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Uber Arbitration Clause Accessed through Hyperlink to Contract with Driver Found Enforceable

By on February 22, 2017 in Arbitration with 0 Comments

Plaintiff Jaswinder Singh filed a lawsuit against Uber Technologies Inc. (“Uber”), claiming that Uber misclassified him and other similarly situated New Jersey Uber drivers as independent contractors, failed to pay overtime, and required drivers to pay for significant business expenses. Instead of filing an answer, Uber filed a motion to dismiss the complaint and compel arbitration based upon an arbitration clause found in the online contract document. The issue for the federal district court in the published decision of Singh v. Uber Technologies, Inc., 2017 U.S. Dist. LEXIS 12033 (D.N.J. Jan. 30, 2017) was whether that arbitration clause was enforceable.

To become an Uber driver, the plaintiff had to register with the Uber App to use its “uberX” platform, providing him an option to accept ride requests from prospective passengers and transport them for a fare. To do so, plaintiff was required to electronically accept the software agreement (the “Raiser Agreement”) that was submitted to him by Raiser, LLC, a wholly owned subsidiary of Uber that operates as its technology service provider.

After logging onto the Uber App, the plaintiff was given the opportunity to review the Raiser Agreement by clicking on a hyperlink. To advance past the first screen, the plaintiff had to confirm that he had reviewed and accepted the Raiser Agreement by clicking “YES, I AGREE.” After clicking on the “YES, I AGREE,” the plaintiff was asked a second time to confirm that he reviewed and agreed to the terms of the Agreement.

Plaintiff was given as much time as he found necessary to review this Agreement before accepting it. In fact, he did not click acceptance until about 3 months after it was made available for his review. After he accepted it, it was uploaded to his driver’s portal, where he could access the Agreement at his leisure either online or print out a hard copy.

On the first page of the Raiser Agreement, in bold, was a voluntary arbitration provision, which required that all disputes with the Company be resolved through arbitration but permitted the plaintiff to opt out of the arbitration provision. Unless the driver opted out, the clause obligated the driver to arbitrate all disputes arising out of the Raiser Agreement, including disputes as to breach of contract, wage and hour, and compensation.

Further, this provision made it clear that all such disputes would be resolved through binding arbitration and not by way of court or jury trial or by way of class action. However, arbitration was not mandatory, and the Agreement permitted the driver to opt out of arbitration by notifying the Company within 30 days by electronic mail, regular mail, or hand delivery.

Despite accepting the terms of the Agreement and failing to opt out, plaintiff argued that the arbitration provision was unenforceable. He claimed that he never received a copy, it violated the Federal Arbitration Act, the National Labor Relations Act, and that it was unconscionable.

The Court noted federal law presumptively favors the enforcement of arbitration agreements. However, it had to determine (1) whether the parties entered into a valid arbitration agreement and (2) whether the dispute falls within the scope of the arbitration agreement.

Plaintiff argued that Uber did not provide to him a copy of the Raiser Agreement. He claimed that providing access to the Agreement is not the same as providing a copy of the document and, hence, he cannot be bound to arbitrate any disputes with Uber. The District Court rejected this argument.

The Court noted that in the “internet era,” agreements are often “maintained, delivered and signed in electronic form” with a separate document incorporated through a hyperlink. To determine if an agreement is enforceable, the court looks at whether users were provided with a “reasonably conspicuous notice of the existence of contract terms” and whether the user registered an “unambiguous manifestation of assent to these terms.” The court must then determine if the online agreement provided this “reasonable notice” so that the terms and conditions would apply.

If this condition is met, a party will be bound by the hyperlinked agreement, even if the party did not review the terms and conditions before agreeing to them. To hold otherwise would be contrary to the well settled principle that a party is bound by the terms of contract, even if the party fails to read the contract before he signs it.

The District Court found that the plaintiff was provided with reasonable notice of the existence of the terms and conditions of the hyperlinked Raiser Agreement. To gain access to the Uber App, the plaintiff was advised in capital lettering that he must review and agree to the Raiser Agreement. The hyperlink button was not buried but, rather, was prominently displayed below the instruction button.

Plaintiff did admit that he accessed the Uber program, which had a link to the contract, but he did not click on the link. Regardless, he unambiguously agreed to its terms and conditions twice by clicking on the “YES, I AGREE” buttons. By these actions, the Court ruled that the plaintiff had demonstrated his intent to be bound by this Agreement. Thus, the Court found that Uber’s notice as to the Raiser Agreement was sufficient and the plaintiff was bound by its terms and conditions, including the arbitration provision.

The Court rejected all of the other arguments made by plaintiff to bar its enforcement under the FAA, the NLRA, or on the basis of it being unconscionable. The Court found the agreement to arbitrate was valid and enforceable. Because no party moved for a stay, the Court granted the order to compel arbitration and dismissed the case.

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Betsy G. Ramos

About the Author

About the Author:

Ms. Ramos is an Executive Committee Member and Co-Chair of the Litigation Department at Capehart Scatchard, P.A. located in Mount Laurel, New Jersey. She is an experienced litigator with over 25 years experience handling diverse matters. Practice areas include tort defense, business litigation, estate litigation, tort claims and civil rights defense, construction litigation, insurance coverage, employment litigation, shareholder disputes, and general litigation.

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