Case 4:20-cv-02698-YGR Document 32 Filed 09/03/20 Page 1 of 7
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
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`LUCIA GRECO,
`Plaintiff,
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`vs.
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`UBER TECHNOLOGIES, INC., ET AL.,
`Defendants.
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`CASE NO. 4:20-cv-02698-YGR
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`ORDER DENYING DEFENDANTS’ MOTION
`TO COMPEL ARBITRATION
`Re: Dkt. No. 14
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`Plaintiff Lucia Greco brings this action for violation of the Americans with Disabilities Act
`(“ADA”) and the California Unruh Act against defendants Uber Technologies, Inc., Raisier LLC,
`and Rasier-CA LLC (collectively, “Uber”). (Dkt. No. 1 (“Compl.”) ¶¶ 55-76.) Now before the
`Court is Uber’s motion to compel arbitration pursuant to the Federal Arbitration Act (“FAA”).
`(Dkt. No. 14 (“MTC.”).) Having carefully considered the pleadings and the papers and exhibits
`submitted, the Court DENIES Uber’s motion to compel.1
`I.
`BACKGROUND
`Ms. Greco is visually impaired and uses a guide dog. (Dkt. No. 30-2 (“Greco Decl.”) ¶ 3.)
`In 2013, Ms. Greco signed up for Uber—a ride sharing service that allows users to request rides
`from drivers. (Id. ¶ 7; Dkt No. 17 (“Barajas Decl.”) ¶ 2.) Upon signup, Ms. Greco agreed to
`“Terms and Conditions” that included the provision that “any dispute, claim or controversy arising
`out of or relating to this Agreement . . . or the use of the Service or Application . . . will be settled
`by binding arbitration.” (Barajas Decl. ¶¶ 6-13; Dkt. No. 17-5 (“2012 Terms and Conditions”) at
`9; Greco Decl. ¶ 7.) The agreement specified that such “arbitration will be administered by the
`American Arbitration Association (‘AAA’) in accordance with the Commercial Arbitration Rules
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`1 Pursuant to Federal Rule of Civil Procedure 78(b) and Civil Local Rule 7-1(b), the Court
`finds the motion appropriate for resolution without oral argument.
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`and the Supplementary Procedures for Consumer Related Disputes.” (2012 Terms and Conditions
`at 9.) It also permitted Uber to change the terms and conditions, stating that continued use of the
`application and service indicates consent to those rules. (Id. at 2.)
`In 2016, Uber updated its terms and conditions, reiterating that Ms. Greco and Uber agreed
`to arbitrate “any dispute” arising from Ms. Greco’s “access to or use of the Services” and further
`specifying that the arbitrator shall have “exclusive authority to resolve any disputes relating to . . .
`any defense to arbitration,” such as “waiver, delay, latches or estoppel.” (Barajas Decl. ¶¶ 14-15;
`Dkt. No. 17-6 (“2016 Terms and Conditions”) at 2; Greco Decl. ¶ 8.)
`On March 27, 2020, Ms. Greco filed a demand for arbitration with the AAA. (Compl. ¶
`52; Dkt. No. 18-1 (“Arbitration Demand”).) Ms. Greco alleged—as she does in the complaint—
`that Uber drivers repeatedly cancelled rides after learning of Ms. Greco’s guide dog, leaving her
`stranded, late, and humiliated. (Arbitration Demand at 1.) Ms. Greco also alleged that Uber failed
`to train and supervise its drivers and is liable for the resulting discrimination. (Id. at 2.) The
`demand was served on Uber on April 21, 2020. (Dkt. No. 18 (“Jackson Decl.”) ¶ 4.)
`However, prior to service, the AAA sent a letter stating that Uber “failed to comply with
`the AAA’s policies regarding consumer claims” prior to the filing of the arbitration, so the AAA
`“must decline to administer this claim and any other claim between [Uber] and its consumers.”
`(Dkt. No. 1-1 (“AAA Letter”) at 1.) The letter stated that the AAA “administratively closed our
`file,” and that pursuant to Consumer Rule R-1(d), “either party may choose to submit its dispute to
`the appropriate court for resolution.” (Id.) It further advised Uber that if it wishes for the AAA to
`“consider accepting consumer disputes going forward,” it must register its clause on Consumer
`Clause Registry. (Id. at 2.)
`Upon receiving the letter, Uber contacted AAA by phone and learned that it had failed to
`pay fees in two unrelated matters pending before the AAA. (Jackson Decl. ¶ 6.) Uber then paid
`those fees, and AAA reinstated Uber to the consumer arbitration registry on April 30, 2020. (Id. ¶
`9.) When Uber requested that AAA reopen Ms. Greco’s case, AAA sent a letter reiterating that
`“AAA declined to administer the matter and closed its file” and that “[b]ecause this case was
`previously closed, the AAA will not reopen the matter unless the parties agree to reopen the
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`matter.” (Id. ¶ 10; Dkt. No. 18-4 (“AAA Second Letter”) at 1.) However, the letter also stated
`that “the AAA will abide by any court order directing the manner in which the previously closed
`case should or should not proceed” and that if “Claimant wishes to refile the case,” “the AAA
`would administer this case.” (AAA Second Letter at 1.) Otherwise, it stated that “the case will
`remain closed as stated” previously. (Id.)
