Chilutti, S. v. Uber Technologies, Inc. ( 2023 )

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2023 PA Super 126SHANNON CHILUTTI AND KEITH IN THE SUPERIOR COURT
CHILUTTI, H/W OF PENNSYLVANIA
Appellants
v.
UBER TECHNOLOGIES, INC., GEGEN,
LLC, RAISER-PA, LLC, RAISER, LLC,
SARAH’S CAR CARE, INC. AND
MOHAMMED BASHIER
Appellees No. 1023 EDA 2021
Appeal from the Order Entered April 26, 2021
In the Court of Common Pleas of Philadelphia County
Civil Division at No: 200900764
BEFORE: BENDER, P.J.E., LAZARUS, J., OLSON, J., STABILE, J., DUBOW, J.,
NICHOLS, J., McLAUGHLIN, J., McCAFFERY, J., and SULLIVAN, J.
DISSENTING OPINION BY STABILE, J.: FILED JULY 19, 2023
While I do not discount the concerns expressed by the Majority
regarding Internet contracts, I disagree with the Majority’s premise that
Appellants’ right to a jury trial is “central” to our Court’s disposition of this
case. Majority Opinion at 1. What is central to this case is whether we have
jurisdiction over an appeal from the trial court’s collateral order staying the
proceedings and compelling arbitration. Because Appellants have not satisfied
the third prong of the collateral order doctrine, i.e., that their claim will be
irreparably lost if review is postponed, I conclude that this Court lacks
jurisdiction and the appeal should be quashed. Therefore, I respectfully
dissent.
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As the Majority observed, the trial court granted Uber’s petition to
compel arbitration and stayed the proceedings with respect to the co-
Appellees. In its Rule 1925(a) opinion, the trial court did not discuss the
parties’ arguments regarding the agreement to arbitrate (or lack thereof) or
explain its basis for granting the motion to compel arbitration. Rather, the
court appropriately limited its discussion to the appealability of a motion to
compel arbitration and concluded that its order is “not appealable at this time
because the parties have not been forced ‘out of court.’” Trial Court Opinion,
6/2/21, at 2 (citing Maleski v. Mut. Fire, Marine & Inland Ins. Co., 633
A.2d 1143, 1145 (Pa. 1993)).
Initially, I note that “[a]n order compelling arbitration and staying court
action is not final; rather, it is interlocutory because the parties are not forced
‘out of court.’” Maleski, 633 A.2d at 1145 (citation omitted). As our Supreme
Court stated in Maleski, “[T]here is no express statutory authority providing
for an appeal from an interlocutory order in a case where arbitration is
compelled[.]” Id. at 1146 (footnote omitted). See also Schantz v.
Dodgeland, 830 A.2d 1265, 1266 (Pa. Super. 2003) ("An order directing
arbitration, whether statutory or common law, is an interlocutory order and is
not immediately appealable. The parties have been forced into, not put out
of court. Thus the order is interlocutory[.]”) (citations omitted). Appellants
nevertheless contend that we have jurisdiction to entertain this appeal as a
collateral order pursuant to Pa.R.A.P. 313(b). As this Court has recognized:
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Under Pa.R.A.P. 313(b), a collateral order is an order that 1) is
separable from and collateral to the main cause of action; 2)
involves a right too important to be denied review; and 3)
presents a question that, if review is postponed until final
judgment in the case, the claim will be irreparably lost.
In re Bridgeport Fire Litigation, 51 A.3d 224, 230 n.8 (Pa. Super. 2012)
(citation omitted).1
In Shearer v. Hafer, 177 A.3d 850 (Pa. 2018), our Supreme Court
reiterated:
[We] construe the collateral order doctrine narrowly, and insist
that each one of its three prongs be “clearly present” before
collateral appellate review is allowed. Melvin v. Doe, 575 Pa.
