The Uber logo displayed on a phone screen

US court rules Uber customers must settle disputes out of court

Image credit: Reuters/Toby Melville

Uber Technologies Inc won a legal victory when a US federal appeals court ruled that a legal case raised by an Uber customer must be sent into arbitration.

Spencer Meyer, an Uber customer from Connecticut, alleged that Uber and Travis Kalanick, its former CEO, had engaged in illegal price fixing. According to Meyer, Uber and Kalanick conspired with the company’s private drivers to charge higher fees (“surge pricing”) during periods of high demand.

Uber responded by requesting arbitration, arguing that Meyer had agreed to an arbitration provision in the company’s terms of service. Meyer claimed that he never saw a hyperlink to this provision when he signed up to the ride-hailing service.

Previously, US District Judge Jed Rakoff of the Second US Circuit Court of Appeals in Manhattan ruled that Uber and Kalanick had failed to properly notify the ride-sharing app’s users that disputes should be settled outside court by a third party, as the notice was not conspicuous enough in the additional terms and conditions provided to new users.

The appeals court, however, stated that Meyer had agreed to arbitrate his claims as the arbitration condition was “reasonably conspicuous”, and to not read additional terms and conditions is “the choice the users makes”. The court ruled 3-0 in favour of Uber.

“We look forward to pressing ahead with the litigation,” said Brian Feldman, Meyer’s lawyer. Feldman will argue that Uber has waived its right to arbitration by actively engaging Meyer in court.

“The Second Circuit’s powerful and commonsense opinion will serve to protect online contracting and strengthen commerce nationwide,” said Theofore Boutrous, Uber’s lawyer, in a statement. “We are thrilled with the decision.”

The court’s decision is a boost for corporate efforts to enforce requirements for arbitration. These conditions are often hidden in lengthy ‘terms and conditions’ documents which customers do not read or fully comprehend.

Uber has suffered numerous setbacks in recent months, with Kalanick resigning as CEO in June 2017 amid a cascade of reports of an aggressive workplace culture rife with sexual harassment, which he is accused of having failed to act upon.

Kalanick is now engaged in a legal dispute with Benchmark, one of Uber’s most prominent backers. Benchmark has accused Kalanick of undermining Uber’s search for a new CEO.

Uber is also being sued by Waymo, Google’s self-driving car spinoff, accused of having stolen Waymo trade secrets, and is the subject of a criminal inquiry into its “greyball” software which hides its drivers from law enforcement officers attempting to track down Uber drivers operating in areas where it is banned or restricted.

The company has also faced long-running legal battles in various countries on whether Uber drivers can be considered employees or contractors. A federal appeals court in San Francisco is due to rule on whether Uber drivers can recoup expenses and tips due to their employee status.

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