`Uber contacted Ms. Greco to request that she refile the arbitration. (Jackson Decl. ¶ 11.)
`Ms. Greco declined and filed the instant action. (Id.)
`II.
`LEGAL STANDARD
`Under the FAA, “[a] party aggrieved by the alleged failure, neglect or refusal of another to
`arbitrate under a written agreement for arbitration” may “petition any United States district court
`. . . for an order directing that such arbitration proceed in the manner provided for in such
`agreement.” 9 U.S.C. § 4. The court's role in addressing a question of arbitrability generally is
`“limited to determining (1) whether a valid agreement to arbitrate exists, and if it does, (2) whether
`the agreement encompasses the dispute at issue.” Chiron Corp. v. Ortho Diagnostic Sys. Inc., 207
`F.3d 1126, 1130 (9th Cir. 2000). If the court finds that both of these requirements are met, the
`FAA requires it to enforce the provision in accordance with its terms. Id. In addition, the court
`must stay civil proceedings where the issues are asserted “until such arbitration has been had,”
`unless the party seeking the stay is in default. 9 U.S.C. § 3.
`The FAA reflects both a “liberal federal policy favoring arbitration” and the “fundamental
`principle that arbitration is a matter of contract.” AT & T Mobility LLC v. Concepcion, 563 U.S.
`333, 339 (2011) (citations omitted); see Mortensen v. Bresnan Commuc'ns, LLC, 722 F.3d 1151,
`1157 (9th Cir. 2013) (“The [FAA] . . . has been interpreted to embody ‘a liberal federal policy
`favoring arbitration.’”) (citing Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
`24 (1983)). The FAA “leaves no place for the exercise of discretion by a district court, but instead
`mandates that district courts shall direct the parties to proceed to arbitration on issues as which the
`arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218
`(1985) (emphasis in original).
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`Northern District of California
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`Case 4:20-cv-02698-YGR Document 32 Filed 09/03/20 Page 4 of 7
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`III. ANALYSIS
`The parties do not dispute that they have a valid contract to arbitrate. They also do not
`dispute that the issues raised in this litigation fall within the scope of that contract. However, Ms.
`Greco argues that arbitration has already “been had” in accordance with the terms of the contract,
`so there is no “failure, neglect, or refusal” to arbitrate sufficient to compel arbitration, nor any
`basis to stay the litigation. 9 U.S.C. §§ 3, 4.
`Section 4 of the FAA provides that:
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`A party aggrieved by the alleged failure, neglect, or refusal of another
`to arbitrate under a written agreement for arbitration may petition any
`United States district court . . . for an order directing that such
`arbitration proceed in the manner provided for in such agreement. . .
`. . The court shall hear the parties, and upon being satisfied that the
`making of the agreement for arbitration or the failure to comply
`therewith is not in issue, the court shall make an order directing the
`parties to proceed to arbitration in accordance with the terms of the
`agreement . . . . If the making of the arbitration agreement or the
`failure, neglect, or refusal to perform the same be in issue, the court
`shall proceed summarily to the trial thereof.
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` 9
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` U.S.C. § 4.
`In Lifescan, Inc. v. Premier Diabetic Services, Inc., 363 F.3d 1010 (9th Cir. 2004), the
`court considered “failure, neglect, or refusal of another to arbitrate” based on failure to pay fees.
`The parties initially proceeded with arbitration, but before the final hearings, one party became
`unable to pay its share of the arbitrators’ fees. Id. at 1011. AAA offered the other party the option
`of advancing the required fees, but that party refused, and the arbitration was terminated. Id. The
`paying party then successfully petitioned a district court to compel arbitration, including by
`forcing the non-paying party to pay fees, and to hold that failure to do so constituted “failure,
`neglect, or refusal” to arbitrate under 9 U.S.C. § 4. Id. The Ninth Circuit reversed.
`Acknowledging that arbitration is a creature of contract law, the court looked to the
`parties’ agreement, which stated that all disputes “shall be settled by binding arbitration” in
`accordance with “then-current rules of the American Arbitration Association.” Id. at 1012. The
`AAA rules, in turn, vested the arbitrators with discretion to allocate expenses and require fees to
`be paid in advance. Id. Since the AAA rules allowed the arbitrators to condition arbitration on
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`pre-payment of fees, “there was no ‘failure, neglect, or refusal’ by [the non-paying party] to
`arbitrate” and “the arbitration has proceeded pursuant to the parties’ agreement and the rules they
`incorporated.” Id. at 1013. Accordingly, there was “no basis for an order . . . compelling
`arbitration.” Id.
`The holding in Lifescan was confirmed in Tillman v. Tillman, 825 F.3d 1069 (9th Cir.
