Uber drove a Telephone Consumer Protection Act (TCPA) class action out of the courthouse, successfully convincing an Illinois federal court judge that the ride-hailing app’s terms included a “clear and conspicuous” statement that arbitration was the forum for any disputes.
In 2013, Charles Johnson downloaded the Uber app to his smartphone and completed each of the steps required to create an account. Johnson provided his email address, first and last name, and mobile phone number; created a password; and linked his debit card to the account.
During the process, Johnson was informed that “[b]y creating an Uber account, you agree to the Terms of Service & Privacy Policy” and given a hyperlink that brought users to a screen displaying the terms of service in effect at the time. The first paragraph of the terms stated: “In order to use the Service … and the associated application … you must agree to the terms and conditions that are set out below.”
The terms of service also included a “Dispute Resolution” section. The first paragraph of the section read: “You and Company agree that any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof or the use of the Service or Application (collectively, ‘Disputes’) will be settled by binding arbitration … You acknowledge and agree that you and Company are each waiving the right to a trial by jury or to participate as a plaintiff or class User in any purported class action or representative proceeding.”
Johnson admitted that he may have seen, clicked on, read and indicated that he accepted Uber’s terms of service and privacy policy when he created his account, but he did not recall doing so. Although Johnson later opened the app to see how it worked, he never requested a ride using the Uber app.
In his putative TCPA class action, Johnson alleged that Uber sent a single unsolicited text message to his mobile phone number asking him whether he wanted to sign up to be an Uber driver.
Pursuant to the terms of service that Johnson agreed to when he downloaded the app, Uber moved to compel arbitration. Applying Illinois law, U.S. District Judge John Z. Lee granted the motion.
A consumer must be provided reasonable notice of all the terms and conditions of an agreement as well as reasonable notice that, by clicking a button, the consumer is assenting to the agreement, Judge Lee explained. He also considered whether a reasonable person would have been misled, confused, misdirected or distracted by the manner in which Uber presented the terms and conditions.
Reviewing the process of creating an Uber account, the court found the defendant put users on notice that “[b]y creating an Uber account, you agree to the Terms of Service & Privacy Policy,” using an easy-to-read font on an uncluttered screen that required no scrolling to view. The words “Terms of Service” also served as a hyperlink, the court noted, which brought users to a screen displaying the full terms.
“[T]he Court holds that the manner in which this statement and the Terms of Service were presented placed a reasonable person on notice that there were terms incorporated with creating an Uber account and that, by creating an account, he or she was agreeing to those terms,” Judge Lee wrote.
Uber’s “clear and conspicuous” statement that users were agreeing to its terms was easily distinguishable from other cases where a website actively misled a customer or lacked a clear statement that a purchase was subject to any terms and conditions. Further, “a reasonable user would know that, by entering his debit or credit card information … he was creating an Uber account,” the court added.
The fact that Johnson elected not to read the actual terms of service, when he was given an opportunity to do so, “has no probative force,” Judge Lee said.
Although the court found Johnson failed to raise a genuine dispute as to whether he entered into an enforceable agreement to arbitrate, the plaintiff tried a fallback argument that even if the arbitration agreement was binding, his TCPA claim did not fall within its scope.
The court was not persuaded, as the terms of service specifically permitted Uber to text promotional offers to its customers. “Because Johnson’s TCPA claim may arguably fall within the parameters of this provision, the claim must be arbitrated,” the court said.
Judge Lee granted Uber’s motion for summary judgment, staying the case pending the resolution of arbitration proceedings.
To read the memorandum opinion and order in Johnson v. Uber Technologies, Inc., click here.
Why it matters: This case highlights the importance of having a solid arbitration provision and of having the customer agree to terms and conditions which are truly clear and conspicuous. The Illinois federal court determined that Uber provided reasonable notice of all the terms and conditions of its arbitration agreement with a “clear and conspicuous statement” and that, by clicking a button, the plaintiff assented to that agreement. Further, the manner in which the terms were presented in an easy-to-read font on an uncluttered screen, with no scrolling required—supported the conclusion that the plaintiff was not misled, confused or misdirected by the terms and conditions, and was thus bound by the arbitration provision.