Uber cannot compel a passenger seriously injured in a crash involving an Uber driver to go to arbitration over his $63 million damages claim without a trial.
Citing a 2021 state high court ruling that also went against Uber, a Massachusetts state trial court judge has ruled that the transport company’s online popup format provides inadequate notice of its extensive terms and conditions that include binding arbitration.
Also, Uber’s format does not require an affirmative action by a user to show assent to the terms and conditions, according to the court.
Without those two elements—reasonable notice and reasonable assent — there is no contract between Uber and the rider and thus there is no enforceable arbitration clause, the court concluded.
In her ruling, Suffolk County Superior Court Justice Debra Squires-Lee closely followed the ruling in a 2021 Massachusetts Supreme Judicial case, Kauders v. Uber, which set forth the two-pronged test.
The judge rejected arguments by Uber and its driver that rested on earlier Massachusetts rulings that found similar popup formats acceptable. Those cases, the judge noted, involved claims by drivers and job applicants, not consumers.
William Good, 31, was on his way home from his job in a Boston restaurant when he was rendered a quadriplegic by the crash last April 30 close to 1 a.m. Good suffered “devastating and debilitating injuries” including a severe spinal cord injury. He will remain a quadriplegic for life.
Good’s lawsuit, filed in January, accuses Uber of negligence in the hiring of the driver, who the complaint says had at least 20 driving citations on his driving record and had been required by the state to take a driver re-training course. Uber “knew or should have known” that the defendant driver posed an unreasonable risk to riders, as well as to other drivers, pedestrians and cyclists, the suit claims.
The suit also maintains that the driver was an employee of Uber and not an independent contractor as Uber claims.
Uber maintains that its popup created an enforceable agreement to arbitrate. Good says it did not.
Justice Squires-Lee said the answer depended on if there was a contract and determining that required careful reading of the 2021 Kauders decision, which involved an Uber driver’s refusal to serve a blind person with a dog. In this ruling, the state’s high court said that the fundamentals of an online contract should not be different from those of an ordinary contract. It introduced a two-pronged test: was there reasonable notice and reasonable assent? It placed the burden of proof on the party seeking to enforce the contract.
In Kauders, the court identified various flaws in Uber’s interface that led it to conclude there was no reasonable notice or assent and thus there was no agreement. The court said Uber did not make it obvious that riders were signing up to such extensive terms and conditions. The layout downplayed the importance of the legal consequences of creating an account. The interface did not require a user to scroll through or select terms and an account could be set up without even viewing the terms.
In Kauders, users gave their assent to the terms at the same time they clicked to create an account—not a separate box. Good said he checked a box indicating he agreed to the terms without viewing them. That same check indicated he was at least 18 years of age. He then tapped the confirm button on his smartphone.
In the Good case, Justice Squires-Lee wrote that the smartphone popup “would not reasonably have indicated that, by checking the box and clicking confirm, Good was entering into a contract,” stressing that it is unlike a person signing a physical contract who would be “rarely unaware” that is what they were doing. Also the language informed the user only that the terms had been “updated” without indicating the significance of the changes or the underlying document.
She also found it was of “significant consequence” that Good did not even have to click on the link to the terms before ordering a vehicle. Had he been required to do so, the outcome in this case might be different, the judge offered. There is no reason Uber could not have required that, she added.
While the checkbox like Uber’s might ordinarily satisfy the Kauders test for assent, the checkbox alone without any reasonable notice that the user would be bound to the terns is insufficient, the trial judge concluded.
The court added that Uber is “undoubtedly aware” that most users do not read the terms.
Last month, a Pennsylvania appeals court came to the same conclusion in another case involving an Uber crash victim. The court ruled that an arbitration agreement buried behind a hyperlink was invalid because it did not give consumers clear notice they were waiving their right to a jury trial when they agree to the company’s terms and conditions.
In that strongly-worded opinion, Pennsylvania Superior Court Judge Daniel McCaffery called for more judicial scrutiny of the growing use of arbitration agreements. He ruled that the Uber approach is inadequate because it does not inform users in an “explicit and upfront manner” that they are giving up a constitutional right to seek damages through a jury trial proceeding.