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Accidents with Uber in Massachusetts and Arbitration Clause in Uber Terms of Service Contract

Uber and Lyft drivers are all over Massachusetts; while the number of people traveling with RideShare has certainly decreased with COVID-19, there are still a significant number of Lyft and Uber drivers on the road.  What happens if you are involved in an accident with Uber or Lyft or have a dispute with one of these companies.  Recently, the Massachusetts Supreme Court decided a case that addressed whether the arbitration provision in the Uber contract was enforceable.

Is a Contract Formed When You Create an Uber Account?

 This question was recently decided by the Massachusetts Supreme Court in Christopher P. Kauders & Another vs. Uber Technologies, Inc., & Another. In this case, a couple who had both downloaded Uber on their phones alleged discrimination by Uber against husband, who is legally blind, was refused an Uber ride because he was accompanied by his guard dog. Uber is a widely-used app that allows users to pay for transportation by Uber’s contracted drivers after downloading the app.

What happened in Kauders?

The Plaintiffs, Christopher Kauders, and his wife, Hannah Kauders, claimed that on three separate occasions between the dates of August 26, 2015 and March 25, 2016 Mr. Kauders was denied service by Uber when the drivers did not allow Mr. Kauders’ guide dog to enter the vehicle with him. According to the plaintiffs’ complaint, Mr. Kauders frequently relies on Uber as he is not able to obtain a driver’s license due to his visual impairment. Mr. Kauders has taken over 100 rides with Uber, with his guide dog accompanying him on about half of the rides.

The Kauders filed a complaint with the Massachusetts Commission Against Discrimination (“MCAD”) against Uber. The MCAD notified the Kauders that they had depleted all administrative remedies available to them and that they could file a civil suit against Uber. In 2016, the Kauders then filed a complaint in Suffolk Superior Court against Uber and Raiser, Uber’s parent company, alleging the violation of Massachusetts anti-discrimination law, M.G. L. c. 272, § 98A, as well as one count of intentional infliction of emotional distress against Mr. Kauders and one against both Mr. and Mrs. Kauders.

Uber looked to compel arbitration based on their terms and conditions that must be agreed to upon making an Uber account. Arbitration is a way to settle disputes outside of court with a third party presiding over the matter. The Kauders argued that they did not believe there was an enforceable arbitration agreement. The Kauders believed that when terms of service are ambiguous under contract formation principles such terms can still be invalidated especially when Constitutional Rights are at play. Here, the Constitutional right at issue is the plaintiff’s Seventh Amendment right to a trial by jury. The judge ultimately granted Uber’s motion and the parties began arbitrating their dispute. The arbitrator concluded that Uber was not liable for the discriminatory acts of their independent contractor drivers.

Meanwhile, the United States Court of Appeals for the First Circuit decided the case Cullinane v. Uber Techs, Inc. The Cullinane Court found in this case that Uber’s registration process did not create a contract because there was no notice given to users. A user may be unaware that they are entering into a contractual relationship when signing up for an account with Uber. Uber does not require that users read through terms and conditions before agreeing to them and therefore Uber has not provided reasonable notice of their terms and conditions.

 

Based upon Cullinane, the Kauders Judge reversed his previous decision and concluded that there was not an enforceable contract between the Kauders and Uber. The judge further concluded that Uber’s registration process does not provide users notice of the terms and conditions. Further, the judge held that Uber did not obtain the Kauders’ manifestation of assent to their terms and conditions. A user could create an Uber account without ever agreeing to Uber’s “Terms & Conditions” or “Privacy Policy.” Moreover, the final step in creating an Uber account is clicking a button that states “DONE” which does not signify that a user agrees to the terms and conditions like a button that stated “I AGREE” would.  The court held that no arbitration agreement was enforceable and therefore the dispute was not arbitrable. The case was remanded to the lower court for further proceedings.

 

In response to the Kauders decision an uber spokeswoman told the Boston Globe that Uber had modified its online application form to comply with the court’s conclusion. It will be interesting to see if similar suits against companies like Uber arise.

 

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