Terms of Service Binds Uber APP Users to Arbitration

The Court of Appeals for the Second Circuit ruled that customer Meyer agreed to arbitrate his claims with the ride hailing company Uber by agreeing to the Terms of Service (TOS) linked to the Uber APP on Meyer’s cell phone.  Meyer v. Uber Technologies, et al., Case No. 16-2750 (2nd Cir. August 17, 2017) (Available Here).   However, the Court of Appeals remanded the case for a determination of whether Defendant Uber waived its right to arbitrate by actively litigating the case.

This is a class action alleging that Uber engaged in illegal price fixing.  Uber moved to compel arbitration, contending that the user TOS agreement required arbitration and the user agreed to it when the account was registered using the online APP or application.  The trial court denied Uber’s motion to compel arbitration.  On appeal, Uber contended that the trial court erred in concluding that the notice of the Terms of Service (the TOS, sometimes called Terms of Use or TOU) was not reasonably conspicuous and that the customer, using the Uber account set-up APP, did not unambiguously manifest assent to the arbitration provision by registering an Uber account.

The 2nd Circuit applied California state law finding that, only if the undisputed facts establish that (a) there is a reasonably conspicuous notice of the existence of contact terms and (b) the customer unambiguously manifested his or her assent to those terms, then the Court will find that a contract had been formed.

In the user APP Interface at issue in this case, a user was not required to explicitly assent to the contract terms.  Instead, the user must click a button marked “Register,” underneath which the screen states “By creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY,” with hyperlinks to the Terms of Service and Privacy Policy.

The Court found that as long as the hyperlinked text was itself reasonably conspicuous – and the 2nd Circuit Court herein concluded that it was – a reasonably prudent smartphone user would have constructive notice of the terms and conditions in the TOS.  The Court found that the Uber APP provided reasonably conspicuous notice of the Terms of Service as a matter of California law.

The Court also found that customer Meyer unambiguously manifested his assent to Uber’s Terms of Service.  The registration process clearly contemplated some sort of continuing relationship between the putative user (that is, Meyer) and Uber, that a prudent person would understand that the interrelationship of Uber and the customer one would require some terms and conditions, and the Uber Payment screen provided clear notice that there were terms that governed the relationship. Although the 2nd Circuit ruled in favor of Uber on this contract issue, the Court of Appeals remanded the case for a determination of whether Uber waived their right to arbitrate by actively litigating the case.

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