Uber’s Consumer Contract Faces Hostile Massachusetts High Court

Uber Technologies Inc.'s vague pop-up terms of use that intend to bind users to an enforceable contract was met by a highly critical Massachusetts Supreme Judicial Court during a Friday oral argument about a crash victim’s rights.

The language in Uber’s pop-up notice, which attempts to require crash victims to resolve disputes with the company through arbitration, rather than litigation, is central to the case. It encouraged users to read its updated terms and hyperlinked two documents outlining those terms.

“Why are you not doing it more clearly? You know people are reluctant to read these awful things, right?” Justice Scott Kafker asked Uber’s attorney during oral arguments.

The Supreme Judicial Court’s recent case law is “clear that we wanted you to put in language that put you on notice that you were entering into a contract that’s significant,” Kafker said. Here, “you’re giving up your right to sue Uber,” Kafker said. “Basically, if you get killed or raped, Uber is off the hook.”

Uber’s arbitration agreement was also in the spotlight in 2018 after the company announced it would suspend mandatory arbitration for sexual assault and harassment claims following public pressure from the #MeToo movement.

Plaintiff William Good and other customers weren’t required to click on the links and scroll through the terms.

The outcome could have broad implications for the rideshare industry and will offer online companies that do business in Massachusetts more clarity on the requirements they must satisfy to create a legally-binding contract.

Uber’s arbitration agreement is significant for customers like Good, who is asking for more than $60 million in damages after a car crash left him permanently quadriplegic. Good, who was using Uber to get home from his job as a chef, claims the box he checked agreeing to Uber’s terms of use weren’t sufficient notice that he was entering into a binding contract.

Binding Contract?

The justices appeared frustrated that Uber hadn’t learned from the precedent the Supreme Judicial Court set out in Kafker’s 2021 opinion in Kauders vs. Uber. That case ruled the company needed to give customers reasonable notice that they would be bound to its terms, and obtain a reasonable manifestation of agreement to those terms.

“It was only three years ago that the court looked at what Uber was doing and said that was inadequate, and gave it a pretty clear road map for how it could legally bind riders to this extensive set of contractual terms,” Matthew Wessler, the Gupta Wessler LLP principal representing Good, said in an interview after oral argument. Uber “deliberately didn’t follow the recommendations that the court set out,” he said.

“If you had that pop-up page that said words that are far more prescriptive then, ‘hey, we encourage you to read it'— stronger terms that said ‘you have to read this,’ ‘we urge you to read this,’ or just ‘read this,’” it could be more evident to consumers that they are signing a contract, Justice Serge Georges said.

Michael Huston, the Perkins Coie LLP partner representing Uber, said that the pop-up agreement “is the sort of solemn language that this court in Kauders said puts a user on notice that they are entering into an agreement.”

“The evidence strongly shows that people don’t read contractual terms no matter what you do,” Huston said.

The justices took issue that the pop-up was delivered to users when they were requesting a ride. “Mr. Good wanted to go home. He worked all day and wanted to just go home. You make it seem like that’s the most opportune moment to seize upon someone,” Georges said. “When would be a worse time, than when you’re leaving the bar, its late at night, you’re tired, and you just want to go home.”

A lower court denied Uber’s motion to compel arbitration, and said the outcome of the case may have been different had Good been required to click and scroll through the terms.

Actual Notice

While Uber’s pop-up could be more clear, it could still serve as actual notice that a user was entering into a binding agreement, the justices suggested.

“Uber has come forward with evidence that your client actually did confirm that he’d read and agreed to the terms of use,” Justice Dalila Argaez Wendlandt told Wessler.

But Uber did not prove that Good actually read the contract, which Wessler argued requires “some evidence that the person actually went to the page with the contract, or at minimum, actually interacted with the link in some way.”

Kafker also said the pop-up at issue in this case is “more explicit” that it’s an agreement than the pop-up at issue when the justices ruled against Uber in Kauders.

“Reasonable users don’t necessarily associate the phrase ‘terms of use’ or ‘terms and conditions’ with extensive contractual obligations that would require someone to sign their life away, Wessler said.

“To lose the right to litigation over a terms of usage, not a new contract,” Good said in an interview after the argument, “is not within the law as it is laid down in Massachusetts.”

The case is Good vs. Uber Tech. Inc., Mass., No. SJC-13490, oral argument 1/5/24.