‘Legal Fiction’ Shields Uber From Antitrust Suit

MANHATTAN (CN) — Dismissing an antitrust lawsuit challenging Uber’s surge-pricing model, a New York federal judge said he had no choice but to enforce arbitration clauses that he called “legal and factual fictions.”

Uber has spent more than two years fighting an antitrust lawsuit by Connecticut resident Spencer Meyer, who sued the ride-share company and its then-CEO Travis Kalanick in late 2015.

Meyer hobbled his lawsuit from the start by agreeing to Uber’s terms of service, which included a clause agreeing to settle all disputes before an arbitration panel rather than a court of law.

In August 2016, U.S. District Judge Jed Rakoff found that such clauses illegally deprived consumers of their constitutional rights to a jury trial, but he was overruled in 2017 by the Second Circuit.

Rakoff reluctantly followed the Second Circuit’s instructions Monday.

“One might have thought that such waivers were unenforceable on their face,” he wrote in a 21-page opinion and order. “The right to trial by jury, in civil as well as criminal cases, is a central feature, not only of the federal Constitution, but also of the constitutions of virtually every state. The right reflects the deep-seated view of the American people that the community is the best judge of justice. But this, it appears, is not the view of the judiciary.”

An Uber spokesperson said the company was “pleased with the decision.”

But Rakoff complained that the classical view of contracts as a “meeting of the minds” has become a “figment of the imagination, or nostalgia, at least so far as national retail markets are concerned.”

“Increasingly, consumers purchasing a product were forced, as a condition of their purchase, to agree to a form contract drafted by the seller, replete with one-sided legalistically worded provisions that the consumer had to accept if she wished to make the purchase,” Rakoff wrote.

“Such one-sided, take-it-or-leave-it form contracts were utilized by sellers in even otherwise competitive markets, because sellers saw no material competitive advantage in eliminating or negotiating any of these terms. Most consumers, for their part, did not even bother to read these small-print forms — not that most consumers would have been able to understand most of them if they had read them.”

Meyer’s attorney Ankur Kapoor, with Constantine Cannon, declined to comment.

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