9th Circuit Affirms Denial of Amazon’s Motion to Compel Flex Driver to Arbitration

The 9th U.S. Circuit Court of Appeals, in a majority opinion Thursday (docket 21-56107), upheld the district court’s denial of Amazon’s motion to compel to arbitration Amazon Flex driver Drickey Jackson's privacy claims on behalf of himself and a nationwide class of Flex drivers. Flex drivers use their own cars to deliver goods they retrieve from Whole Foods stores, Amazon Fresh locations and other local markets.

The district court found, and the 9th Circuit agreed, that Amazon monitored and wiretapped the drivers’ conversations when they communicated during off hours in closed Facebook groups, said Circuit Judge Mary Schroeder’s majority opinion. Though Jackson believed he was communicating only with other drivers, his complaint alleged that Amazon was unlawfully monitoring the communications in the Facebook groups, said the opinion. It said Jackson’s claims fell within the scope of the arbitration provisions in the terms of service (TOS) he agreed to in 2016, and that the broader arbitration agreement in the TOS that Amazon updated in 2019 didn’t apply.

Circuit Judge Susan Graber concurred in part and dissented in part. She concurred with the majority opinion the 9th Circuit had jurisdiction to hear the appeal and the 2016 TOS applies to Jackson’s claims. But she held that the 2016 TOS arbitration clause covered the matters alleged in the complaint, and said she would reverse and remand with an instruction to order arbitration.

Amazon contends it emailed a new TOS to Flex drivers in 2019 with a broader arbitration provision making arbitrability itself subject to arbitration. The 2016 TOS left the issue of arbitrability to the discretion of the court. It’s not disputed that Jackson “continued in the program after 2019 and continued participating in closed Facebook groups of Amazon Flex drivers as he had since 2016,” said Schroeder’s opinion. Amazon claimed Jackson accepted the 2019 TOS by continuing to make deliveries after being emailed a copy of the new terms, it said. But Amazon didn’t produce a copy of the 2019 email notifying drivers of the new TOS, “nor did it provide any evidence that Jackson received such an email,” it said.

In denying Amazon’s motion to compel Jackson’s dispute to arbitration, the district court ruled that under California law, the 2016 TOS applied because “Amazon had not shown that it provided individualized notice to Jackson of a 2019 TOS,” said the opinion. “Such individualized notice was necessary to establish mutual assent to the 2019 arbitration provision,” it said.

At issue is whether Jackson accepted the terms of the 2019 TOS, said the opinion. Jackson contends Amazon didn’t meet its burden “of showing that he assented to the 2019 TOS,” it said. “Amazon relies on the provision in the 2016 TOS stating that by signing the 2016 TOS, Flex drivers agreed to be bound by future revisions to the agreement, so long as they continued to perform deliveries or use the Amazon Flex app after receiving notice of the change,” it said.

The issue is whether Amazon “provided notice of the new terms because without notice, the drivers couldn't assent to new contractual terms,” said the opinion. “The district court correctly applied fundamental rules of contract formation” when it denied Amazon’s motion to compel for its failure to produce a copy of the email for the court, it said. “Under California law and generally applicable principles of contract law, the burden is on Amazon as the party seeking arbitration to show that it provided notice of a new TOS and that there was mutual assent to the contractual agreement to arbitrate,” it said.

Though society has experienced “a technological revolution in the way parties communicate, technological innovation has not altered these fundamental principles of contract formation,” said the opinion. “Mutual assent requires, at a minimum, that the party relying on the contractual provision establish that the other party had notice and gave some indication of assent to the contract,” it said.

Amazon contends that it satisfied its burden to show notice “by stating in a declaration that it sent an email notifying drivers of a new TOS, such that Jackson assented by continuing to perform deliveries,” said the opinion. Amazon relies on two district court cases in which the companies sent notice of new terms via email and the courts held that plaintiffs were notified of and assented to the new agreement, it said: “We are of course not bound by those cases because they are district court decisions. Moreover, they do not support Amazon in this case because the records in those cases were quite different from the record before us.”

In one of the district court decisions, Webber v. Uber in 2018, an email notified users of the Uber app that the company’s terms had been updated, said the opinion. The Central District of California found that communication “to be sufficient to establish that plaintiffs had reasonable notice of the new terms and assented to them by continuing to use Uber after the terms were updated,” it said. In the 2016 decision in In re Facebook Biometric Information Privacy Litigation, the Northern District of California determined plaintiffs “had adequate individualized notice of the updated terms and that they agreed to them by continuing to use Facebook,” it said.

But in Jackson’s case against Amazon, there’s “no evidence that the email allegedly sent to drivers adequately notified drivers of the update,” said the opinion. “The district court did not have the email, so it could not evaluate whether the email (assuming it was received at all) sufficed to provide individualized notice,” it said. Unlike in Webber, there’s no evidence the alleged notice Amazon sent to drivers in 2019 “informed them that continuing to complete deliveries or use the app would bind drivers to the new terms,” it said.