United States: SDNY Refuses To Enforce Uber's Online "Sign-In-Wrap" Terms, Arbitration Provision And Jury Waiver Clause

By Jeffrey Prokop, Barrie VanBrackle, Antony P. Kim and Katie DeWitt

On July 29, 2016, the Southern District of New York, in Meyer v. Kalanick, refused to enforce mandatory arbitration and jury waiver provisions against a putative class of Uber consumers. In a lengthy and strongly worded decision by Judge Rakoff, the Court held that consumers had not received sufficient notice of, and did not assent to, the online terms of service that contained the arbitration and waiver clauses at issue.

Every company that seeks to implement contractual commitments through online terms and policies should pay close attention to this decision. While not binding in other jurisdictions outside the SDNY, Meyer reflects a growing trend of more exacting judicial scrutiny on the enforceability of online agreements across the country, and represents an important development in a rapidly developing area of the law.

Uber's "Sign-In-Wrap" Terms of Service

In Meyer, the court rejected Uber's claim that in creating an online account through Uber's mobile app, consumers had bound themselves to Uber's terms of service and privacy policy. The court arrived at this result by carefully examining the Uber account registration process. First, the mobile app prompted the user to select a method for signing up and required the user to click "next." Second, the app then displayed requested payment information, allowing the user to enter credit card information, or alternatively, to use PayPal or Google Wallet services.

The main button for continuing past the payment screen read "REGISTER" and did not otherwise indicate that the user was agreeing to anything. At the bottom of the screen, in much smaller font, was a notice that stated: "[b]y creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY." The terms of service and privacy policy were hyperlinked. To review the terms of service, which contained mandatory arbitration and jury waiver provisions, a user had to (i) click on the hyperlink, (ii) click another button to access the terms, and (iii) scroll to the relevant sections of the terms where the arbitration and jury waiver clauses appeared, which were near the very end of the document. The foregoing set-up is commonly referred to by the courts as a "sign-in-wrap agreement."

Judge Rakoff Rejects Enforceability of Uber's Terms of Service

On the foregoing facts, Judge Rakoff found that the plaintiffs did not have reasonable notice of the arbitration clause and jury waiver contained in the Terms of Service, and thus could not have assented to such provisions. In other words, no contract was ever formed between the parties. The basis for this determination was highly contextual and involved the following factors:

  1. the relatively small size of the font setting forth that creation of an account also constituted agreement to the Terms of Service and Privacy Policy
  2. the placement of the notice concerning the Terms of Servicebelow the "REGISTER" button, which meant that it was very easy for a user to register without even seeing the hyperlink for the Terms of Service (let along the Terms themselves), or even realizing that using the Uber app constituted assent to the agreement;
  3. that the phrase "Terms of Service" may not have been understood to refer to a contract between the parties relating to the responsibilities of both parties, as opposed to a description of Uber's services;
  4. the fact that a user was not taken directly to the Terms of Service after clicking on the hyperlink; and
  5. once accessing the Terms of Service, the user had to scroll through several pages of "highly legalistic" language to find the arbitration provision and jury waiver.

Meyer Decision In Tension With Decision in Massachusetts Action

Interestingly, two weeks prior to the Meyer decision, a U.S. District Judge in Massachusetts DID enforce an arbitration clause in Uber's online customer agreement and dismissed a putative class action against Uber. The Massachusetts court ruled that the plaintiffs, which had signed up for Uber's services using a slightly different version of Uber's mobile app than in Meyer, did receive reasonable notice of Uber's terms of service agreement and, by signing up for Uber's services, assented to those terms. This holding is difficult to square with Judge Rakoff"s decision in Meyer.

Taken together, these two Uber cases demonstrate that the smallest of details in the implementation of an online agreement—the size and color of a font, the placement of links and the number of clicks required to access terms of service—can mean the difference between an arbitration clause and jury waiver being enforced or not.

Practical Implications of the Meyer Decision

Companies are well advised to check not only the substantive text in their online terms of service and privacy policies, but the methodology used to effectively notify users of, and to obtain users' consent to, such agreements. Here are some considerations in the aftermath of Meyer:

  • For maximum protection against claims of unenforceability, use a "click wrap" or "scroll wrap" agreement. Generally, a "click wrap" agreement requires a user to click "I agree" or a similar button that is placed in close proximity to a conspicuous hyperlink to the agreement, and which must be clicked in order to continue use of the website or register for a user account. A "scroll wrap" agreement requires a user to click "I agree" in conjunction with a scroll box (e.g., in a pop-up window) that displays the terms of the agreement.
  • Utilize conspicuous font size and color and placement of notices intended to form the contract. Such notices should be as prominent as other items appearing on a registration or sign-in page.
  • If the link for signing up for a user account does not state "I Agree" in clear reference to the terms of service, there should be a prominent notice that continuing with the registration process constitutes agreement to the terms that are available at a hyperlink or appear in a pop-up box. That notice should be placed in close proximity to the button intended to create assent to the agreement (e.g., "Register," "Sign in," "Done") and in a conspicuous font.
  • Hyperlinks should be conspicuous and link directly to the agreement, not to other buttons that provide access to the agreement.
  • Place a prominent notice regarding the agreement to arbitrate and class action waiver on the top of the first page of any terms of service, preferably in all caps in bold text, or both.

Orrick will continue to monitor these issues and is also actively monitoring the series of class actions brought earlier this year under New Jersey's Truth-in-Consumer Contract, Warranty and Notice Act, N.J.S.A. § 56:12-14 et seq. The potential class action plaintiffs' in those cases claim that they were asked to give up "established rights" in consumer contracts, that "notices" in such contracts are unenforceable because they violate "clearly established rights", and that contractual disclaimers stating that certain provisions may be void in "some states," impermissibly fail to specify which provisions are void in New Jersey. Orrick looks forward to reporting the outcomes of the pending motions to dismiss and compel arbitration in these suits.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
26 Sep 2018, Seminar, Tokyo, Japan

Orrick’s Global Japan Practice is hosting a series of “Orrick Library” seminars to explore legal issues in various fields in Japan as well as the United States, Asia and Europe

26 Sep 2018, Conference, New York, United States

Employment Partner, Mandy Perry and Chair of Orrick's Global Employment Law Practice, Mike Delikat will be participating in the Global Business Protections 2018: International Restrictive Covenants and Confidential Information Conference.

10 Oct 2018, Conference, Florida, United States
Julie Totten is Program Chair of this year’s conference, Lynne Hermle is speaking on women in the courtroom, boardroom, and c-suite, and Erin Connell is speaking on pay equity and pay transparency.

Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions