Ninth Circuit Judge Richard Clifton. Photo: Jason Doiy/ALM

Uber Technologies Inc. has won a victory against some 160,000 drivers who could potentially have been class members in a suit over the company taking a cut of their tips and keeping them from working as full-time employees with benefits.

The U.S. Court of Appeals for the Ninth Circuit on Tuesday reversed class certification in the case, ruling that the drivers can't sue the company because of an arbitration clause contained in their contracts.

Circuit Judge Richard R. Clifton wrote for the panel, which included Judges Richard C. Tallman and Sandra S. Ikuta.

The judges rejected the argument that the lead plaintiffs in O'Connor v. Uber “constructively opted out of arbitration on behalf of the entire class.” Instead, the panel ruled that Uber's arbitration agreements can be enforced, and so overturned the class certification and related rulings by U.S. District Judge Edward M. Chen of the Northern District of California.

The circuit panel relied on the U.S. Supreme Court's ruling on arbitrability earlier this year in Epic Systems v. Lewis, which the parties addressed in supplemental briefs following the release of the decision in May 2018.

And the plaintiffs found no success citing a Georgia case.

“The sole authority offered by plaintiffs for this proposition is a Georgia Supreme Court decision, Bickerstaff v. SunTrust Bank, 788 S.E.2d 787 (Ga. 2016),” Clifton said. “The argument is unpersuasive for multiple reasons.”

The court said, “Nothing gave the O'Connor lead plaintiffs the authority to take that action on behalf of and binding other drivers. Nor did Bickerstaff hold that individuals in the lead plaintiffs' position had the authority to make such an election for others. Perhaps more importantly, plaintiffs provide no federal case law that has relied on Bickerstaff, nor could they. That decision rested exclusively on state law grounds and did not discuss the Federal Arbitration Act (FAA), 9 U.S.C. § 2.”

In the Bickerstaff case, the Georgia Supreme Court approved class certification for customers claiming Suntrust Bank manipulated their accounts to charge them excessive overdraft fees for small debits. The underlying lawsuit is still pending.

An Uber spokesperson offered a one-sentence email response: “We are pleased with the court's decision.”

Uber was represented by Theodore J. Boutrous Jr., Theane D. Evangelis, and Kevin J. Ring-Dowell of Gibson, Dunn & Crutcher in Los Angeles, and Joshua S. Lipshutz of Gibson Dunn's San Francisco office. Boutrous spoke for the company at oral arguments.

Shannon Liss-Riordan and Adelaide H. Pagano of Lichten & Liss-Riordan in Boston represented the plaintiffs. Liss-Riordan made the argument.

“We have, unfortunately, been long expecting this,” Liss-Riordan said by email Tuesday. “This panel of the Ninth Circuit had previously ruled against Uber drivers, and the U.S. Supreme Court's decision in Lewis v. Epic Systems earlier this year removed one of our remaining arguments for why Uber should not be able to use its arbitration clause to avoid certification of a class for its widespread labor violations. We are considering our options, including an en banc appeal to the entire Ninth Circuit.”

Liss-Riordan said she is also “urging all Uber drivers who want to pursue these misclassification claims to contact us immediately to sign up for individual arbitration,” which “thousands” so far have done.