After using the Uber app, plaintiff Meyer sued in federal district court for illegal price-fixing. Uber moved for enforced arbitration pursuant to a digital TOS agreement, and the trial court denied on grounds that Meyer did not have “reasonably conspicuous notice” of the TOS and did not “unambiguously manifest assent” to them. Uber appealed to the Second Circuit.
Rules of law
The appellate court found no questions of fact and reviewed the trial court’s dismissal of the motion to compel arbitration de novo. Under federal law, there is a liberal policy in favor of arbitration agreements and contracts. However, the court must first determine whether an agreement exists to know whether the arbitration element can be enforced. They also must determine whether the dispute falls within the scope of the agreement.
Under California law, an offeree is not bound by “inconspicuous contraction provisions” he doesn’t become aware of, contained in a document “whose contractual nature” is not readily apparent. However, an offeree will still be bound by an agreement if a “reasonably prudent user” would be on notice of the terms at inquiry. An electronic contract is binding if “the layout and language of the site give the user reasonable notice that a click will manifest assent” to the contract.
The court held that from the standpoint of a reasonably prudent smartphone user, the design of the screen and language used “render the notice provided reasonable as a matter of California law.” There was also temporal and spatial coupling of the notice with the “register” function. Having those terms of service available only by hyperlink did not preclude the determination that notice was reasonable. Appeals court remanded.