Seems like I’m picking on the gig economy these days.  I really don’t mean to be.  But a former research assistant of mine brought an important, hot-off-the-presses decision to my attention, O’Hanlon v. Uber Techs., Inc., No. 2:19-cv-00675, 2019 BL 434840 (W.D. Pa. Nov. 12, 2019).

The case presents a couple of important Arbitration 101 reminders, including one about equitable estoppel in the context of arbitration.

The plaintiffs brought a class action against Uber, alleging that it violated Title III of the Americans with Disabilities Act because it failed to provide any wheelchair accessible vehicles through its on-demand ridesharing service in Pittsburgh.  There have been a number of related suits against Uber and Lyft recently, which also makes the case noteworthy.  (Hat tip to my former research assistant, Beau RaRa, and the Minnesota Disability Law Center.)

Uber responded by trying to compel arbitration.  The court refused.  The holding is straight-forward enough: the plaintiffs were all folks who had never downloaded the Uber app and had never booked an Uber ride before.  So, they never consented to the arbitration provision.  Cite Volt Info. Sci., Inc. v. Bd. of Tr. of Leland Stanford Junior Univ., 489 U.S. 468 , 478 , 109 S. Ct. 1248 , 103 L. Ed. 2d 488 (1989) (“the FAA does not require parties to arbitrate when they have not agreed to do so”).  Mic Drop.  Boom.  Arbitration 101.  How you like me now, Uber?

What makes the case more interesting from an arbitration law perspective, however, is Uber’s clever, though failed, equitable estoppel argument.  Uber tried to convince the court that the plaintiffs’ claims necessarily “implicated” Uber’s terms of use.

Let’s dig into that argument, as a refresher on equitable estoppel in arbitration.  (Importantly, not all courts are in agreement about how various flavors of equitable estoppel should work in arbitration, but it’s pretty clear that it’s a slightly different doctrine than applies to regular ol’ contracts.) When a plaintiff brings a claim which relies on contract terms against a defendant, the plaintiff may be equitably estopped from denying the effect of the arbitration clause contained in that agreement.  This sort of equitable estoppel is sometimes referred to as the “direct benefits” theory of estoppel.  It “prevents a nonsignatory from knowingly exploiting an agreement containing the arbitration clause.” Graves v. BP Am., Inc., 568 F.3d 221, 223 (5th Cir. 2009). That is, “a nonsignatory cannot sue under an agreement while at the same time avoiding its arbitration clause.” Id.

Importantly, as a closely related case from the Northern District of California last year notes, the doctrine is, well, equitable.  See Namisnak v. Uber Technologies, Inc., 315 F.Supp.3d 1124 (N.D. Cal. 2018).  As the court said, “’[t]he linchpin for equitable estoppel is equity—fairness,’ and ‘the application of the doctrine is fact-specific.’” (citations omitted).

In O’Hanlon, the court didn’t buy Uber’s argument.  Borrowing from Namisnak, the court concluded that the plaintiffs asserted rights created by the ADA, which are not dependent on or bound up with the terms and conditions of Uber’s service.  Essentially, according to the plaintiffs, Uber was refusing to comply with the ADA not breaching the terms of its contract with riders.

I’ll just briefly conclude by pointing out that Uber also advanced a novel standing argument, predicated on pretty much the same idea.  Basically, Uber said that the plaintiffs necessarily embraced the terms of use for their benefit in pursuing standing.  Although none of the plaintiffs were actually Uber customers, they must have been thinking about becoming customers in order to have any injury.  Thus, Uber tried to say, the plaintiffs needed to stand in the shoes of actual customers who would have been bound to Uber’s terms of use, including the arbitration provision.

The court didn’t buy this either.  It cited to “futile gesture” caselaw on standing and concluded that the plaintiffs “deterrence-based injury is actual and cognizable and their own.”