Mazen Hasan Agha v. Uber Technologies, Inc .

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 24-1749
M AZEN HASAN A GHA, et al.,
Plaintiffs-Appellees,
v.
U BER TECHNOLOGIES, I NC .,
Defendant-Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:23-cv-17182 — Matthew F. Kennelly, Judge.
____________________
A RGUED DECEMBER 10, 2024 — DECIDED A UGUST 26, 2025
____________________
Before K IRSCH , LEE, and K OLAR , Circuit Judges.
LEE, Circuit Judge. Four drivers brought claims against
Uber Technologies, Inc., alleging that Uber violated the Fair
Labor Standards Act (FLSA) and Illinois wage laws by mis-
classifying them as independent contractors, rather than em-
ployees, and thus failing to pay them the statutorily man-
dated minimum wage, overtime, and business expenses. In
response, Uber asked the district court to compel the drivers
to arbitrate their claims under the Federal Arbitration Act

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2 No. 24-1749
(FAA) and the Illinois Uniform Arbitration Act (IUAA), citing
the arbitration provisions contained in their driver agree-
ments. The district court granted Uber’s request as to three of
the four drivers.
As for the fourth, Ken Zurek, he had filed his own lawsuit
against Uber in Illinois state court a year before joining the
present case. Like here, Uber asked the state court to compel
arbitration, citing the same arbitration provisions in its driver
agreements with Zurek. The state court, however, concluded
that the arbitration provisions were ineffectual because Zurek
had exercised his right to opt out of the applicable arbitration
agreement with Uber.
Given the state court’s decision, the district court deter-
mined that the doctrine of issue preclusion blocked Uber from
relitigating the effect of the arbitration agreements on Zurek’s
claims that arose after his opt-out of the arbitration agreement
in the 2022 PAA and denied Uber’s motion to compel arbitra-
tion as to Zurek. Uber appeals. Because we find the district
court’s analysis to be sound, we affirm.
I
A. Uber’s Driver Agreements
Uber operates an app-based platform connecting drivers
with customers. An Uber driver must agree to a Platform Ac-
cess Agreement (PAA) with Uber (or one of its subsidiaries)
before providing transportation services through Uber’s plat-
form.1 Each PAA includes an arbitration provision, whereby
1 Uber’s wholly-owned subsidiaries facilitate different services, and
drivers enter into agreements with subsidiaries depending on the services

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No. 24-1749 3
the parties agree to arbitrate all disputes between the driver
and Uber, with some exceptions not relevant here.
The PAAs, however, also contain an opt-out provision,
which permits any driver who does not wish to be subject to
mandatory arbitration to opt out (by mail or email) within
thirty days of agreeing to the arbitration provision. The crux
of this appeal is § 13.8(c) of the PAAs, which appears to nar-
row the applicability of this opt-out right:
Any opt out of this Arbitration Provision does not af-
fect the validity of any other arbitration agreement be-
tween you and us. If you opt out of this Arbitration
Provision and at the time of your receipt of this Agree-
ment you were bound by an existing agreement to ar-
bitrate disputes arising out of or related to your use of
our Platform and Driver App, that existing arbitration
agreement will remain in full force and effect.
During their time driving for Uber, all four plaintiffs en-
tered into a number of PAAs on various occasions (when, for
example, Uber updated the PAA’s terms). Zurek entered into
a PAA in 2020, 2021, and again in 2022. Zurek did not opt out
of the arbitration agreement after agreeing to the 2020 PAA,
they wish to provide and the online platforms they would like to access.
Peer-to-peer transportation drivers enter into PAAs with Raiser, LLC; food
delivery drivers enter into PAAs with Portier, LLC; and item delivery driv-
ers enter into PAAs with Schleuder, LLC. The relevant provisions of the
PAAs of Uber and its subsidiaries appear to be materially indistinguisha-
ble, and because neither side has argued the distinctions matter, we rely
on the contractual language from Raiser, LLC’s PAA, which is the focus of
the parties’ arguments.

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4 No. 24-1749
but he did exercise his opt-out right after entering into the
2021 and 2022 PAAs.
B. State Court Action
Before joining this action, Zurek had filed suit against
Uber in Illinois state court. There, he alleged that, in 2023,
Uber had violated a provision of the Chicago Municipal Code
by terminating his access to the Uber Driver App after a back-
ground check had revealed prior arrests. Zurek asked the
state court to grant temporary and preliminary injunctive re-
lief requiring Uber to allow him to use the App and barring
Uber from considering his prior arrests in deciding whether
he could access the App.
Uber filed a motion asking the court to dismiss the case or,
alternatively, to compel arbitration. According to Uber, even
though Zurek’s dispute with Uber arose after the execution of
Zurek’s 2022 PAA, § 13.8(c) makes clear that the arbitration
provision from his 2020 PAA still applied to his claim despite
his opt-out under the 2022 agreement.
The state court rejected Uber’s argument, reasoning that
Uber’s interpretation of § 13.8(c) would nullify Zurek’s unam-
biguous right to opt out of the arbitration provision in the
2022 PAA and render the opt-out provision meaningless. The
state court opined that “[t]he only reasonable interpretation
of § 13.8(c) is that [Zurek] would still be bound by the arbitra-
tion provision of the 2020 PAA for any dispute arising during
the effective period of the 2020 PAA, but not for any dispute
arising during the effective period of the 2022 PAA.” In the
court’s view, accepting Uber’s interpretation would lead to
“the absurd result” of binding a driver who opts out of the

