State Court of Appeals Invalidates Uber’s Linked User Arbitration Pact

An arbitration agreement buried behind a hyperlink that doesn’t clearly notify consumers that they’re waiving their right to a jury trial when they agree to the company’s terms and conditions is invalid, a court has ruled of Pennsylvania in the case of an Uber passenger injured in a car accident.

Uber argued that when passengers sign up for its ride-sharing service, they signify that they agree to be bound by the binding arbitration provision in the hyperlinked terms and conditions, thereby waiving their right to a trial. before a jury. A trial court agreed and upheld Uber’s motion to compel arbitration, but on appeal, the Pennsylvania Superior Court overturned, ruling that a stricter burden of proof is needed to show a person’s consent. party to arbitration when the important right to a jury trial is at stake.

In a strongly worded opinion by Judge Daniel McCaffery that calls for deeper judicial review of the growing use of arbitration agreements, the court ruled that Uber’s approach was inadequate because it failed to inform users in an “explicit and direct manner” that they are waiving a constitutional right to seek damages through a jury trial.

The notice guides businesses on how they can meet this stricter burden of proof by: (1) explicitly stating on registration websites and application screens that a consumer waives their right to a jury trial when accepting the company’s “terms and conditions,” and the registration process cannot be completed until the consumer is fully notified of this waiver; and (2) where the agreements are available for viewing after a user clicks on the hyperlink, the waiver must not be hidden in the “terms and conditions” provision but must appear at the top of the first page in bold type. and in capitals.

The call arose from a car accident in 2019. Shannon Chilutti, who is in a wheelchair, was injured while riding in a car provided by Uber Technologies on her way home from an appointment. you medical. After Uber insisted that her injury claims go to arbitration, Chilutti and her husband both filed lawsuits.

The court said the case concerns whether parties should be deprived of their constitutional right to a jury trial when they allegedly entered into an arbitration agreement via a hyperlinked set of terms and conditions on a website. or a smartphone app that they had never clicked on, viewed or read.

The trial court granted Uber’s motion to compel arbitration of the claims, determining that the plaintiffs had not been forced out of court. But the Superior Court has now ruled that the trial court failed to consider the importance of the protected constitutional right to a jury trial. The Superior Court quashed and returned the case to the lower court, finding that the plaintiffs were legally entitled to relief and that they had demonstrated that there was “no valid agreement to arbitrate; therefore, they are entitled to invoke their constitutional right to a jury trial.

In Shannon Chilutti’s case, the court said, the “terms and conditions” agreement was encapsulated in tiny blue type at the very bottom of a cluttered web page. Relevant text was neither underlined nor capitalized. As far as Keith Chilutti was concerned, he was on the fifth screen of the registration process, having already provided substantial personal information, when the “Terms and Conditions” page could be examined in fine print which, again, does not were neither underlined nor capitalized.

The appeals court said Uber failed to “explicitly and directly” notify the Chilluttis that they were waiving a constitutional right to seek damages through a jury trial. Instead, the court noted, plaintiffs did not click on or access the terms and conditions until their registration process was complete; they simply created a user account. Also, the definition of arbitration is not in the agreement; there is also no explanation of binding and non-binding arbitration. In particular, if a party wants to review the rules governing the arbitration, it must click on a second hyperlink.

Further, the court said the term “arbitration” is ambiguous in that there is “nothing to explain its meaning and any non-lawyer subscriber could easily believe that arbitration is just another step of the judicial process which does not imply the abandonment of constitutional law”. right to a full jury trial”.

The court noted that Pennsylvania has a well-established public policy that favors arbitration, and that policy aligns with the federal approach of the Federal Arbitration Act. [(FAA]. However, the court noted that the FAA prevails over state law in all cases, warning that “the evolution and effect of arbitration provisions have significantly weakened the constitutional right to a jury trial in the civil proceedings”. The court further noted that the Supreme Court of Pennsylvania said that one of the consequences of abandoning the civil justice system in favor of private arbitration is that “corporations routinely deprive individuals” of their constitutional right. to a jury trial.

“The slow recognition of the extensive use of arbitration agreements in current contracts and the ramifications of these agreements on a party’s right to a jury trial is of concern, particularly in the context of internet contracts like the one at issue here where the parties agree on alleged unequal bargaining power,” the opinion continues. While some courts have taken small bites on the issue, it is necessary to take a closer look at the waiver of a party to its constitutional right to a jury trial with respect to these arbitration agreement matters, the opinion states.

The opinion further argues that if the issue on appeal involved a money admission judgment, the court would have no qualms overturning a judgment based on the “discreet use” of the provision in question. The same would apply to a criminal conviction where no interview was provided, or the defendant was not advised of his right to a jury trial. “We see no reason why the same analysis should not be given here when a constitutional right to a jury trial in a civil action is ‘taken away’ without the benefit of statutory protections,” the judge wrote. McCaffery.

In ruling as it did, the state appeals court went beyond a federal appeals court standard (Berman v. Freedom Fin. Network, US 9th Cir. 2022) that held so-called “clickwrap” agreements that use pop-ups to grab users. attention generally more acceptable than “browsewrap” agreements that only use hyperlinks, such as those of Uber.

Justice Alice Beck Dubow joined in the opinion written by Justice McCaffery. Judge Victor Stabile dissented.

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