Federal Appeals Court Is Okay With Uber Taking Away Customers’ Right To Sue

Image courtesy of Elliott Brown

Like companies in just about every industry, the ride-hailing app Uber requires users to agree that they will take any disputes to an arbitrator rather than the legal system. And although you may never have noticed this clause, a federal appeals court has now ruled that customers receive “reasonably conspicuous” notice about the arbitration requirement.

“The choice the user makes”

Uber’s signup page at the time the plaintiff registered for the app.

In his opinion issued today [PDF], Judge Denny Chin of the 2nd U.S. Circuit Court of Appeals went ahead and blamed Uber users who don’t tap on the hyperlink and read the user agreement. (Never mind that 98% of users do the same.)

The plaintiff claimed that he had not done so, and the court accepted that he hadn’t read the terms and conditions before registering for an Uber passenger account. The question was: Was it his responsibility to know that by signing up for an account, he was agreeing to arbitration? The court concluded that yes, it was.

“As long as the hyperlinked text was itself reasonably conspicuous — and we conclude that it was — a reasonably prudent smartphone user would have constructive notice of the terms,” Chin wrote. “While it may be the case that many users will not bother reading the additional terms, that is the choice the user makes.”

Meyer v. Kalanick

Originally, the case was a price-fixing complaint [PDF] filed against then-CEO Travis Kalanick, accusing the company of conspiring with its drivers to price-gouge customers in need of transportation by using surge pricing, multiplying fares up to eight times the normal rate.

Uber argued that instead of an antitrust suit, the plaintiff and anyone else who believes that its pricing is unfair should individually take their cases to arbitration.

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

Arbitration, a stripped-down legal process where individuals are at a distinct disadvantage, arbitrators often work for the same companies, and there’s no way to appeal decisions.

Ironically, this opinion now means that the case heads back to a lower court, Reuters reports, where another judge must decide whether Uber waived its own arbitration agreement by fighting the original lawsuit in the regular court system.

A few months ago, a judge in California ruled the exact opposite: That Uber’s process is deficient, and customers don’t really agree to arbitration when signing up.

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