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Judge Rules Uber's Arbitration Agreements Unenforceable

In light of the Consumer Financial Protection Bureau's proposal to ban arbitration clauses, U.S. District Judge Jed Rakoff recently denied Uber Technologies Inc.'s ("Uber" or the "Company") push for customers to arbitrate their claims with the Company.

The case against Uber was brought by one of its riders, Spencer Meyer ("Meyer"), who alleged its CEO, Travis Kalanick ("Kalanick"), colluded with drivers to hike up prices. Initially, Uber argued that Meyer specifically sued Kalanick to circumvent the arbitration agreement in his contract. The Company successfully joined the case as a co-defendant and pressed Judge Rakoff to enforce Uber's arbitration clause.

However, because Uber runs on an Internet platform, the arbitration agreement was not as conspicuous as the Company claimed. Specifically, Meyer and other Uber customers would have to scroll past the authorization button, click on a hyperlink that directs them to the Company's webpage, click on another button to get to the terms, and read until page 7 to see and read the arbitration clause at issue.

Judge Rakoff decided that the extraneous process to get to the arbitration clause posed a risk to the customers' actual consent to the contract's terms, and, thus, the agreement was unenforceable.

The legal team at SFMS has significant experience litigating class action matters. If you have any questions regarding this subject or this posting, please contact Nick Lussier ([email protected]) or Chiharu Sekino ([email protected]). We can also be reached toll-free at (866) 540-5505.

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Greene, Kat. "Rakoff Slams 'Legal Fiction' In Nixing Uber Arbitration Bid." Law360. Last modified July 29, 2016.

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