Karon Law Blog

ClickwrAPP: Forced Arbitration Agreements in Rideshare Applications

Posted June 18, 2024

[Editor’s/Founder’s Note-Our blog has frequently discussed the unfairness of forced arbitration clauses in consumer contracts and how the Supreme Court’s unfortunate interpretation of the Federal Arbitration Act created this mess. Earlier this month, the Massachusetts Supreme Judicial Court upheld Uber’s mandatory arbitration clause embedded in its app. So, if you send for an Uber and you’re injured due to your driver’s negligence, there goes your right to a jury trial. My Summer Law Clerk, Julia Sicard, explains the recent decision and its real world impact in the post below.]

ClickwrAPP: Forced Arbitration Agreements in Rideshare Applications

By Julia Sicard

You guessed it! We’re talking about forced arbitration agreements again…this time revealing how—with one click of a button in your smartphone’s rideshare app—you may be signing away your right to recover in court.

While the Federal Arbitration Act states arbitration agreements “in any…contract…shall be valid, irrevocable, and enforceable,” prior blog posts discuss attempts by legislators to exempt employee-victims of sexual harassment and discrimination, credit card and bank account holders, nursing home residents, servicemembers, veterans and more. Unfortunately, the Supreme Court continues to uphold arbitration clauses in questionable circumstances, blocking untold numbers of meritorious claims. This is concerning because a study by the American Association for Justice determined that plaintiffs are more likely to be struck by lightning than win in forced arbitration.  

Most recently, in Good v. Uber, the Massachusetts Supreme Judicial Court (“SJC”) upheld Uber’s arbitration clause, barring the suit of a plaintiff rendered quadriplegic at the hands of his negligent driver. In reaching this decision, the SJC departs from Kauders v. Uber, an earlier decision in which it declined to enforce Uber’s arbitration agreement against a plaintiff bringing a disability discrimination suit. In both cases, Uber’s arbitration clause appeared as a “clickwrap” agreement requiring users to click a checkbox and a ‘confirm’ button to access rideshare service. However, users may do so without having first viewed the contract. How is this legal?

Principles of contract formation tell us that outward manifestations of assent, like clicking a button or checking a box, may be sufficient to form a contract. This is because no one can mindread, and conglomerates like Uber can’t knock on each of their approximately 44.1 million app-users’ doors to ask for a handshake and a signature on a dotted line. Companies like Uber are entitled to rely on a checked box because it’s the only legitimate signal of app-users’ consent…or is it?

Courts do draw one line in the sand. A Good question to ask (pun intended) is whether the app-user had sufficient “notice” of the arbitration clause. If a user does not actually view the terms and conditions, they don’t have “actual” notice. However, “reasonable” notice exists, even if the user does not scroll through or even open the agreement, as long as they had an opportunity to do so. To determine if reasonable notice exists, courts get down to the nitty-gritty: analyzing hyperlink font size and colors, whether text is bolded or underlined, etc. The only difference between Kauders and Good? The pop-up screen referenced terms in only one spot in Kauders, but four different spots in Good. Oh, and Uber put a graphic of pencil and paper nearby.  

Data reveals what you probably already know: almost no one reads electronic contracts! In one study, 97% of participants agreed to a fake online privacy policy requiring them to give away their first-born child. 74% accepted this policy without viewing it, and of those who did, the average reading time was only 73 seconds. The SJC acknowledges this empirical evidence plus the heightened sense of distraction and urgency of an Uber-app user desperate for immediate transportation. Companies and courts alike know laypeople don’t bother to read incomprehensible legal jargon, no matter how big or bold it appears.  

So why do we continue to pretend that font size and graphics matter? Why pretend one click of a button is sufficient to waive our right to a jury, when it flies in the face of informed consent? So long as courts continue to uphold one-sided and nefariously obfuscated forced arbitration clauses, and allow companies to escape liability at the cost of consumer protection, this blog will continue to offer our critique. The takeaway? The court doesn’t care, so ridesharers beware.