JASWINDER SINGH, on behalf of himself and all those similarly situated,
UBER TECHNOLOGIES INC Jaswinder Singh, Appellant
April 26, 2019
Appeal from the United States District Court for the District
of New Jersey (D.C. Civ. Action No. 3-16-cv-03044) District
Judge: Honorable Freda L. Wolfson
A. Horowitz Matthew D. Miller Justin L. Swidler [ARGUED]
Swartz Swidler Attorneys for Appellant
Theodore J. Boutrous, Jr. Samuel E. Eckman Theane D.
Evangelis [ARGUED] Gibson Dunn & Crutcher Joshua S.
Lipshutz Gibson Dunn & Crutcher Paul C. Lantis William J.
Simmons Littler Mendelson Attorneys for Appellee
Before: GREENAWAY, JR., SHWARTZ, and PORTER, Circuit Judges.
GREENAWAY, JR., CIRCUIT JUDGE.
agreements are essentially contracts that predetermine that a
dispute between parties will be decided by an arbitrator,
rather than in court. In response to judicial hostility
toward these types of contracts, Congress passed the Federal
Arbitration Act ("FAA"), 9 U.S.C. §§
1-16. The FAA places certain arbitration agreements on equal
footing with all other contracts by requiring courts to
enforce such agreements according to their terms. Section 2
provides that the FAA covers "a written provision in any
maritime transaction or a contract evidencing a transaction
involving commerce," id. § 2, but a
provision in § 1 sets an outer limit, providing that
"nothing" in the FAA "shall apply to contracts
of employment of seamen, railroad employees, or any other
class of workers engaged in foreign or interstate
commerce," id. § 1 ("§ 1").
This outer limit sets the stage for the case before us.
Singh brought this putative class action in the Superior
Court of New Jersey, Monmouth County, on behalf of himself,
and other similarly situated New Jersey Uber drivers. He
alleged that Uber Technologies, Inc. ("Uber")
misclassified them as independent contractors as opposed to
employees, which resulted in their being deprived of overtime
compensation, and having to incur business expenses for the
benefit of Uber. Uber removed the case to federal court in
the District of New Jersey. It then moved for the District
Court to dismiss the case and compel Singh to have it decided
by an arbitrator, on the basis of an agreement to arbitrate.
Singh opposed the motion to compel arbitration on numerous
grounds, one of which was that the District Court did not
have the authority to compel arbitration under the FAA. He
argued that, to the extent that he had an agreement with
Uber, it fell within the ambit of the residual clause-the
"any other class of workers" portion-of § 1.
In the least, Singh asked that he be given the opportunity
for discovery on the essential § 1 residual clause
inquiry, which is whether the class of workers to which Singh
belongs is "engaged in foreign or interstate
District Court granted the motion over Singh's
objections. But it did not reach the engaged-in-interstate
commerce inquiry. Instead, the Court ruled that Singh did not
fall within the ambit of the residual clause of § 1
because that clause only extends to transportation workers
who transport goods, not those who transport passengers. We
disagree with this reading. Consistent with our longstanding
precedent, we hold that the residual clause of § 1 may
extend to a class of transportation workers who transport
passengers, so long as they are engaged in interstate
commerce or in work so closely related thereto as to be in
practical effect part of it. We will therefore vacate the
District Court's order compelling arbitration. In
addition, because neither the Complaint nor incorporated
documents suffice to resolve the
engaged-in-interstate-commerce inquiry, we will remand this
and the remaining issues to the District Court for further
proceedings consistent with this opinion.
"place[s] arbitration agreements on equal footing with
all other contracts" by requiring courts to
"enforce [such] agreements according to their
terms." McDonald v. Cashcall, Inc., 883 F.3d
220, 226 (3d Cir. 2018) (first alteration in original)
(citations omitted). So the statute provides that, like any
other contract, arbitration agreements may be rendered
unenforceable by grounds that exist at law or in equity for
revocation. See id.; 9 U.S.C. § 2. To the
extent that a particular ground implicates the threshold
question of whether the parties are bound by an agreement to
arbitrate, it is referred to as a gateway question of
arbitrability and is typically resolved in court. Howsam
v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002);
Chesapeake Appalachia, LLC v. Scout Petroleum, LLC,
809 F.3d 746, 756 (3d Cir. 2016).
this is the typical route, the parties may contract around
it, and agree to have even these questions decided by an
arbitrator. To do so, the arbitration agreement need only
include a clause-a delegation clause-that reserves
arbitrability questions for an arbitrator to decide.
Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63,
70, 72 (2010) ("Rent-A-Center"). Where
such a clause is included, courts cannot decide threshold
questions of arbitrability "unless a party challenge[s]
the delegation clause [specifically] and the court concludes
that the delegation clause is not enforceable."
MacDonald, 883 F.3d at 226 (citations omitted). The
rationale is that a delegation clause is severable from the
underlying arbitration agreement such that it is separately
entitled to FAA-treatment-that is, unless specifically (and
successfully) challenged, the clause is in and of itself
treated as a valid contract that must be enforced under the
FAA's enforcement provisions. See Rent-A-Center,
561 U.S. at 72.
this, of course, assumes that the FAA controls. But what if
it does not? Or, more precisely, who gets to decide the
question of whether the FAA applies where there is a
delegation clause? During the pendency of this appeal, the
Supreme Court answered this question, holding that courts
must be the ones to determine whether an agreement is
excluded from FAA coverage even where there is a delegation
clause. New Prime Inc. v. Oliveira, 139 S.Ct. 532,
§§ 1 and 2 of the FAA identify the subset of
arbitration agreements covered by the statute. Since they
come before the FAA's enforcement clauses under
§§ 3 and 4-which authorize a court to stay a
proceeding and compel arbitration-the Supreme Court reasoned
that §§ 3 and 4 cannot apply to an arbitration
agreement that is excluded from the FAA's coverage by the
terms of §§ 1 and 2. Id. at 537-38.
Pursuant to the rationale offered by Rent-A-Center,
the Court viewed a delegation clause as "merely a
specialized type of arbitration agreement," and, as a
result, held that the same reasoning applied. Id. at
background sets the stage for our case: the contract between
the parties contains an arbitration provision and a
delegation clause. If the contract is covered by the FAA,
these provisions might combine to require the parties to have
much of their dispute resolved by an arbitrator. However, the
parties disagree over whether their contract is excluded from
the FAA under the residual clause of § 1.
Proceedings in the District Court
brought this putative class action in the Superior Court of
New Jersey, Monmouth County, on behalf of himself and other
similarly situated New Jersey Uber drivers. He alleged that
Uber misclassified them as independent contractors as opposed
to employees, and that, as a result, Uber deprived them of
overtime compensation, and required them to incur business
expenses for the benefit of Uber. Uber removed the action to
federal court in the District of New Jersey. It then moved to
dismiss the action and compel arbitration pursuant to the
arbitration provision of an agreement between the parties
called the Rasier Software Sublicense Agreement ("Rasier
response to the motion, Singh argued that there was no valid
agreement between Uber and him, and, even if there was, he
was not bound by its arbitration provision for four reasons:
(1) Uber failed to meet its burden to show that the provision
was a constitutional waiver of the Seventh Amendment right to
a jury trial; (2) the provision is excluded under the
residual clause of § 1 of the FAA; (3) the provision
violated the National Labor Relations Act ("NLRA"),
the Norris-LaGuardia Act, and the New Jersey Wage and Hour
Law ("NJWHL"); and (4) the provision was
the residual clause of § 1 of the FAA specifically,
Singh argued that he had at least put forth enough to warrant
discovery on the question. He relied on our decision in
Guidotti v. Legal Helpers Debt Resolution, L.L.C.,
716 F.3d 764 (3d Cir. 2013), to support this argument. There,
we recognized that our precedents suggested two possible
standards under which a motion to compel arbitration could be
decided-the motion to dismiss standard or the summary
judgment standard. Id. at 771-72. The two differ
significantly, as we accept as true the facts established by
the pleadings-the complaint and incorporated documents-when
deciding the former, but, for the latter, we require the
party opposing the motion to submit evidence, which is
typically obtained through discovery. See id. at 772
(citing Fed.R.Civ.P. 56(c)(1)(A)).
