The New Jersey Appellate Division has just affirmed an arbitration provision in a click-wrap agreement.
This ruling gives a strong boost of support to the Bais Din system. At the same time, the ruling reinforces how imperative it is for parties to commercial contracts, divorce agreements, and rental leases to closely review precise terms of arbitration clauses with experienced Toanim and Lawyers to ensure; a) that there are no confusions as to what is being agreed to; and b) that the agreement will be enforceable in court if necessary.
The case ruling involved the Uber app.
To utilize the Uber Rides platform to connect with a driver, a user downloads the Uber app and then registers for an account with Uber. Before users can complete their registration, they are presented with "an in-app blocking pop-up screen." The top of the pop-up screen contains the phrases "We've updated our terms" and "We encourage you to read our updated Terms in full," followed by bullet points with "Terms of Use" and "Privacy Notice" underlined and printed in blue against a white background, clearly indicating each phrase is a separate hyperlink. Each hyperlink takes users to a display of the respective document. Users must affirmatively check a blank box appearing below the hyperlinks that states: "by checking the box, I have reviewed and agree to the Terms of Use and acknowledge the Privacy Notice. I am at least eighteen years of age." Beneath that box is a "Confirm" button.
On the first page of Uber's hyperlinked "Terms of Use" document, the following excerpt is shown in capital letters:
IMPORTANT: PLEASE BE ADVISED THAT THIS AGREEMENT CONTAINS PROVISIONS THAT GOVERN HOW CLAIMS BETWEEN YOU AND UBER CAN BE BROUGHT, INCLUDING THE ARBITRATION AGREEMENT (SEE SECTION 2 BELOW). PLEASE REVIEW THE ARBITRATION AGREEMENT BELOW CAREFULLY, AS IT REQUIRES YOU TO RESOLVE ALL DISPUTES WITH UBER ON AN INDIVIDUAL BASIS AND, WITH LIMITED EXCEPTIONS, THROUGH FINAL AND BINDING ARBITRATION (AS DESCRIBED IN SECTION 2 BELOW). BY ENTERING INTO THIS AGREEMENT, YOU EXPRESSLY ACKNOWLEDGE THAT YOU HAVE READ AND UNDERSTAND ALL OF THE TERMS OF THIS AGREEMENT AND HAVE TAKEN TIME TO CONSIDER THE CONSEQUENCES OF THIS IMPORTANT DECISION.
Section 2 of the "Terms of Use" document, which appears on the second page, is entitled in larger, bold print: "Arbitration Agreement." The arbitration agreement states that "by agreeing to the Terms, you agree that you are required to resolve any claim that you may have against Uber on an individual basis in arbitration," claims "will be settled by binding arbitration between you and Uber, and not in a court of law," and "you and Uber are each waiving the right to a trial by jury." It also provides that "the Federal Arbitration Act will govern the arbitration agreement's interpretation and enforcement and proceedings pursuant thereto."
Maurice Williams, Jeannette Williams, and Michael Floyd each registered for an Uber account. Each followed the process – checking the box to indicate he or she had "reviewed and agreed to the Terms of Use" and clicking "Confirm."
On October 3, 2021, the party of three requested a ride through the Uber app. They were picked up in a vehicle owned by SAJ Transportation Northeast, LLC and operated by Eric Dortbucuk. During the trip, that vehicle and a vehicle owned and operated by Eric Ysabel collided.
On May 3, 2022, the party of three filed a lawsuit in New Jersey Superior Court in Hudson County, alleging negligence had caused the collision and plaintiffs' resulting injuries. Uber filed a motion to compel arbitration of the claims against them, based on their arbitration provision.
