San Francisco:
Uber lost a bid to force arbitration in a lawsuit brought by its drivers, as a US judge ruled the smartphone-based taxi service's employment contracts from 2013 and 2014 are "unconscionable, and therefore unenforceable."
The ruling, from US District Judge Edward Chen in San Francisco on Tuesday, allows the lawsuits over driver background checks to continue in federal court. Arbitration is generally viewed as a more friendly forum for corporate defendants.
The decision is the latest in a host of legal and regulatory challenges facing Uber. Earlier this year, the same judge rejected Uber's bid to deem its drivers independent contractors, which would have prohibited them from recovering a range of expenses. Chen said a jury would decide that question.
An Uber representative could not immediately be reached for comment on the arbitration ruling.
Plaintiff Ronald Gillette sued Uber late last year after he was told something surfaced in his consumer background report, and he was terminated. The lawsuit is a proposed class action alleging violations of fair credit reporting laws, among other claims.
In the ruling this week, Chen said drivers' right to opt out of arbitration was "illusory" because the language was buried on the second-to-last page of the 2013 agreement.
The case in US District Court, Northern District of California is Ronald Gillette et al. vs. Uber Technologies et al., 14-5241.
© Thomson Reuters 2015