The opinion is expected to have far-ranging effects in what was a previously insufficiently-explored area of contract formation and consumer rights in the new high-tech era
On January 4, 2021, the Massachusetts Supreme Judicial Court issued an opinion in the high-profile Massachusetts Uber consumer contracts case about how contracts get formed online and what constitutes adequate communication/imposition of strict contract terms. The court ruled that the same two-part test governs agreements consummated over computer or mobile device as for any other type of contract: reasonable notice of contract terms and clear manifestation of assent to those terms. Extending that into the instant consumer case against Uber, the Court held that Uber’s frictionless “one-button” imposition of terms that multiply abridge consumer’s rights is improper.
The court made several important observations about consumer behavior and online terms of use: that people associate signing documents with serious legal consequences but may not appreciate that the same serious legal consequences can flow from clicking a button or proceeding to the next screen in an online sign-up process; that Uber’s Terms of Use abridge customers’ rights in multiple ways, such as by immunizing Uber for any claims for damages and requiring customers to indemnify Uber for any costs expended based on a customer’s “breach” of the terms; and that there is a mismatch between the frictionlessness, ease and speed of the sign-up process and the weighty rights that consumers give up through that process.
This case arose after Christopher Kauders, a blind man who travels with a guide dog, was denied transportation by several Uber drivers. He filed a discrimination action in state court but Uber successfully compelled his claims into arbitration. The arbitrator then ruled that though he had suffered discrimination, Uber was not responsible for the actions of its drivers (another term customers “agree” to when they sign up for Uber’s services). By the time Uber moved to confirm the award, the First Circuit had decided Cullinane v. Uber Technologies, 893 F.3d 53 (1st Cir. 2018), which ruled that Uber’s registration process did not form an enforceable contract under Massachusetts law based on lack of notice. Mr. Kauders asked the trial court to reconsider its earlier order compelling arbitration based on Cullinane and the court agreed, resulting in this appeal.
Lieff Cabraser filed an amicus brief in the case on behalf of Public Justice and The National Consumer Law Center in support of Mr. Kauders. The brief, co-authored by Lieff Cabraser, Karla Gilbride of Public Justice, and Stuart Rossman of the National Consumer Law Center, focuses on the one-sided, rights-limiting nature of the Terms of Use as a whole in reaching its conclusion that Uber does not provide reasonable notice of critical contract terms to its customers. The Court followed the same approach in its decision, going so far as to emphasize how corporations like Uber make it as easy as possible for people to sign up for products and services from the comfort of home while deliberately obscuring the legal rights they are relinquishing.
Congratulations to all involved in securing this important victory, including Jeff White of AAJ and Thomas Murphy of the Massachusetts Academy of Trial Attorneys, who also submitted an excellent amicus brief.
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