Recently, in the case Metter v. Uber Technologies, Inc., the plaintiff sued Uber alleging that Uber improperly assessed a cancellation fee without advising the user ahead of time. The plaintiff filed the lawsuit in the Federal District Court for the Northern District of California, and Uber filed a motion to compel arbitration (rather than litigation in court) based on the mandatory arbitration provision in the company’s “terms of service”. But, in a somewhat surprising ruling, the court denied Uber’s motion, because it concluded that the plaintiff did not have “reasonable notice” of the “terms of service”. The court rejected most of plaintiff’s arguments – including (1) the alert for the “terms of service” was not sufficiently conspicuous, (2) the alert was confusing and does not call out a waiver of jury trial, and (3) the alert was a “browsewrap” agreement (i.e. did not require the user to affirmatively accept) – but agreed with the plaintiff’s fourth argument: a pop-up blocked his view of the terms of service. More specifically, the link to the “terms of service” was at the bottom of the screen, but when the user tapped on the screen to enter his credit card information, the keypad popped up and blocked his view of the link. In other words, the plaintiff would have had to see and click on the link to the “terms of service” before entering his credit card information, because the link was not viewable once the keypad popped up. But the court stated that there was nothing in the process that would lead it to conclude that the user would look at the link or “terms of service” before entering the credit card information. In fact, the court stated that “the keypad obstruction is a fatal defect to the alert’s functioning”. (Pro tip: You never want the court to call anything “fatal” to your case.)
This case is certainly notable, but this ruling should not be overstated. It is not as if the court said that Uber’s “terms of service” or the specific arbitration provision at issue are unenforceable. Rather, the issue was exclusively related to how the “terms of service” were presented (or, more accurately, not presented) to the user.
This can be a delicate balance, though. You want to ensure users have “reasonable notice” but you do not want the barrier to be too high. For example, you could require that each user to type their full legal name and the words “I Agree” before proceeding. But this might cause a certain percentage of users to walk away, which would result in lost users and revenue. Typically, you want to force users to check a box or click a button that says “I Agree” and include a link to the “terms of service” right next to this box or button. This way, they cannot check the box or click the button without seeing the link. Had Uber done this, they likely would have prevailed in the Metter case.
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