The Nevada Supreme Court recently reversed the denial of a motion to compel arbitration, explaining that the plaintiff’s arguments that the contract at issue was illegal were not a valid basis to deny arbitration because those arguments did not challenge the validity of the arbitration clause or delegation clause specifically, as is required to preclude arbitration.
Several individuals sued a company that operates the Uber app, including Uber’s Uber Pool feature. They claimed that Uber Pool was operating in Nevada illegally, without required licenses.
The company, Rasier LLC, moved to compel arbitration under the Uber app’s terms of service. The district court denied that motion, holding that the Federal Arbitration Act did not apply and that the terms of service were void in light of the allegations that Uber Pool was operating illegally.
The Supreme Court of Nevada reversed. It noted that “the FAA applies to contracts evidencing a transaction involving interstate commerce” and that the FAA therefore applied here. The court also noted that a party must challenge an arbitration clause itself, not the validity of a contract generally, to avoid arbitration. The plaintiffs only “generally challenge the Terms of Service and not the arbitration agreement or delegation clause specifically.” The motion to compel therefore should have been granted for the arbitrator to consider the merits.
Rasier, LLC v. Boykin, No. 84814 (Nev. Aug. 24, 2023).