Lieff Cabraser Civil Justice Blog
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Judge Rakoff Calls Consumer “Consent” to Online Arbitration Agreements a Legal Fiction

In a court ruling regarding alleged Uber price-fixing, U.S. District Judge Jed Rakoff states in no uncertain terms that when it comes to online arbitration agreements, consumer consent is nothing more than a “legal fiction.”

As reported by Law360 (subscription), the Judge opined that “[i]n the world of the internet, consumers are deemed to have waived their right to a jury trial and given up access to the courts altogether by clicking a button or sometimes just continuing to use a service if the company providing that service has given them some form of notice of its terms and conditions.” Rakoff emphasized that in such situations, consumers “have no realistic power to negotiate the terms and conditions provided.”

“This legal fiction is sometimes justified, at least where mandatory arbitration is concerned, by reference to the ‘liberal federal policy favoring arbitration,’” Judge Randkoff wrote, quoting from the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion. “Application of this policy to the internet is said to inhere in the Federal Arbitration Act, as if the Congress that enacted that act in 1925 remotely contemplated the vicissitudes of the World Wide Web.”

In what commentators are viewing as a scathing indictment of these extreme yet wildly prevalent rights-abrogation policies, the judge went on to note that if information about a consumer’s release of their right to bring suit in a courtroom is only accessible via a diminutive hyperlink vaguely titled “Terms of Service and Privacy Policy” followed by an even more obscure text agreement, “there is a genuine risk that a fundamental principle of contract formation will be left in the dust: the requirement for ‘a manifestation of mutual assent.”

Though subscription is required, the full text of Law360’s excellent report can be read online here.

About Lieff Cabraser and Consumer Protection

False advertising, bait and switch marketing, phony disclosure of manipulative bookkeeping devices, unconscionable pricing, and charging for services never provided are some of the many unfair and deceptive practices rogue corporations use to defraud consumers.

Lieff Cabraser advises consumers as well as businesses whether and how to pursue legal action to halt and obtain compensation for the deceptive practices of large corporations. With a blend of courage, superior legal skills, and high principles, we protect our clients’ interests and help them achieve their goals by winning highly-complex consumer protection lawsuits against those that have defrauded consumers.

We have successfully prosecuted scores of consumer class action lawsuits against many of the largest U.S. banks, financial service companies, and corporations. Working with co-counsel, we have achieved judgments and settlements in excess of $3 billion for consumers in these cases, including over $200 million in lawsuits over abusive and harassing robocalls and text messages brought under the Federal Telephone Consumer Protection Act.