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Uber Riders Suffer a Setback in Federal Court

Attorneys for a proposed class of Uber riders on Thursday vowed to fight to stop Uber from forcing claims over bogus cancellation fees into arbitration and denying their clients the right to a jury trial.

SAN FRANCISCO (CN) - Attorneys for a proposed class of Uber riders on Thursday vowed to fight to stop Uber from forcing claims over bogus cancellation fees into arbitration and denying their clients the right to a jury trial.

The attorneys said they would appeal a ruling U.S. District Judge Richard Seeborg issued shortly after a hearing Thursday, granting Uber’s motion to compel arbitration. Seeborg found Uber’s process for getting users to waive their right to sue is sufficient.

Class attorney Kristopher Badame disagreed.

“It would be a historic case for California if by simply downloading an app you’ve agreed to terms and conditions whether you acknowledge them or not,” Badame said shortly after the hearing.

Seeborg rejected arguments that lead plaintiff Michael Cordas never saw a link to the terms and conditions when he signed up for Uber, or that the sign-up process did not adequately warn users they were agreeing to waive their right to seek justice through the courts.

Class co-counsel Joseph Hunter said his client and other Uber users were unlikely to see “tiny little words” in gray type at the bottom of the final sign-up page that link to Uber’s terms and conditions.

Hunter called Uber's sign-up process, which required users to click “Done” as the last step to consent to terms and conditions, a “browsewrap” agreement, which is unenforceable under California law. He said it does not meet the requirements of a legal “clickwrap” agreement, which must unambiguously inform a user of the terms to which he or she is consenting.

But Seeborg disagreed, saying browsewrap agreements are deemed unenforceable because they lack interactive components, which is not the case here.

“They're interacting with the process,” Seeborg said. “That's fundamentally different. You're clicking a button. That's a big deal.”

Hunter pushed back, saying the only thing the user agreed to in this case was that he or she had completed filling out the payment information.

He cited Uber’s decision to revamp its sign-up process as evidence that its prior method was inadequate. But Seeborg didn't buy it.

“The question is not whether they could have done it a better way,” Seeborg said. “The fact that they found a better way to do it now is irrelevant.”

The judge said his job is to decide whether the old sign-up process was adequate, “not to be a business consultant on whether Uber could do things better.”

Seeborg’s statements differed sharply from opinions expressed by a federal judge in the Southern District of New York, who issued a scathing opinion last August deeming Uber’s arbitration provisions for users unenforceable.

U.S. District Judge Jed Rakoff wrote: “In this brave new world, consumers are routinely forced to waive their constitutional right to a jury and their very access to courts, and to submit instead to arbitration, on the theory that they have voluntarily agreed to do so in response to endless, turgid, often impenetrable sets of terms and conditions, to which, by pressing a button, they have indicated their agreement."

Notwithstanding the debate over the ubiquitous use of arbitration clauses to force consumers to waive their rights to sue, Seeborg identified the lead plaintiff's failure to state precisely what he saw when signing with Uber as a major problem with the case.

Hunter told Seeborg that Cordas never saw a link to terms and conditions because his iPhone 6 was turned horizontally when he signed up.

But in reviewing the lead plaintiff’s deposition, Seeborg said Cordas failed to articulate exactly what he saw or how his phone was oriented when he moved through the sign-up steps.

“The plaintiff is the plaintiff,” Seeborg said. “He has to say what he saw or didn't see.”

Cordas sued Uber in July 2016, claiming that he and other users had their rides automatically canceled and were charged phony cancellation fees.

After the hearing, Hunter said a ruling for Uber would force riders to pursue their claims through individual arbitration, effectively denying them the ability to recover those losses.

“No one’s going to litigate $5 or $10 claims, so Uber will win,” Hunter said.

After the hearing, Seeborg issued a 9-page ruling granting Uber’s motion to compel arbitration.

Badame and Hunter, both of Badame & Associates in Lake Forest, vowed to appeal.

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