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No. 24-1749 5
2022 arbitration agreement to arbitrate any dispute, even if
the dispute arises out of the 2022 PAA.
Zurek and Uber also disputed whether Zurek had in fact
received and agreed to the 2020 PAA. But the state court
found it unnecessary to decide this issue given that Zurek’s
claim did not arise when the 2020 PAA was in effect. In any
event, the state court noted, Uber had failed to attach any rec-
ords substantiating its assertion that Zurek had agreed to the
2020 PAA, while Zurek had declared in an affidavit that he
had not. Thus, the state court observed, even if the court were
to accept Uber’s interpretation of the 2022 PAA, dismissal
would be unwarranted.
About two months after the state court issued its decision,
the parties settled the case, and the lawsuit was dismissed.
C. District Court Proceedings
The plaintiffs filed the instant lawsuit in 2023, alleging that
Uber improperly classified them as independent contractors
rather than employees. According to them, employing this
misclassification, Uber refused to pay its drivers the man-
dated minimum wage and overtime rates, thereby violating
the FLSA. Moreover, the plaintiffs assert, Uber failed to reim-
burse drivers for their necessary business expenses, which vi-
olated Illinois law.
That is not all, the plaintiffs say. Uber not only misclassi-
fied the four of them, but also every other Uber driver in Illi-
nois who was similarly situated to them. Accordingly, on Feb-
ruary 10, 2024, the plaintiffs asked the district court to condi-
tionally certify the action so that it could proceed as a collec-
tive action under the FLSA. On March 4, 2024, Uber filed its
motion to compel arbitration.

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6 No. 24-1749
In its motion, Uber argued that each plaintiff had entered
into at least one arbitration agreement with Uber that was still
binding, even if they had opted out of subsequent ones. This
was because, Uber asserted, § 13.8(c) provides that opting out
of one arbitration agreement does not nullify the prior ones.
In response, the four plaintiffs argued that the FAA did not
apply to Uber drivers and that the arbitration provisions were
unenforceable under Illinois law. Moreover, Zurek offered
the additional argument that Uber was bound by the state
court’s ruling under the doctrine of issue preclusion.
Addressing Zurek, the district court agreed that issue pre-
clusion prohibited Uber from relitigating whether Zurek was
bound by his 2020 arbitration agreement despite his election
to opt out of the arbitration provision in the 2022 PAA. As for
the other plaintiffs, the district court took a fresh look at
§ 13.8(c) and held that their subsequent opt-outs did not in-
validate prior agreements to arbitrate with Uber. Thus, the
district court denied Uber’s motion as to Zurek but granted it
as to the other three drivers. Those drivers do not appeal the
order compelling them to arbitrate. Uber, however, asks us to
review the district court’s denial of its motion as to Zurek.
II
We review a district court’s application of issue preclusion
de novo. E.E.O.C. v. AutoZone, Inc., 707 F.3d 824, 831 (7th Cir.
2013) (citing Dexia Crédit Loc. v. Rogan, 629 F.3d 612, 628 (7th
Cir. 2010)).
Section 1738 of Title 28 requires federal courts to give state
court judgments the same preclusive effect as they would be
given under the law of the rendering state. 28 U.S.C. § 1738;
see Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81

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No. 24-1749 7
(1984); Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S.
373, 380 (1985) (“Section 1738 embodies concerns of comity
and federalism that allow the States to determine, subject to
the requirements of the statute and the Due Process Clause,
the preclusive effect of judgments in their own courts.”); Sapp
v. Foxx, 106 F.4th 660, 665 (7th Cir. 2024), cert. denied, No. 24-
379, 2024 WL 4655013 (U.S. Nov. 4, 2024). Thus, we apply Illi-
nois law to determine the preclusive effect of the state court
decision.
Under Illinois law, a party asserting issue preclusion must
establish that (1) the issue decided in the prior adjudication is
identical to the one presented in the suit in question; (2) there
was a final judgment on the merits in the prior adjudication;
and (3) the party against whom issue preclusion is asserted
was a party or in privity with a party to the prior adjudication.
Dunlap v. Nestlé USA, Inc., 431 F.3d 1015, 1018 (7th Cir. 2005)
(citing Herzog v. Lexington Twp., 657 N.E.2d 926, 929–30 (Ill.
1995)). Additionally, the party sought to be bound must have
actually litigated the issue in the first suit, and a decision on
the issue must have been necessary to the judgment in that
case. Am. Fam. Mut. Ins. Co. v. Savickas, 739 N.E.2d 445, 451 (Ill.
2000).
Uber’s sole argument on appeal is that the issue decided
by the state court is not identical to the issue the district court
faced here. This is incorrect. The state court decided that
Zurek’s agreement to arbitrate in 2020 did not apply to a claim
that arose during the period governed by the 2022 PAA. In-
stead, such a claim was governed solely by the 2022 arbitra-
tion provision, which was the subject of Zurek’s 2022 opt-out.
That was the exact issue before the district court.

