The Massachusetts Supreme Judicial Court has ruled that Uber cannot bind plaintiffs bringing discrimination claims against it to the forced arbitration agreement stated in its online terms and conditions. According to the Court, plaintiffs did not have reasonable notice of the contract’s terms, nor had they assented to the terms.
Christopher Kauders, who is blind and accompanied by a guide dog, signed up for Uber’s app on his smartphone. He followed a set of screens to registers, entered his payment information, and click on a button that said “Done.” His daughter followed the same process. After several Uber drivers refused rides because of the guide dog, Kauders sued Uber in Massachusetts state court. Uber attempted to compel arbitration per the terms and conditions, but the plaintiff argued he had never received notice of the arbitration agreement or agreed to it.
Initially, the trial court granted the motion, and the dispute went to arbitration. In June 2018, the arbitrator ruled in favor of Uber on all the plaintiff’s claims, finding the company could not be liable for its drivers’ actions because they were independent contractors, not employees. Later that same month, the First Circuit found that the same registration process Kauders followed in the app did not create a valid contract because it lacked reasonable notice to the users of its terms and conditions.
Following that decision, Uber petitioned the trial court to confirm the arbitration decision in Kauders’s case. As a result, the judge allowed the plaintiff to move for reconsideration. The judge granted that motion and reversed his earlier ruling to compel arbitration on grounds that the app’s contract was not enforceable.
Uber appealed to the Massachusetts high court, arguing that the plaintiff had missed their window to appeal the arbitration decisions, the judge abused his discretion in hearing the motion for reconsideration, and that the contract was enforceable. Under the Massachusetts Arbitration Act, the plaintiff met the requirements to preserve the arbitrability question for appeal, but the judge abused his discretion. But, instead of remanding for the judge to confirm the arbitration decisions just to have it appealed back, the court decided to move forward with the merits of the contract challenge for the judicial economy.
Salem, Massachusetts attorney Thomas Murphy, the amicus committee chair for the Massachusetts Academy of Trial Attorneys spoke with the American Association for Justice about the matter: “Because the notice and the assent are buried in the bowels of the phone’s app, the arbitration agreement was unenforceable. The takeaway is that technology does not trump the fundamental age-old principle of contract law.”