Judge Says Uber Can’t Use “Deficient” Sign-Up Process To Strip Users Of Their Right To Sue

Can Uber use some contractual language that users never actively acknowledge to force wronged customers out of the courtroom and break up class-action lawsuits? Currently, that depends on which federal judge you ask, with yet another court ruling that Uber may not be doing enough to tell users that they are giving up their right to a day in court.

This latest ruling involves a lawsuit [PDF] filed last year in a California federal court over fees that Uber charges for canceled rides.

Before this lawsuit, which was seeking class-action status, could really go anywhere, Uber pulled out its “get out of jail free” card: the clause in its user agreement that forces all legal disputes to be resolved outside of the legal system through private arbitration, and prohibits similarly wronged users from joining together in any sort of group action against Uber, even in arbitration.

READ MORE: From Credit Cards To Mail-Order Steaks: 87 Companies That Are Taking Away Your Right To Sue

But the plaintiff in this case argued that he never actively agreed to that arbitration clause. That alone isn’t enough to get out from under the terms of an agreement; you have to show that you were not properly notified about the agreement.

Like others who have made similar claims, this plaintiff originally signed up for Uber using his smartphone. At no point during that process did he have to sign anything, check a box, or otherwise indicate that he had read and agreed to the Uber Terms of Service.

The only indication these terms existed, he notes, is during the step where the new user enters their payment information. On the bottom half of that screen is a tiny-type statement that says, “By creating an Uber account, you agree to” the company’s terms of service and privacy policy.

Not only was this too small to serve as adequate notice, argued the plaintiff, but he would never have seen it. He claims that when you get to that page in the sign-up process, it automatically brings up your keypad so you can enter in the payment card information. The keypad, according to the plaintiff, covers up the terms and condition notice.

The judge in this case wasn’t bowled over by the arguments that the notice was too small or did not adequately alert the user to the existence of an arbitration clause, but the judge did see something in the claim that the pop-up keyboard would have hidden the notice.

In fact, notes the judge, Uber did not dispute that the keyboard could cover up the notice. The company’s argument was that the plaintiff would have seen the notice before the keyboard popped up, and that he could have still seen it if he’d scrolled all the way down the page. This was not enough to convince the judge.

“For one thing, Uber never explains why [the plaintiff] would have scrolled down to find a terms of service alert he was not otherwise aware of, especially when the registration and payment screen neither instructed him to scroll down nor presented any reason for him to do so,” writes the judge in his order [PDF] denying Uber’s motion to compel arbitration. “Moreover, although it is true that the terms of service alert would have been visible… when he first
reached the payment and registration screen, it would have been obscured immediately when [the plaintiff] pressed any field asking for his credit card information. As these fields are at the top of the screen, and entry of payment information is one of the primary purposes of this page, the Uber app essentially prompts a user to enter his credit card information as soon as he reaches the payment and registration screen.”

The judge concluded that your typical new Uber user would likely go straight to filling in the credit card information without looking elsewhere on the page for a terms and condition alert. So when that user presses the “REGISTER” button, they have probably not even seen the notice and linked user agreement.

According to the judge, having this important notice obstructed by the phone’s keyboard is a “fatal defect to the alert’s functioning. That defect turns what would be a sufficient notice process into a deficient one.”

Uber has repeatedly attempted to use this arbitration clause to get out of lawsuits — to varying degrees of success.

Last summer, a federal judge in New York rejected a motion to compel arbitration and ridiculed the design of Uber’s sign-up process, finding that there was a good argument to be made that Uber had deliberately designed this page so that users’ eyes were “drawn seamlessly to the credit card information and register buttons instead of being distracted by the formalities in the language below.”

Uber also uses arbitration clauses to prevent its drivers from suing the company. In 2015, a federal judge in California ruled that the company’s arbitration clause is “procedurally and substantively unconscionable, and therefore unenforceable as a matter of California law,” but that decision was overturned by the Ninth Circuit Court of Appeals last fall.