 million invoice is unlawful and invalid, so Uber should not be ordered to pay it. Third, at a minimum, the Court should deny relief to Petitioners until they provide evidence. Petitioners allege that they paid Uber Eats delivery fees during Uber’s initiative to support Black-owned restaurants. However, Uber has strong reasons to believe that numerous Petitioners did not pay delivery fees during the initiative, and in some cases, did not even have Uber Eats accounts at all. Petitioners should not obtain a court order forcing Uber to pay over $10 million until Petitioners provide evidence that they are entitled to that court order. Petitioners also seek relief under California law, but the California statute at issue does not apply on its own terms and does not apply in federal court at all. Petitioners’ motion should be denied and the petition dismissed. STATEMENT OF ISSUES TO BE DECIDED 1. Whether the Court should issue an order under Section 4 of the FAA when Uber has not refused to arbitrate. 2. Whether the Court should enjoin pending state court litigation when the FAA does not authorize such relief and the Anti-Injunction Act bars it. 3. Whether the Court should order Uber to pay an invoice of over $10 million even though Uber does not owe that amount and a state court is currently considering that very dispute. 4. Whether the Court should grant Petitioners’ requested relief even though Petitioners have provided no evidence to support the allegations in the Petition. Case 3:21-cv-09577-RS Document 22 Filed 01/31/22 Page 9 of 32
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`RESPONDENTS’ MOTION TO DISMISS AND OPPOSITION TO MOTION TO COMPEL ARBITRATION No. 3:21-cv-09577 (RS) 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JENNER & BLOCK LLP 455 Market Street, Suite 2100 San Francisco, CA 94105 5. Whether a California procedural remedy applies in federal court. STATEMENT OF FACTS Uber is a technology company that connects consumers with goods and services. Uber’s “Uber Eats” marketplace allows end users, or “Eaters,” to order food delivery from restaurants. All Eaters who open Uber Eats accounts enter into arbitration agreements with Uber. Pet., Ex. A (ECF No. 4-2). Under the applicable arbitration agreement, Uber agrees to pay AAA filing, administrative, and arbitrator fees in the first instance for claims that do not exceed $75,000. Id. at 5. At all times relevant to this petition, the arbitration clause designated AAA as the parties’ arbitration service provider. Id. at 4. Following the murder of George Floyd in May 2020, Uber implemented a program from June 4 through December 31, 2020 to support small- and medium-sized Black-owned restaurants on its Uber Eats platform by waiving delivery fees paid by Eaters for orders that they placed at those restaurants. See Edelstein Decl., Ex. 1 ¶ 15. In response, Consovoy put up ads on social media platforms luring Eaters as clients with the prospect of suing Uber for “reverse discrimination” and obtaining statutory damages. In late 2020, Consovoy filed over 31,000 materially identical arbitration demands with AAA on behalf of Eaters, alleging that Uber had violated the Eaters’ rights under 42 U.S.C. § 1981 and California’s Unruh Act. Id. ¶ 17. AAA’s Rules contain a fee schedule for individual cases, consisting of three categories: filing fees, case management fees, and arbitrator compensation. See McCarthy Decl., Ex. B at 33-34 (ECF No. 14-2). AAA’s Rules also incorporate a Due Process Protocol which requires AAA to charge “reasonable costs” that are “rational, equitable, and consistent.” Edelstein Decl., Ex. 2 at 17, Principle 6. After Consovoy filed its arbitration demands, AAA invoiced Uber for filing fees for all of the cases. If AAA multiplied its ordinary filing fee ($500) by the number of arbitrations, the filing fee would have exceeded $15,000,000. But AAA did not do this. Instead, on November 1, 2020, in recognition of the efficiencies of administering large numbers of boilerplate claims, AAA exercised its discretion and promulgated a revised set of filing fees for mass arbitrations. Edelstein Decl., Ex. 3 ¶ 27. AAA applied that fee schedule to all of Consovoy’s claims, Case 3:21-cv-09577-RS Document 22 Filed 01/31/22 Page 10 of 32
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`RESPONDENTS’ MOTION TO DISMISS AND OPPOSITION TO MOTION TO COMPEL ARBITRATION No. 3:21-cv-09577 (RS) 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JENNER & BLOCK LLP 455 Market Street, Suite 2100 San Francisco, CA 94105 including thousands that were filed before the new fee schedule took effect. Under the new fee schedule, AAA charged Uber $4,346,625, reflecting a 72% discount from the ordinary filing fee. McCarthy Decl., Ex. C at 2 (ECF No. 14-3). Uber promptly paid that fee. See Edelstein Decl., Ex. 1 ¶ 20. AAA then unilaterally divided the arbitration demands into five “tranches,” the first consisting of 477 cases and the second four consisting of 7,771 cases each. AAA has at most 750 qualified available arbitrators, which means that each arbitrator would hear at least 40 cases on average. Edelstein Decl., Ex. 4 at 4. Nonetheless, AAA decided it would invoice Uber for the full $1,400 case management fee, as well as the full $1,500 arbitrator fee, for every single arbitration. In other words, even if the same arbitrator would hear the identical case based on identical briefs and issue identical awards 40 times, Uber would pay the full case management fee and full arbitrator fee multiplied by 40. This would result in a total bill exceeding $90 million. See Edelstein Decl., Ex. 5 at 79:18-22. In Uber’s view, this is a grossly unreasonable position that would result in a massive windfall for AAA and would violate AAA’s contractual and statutory obligations toward Uber. For the first tranche of arbitrations, Uber attempted to pay these fees under protest to ensure it protects its rights to object, but AAA rejected that approach, and