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SDNY Not Enforcing Uber Arbitration Clause

Thursday, August, 25, 2016


The Southern District of New York has decided to not enforce the mandatory arbitration and jury waiver provision against a class of Uber consumers. Judge Rakoff issued a “lengthy and strongly worded” decision concerning the matter and held that consumers have not been given sufficient notice of the arbitration provision and had not assented to the online terms of service in question.

 

According to the judge, there is a growing trend of judicial scrutiny concerning the enforceability of online agreements and it represents an important development in this area of law. He rejected Uber’s claim that the online terms of service binds consumers. The mobile app prompts the user to select a method for signing up and users must click “next.” The mobile app then displays payment information, and allows for several types of payment, and requires consumers register. However, it does not indicate the user is agreeing to anything and only includes small font at the bottom of the screen stating users agree to terms of service and the company’s privacy policy.

 

The TOS and privacy policy are hyperlinked from there and users must click on the link and then click an additional button to access the TOS and then scroll to sections that contain information about mandatory arbitration and jury waivers. The court determined this was not reasonable notice of the arbitration clause and was not able to assent to the provisions. The judge did not believe a contract had been formed between Uber and its customers based on the electronic agreement.