Johnson v. Uber Technologies, Inc., No. 16 C 5468 (N.D. III. Sep. 20, 2018) [click for opinion]

Plaintiff Charles Johnson sued Uber Technologies, Inc. (“Uber”) for sending an unsolicited text message in violation of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. Johnson downloaded the Uber app in July 2013. As part of his signing up to use the app, Johnson agreed to be bound by the terms and conditions of the Uber Terms of Service then in effect and any future amendments or additions as may be published. The Terms of Service included a Dispute Resolution section, which stated that both the user and Uber agree that any dispute or claim arising out of the Agreement “will be settled by binding arbitration, except that such party retains the right to bring an individual action in small claims court and the right to seek injunctive or other equitable relief in a court of competent jurisdiction to prevent the actual or threatened infringement, misappropriation or violation of a party’s copyrights, trademarks, trade secrets, patents or other intellectual property rights.” In bold-faced font, the Terms of Service further stated “You acknowledge and agree that you and Company are each waiving the right to a trial by jury or to participate as a plaintiff or class User in any purported class action or representative proceeding.”

Johnson did not recall reading the Terms of Service. Johnson never requested a ride using the Uber app and further claims to have deleted the Uber app from his phone. Johnson alleged that, after this deletion, Uber sent a single unsolicited text message to his mobile phone number asking him whether he wanted to sign up to be an Uber driver.

The court noted that arbitration is a creature of contract and whether an agreement to arbitrate has been formed is governed by state law. As such, the court turned to Illinois law, which requires that a consumer be provided reasonable notice of all the terms and conditions of an agreement as well as reasonable notice that, by clicking a button, the customer is assenting to the agreement. Referring to Illinois appellate court precedent in a case involving Dell computers, the district court noted that, in that case, the court held that the statement that sales were subject to terms and conditions which appeared on web forms completed by a party would place a reasonable person on notice that there were terms and conditions attached to the purchase.

The district court noted that, as in the Dell case, the app which Johnson used to create an Uber account included the statement: “By creating an Uber account, you agree to the Terms of Service & Privacy Policy.” This contained a hyperlink, was legible, and required no scrolling on the screen to see it. The court also referred to a Second Circuit decision involving Uber that held, under California law, that the person creating an Uber account agreed to the terms and conditions contained in the hyperlink, regardless of whether he clicked on the hyperlink. The court further explained that the cases relied on by the Plaintiff were readily distinguishable, as they involved situations where there was no hyperlink or clear statement that the purchase was subject to terms and conditions. The choice of the Plaintiff not to read the terms of service provided via hyperlink had no probative force.

Johnson also argued that, regardless of whether he entered into an arbitration agreement with Uber, the TCPA claim did not fall within the scope of that agreement. The court rejected that argument. The court also agreed with Uber that the broad language of the arbitration clause meant that the arbitrator should determine whether a dispute falls within the scope of the arbitration clause. The court granted Uber’s summary judgment motion, dismissed the class claims without prejudice and stayed the case pending resolution of the arbitration proceedings.

A version of this post originally appeared in the November 2018 edition of Baker McKenzie’s International Litigation & Arbitration Newsletter, which is edited by David Zaslowsky and Grant Hanessian.

 

Previous articleItaly: State courts’ decisions on appointments and removals of arbitrators are not subject to extraordinary appeal
Next articleU.S.: District court holds it has personal jurisdiction over non-signatory to an arbitration agreement.