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8 No. 24-1749
Despite this, Uber believes that two material differences
belie this conclusion. First, Uber points out that the state court
expressly declined to address the question of whether Zurek
had agreed to the 2020 PAA. Uber sees that question as, at
best, undecided, and it cites Best Coin-Op, Inc. v. Paul F. Ilg
Supply Co. for the proposition that issues “at best undecided”
cannot support issue preclusion. 545 N.E.2d 481, 496 (Ill. App.
Ct. 1989). But that case does not help Uber.
In Best Coin-Op, the plaintiff alleged, in part, that the de-
fendant had tortiously interfered with its contract with an-
other entity. See id. at 482. The defendant asked the court to
dismiss the claim on issue preclusion grounds, arguing that
another court had determined that the contract did not exist.
See id. at 496. The Illinois appellate court disagreed, noting
that the existence of the contract as well as its breach—two
elements necessary for a tortious interference with contract
claim—had not been decided by the prior court. See id. By con-
trast, as the state court in Zurek’s case explained, whether
Zurek had agreed to the 2020 PAA was “not necessary to ad-
dress” because the claim before it “did not arise while the 2020
PAA was in effect.”
Second, Uber contends that the state court decided the ar-
bitration issue under state law instead of the FAA. Because
the district court ignored this distinction, it argues, the court
committed reversible error. The problem is that Uber does not
explain how the two standards are different, if at all. For ex-
ample, Uber states that “[t]he FAA applies to questions of for-
mation,” but later it appears to concede that those questions
are governed by Illinois state law, the precise standard the
state court applied here. See Br. of Appellant at 32. Thus, the
question before the district court was the same question

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No. 24-1749 9
decided by the state court—that is, did Zurek’s arbitration
agreement in the 2020 PAA obligate him to arbitrate a claim
that arose during the time the 2022 PAA was in effect, even
though Zurek had opted out of the 2022 arbitration agree-
ment.
The remaining elements of issue preclusion are uncon-
tested and easily satisfied. On the question of whether the
state court decision constitutes a final judgment on the merits,
as the district court correctly observed, under Illinois law, is-
sue preclusion may apply to determinations made prior to the
entry of a settlement agreement disposing of the underlying
litigation. See Du Page Forklift Serv., Inc. v. Material Handling
Servs., Inc., 744 N.E.2d 845, 853 (Ill. 2001). The state court order
denying Uber’s motion to compel arbitration of Zurek’s
claims fits the bill, and Uber does not argue otherwise.2 Nor
does it argue that it was not a party to the state court action or
that it lacked sufficient opportunity to litigate the issue before
the state court.
2 Furthermore, Illinois courts may turn to the Restatement (Second) of
Judgments, see, e.g., Du Page Forklift Serv., 744 N.E.2d at 849–50, which
states that a final judgment, for the purposes of issue preclusion, includes
any prior adjudication of an issue that is determined to be “sufficiently
firm to be accorded conclusive effect,” Restatement (Second) of Judgments
§ 13 (1982). Relevant factors include whether the parties were fully heard,
whether the rendering court supported its decision with a reasoned opin-
ion, and whether the decision was subject to appeal. See Restatement (Sec-
ond) of Judgments § 13; Haber v. Biomet, Inc., 578 F.3d 553, 556 (7th Cir.
2009). In this case, the state court’s decision on arbitration was supported
by a reasoned opinion, and there is “nothing in the record that indicates
that it would revisit the issue at a later time.” Haber, 578 F.3d at 557.

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10 No. 24-1749
Before concluding, we acknowledge the superficial incon-
sistency in enforcing the 2020 arbitration agreement as to the
three other plaintiffs but not as to Zurek. But the doctrine of
issue preclusion promotes important goals. It “protect[s] liti-
gants from the burden of relitigating an identical issue with
the same party” and “promot[es] judicial economy by pre-
venting needless litigation.” Parklane Hosiery Co. v. Shore, 439
U.S. 322, 326 (1979). Uber had an opportunity to litigate this
issue before the state court; it lost. It does not get another bite
at the apple.
III
For the foregoing reasons, we AFFIRM the district court’s
denial of Uber’s motion to compel arbitration as to Zurek’s
claims.3
3 Because our ruling on issue preclusion is sufficient to resolve this
appeal, we need not explore the many alternative arguments made by the
parties.

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