First Circuit Invalidates Arbitration Clause In Uber's User Agreement

Author:Mr Caleb Schillinger
Profession:Seyfarth Shaw LLP

Executive Summary and Takeaway.   User agreements for websites and apps have become increasingly prevalent in recent years, and courts have had to adapt traditional rules of contract interpretation to the new digital frontier.  On Monday, June 25, 2018, the First Circuit in Cullinane v. Uber Technologies, Inc. reversed a district court decision enforcing an arbitration clause contained in the terms of service for Uber's smartphone app, finding that those terms were not sufficiently "conspicuous" for a user to know that he or she had agreed to be bound by them.  The First Circuit's decision continues a trend of judicial hostility to arbitration clauses, and is notable for its scrutiny of the record below:  the court studied in minute detail the design and content of the registration screen containing a hyperlink to the terms of service—including the size, shape, color, font, and location of the hyperlink—and concluded that the link to the terms of service failed "to grab the user's attention."  Companies with similar user agreements governed by Massachusetts law or that could potentially apply to Massachusetts consumers should review their websites and/or apps to ensure that their platforms disclose any terms of use in a clear and conspicuous manner in relation to the rest of the content on the screen.

Additional Background.  To request a ride via the Uber app, a customer must first register with Uber by creating an account.  As part of the registration process, users are shown a screen that requests their payment information and notifies them that by creating an account they are agreeing to Uber's Terms of Service and its Privacy Policy:

The words "Terms of Service & Privacy Policy" are in a clickable box that includes a hyperlink.  Upon clicking on that hyperlink, the user is directed to a screen with two other links:  one to Uber's Terms of Service, and the other to its Privacy Policy.  The user can view either document by clicking on the appropriate link.

At the end of the registration process, the user clicks on the button in the top-right-hand corner of the screen that says "DONE."  (As shown above, the button is grayed out and unclickable until the user enters her payment information.)  Users cannot complete the process without completing each of the registration steps and clicking the "DONE" button on the final screen.  They can, however, complete the process without clicking on the "Terms of Service & Privacy Policy" box and without...

To continue reading