SJC case questions enforceability of Uber rider agreement

HAVE YOU EVER scrolled past the terms and conditions when downloading a new app, then mindlessly clicked “done” without reading the fine print? Most of us have done that more times than we can remember.

A case against Uber that the Supreme Judicial Court will hear Thursday will be a test of how conspicuous an agreement must be to the reader for it be enforceable in court.

Uber rider Christopher Kauders claimed Uber drivers denied him service three times in 2015 and 2016 because he is legally blind and uses a guide dog. He filed a lawsuit against Uber. Uber said Kauders must submit to arbitration because when Kauders registered with Uber’s rider app, he agreed to Uber’s terms of use, which included an arbitration clause. Kauders said Uber’s account registration process did not give him reasonable notice of the terms.

In a 2018 First Circuit federal court case, Cullinane v. Uber Technologies, the federal court found that Uber’s rider registration app did not provide adequate notice to users. In this case, the SJC will consider on a state level whether Uber’s registration process creates an enforceable contract.

The case spotlights the low-key nature of many online legal documents. To register as an Uber rider, the same screen that requires a person to input their credit card number also includes a statement that the rider must agree to Uber’s terms and conditions. The rider then clicks a “done” button. A rider can – but does not have to – click on a hyperlink to read the “terms and conditions.” If someone clicks on the hyperlink, they would have to scroll through 4,400 words – around three dozen pages – of text to read the full agreement.

The Cullinane case found – going into excruciating minutiae down to the color of the hyperlink – that the hyperlink was not presented clearly and conspicuously enough to give a person reasonable notice or opportunity to accept the terms.

Kauders argues in a court brief that under state contract law, Uber’s registration process was insufficient to bind him to arbitration. Uber says the federal decision should not impact state law, and the courts have routinely accepted the fact that electronic acceptance of a binding contract on a smartphone has become “a standard way to do business in the internet age.”

The National Consumer Law Foundation, a consumer-focused research group; Public Justice, a national legal advocacy organization; and two attorneys groups that tend to side with employees in employment rights cases – the Massachusetts Academy of Trial Attorneys and the American Association for Justice – are siding with Kauders.

A brief filed by the Massachusetts Academy of Trial Attorneys and the American Association for Justice refers to Uber’s approach as “contract-by-trickery” because of the “hidden” nature of Uber’s terms and conditions agreement. The groups write that the court should “refuse to empower Uber (and the many other companies that would be tempted to follow suit) to strip unsuspecting customers of fundamental constitutional rights.” It contrasts Uber’s agreement for customers with its contract for drivers, where the arbitration agreement is in bold capital letters and a driver must click on an icon indicating agreement.

“To accept Uber’s argument that clicking ‘DONE’ after entering credit card information is sufficient to bind an unsuspecting user to an arbitration agreement, this Court would have to endorse a race to the bottom—a free-for-all in which companies seek to make contract terms as obscure as possible, and yet binding so long as a user clicks any button at all,” the attorneys’ groups wrote in their brief.

The US Chamber of Commerce and New England Legal Foundation, a public interest law firm representing businesses, sided with Uber. Both argue that completion of Uber’s registration app created a binding arbitration agreement.

The Chamber writes that, with the enormous growth of e-commerce, online contracts are becoming increasingly important to the economy. The process used by Uber, the Chamber’s attorneys write, is similar to that used “by untold numbers of businesses and consumers.” The Cullinane decision’s balancing of minutiae like color and formatting, they write, creates uncertainty about the standards for contract formation that “threatens to impose massive and unwarranted costs on businesses that enter into transactions in the mobile economy.”

Shannon Liss-Riordan, a Boston attorney who has brought other cases against Uber but is not involved in this one, said the SJC case has broader implications for what it means to agree to an online contract. “We’re barraged every day in online contracts written in dense legalese that no real person would read or understand, even lawyers,” Liss-Riordan said. “Courts have been untangling which online contracts they determine show actual assent and which ones don’t.”