264, 836 A.2d 42, 47 (2003); Geniviva v. Frisk, 555 Pa. 589,
725 A.2d 1209, 1214 (1999). Indeed, “[w]e construe the
collateral order doctrine narrowly so as to avoid ‘undue corrosion
of the final order rule[’]”. K.C. v. L.A., 633 Pa. 722, 128 A.3d
774, 778 (2015) (quoting Pridgen v. Parker Hannifin Corp.,
588 Pa. 405, 905 A.2d 422, 427 (2006)). . . . Moreover, as
parties may seek allowance of appeal from an interlocutory order
by permission, we have concluded that that discretionary process
would be undermined by an overly permissive interpretation
of Rule 313. Geniviva, 725 A.2d at 1214 n.5.[2] . . . As noted
above, the collateral order doctrine permits an appeal as of right
from a non-final collateral order if the order satisfies the three
requirements set forth in Rule 313(b)—separability, importance,
and irreparability.
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1 “The appealability of an order under the Pa.R.A.P. 313 collateral order
doctrine presents a question of law, over which our standard of review is de
novo and our scope of review is plenary.” Brooks v. Ewing Cole, Inc., 259
A.3d 359, 365 (Pa. 2021) (citations omitted).
2 I note that Appellants did not seek an appeal by permission pursuant to
Pa.R.A.P. 312.
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Id. at 858. All three prongs of the collateral order test must be satisfied for
this Court to exercise jurisdiction over an otherwise non-final order. Spanier
v. Freeh, 95 A.3d 342, 345 (Pa. Super. 2014).
Here, while the first two prongs of the collateral order doctrine are
arguably satisfied, I conclude that the third prong is not. In the event
Appellants might not be satisfied with the results of their arbitration, they
could seek review of the arbitrator’s decision.
In this regard, I recognize that Uber’s Terms of Use call for arbitration
pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C.A., § 1 et seq.
Nevertheless, as the Court of Appeals for the Third Circuit acknowledged:
Arbitration is fundamentally a creature of contract. The Supreme
Court has stated: “arbitrators derive their authority to resolve
disputes only because the parties have agreed in advance to
submit such grievances to arbitration.” AT & T Techs., Inc. v.
Communications Workers, 475 U.S. 643, 648–49, 106 S.Ct.
1415, 1418, 89 L.Ed.2d 648 (1986) (citation omitted). The
Federal Arbitration Act makes written agreements to arbitrate
“valid, irrevocable, and enforceable” on the same terms as other
contracts. 9 U.S.C.A. § 2 (West 1970). There must be evidence
sufficient to establish the parties’ consent to arbitration. As a
matter of contract, no party can be forced to arbitrate unless that
party has entered into an agreement to do so. That agreement
must be express and unequivocal.
Kaplan v. First Options of Chicago, Inc., 19 F.3d 1503, 1512 (3d Cir.
1994), aff’d, 514 U.S. 938, 115 S.Ct., 1920, 131 L.Ed.2d (1995) (some
citations omitted). “An arbitrator's decision to assert jurisdiction over
objection is, however, subject to a much broader and more rigorous judicial
review than an arbitral decision on the merits. Because it is a question for the
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court to decide, it is subject to de novo judicial review.” Id. (internal
quotations omitted).
In affirming the Third Circuit’s decision, the United States Supreme
Court stated, “Courts should not assume that the parties agreed to arbitrate
arbitrability unless there is ‘clear and unmistakable evidence’ that they did
so.” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115
S.Ct. 1920, 131 L.Ed.2d (1995) (alterations and citations omitted).
While Uber’s Terms of Use call for arbitration pursuant to the FAA, this
Court has determined that “the FAA standards of review do not apply to a
state trial court’s review over an arbitration award created and enforced under
the FAA.” Trombetta v. Raymond James Financial Services, Inc., 907
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A.2d 550, 569 (Pa. Super. 2006).3 Therefore, we look to Pennsylvania’s
arbitration laws.4
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3 In Trombetta, the Court explained that, “[t]he language of FAA §10 itself
substantiates this conclusion. Section 10 explicitly states: ‘the United States
court in and for the district where in the award was made . . .’ may vacate an
arbitration award when certain circumstances are present.” Id., 907 A.2d at
568-69 (emphasis and ellipses in original). “We believe this phrase
constitutes plain language stating that FAA § 10 only applies to proceedings
in United States district courts.” Id. at 569 (emphasis added). Because a
review of the Complaint filed in this action reveals that Appellants as well as
some Appellees are residents of or entities incorporated in Pennsylvania, there
is no diversity of citizenship (or federal question) upon which jurisdiction in
the district court could be based.