that the motion to dismiss standard applies to a motion to
compel arbitration where a party's claims are
"subject to an enforceable arbitration clause"-that
is, where the existence of a valid agreement to
arbitrate between the parties is apparent from the face of
the complaint or incorporated documents. Id. at 774,
776. "But if the complaint and its supporting documents
are unclear" as to whether the parties agreed to
arbitrate, "or if the plaintiff has responded
to a motion to compel arbitration with additional
facts sufficient to place the agreement" in
dispute, a "restricted inquiry into factual issues [is]
necessary . . . ." Id. at 774-75 (emphases
added) (internal quotation marks and citations omitted). The
motion to compel arbitration is judged under a summary
judgment standard if it is renewed after this inquiry.
Id. at 775.
asked the Court to reject this request for discovery on the
grounds that the residual clause of § 1 of the FAA only
applies to transportation workers that transport goods, the
parties' agreement states that the FAA would govern, and
that, even if the FAA did not govern, the result would be the
same under the New Jersey Arbitration Act ("NJAA"),
N.J. Stat. Ann. §§ 2A:23B-1 to -32. In addition,
Uber put forth that the parties' agreement contained a
valid delegation clause, which, unless successfully
challenged, required that all the issues Singh raised
regarding the validity of their arbitration
agreement-including the § 1 residual clause issue-be
decided by an arbitrator.
District Court ruled in Uber's favor, without addressing
the discovery or delegation clause arguments.
recognized that the parties had "agree[d] to have
[threshold issues] decided by an arbitrator through the
inclusion of a delegation clause within the arbitration
agreement," App. 7, but nonetheless proceeded to address
four of the five issues presented by Singh. It determined
that the delegation clause was valid, that the parties had in
fact entered into a valid and enforceable arbitration
agreement, and that the residual clause of § 1 of the
FAA does not extend to transportation workers who transport
passengers. It also found that the arbitration provision did
not violate the NLRA or the other labor-related statutes, and
was not unconscionable. It did not decide whether the
parties' dispute fell within the scope of the arbitration
provision, on the basis that the delegation clause required
that this determination be "reserved for the
arbitrator." App. 28.
Proceedings on Appeal
appealed the District Court's § 1 determination, its
determination that the arbitration provision did not violate
the NJWHL, its failure to address his Seventh Amendment
argument, and its rulings on unconscionability. In its response
brief on appeal, Uber primarily argued that Singh had waived
any issue as to the enforceability of the delegation clause,
and, as such, all of the issues Singh raises on appeal must
be decided by an arbitrator. Given New Prime, Uber
now concedes that a court has to resolve Singh's § 1
argument as an antecedent matter.
1 of the FAA requires that we determine whether the agreement
between Singh and Uber qualifies as a "contract of
employment of seamen, railroad employees, or any other class
of workers engaged in foreign or interstate commerce." 9
U.S.C. § 1. Of course, there is no dispute as to whether
Uber drivers like Singh are seamen or railroad employees.
Rather, the dispute centers on § 1's residual
clause-the "any other class of workers"
portion-with Uber arguing that the agreement between it and
Singh does not qualify as a "contract of
employment," Appellee Resp. Br. 19- 20, and, even if it
did, Singh does not belong to a class of workers engaged in
interstate commerce because such drivers transport
passengers, and not goods, and they do so "only
locally," Appellee Resp. Br. 20-26. New Prime
eliminated Uber's "contract of employment"
argument, see New Prime, 139 S.Ct. at 541
("Congress used the term 'contracts of
employment' in a broad sense to capture any contract for
the performance of work by workers."
(emphasis in original)), so we are left with its
transportation-of-goods and "engaged in interstate
Jurisdiction and Standard of Review
District Court had jurisdiction pursuant to 28 U.S.C.
