MANHATTAN (CN) — A federal judge sent to arbitration a New Yorker’s claim that Lyft overcharges customers for toll crossings, finding the customer agreed to waive his right to file class action lawsuits.
Silicon Valley giants such as Lyft, Uber and Airbnb are among the growing number of companies that force customers to accept arbitration clauses waiving their rights to a jury trial in order to use their services.
Consumer-rights advocates have blasted these clauses for making it difficult for U.S. citizens to use a credit card, the internet or even a bank without signing mandatory and often murky contracts forfeiting constitutional protections.
When Josh Applebaum downloaded his Lyft app in April 2016, it was easy to miss that he was entering into one of these binding legal agreements. Under a screen prompting him to enter his phone number, the user had to check a box next to the sentence “I agree to Lyft’s Terms of Service,” in small text.
Applebaum insisted he did not even click on the hyperlinked phrase “Terms of Service,” or scroll down 17 paragraphs to read the legalese obligating him to resolve all disputes before the American Arbitration Association.
He said he just checked the box, clicked “Next,” and signed up for the service.
Though this trip typically costs $15 for most vehicles, most Lyft drivers receive the “E-Z Pass rate” of $12.50 for enrolling in an electronic toll-collection service for New York and New Jersey.
Applebaum filed a class action complaint on Sept. 9 last year, charging that Lyft promised its New York customers the discounted rate, but charged them for the full rate.
Had Applebaum had stopped using his Lyft app at this point, U.S. District Judge John Koeltl said Monday, he might have had a viable lawsuit.
But weeks later, Lyft forced its users to sign new terms of service, curing the old defects.
At the top of the page, in block capital letters, the new terms of service informed customers that the agreement would be legally binding and strip their right to a jury trial.
Applebaum clicked “I Accept” to this updated this agreement in November, a move that Judge Koeltl said torpedoed his then-active lawsuit.
“While the plaintiff concedes that he assented to the arbitration provisions in the September 30, 2016 terms of service, the plaintiff argues that his claims are outside the scope of that arbitration agreement because the arbitration agreement did not cover disputes that were already subject to litigation,” Koeltl wrote in his Monday opinion and order. “However, the arbitration agreement contained a very broad arbitration clause together with a delegation clause that gave the arbitrators the power to decide issues of arbitrability.”
He granted Lyft’s motion to compel arbitration.
Attorneys for Lyft and Applebaum did not immediately respond to requests for comment.