A recent United States Supreme Court decision confirms that review of an
arbitral award in this case would be governed by state law. In Badgerow v.
Walters, 142 S.Ct. 1310 (2022), the Court held that “Congress has not
authorized a federal court to adjudicate a Section 9 or 10 application just
because the contractual dispute it presents grew out of arbitrating different
claims, turning on different law, that (save for the parties’ agreement) could
have been brought in federal court.” Id. at 1318. Further, “[t]he statutory
plan . . . makes Section 9 and 10 applications conform to the normal—and
sensible—judicial division of labor: The applications go to state, rather than
federal, courts when they raise claims between non-diverse parties involving
state law. Id. at 1321.
4 I note that Uber’s arbitration provisions reference applicability of California
law in the event the FAA rules are found not to apply. If Appellants should
attempt to vacate an award of the arbitrator, and if it is determined that
California law applies, the court could look to Cal. Code Civ. Proc.
§ 1286.2(a)(4), which provides for vacating an award in the event “arbitrators
exceeded their powers and the award cannot be corrected without affecting
the merits of the decision upon the controversy submitted.” See Cable
Connection, Inc. v. DIRECTV, Inc., 190 P.3d 586, 600 (Ca. 2008) (“The
powers of an arbitrator derive from, and are limited by, the agreement to
arbitrate. Awards in excess of those powers may, under section[] 1286.2 and
1286.6 be corrected or vacated by the court”) (citations omitted).
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As this Court explained in Sage v. Greenspan, 765 A.2d 1139 (Pa.
Super. 2000), appeal den’d, 784 A.2d 119 (Pa. 2001):
Chapter 73 of the Pennsylvania Judicial Code governs statutory,
common law and judicial arbitration. 42 Pa.C.S.A. §§ 7301–
7362. Sections 7301–7320 of Subchapter A apply to statutory
arbitration proceedings and are known collectively as the
Pennsylvania Uniform Arbitration Act (“UAA”). Sections
7341 and 7342 of Subchapter B apply to common law arbitration
proceedings. 42 Pa.C.S.A. §§ 7341–7342[.] Whether an
arbitration agreement is subject to the UAA (Sections 7301–
7320 of Subchapter A) or common law (Sections 7341–7342 of
Subchapter B) arbitration principles depends on whether the
agreement is in writing and expressly provides for arbitration
under the UAA. 42 Pa.C.S.A. § 7302(a)[.] Absent an express
statement in the arbitration agreement, or a subsequent
agreement by the parties which calls for the application of the UAA
statutory provisions in Subchapter A, an agreement to arbitrate is
conclusively presumed to be at common law and subject to the
provisions of Subchapter B.
Id. at 1141 (citations omitted).5 Because the arbitration provisions in Uber’s
Terms of Use make no reference to the UAA, the standards of review for
common law arbitration should apply in the event of a challenge to an award
of the FAA arbitrator.
In Sage, we recognized that “[t]he standard of review for a common
law arbitration is very limited.” Id. at 1142. However, as this Court held in
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5 Because Appellants’ Uber registrations and the accident giving rise to
Appellants’ claim predated July 1, 2019, the effective date of the Revised
Statutory Arbitration Act, 42 Pa.C.S.A. § 7321.1-31, the provisions of that Act
are not implicated.
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Civan v. Windemere Farms, Inc., 180 A.3d 489 (Pa. Super. 2018), “the
narrow standard of review derived from section 7341 is not applicable when
reviewing a petition to vacate based upon a claim that the parties do not have
a valid agreement to arbitrate.” Id. at 499. Further, as this Court recognized
in Sage, the award of an arbitrator “is binding and may not be vacated or
modified unless it is clearly shown that a party was denied a hearing or that
fraud, misconduct, corruption or other irregularity caused the rendition of an
unjust, inequitable or unconscionable award.” Id. (quoting Prudential Prop.