Uber thus elected to pay all fees and waive its objections. Edelstein Decl., Ex. 6 at 1; Edelstein Decl., Ex. 7 at 1. Those arbitrations have gone forward without delay. See McCarthy Decl., Ex. H at 1 (ECF No. 14-8). The second tranche consists of 7,771 individuals. On September 14, 2021, AAA issued an invoice demanding $10,879,400 in case management fees for this tranche. Pet., Ex. C (ECF No. 4-4). Uber intends to arbitrate all claims in the second tranche, but it is not willing to pay an illegal fee while waiving all objections to that fee. Thus, Uber sued AAA in New York, where AAA is headquartered and incorporated as a not-for-profit, and sought a preliminary injunction. Uber’s suit did not seek to stop the arbitrations. Uber’s motion for preliminary injunction stated this clearly: “Uber has no desire to undermine or delay these arbitrations; it seeks only to pay the reasonable fees it contracted to pay.” Pet., Ex. E at 9 (ECF No. 4-6). And from day one, Uber proposed to place the entire invoice amount in escrow to demonstrate there was “no Case 3:21-cv-09577-RS Document 22 Filed 01/31/22 Page 11 of 32
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`RESPONDENTS’ MOTION TO DISMISS AND OPPOSITION TO MOTION TO COMPEL ARBITRATION No. 3:21-cv-09577 (RS) 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JENNER & BLOCK LLP 455 Market Street, Suite 2100 San Francisco, CA 94105 question it will pay whatever amount the court determines is appropriate.” Id. Instead, Uber sought a declaration that the AAA must comply with its contractual and statutory obligations to impose reasonable fees. Id. at 16. To ensure that its suit would not interfere with the arbitrations, Uber moved for a preliminary injunction, seeking to extend the payment deadline and to prohibit closure of the arbitration files while Uber pursued its claims against AAA. Consovoy, on behalf of four individual claimants, sought to intervene. The state court denied this motion, reasoning that Uber would arbitrate no matter what and Consovoy had no interest in how much Uber paid AAA for the ability to do so. Pet., Ex. H (ECF No. 4-9). However, the court allowed Petitioners to file an amicus brief (which they did), and Petitioners did not appeal the denial of their motion to intervene. The New York trial court promptly held an evidentiary hearing and heard testimony. An AAA Vice President, Neil Currie, testified that there were numerous efficiencies inherent in the mass arbitration context, and he could not offer evidence that AAA’s fees reflected AAA’s costs. He also acknowledged that AAA did not take those efficiencies into account even though it “always” retains discretion to adjust fees. Edelstein Decl., Ex. 8 at 10-11. Nonetheless, the trial court denied Uber’s motion for a preliminary injunction.1 Uber appealed and filed a motion for an injunction pending appeal. The appellate court granted the motion. Specifically, the court enjoined AAA’s threatened closure of the arbitrations. Pet., Ex. J at 3 (ECF No. 4-11). It also stayed the payment deadline contingent on Uber paying $700,000 to AAA. Id. AAA has never disputed that $700,000 is sufficient to cover AAA’s actual and reasonable case management costs for the second tranche. Nevertheless, AAA stuck to its $1,400-per-case fee schedule and applied this $700,000 payment to cover case management fees for only 500 additional claimants. Pet., Ex. K at 1 (ECF No. 4-12). AAA has since invoiced Uber for arbitrator fees for those 500 individuals, and Uber has paid this invoice. See id. 1 As explained in Uber’s New York appellate brief, Edelstein Decl., Ex. 9. the trial court seriously erred. The court myopically focused on AAA’s fee schedule while ignoring AAA’s contractual promises and three of Uber’s claims. Further, the court ignored the irreparable harm to Uber and wrongly denied relief despite the absence of any prejudice to AAA. Case 3:21-cv-09577-RS Document 22 Filed 01/31/22 Page 12 of 32
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`RESPONDENTS’ MOTION TO DISMISS AND OPPOSITION TO MOTION TO COMPEL ARBITRATION No. 3:21-cv-09577 (RS) 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JENNER & BLOCK LLP 455 Market Street, Suite 2100 San Francisco, CA 94105 Petitioners are the remaining 7,271 individuals in the second tranche. They seek an order enjoining the New York suit and forcing Uber to pay the entire case management fee invoice. ARGUMENT I. THE PETITION SHOULD BE DISMISSED BECAUSE UBER HAS AGREED – NOT REFUSED – TO ARBITRATE PETITIONERS’ CLAIMS. Section 4 of the Federal Arbitration Act provides that “[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration” may move to compel “an order directing that such arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. Thus, to obtain relief under the FAA, Petitioners bear the burden of proving Uber’s “failure, neglect, or refusal” to arbitrate their claims. Id. “[U]nless and until an adverse party has refused to arbitrate a dispute putatively governed by a contractual arbitration clause, … the petitioner cannot claim to be ‘aggrieved’ under the FAA.” PaineWebber Inc. v. Faragalli, 61 F.3d 1063, 1067 (3d Cir. 1995). To satisfy the FAA’s “failure, neglect, or refusal” requirement, Petitioners must show that Uber “unequivocally refused to arbitrate.” Id. The Petition should be dismissed because Uber has not “unequivocally refused to arbitrate” with Petitioners. To the contrary, Uber’s actions demonstrate that Uber has agreed and wants to arbitrate. After Consovoy served arbitration demands for 31,000+ claimants, Uber paid AAA’s filing fees for every claimant in full. Moreover, for the first tranche of 477 claimants, Uber paid all of AAA’s invoices—filing fees, case management fees, and arbitrator fees—in full. Those arbitrations are underway without delay. The second tranche is composed of 7,771 claimants. Petitioners (7,271 individuals) are within the second tranche. As noted above, Uber paid AAA’s