Why Can’t Rider Sue Uber

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As you likely know, Uber is a service you can use to hail a ride in your city. It employs locally and allows you to review the driver, his or her car, and the service. When you sign up for Uber, you sign a term of agreement that states that you cannot sue the company or join into a class action lawsuit – at least that’s what the internet tells you. However, a federal judge has said that people can sue the company because Uber cannot prove that users agreed to the terms.

At one point, an Uber user filed a class-action lawsuit against founder and CEO of Uber, Travis Kalanick, about surge pricing. Uber was a co-defendant in the case and Uber asked the court into binding arbitration, which is what was required in the terms of use.

This allows Uber to force the customer to go into arbitration where things are limited and it ends things rather quickly. It also bars customers from working together to file a class action suit – and that is when cases get huge. In order to make antitrust action cases worthwhile, one would need to team with many other plaintiffs for a large potential payout.

So why did the judge rule this way and say that the arbitration clause can’t be invoked against Uber? According to the PDF of the case, U.S. District Court Judge Ned Rakoff said that he isn’t so sure that people are paying attention to and agreeing to the terms at all.

So why did the judge in the Uber case say the arbitration clause can’t be invoked in this case?

“Plaintiff denies that such an agreement was ever formed, on the ground that when he registered to use Uber, he did not have adequate notice of the existence of an arbitration agreement,” said the judge. “The question of whether an arbitration agreement existed is for the Court and not an arbitrator to decide.”

When faced with that, Uber said that the plaintiff even admitted that as a new Uber user, he had to agree with the terms and conditions before he hailed a ride. However, the judge said that Uber wasn’t using the “I agree” charade that most apps do – even if that isn’t enough to take away blame from the company.

Instead, most people who regularly use Uber sign up without reading the agreement and agreeing to the terms by creating an account. The judge says that while this is enough in some cases, people who sing up for the app likely don’t even know that they are signing contracts.

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“[W]hat about situations where the consumer is not even asked to affirmatively indicate her consent?” he said. “What about situations in which the consumer, by the mere act of accessing a service, is allegedly consenting to an entire lengthy set of terms and conditions? And what about the situation where the only indication to the consumer that she is so consenting appears in print so small that an ordinary consumer, if she could read it at all, would hardly notice it?”

He goes on to say that there isn’t even a check-off box that indicated that the person has at least glanced at the terms and conditions. One can just click through without even comprehending what they are moving through. Rakoff points out that the arbitration clause is toward the end, which could be to hide it and that it is full of “highly legalistic language that no ordinary consumer could be expected to understand.” Note that this is a tactic that has been used by other companies as well, and a quick Google search can help you to understand what you are signing up for.

This is all exactly what the Uber creators wanted according to the judge: “it is hard to escape the inference that the creators of Uber’s registration screen hoped that the eye would be drawn seamlessly to the credit card information and register buttons instead of being distracted by the formalities in the language below.”

In this particular case, Uber was not able to show that the plaintiff had any knowledge of what he was agreeing to. However, you can bet that apps of all kinds looked to this to see how to treat their agreements and user terms. Now they are smarter and you have to pay attention to what you are doing. Every now and again, users have to re-read the terms and conditions of having an account, so you can’t even get away with keeping the app for a long time.

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Why Can’t Rider Sue Uber

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