`2016) on a slightly different procedural posture. Section 3 of the FAA requires a court to stay
`proceedings “until [] arbitration has been had in accordance with the terms of the agreement.” 9
`U.S.C. § 3. Addressing the meaning of “has been had,” the court found that parties whose
`arbitration was terminated due to non-payment of fees “had” arbitration in accordance with the
`terms. Tillman, 825 F.3d at 1073. Similar to Lifescan, the arbitration agreement “explicitly
`incorporated the AAA’s rules” and those rules allowed the arbitrator to terminate proceedings
`without a decision on the merits. Id. Since “[a]ll of these steps were followed,” the arbitration
`“had ‘been had’ pursuant to the agreement.” Id. at 1075. Ultimately, the court concluded that
`“parties have the right under the FAA to choose the rules under which their arbitration will be
`conducted,” and since parties “chose rules that allowed the arbitrator to terminate their arbitration
`in the event of nonpayment,” such termination satisfies the parties’ agreement. Id. at 1076.
`Moreover, and tellingly for this case, the court reversed the district court’s dismissal of the case
`and ordered it to adjudicate the claims on the merits. Id. at 1076.
`Lifescan, as confirmed by Tillman, resolves the current dispute. Like the parties in those
`cases, Uber and Ms. Greco had contracted to resolve their disputes in accordance with AAA rules.
`Those rules require businesses to pay certain fees and state that “AAA will decline to administer
`consumer arbitrations . . . if the business declines to pay the . . . fees.” (Dkt. No. 30-1 (“Cabalo
`Decl.”) Ex. A at 16, 32.) Once AAA declines to arbitrate, the rules provide that “either party may
`choose to submit its dispute to the appropriate court for resolution.” (Id. at 10.) Uber expressly
`agreed to be bound by these rules. It cannot now complain of their enforcement. In this case, it is
`not Ms. Greco that seeks to escape the agreement, but Uber itself, by asking the Court to overturn
`the AAA rules and force the case back to arbitration. The Court declines to do so.
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`Uber’s remaining arguments miss the mark.2 Uber argues that “gateway” issues of
`arbitrability, such as waiver and breach, have been delegated to the arbitrator. But these issues are
`not in dispute here: the parties agree that the contract is valid, and Ms. Greco only asserts her
`“breach” theory in the alternative to finding that arbitration has taken place. Uber also argues that
`there was no waiver of arbitration because Uber paid the outstanding fees as soon as it learned of
`them. Relatedly, Uber argues that it had not breached the agreement because the fees at issue
`were intended for other cases. Both of these arguments assume that the contract must have been
`invalidated. But there is no reason to think that—the arbitration here took place in accordance
`with the parties’ terms and has come to the court under those same terms.
`Uber further points out that the FAA allows a court to select an alternative arbitration
`mechanism when the one chosen in an agreement becomes unavailable. 9 U.S.C. § 5. Under
`Section 5 of the FAA, courts may “designate and appoint an arbitrator” if “a method of naming or
`appointing an arbitrator . . . shall fail.” Id. But courts have interpreted this provision narrowly to
`give force to the parties’ intent. See Newton v. Am. Debt. Servs., Inc., No. C-11-3328 EMC, 2012
`WL 3155719, at **5-7 (N.D. Cal. Aug. 2, 2012). Thus, courts cannot select an arbitrator when the
`parties’ original selection was integral or central to the agreement. See Brown v. ITT Consumer
`Fin. Corp., 211 F.3d 1217 (11th Cir. 2000). Here, there is no need to appoint another arbitrator
`because the parties’ original intent is clear: they meant to be governed by AAA rules, which allow
`the arbitrator to decline to arbitrate and the parties to then proceed with litigation.
`Finally, Uber challenges AAA’s substantive determination by arguing that it has breached
`no rule and that its contracts are substantively fair. That is exactly the type of collateral attack that
`modern arbitration law aims to avoid. The AAA is in a far better position to know its own rules
`and to exercise discretion according to those rules. To the extent that the Court reviews the
`AAA’s decision, it detects no error in its application of its rules. That Uber does not think the
`outcome fair because arbitration was terminated without substantive proceedings and based on
`innocent error is of no import—Uber agreed to the rules that allow that outcome.
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`2 Uber notably fails to address either Lifescan or Tillerman in its briefing. Its arguments
`have little relevance to the primary issue as the result.
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`Case 4:20-cv-02698-YGR Document 32 Filed 09/03/20 Page 7 of 7
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`Accordingly, there is no “failure, neglect or refusal . . . to arbitrate” and nothing for the
`Court to compel because the arbitration has already taken place in accordance with the parties’
`agreement, reaching the court under those same terms. Uber’s motion is DENIED.
`IV. CONCLUSION
`For the foregoing reasons, the Court DENIES Uber’s motion to compel. Uber SHALL
`respond the complaint within twenty-one (21) days of this Order. The Court further SETS a case
`management conference for October 19, 2020.
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`This Order terminates Docket Number 14.
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`IT IS SO ORDERED.
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`Dated: September 3, 2020
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`YVONNE GONZALEZ ROGERS
`UNITED STATES DISTRICT COURT JUDGE
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