When patrons of Uber’s ridesharing service open the Uber app, they are taken to a registration screen that advises them that by using the app, they are consenting to Uber’s terms of service. These terms can be accessed by a hyperlink. One of these terms binds users to arbitration. After some of Uber’s customers filed an antitrust lawsuit against the company, Uber tried to hold them to the arbitration clause. But Federal District Court Judge Jed Rakoff looked at Uber’s registration screen and determined that it did not do a good enough job of ensuring that customers knew what they were signing. Specifically, Rakoff found that Uber did not give its customers fair warning that by using their service, they agree to waive their right to sue Uber in court.
This recent Uber arbitration appeal is part of a trend in litigation, whereby consumers are questioning the validity of their “consent” to hidden terms and conditions on their mobile phone screens. Generally, for consent to be valid, consumers must actively click on a button that says, “I agree,” or something similar. This is referred to as a clickwrap contract. Courts in some circuits are reluctant to honor any other type of agreements.
The Age of the Internet Waiver
In his ruling, Judge Rakoff noted that the right to a jury trial has been one of the most precious and fundamental rights afforded to citizens. Yet, in the world of the Internet, consumers are all deemed to have regularly waived this right on a daily basis and given up our access to courts altogether. He emphasized that many people are unaware of these conditions, and even if they are, they have no real ability to negotiate.
Uber appealed Judge Rakoff’s ruling to the 2nd U.S. Circuit Court of Appeals. Judge Rakoff agreed to stay the underlying antitrust class action until the 2nd Circuit weighs in on the validity of consumer consent to Uber’s arbitration clause. If the 2nd Circuit Court reverses Judge Rakoff’s decision, the antitrust class action will proceed to arbitration.
There has been some criticism to Judge Rakoff’s opinion. The Internet Association warned that his opinion unsettled existing case law. Members of the Internet Association include some of the largest online retailers in the United States. They also claim that consumers have become accustomed to this type of mobile contracting (with hyperlinked terms of service), and know what to expect.
Philadelphia Business Lawyers at Sidkoff, Pincus & Green, P.C. Counsel Clients on All Aspects of Arbitration
Philadelphia business lawyers at Sidkoff, Pincus & Green have experience litigating and counseling clients in all facets of arbitration. From defending arbitration clauses, to challenging arbitration clauses in class action lawsuits on behalf of consumers, we have extensive experience with all aspects of business litigation. We also routinely litigate arbitrations and have a track record of achieving our clients’ goals. To schedule a consultation, call us at 215-574-0600 or contact us online today.