& Cas. Ins. Co. v. Stein, 683 A.2d 683, 684 (Pa. Super. 1996)). Because a
party cannot be forced to arbitrate absent an agreement to do so, see First
Options, supra, if a court determines there was no agreement to arbitrate,
and that Appellants submitted to arbitration only because they were compelled
to do so, I believe the court could properly vacate an award based on either
the lack of an agreement to arbitrate or a finding that the resulting award was
“unjust, inequitable or unconscionable.” Therefore, postponing review until
final judgment in this case will not result in irreparable loss of Appellants’ claim
as it can be reviewed in accordance with the applicable Pennsylvania
arbitration statutes. Appellants have failed to demonstrate that postponing
review until final judgment in the case will result in irreparable loss of their
claim. Therefore, they have not satisfied the third prong of the collateral order
test.
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In its discussion of the collateral order doctrine, the Majority quotes our
Supreme Court’s decision in Commonwealth v. Wells, 719 A.2d 729 (Pa.
1998), in which the Court recognized that Rule 313 “sets forth a narrow
exception to the general rule that only final orders are subject to appellate
review.” Majority Opinion at 7 (quoting Wells, 719 A.2d at 730). After
identifying the three prongs, including the third prong, i.e., that “the question
presented is such that if review is postponed until final judgment in the case,
the claimed right will be irreparably lost,” id. (emphasis added), the Court
in Wells observed that “[t]his third prong requires that the matter must
effectively be unreviewable on appeal from final judgment.” Id. Quoting
Commonwealth v. Myers, 322 A.2d 131, 133 (Pa. 1974), the Court in Wells
also noted that an “order is not immediately appealable if it cannot be said
‘that denial of immediate review would render impossible any review
whatsoever of [the] individual's claim.’” (quoting United States v. Ryan, 402
U.S. 530, 533, 91 S.Ct. 1580, 1582 (1971)).
To demonstrate the nature of irreparable loss that satisfies the third
prong of the collateral order test, in Brooks, supra, our Supreme Court held
that the third prong was satisfied because a defendant’s sovereign immunity
defense would be irreparably lost. Id., 259 A.3d at 373, 375 (“a sovereign
immunity defense is irreparably lost if appellate review of an adverse decision
on sovereign immunity is postponed until after final judgment” because “the
bell has been rung, and cannot be unrung by a later appeal.”) (citations
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omitted). The protection is from a lawsuit itself not simply a mere shield from
judgment or liability, as Pennsylvania courts have recognized. Id. at 372
(citing cases). Because sovereign immunity protects government entities
from a lawsuit itself, the Court concluded that a sovereign immunity defense
is irreparably lost if appellate review of an adverse decision on sovereign
immunity is postponed until after final judgment. Id. at 373. Subjecting a
governmental entity, which claims it is immune, to the legal process
undermines the purposes of sovereign immunity. Id.
Unlike Brooks, Appellants here cannot demonstrate the irreparable loss
of any such right. Appellants’ claim essentially concerns the forum in which
they will litigate their claim, not the loss of a forum whereby they would be
out of court. If they are not pleased with the results of an arbitration, they
have avenues open to them, whether based on an assertion that they did not
agree to arbitrate, or a contention that “fraud, misconduct, corruption or other
irregularity caused the rendition of an unjust, inequitable or unconscionable
award.” Sage, supra, 765 A.2d at 1142 (citation omitted). In other words,
the bell can be “unrung.” Although the Majority speaks in terms of legal
hurdles facing Appellants should they attempt to seek judicial review of an
arbitration award, Majority Opinion at 13, the Majority nevertheless stops
short of contending the matter would “effectively be unreviewable,” stating
instead that the third prong of the test is satisfied “because postponing review
until final judgment in this case may result in the irreparable loss of
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Appellant’s claims.” Id. (emphasis added). I submit that the mere possibility
of losing a claim falls short of a claim being “irreparably lost,” in light of the
Supreme Court’s stated insistence “that each one of its three prongs be ‘clearly
present’ before collateral appellate review is allowed.” Shearer, 177 A.3d at
858 (citation omitted).
Again, the issue before this Court is not whether Appellants are being
deprived of a right to a jury trial. The issue is whether this Court has
jurisdiction over this appeal from an interlocutory order compelling arbitration.
“Because there is no express statutory authority providing for an appeal from
an interlocutory order in a case where arbitration is compelled,” Maleski, 633
A.2d at 1146, and because Appellants cannot satisfy the third prong of the
collateral order test, I would quash the appeal.
Judge Olson and Judge Sullivan join the Dissenting Opinion.
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