Uber Wins Appeal on Embedded Terms of Service Link

FILE – In this Monday, Sept. 12, 2016, file photo, a self-driving Uber sits ready to take journalists for a ride during a media preview in Pittsburgh. Riding-sharing company Uber plans to launch its own credit card, partnering with the British bank Barclays. The card will be coming later in 2017, according to Barclays. (AP Photo/Gene J. Puskar, File)

MANHATTAN (CN) — Reviving Uber’s bid to arbitrate price-fixing claims, the Second Circuit found Thursday that the company’s embedding of terms of service in a hyperlink did not render them unreasonably inconspicuous.

“Turning to the interface at issue in this case, we conclude that the design of the screen and language used render the notice provided reasonable as a matter of California law,” U.S. Circuit Judge Denny Chin wrote for a three-judge panel.

The interface at issue is one that all cellphone users confront when they open an account with Uber Technologies.

At a payment screen Chin called “uncluttered,” there is a key warning about Uber’s terms of service and privacy policy.

“The entire screen is visible at once, and the user does not need to scroll beyond what is immediately visible to find notice of the Terms of Service,” the opinion states. “Although the sentence is in a small font, the dark print contrasts with the bright white background, and the hyperlinks are in blue and underlined.”

Chin added that the link by which Uber embedded its Terms of Service should not be considered in a vacuum.

“Many apps … require potential users to sign up for an account to access the appʹs services,” the opinion states. “Accordingly, when considering the perspective of a reasonable smartphone user, we need not presume that the user has never before encountered an app or entered into a contract using a smartphone.  Moreover, a reasonably prudent smartphone user knows that text that is highlighted in blue and underlined is hyperlinked to another webpage where additional information will be found.”

Lead plaintiff Spencer Meyer filed the underlying complaint in 2014 against Uber Technologies and the ride-sharing company’s then-CEO Travis Kalanick. He claims that Uber’s surge pricing amounts to price fixing, and a federal judge in New York initially kept the class action on track when Uber moved to compel arbitration.

Though the lower court said Meyer did not have reasonably conspicuous notice of the Terms of Service, the Second Circuit was unanimous in reversing that decision Thursday.

Meyer’s attorney, Brian Feldman with the Rochester, N.Y., firm Harter Secrest & Emery, emphasized that the battle on arbitration is not over.

“This ruling does not grant defendants the right to throw this case into arbitration,” Feldman said in a statement. “The defense waived that right.  We look forward to pressing ahead with the litigation.”

Uber’s attorney meanwhile cheered the Second Circuit victory.

“The Second Circuit’s powerful and commonsense opinion will serve to protect online contracting and strengthen commerce nationwide,” said Theodore Boutrous, of the Los Angeles firm Gibson, Dunn & Crutcher. “We are thrilled with the decision.”

The lawsuit against San Francisco-based Uber is one of a number of high-profile problems confronting the tech company.

Under fire for sexual harassment and bias accusations by female staff, Kalanick resigned as CEO in June after a shareholder revolt.

Judge Chin cited a 2015 study by the Pew Research Center in laying out the traits of average smartphone users.

Nearly two‐thirds of American adults owned a smartphone that year, and that number is one that had almost doubled since 2011, Pew found.

Chin noted that consumers use their smartphones for everything from dating to banking, and that as much as 89 percent of surveyed smartphone users reported using the internet on their phones.

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