2d Circuit upholds arbitration agreement in Uber cellphone app

This is a case for the modern age. Does the Uber cellphone app trick users into agreeing to arbitrate their disputes? The Court of Appeals says it does not.

The case is Meyer v. Uber Technologies, decided on August 17. Uber is a private taxi service that allows you to hail a ride through a cellphone app. When you download the app that brings you into Uber-land, you have to agree to the terms of service. One of those terms of service is that if you have a dispute with Uber, you have take it to arbitration, not court. Corporate America likes arbitration, in part, because they are streamlined lawsuits largely held outside the public view. Most people, in downloading an app, click "I agree" to the terms and conditions without reading them. Even if they did read them, most people could not care less about mandatory arbitration. They have no plans to sue the entity.

But these plaintiffs did sue Uber, asserting price-fixing allegations. The district court said the process leading to the app download did not properly place unsuspecting people on notice that they were agreeing to arbitrate their disputes. This is how the Court of Appeals (Chin, Raggi and Carney) describes the process:

Below the input fields and buttons on the Payment Screen is black text advising users that ʺ[b]y creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY.ʺ See Addendum B. The capitalized phrase, which is bright blue and underlined, was a hyperlink that, when clicked, took the user to a third screen containing a button that, in turn, when clicked, would then display the current version of both Uberʹs Terms of Service and Privacy Policy. Meyer recalls entering his contact information and credit card details before registering, but does not recall seeing or following the hyperlink to the Terms and Conditions. He declares that he did not read the Terms and Conditions, including the arbitration provision.

Does this process give reasonable conspicuous notice or an unambiguous manifestation of assent to the arbitration provision? Web-based contracts have spawned a new strand of case law, but fundamental contract principles still guide the inquiry. ʺCourts around the country have recognized that [an] electronic ʹclickʹ can suffice to signify the acceptance of a contract,ʺ and that ʺ[t]here is nothing automatically offensive about such agreements, as long as the layout and language of the site give the user reasonable notice that a click will manifest assent to an agreement.ʺ The question here is whether the plaintiff "was on inquiry notice of the arbitration provision by virtue of the hyperlink to the Terms of Service on the Payment Screen and, thus, manifested his assent to the agreement by clicking 'Register.'ʺ Plaintiff loses, and the case goes to arbitration.

Turning to the interface at issue in this case, we conclude that the design of the screen and language used render the notice provided reasonable as a matter of California law. The Payment Screen is uncluttered, with only fields for the user to enter his or her credit card details, buttons to register for a user account or to connect the userʹs pre‐existing PayPal account or Google Wallet to the Uber account, and the warning that ʺBy creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY.ʺ The text, including the hyperlinks to the Terms and Conditions and Privacy Policy, appears directly below the buttons for registration. The entire screen is visible at once, and the user does not need to scroll beyond what is immediately visible to find notice of the Terms of Service. Although the sentence is in a small font, the dark print contrasts with the bright white background, and the hyperlinks are in blue and underlined.