Uber Customer Arbitration Agreement Enforceable Under California Law, Says Second Circuit

by Carlton Fields
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The Second Circuit has found that Spencer Meyer, a customer of Uber, was provided “reasonably conspicuous” notice of Uber’s Terms of Service to which he “unambiguously manifested assent” when he created an Uber account, such that he was contractually bound under California law by an arbitration clause contained in those terms of service.

Meyer filed a putative class action against Uber’s then-CEO Travis Kalanick alleging that the Uber app enabled third-party drivers to engage in illegal price fixing. Kalanick joined Uber as a necessary party, and Uber and Kalanick filed motions to compel arbitration based on an arbitration provision in Uber’s Terms of Service. The district court denied these motions, finding that Meyer did not have reasonably conspicuous notice of the Terms of Service and did not unambiguously manifest assent to those terms, including the arbitration agreement.

The Second Circuit disagreed. In its opinion, the court focused on the particular process that Meyer went through to create his Uber account. This process required Meyer to click a button labeled “Register,” directly below which was stated: “By creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY,” with the phrase “TERMS OF SERVICE & PRIVACY POLICY” highlighted in blue, underlined, and containing a hyperlink to the full Terms of Service. The Court found it significant that this link to the Terms of Service was both “spatially coupled” with the Register button, as it was directly below this button on the screen, and “temporally coupled” with the registration process, as it appeared just as the customer was registering. Thus, the Court found that a “reasonably prudent smartphone user would understand that the terms were connected to the creation of a user account,” and that a reasonable user would know that he was agreeing to these terms by clicking the Register button. Thus, the court found that the requirements of reasonably conspicuous notice and unambiguous assent were satisfied for Meyer to be bound by the arbitration provision. However, the Court remanded the matter so that the district court could consider an issue not decided by the district court: whether Uber and Kalanick waived their right to arbitrate by actively participating in the litigation prior to filing their motion to compel.

Meyer v. Uber Technologies, Inc., et al., Nos. 16-2750-cv and 16-2752-cv (2d Cir. Aug. 17, 2017)

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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