In opposition to the motion, the plaintiffs submitted certifications in which they admitted that "when [they] signed up for Uber" on their smartphones, they "went through an online application and filled it out" and "during this process, [they] had to click on a pop-up or pop-ups in order to continue with the registration." In their opposition brief, the plaintiffs conceded, "[a] user cannot register and continue in the Uber rider app - that is, he or she cannot secure a ride unless he or she clicks a box stating that she or he accepts the Terms of Use embedded in the hyperlink." The plaintiffs also acknowledged the Terms of Use contained an arbitration agreement providing claims "will be settled by binding arbitration between you and Uber, and not in a court of law" and that "you acknowledge and agree that you and Uber are each waiving the right to a trial by jury." Plaintiffs complained the "pop-up" did not expressly advise them of the arbitration agreement and that they were "not directed to or required to read" the Terms of Use. They argued that Uber failed to demonstrate that they had agreed to waive their right to a jury trial.
The motion judge granted Uber's motion. The judge found that the agreement at issue was an enforceable "clickwrap" agreement, meaning an agreement that "requires 'that a user consent to any terms or conditions by clicking on a dialog box on the screen in order to proceed with the internet transaction.'" Skuse v. Pfizer, Inc.
The judge also found that the hyperlinks were not misleading or ambiguous and that "the plaintiffs knew that they were executing an agreement, and that agreement contained terms that plainly waived a trial by jury."
The plaintiffs appealed the ruling, arguing that the judge erred by enforcing Uber's arbitration agreement as a clickwrap contract, failing to recognize the agreement is unconscionable, and failing to "inquire as to the desirability or necessity of discovery on any issues material to the arbitration issue."
In a written ruling just released, Appellate Division Judges Susswein and Gummer were unpersuaded and affirmed the motion to compel arbitration.
"As a general rule, 'one who does not choose to read a contract before signing it cannot later relieve himself of its burdens.'" Skuse, quoting Riverside Chiropractic Grp. v. Mercury Ins. Co.
"An arbitration provision is not enforceable unless the consumer has reasonable notice of its existence." Wollen v. Gulf Stream Restoration & Cleaning, LLC. "But a party may not claim lack of notice of the terms of an arbitration provision for failure to read it." Santana.
New Jersey courts have recognized the validity of consumer web-based contracts "for decades." As we recently confirmed in Santana, "the enforceability of an internet consumer contract often turns on whether the agreement is characterized as a 'scrollwrap,' 'sign-in wrap,' 'clickwrap,' or 'browsewrap' – or a hybrid version of these electronic contract types." Clickwrap agreements are "routinely enforced by the courts" because "by requiring a physical manifestation of assent, a user is said to be put on inquiry notice of the terms assented to."
We agree with the motion judge that the agreement at issue is an enforceable clickwrap agreement. Like the agreement in Santana, the Uber arbitration agreement "was located within a clearly hyperlinked document." "The title of the hyperlinked document" and the language appearing below the hyperlinks next to the blank box "clearly put plaintiffs on reasonable inquiry notice that when [they] checked" the box beneath the link, they were agreeing to Uber's "Terms of Use." Within the hyperlinked Terms of Use document, the title of the arbitration provision, "Arbitration Agreement," appearing in larger, bold print on the second page of the document, "would have alerted a consumer to the importance of the provision in relation to all others." Had the plaintiffs left the agreement box unchecked, they would not have been able to proceed and would not have been able to access Uber's ride-share services. By checking the box, the plaintiffs represented they had reviewed and agreed to the Terms of Use and signaled their assent to those terms, including the arbitration agreement.
The language of the arbitration agreement – "by agreeing to the Terms, you agree that you are required to resolve any claim that you may have against Uber on an individual basis in arbitration," claims "will be settled by binding arbitration between you and Uber, and not in a court of law," and "you and Uber are each waiving the right to a trial by jury" – is "sufficiently clear to place a consumer on notice that he or she is waiving a constitutional or statutory right." Atalese v. U.S. Legal Servs. Grp., L.P.
Accordingly, we affirm the aspect of the order compelling the arbitration of plaintiffs' claims against the Uber defendants, the Appellate judges concluded.
The winning attorneys are Michael L. Kichline, Matthew D. Klayman, and John W. Meyer Esq. of Morgan, Lewis & Bockius LLP, and Goldberg Segalla LLP.
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