In Meyer v. Kalanick, No.15 C 9796, 2016 WL 4073012 (S.D.N.Y July 29, 2016), the U.S. District Court for the Southern District of New York denied defendants' motions to compel arbitration. The plaintiff sued Travis Kalanick, the President of Uber, as well as Uber Technologies, Inc. for antitrust violations. The court held that Uber's User Agreement (Agreement) did not put the plaintiff on notice of the arbitration provision in the Agreement and therefore, that the plaintiff had not agreed to submit his dispute against defendants to arbitration.
Relying on Specht v. Netscape Commc'ns Corp., 306 F.3d 17 (2d Cir. 2002), the court explained that adequate notice and assent are necessary to enforce an arbitration provision within an online agreement, like the Agreement.
The court said that, even if the user did ultimately access the Agreement, the Agreement's arbitration provision appeared on the very bottom of the seventh page. Furthermore, the Agreement was nine pages of "highly legalistic language that no ordinary consumer could be expected to understand."
Under those circumstances, the court found that the plaintiff did not have "reasonably conspicuous notice of the existence of contract terms and [did not] unambiguous[ly] manifest assent to those terms." Most notably, to the court, the plaintiff was not required to indicate his assent to the Agreement, the Agreement was only accessible by clicking on a non-prominent button, and even if the user did view the Agreement, the arbitration provision was near the end of the Agreement. The court thus denied the defendants' motion to compel arbitration.
Companies who want their websites to bind customers to contracts should design their websites so that it is clear to their customers that they are entering into a contract when they "click" through the website. When, as in this case, an arbitration clause is "buried" in an online service agreement and the website makes it less than clear that the customer was entering into an agreement by "clicking" through the website, a court might very well conclude the arbitration clause is not enforceable. Among other things, to help ensure enforceability, the website should be designed to require users to access the agreement prior to being able to use the company's services and the agreement itself should be directly accessible via a prominent button on the registration screen.
Keywords: alternative dispute resolution, adr, litigation, arbitration, online agreement, User Agreement, Uber, notice, assent