SAN FRANCISCO — A state appeals panel has agreed Uber can’t divert to arbitration a class action accusing it of charging fares well more than its advertised estimates.
Named plaintiffs Dove Bogguess and Douglas Marrone say rideshare giant Uber Technologies violated California’s unfair competition and false advertising laws by putting an estimated price on its app when customers order a ride, then “frequently” charging more when the bill is due. Although the company promoted “upfront” pricing in 2016, claiming it allowed customers to see their actual fair before placing a ride request, the complaint alleges the company in January 2020 began showing California patrons an estimated price range.
Uber said it abandoned that system in April 2021, finding consumers disliked not knowing the real price, but the complaint alleges a stated return to upfront pricing didn’t actually happen as the new system continues to use estimates.
“After any given ride, if Uber determines that it underestimated the time or length of the ride, Uber can — and frequently does — charge the consumer more than the price it advertised,” the complaint alleged.
Their December 2024 lawsuit sought financial compensation for the extra amounts paid, as well as an injunction preventing Uber from “advertising prices that are lower than the price consumers will actually pay.”
In response, the company pointed to its user agreement, which requires disputes be arbitrated individually and includes a class action waiver barring pursuit of a public injunction.
San Francisco County Superior Court Judge Jeffrey Ross denied that request, finding the customers are allowed to seek a public injunction and further ruling the user agreement didn’t require them to take individual relief requests to arbitration.
Uber challenged that reading before the California First District Court of Appeals in San Francisco. Justice Mark Simons wrote the panel’s opinion, filed Nov. 4; Justices Gordon Burns and Danny Chou concurred.
On appeal, Uber argued the injunction request wasn’t public in that it would apply only to existing users. Simons explained the relevance of the 2017 California Supreme Court opinion McGill v. Citibank, which in part “clarified that the determination whether a plaintiff is seeking public or private injunctive relief can be made based solely on the complaint’s allegations and prayer for relief” and established agreements that waive a right to seek public injunctions are invalid.
The panel further said it agreed with Judge Ross: the injunction request was public because it would implicate Uber’s advertising in and outside the app, which the complaint alleged is false and unfair to competition. It likened creating an Uber account to other thresholds for potential customers, like driving to a physical store and said the issue is the manner in which a company describes its pricing structure to all potential customers, even if customers get individualized price quotes. Further, a separate request for financial relief is irrelevant.
“The crucial point is that the requested injunction would protect potential customers from Uber’s allegedly deceptive pricing practices,” Simons wrote. “Uber cannot evade consumer protection laws just because its allegedly deceptive scheme is complicated.”
After determining Judge Ross correctly ruled the user agreement’s waiver for public injunction was unenforceable, the panel considered Uber’s alternative argument that request could be severed from the plaintiffs' pursuit of financial compensation. The company wanted the panel to order Ross to stay the injunction request pending arbitration of the individual relief requests. But the appeals panel said the user agreement is too ambiguous, especially given the obligation to come down on the side of the party that signed the contract and not the one that wrote the language.
Uber argued the Federal Arbitration Act “requires piecemeal resolution” if that enables parts of an arbitration agreement to remain in effect, but the plaintiffs said the user agreement stipulates “any class, collective, coordinated, consolidated, and/or representative claims subject to the unenforceable or unlawful portion(s) [of the class action waiver] shall proceed in a court of competent jurisdiction.”
The panel agreed with the plaintiffs’ claim that the agreement language doesn’t allow severability because their complaint revolves entirely around the same underlying allegations of false advertising. It rejected Uber’s argument the FAA pre-empts state-law analysis and specifically that “ambiguities about the scope of an arbitration agreement must be resolved in favor of arbitration.”
Simons pointed to a 2019 U.S. Supreme Court opinion, Lamps Plus v. Varela, which concluded by holding: “Like silence, ambiguity does not provide a sufficient basis to conclude that parties to an arbitration agreement agreed to ‘sacrifice’ the principal advantage of arbitration.” And further explained: “Courts may not infer from an ambiguous agreement that parties have consented to arbitrate on a classwide basis.”
California’s contract rules are neutral, Simons continued, and this specific clause about interpretation in favor of the party that didn’t write the contract ensures that side isn’t “obligated to arbitrate a dispute it did not actually agree to arbitrate. This is especially true in cases, like the present one, involving an adhesive contract, where the nondrafter lacked an opportunity to clarify ambiguities during contract negotiation.”
The panel affirmed Judge Ross’ ruling and awarded the plaintiffs the cost of defending the appeal.
Uber is represented by attorneys from the firm of Gibson, Dunn & Crutcher.
The class is represented by the firms of Leventhal Stanley & Taylor; Kessler Topaz Meltzer & Check; and Joseph Hage Aaronson and Gregory Joseph.
The U.S. Chamber of Commerce filed a support brief on behalf of Uber through attorney Josephine K. Petrick.