§§ 1332(d) and 1453, and we have jurisdiction under
28 U.S.C. § 1291. We review the District Court's
order compelling arbitration de novo, since it
presents a question of law. Reading Health Sys. v. Bear
Stearns & Co., 900 F.3d 87, 100 n. 61 (3d Cir.
2018). We apply the same standard as the District Court, so
"we are first obliged to determine which standard should
have been applied." Guidotti, 716 F.3d at 772.
The Framework for Deciding Which Standard
that the two options are the motion to dismiss standard under
Rule 12(b)(6) and the summary judgment standard under Rule
56, and that we set forth a framework for determining which
should apply to a motion to compel arbitration in
Guidotti. The centerpiece of that framework is
whether the existence of a valid agreement to arbitrate is
apparent from the face of the complaint or incorporated
documents. Id. at 774-76.
so because it represents a balancing of the competing
purposes of the FAA by fostering "efficient and speedy
dispute resolution" tempered by the "important
aim" of "enforc[ing] . . . private agreements"
and the "significant role courts play in interpreting
the validity and scope of contract provisions . . . ."
Id. at 773 (internal quotation marks and citations
omitted). Notably, juxtaposed with Congress's
"declaration of a liberal federal policy favoring
arbitration agreements," id. (internal
quotation marks and citation omitted), § 4 of the FAA
establishes that a court must be "satisfied that the
making of the agreement for arbitration or failure to comply
therewith is not in issue" before "mak[ing] an
order directing the parties to proceed to arbitration . . .
." 9 U.S.C. § 4. Thus, we determined that the
interest in speedy resolution needs no tempering where
"the affirmative defense of arbitrability of claims is
apparent on the face of a complaint" (or incorporated
documents). Id. at 773-74 (internal quotation marks
and citation omitted). However, we recognized that "a
more deliberate pace is required" where the motion
"does not have as its predicate a complaint with the
requisite clarity" as to whether "the parties
agreed to arbitrate." Id. at 774 (internal
quotation marks and citation omitted).
similar balancing is required with respect to the issue
presented here. Indeed, like the agreement-to-arbitrate issue
posed in § 4 of the FAA, the applicability of the
residual clause of § 1 is not merely "presumed to
be [a] question for judicial determination." See
id. at 773 (citation omitted). Rather, New
Prime establishes that a court must be satisfied that
this clause does not apply before making an order that the
parties proceed to arbitration pursuant to §§ 3 and
4 of the FAA. We therefore determine that a "restricted
inquiry" may be necessary to resolve a motion to compel
arbitration that presents an issue regarding the
applicability of the residual clause of § 1.
where the issue of whether the residual clause of § 1 of
the FAA applies arises in a motion to compel arbitration, the
motion to dismiss standard applies if the complaint and
incorporated documents provide a sufficient factual basis for
deciding the issue. But where those documents do not, or the
plaintiff responds to the motion with additional facts that
place the issue in dispute, "the parties should be
entitled to discovery on the question of arbitrability before
a court entertains further briefing . . .," with an
application of the summary judgment standard to follow.
Id. at 776 (alteration in original) (internal
quotation marks and citation omitted).
Standard Applied by the District Court
the District Court's view was that the residual clause of
§ 1 of the FAA does not extend to transportation workers
who transport passengers. So, to decide the § 1 residual
clause inquiry, the fact that Uber drivers transport
passengers need only have been apparent from the face of the
Amended Complaint, from an exhibit attached to the Amended
Complaint, as a matter of public record, or from documents
incorporated or explicitly relied upon in the Amended
Complaint. See Guidotti, 716 F.3d at 772. Setting
aside the affidavit submitted by Uber as not qualifying as
any of these, the Amended Complaint and the Rasier Agreement
each independently establish that Uber drivers transport
passengers. See, e.g., Amended Compl. ¶ 18, ECF
No. 7 ("Defendant offers customers the ability to
hail a car service driver via a mobile
application." (emphasis added)); Rasier Agreement, App.
42 (characterizing Uber drivers as "providers of . . .
peer-to-peer . . . passenger transportation services
. . .") (emphasis added)). Along those lines, ...