Uber headquarters in San Francisco
Uber headquarters in San Francisco (Shutterstock)

In a case that could sharpen the law around arbitration contracts used by apps and websites, judges from the U.S. Court of Appeals for the Second Circuit are considering whether to sign off on an arbitration agreement that Uber Technologies Inc. wrapped into the terms of service for individuals who use the app to seek rides.

At least one judge said the agreement would have been strengthened if Uber had required users to click a button expressly agreeing to the terms. However, the panel also appeared dubious on March 24 that the plaintiff in a price-fixing lawsuit against Uber could have been unaware that he was entering into a contract with the company when signing up for its ride-hailing app.

“Most individuals will understand they’re entering some kind of contract,” said Judge Denny Chin.

Chin, along with Judges Susan Carney and Reena Raggi, heard arguments in Uber’s appeal from Southern District Judge Jed Rakoff’s decision last year to deny a motion to compel arbitration in a suit that accuses Uber of fixing prices with its algorithm-based fare model. Rakoff’s ruling took great issue with the fact that the arbitration agreement was not directly presented to consumers but buried in the terms and conditions on a separate page accessible by clicking a hyperlink.

Chin said that the question of notice would be cleared up if the registration screen where users enter their payment information required users to click a button labeled “I Agree,” acknowledging their consent to the contract.

Gibson, Dunn & Crutcher partner Theodore Boutrous Jr., who argued for Uber, said that Spencer Meyer, the lead plaintiff in Meyer v. Kalanick, 15-cv-9797, has not claimed that he had trouble accessing or reading the contract. He used the app for rides 10 times before filing suit, Boutrous said, adding: “This is someone who knew what he was doing.”

In the underlying case, Uber lost a motion to dismiss the price-fixing case and then moved to direct the case into arbitration.

Harter Secrest & Emery partner Jeffrey Wadsworth, one of Meyer’s attorneys, told the panel that it was “not at all” obvious to a reasonable person that signing up for the Uber app includes agreeing to a contract.

The Meyer case is not the first time that Chin has been presented with the issue of arbitration clauses in online contracts: He authored the court’s decision in Nicosia v. Amazon , 834 F. 3d 220, in which the court reinstated a class-action suit against Amazon.com Inc. and rejected the company’s argument that the plaintiff in the case assented to resolve disputes through arbitration.

Meyer’s lawyers have argued that Rakoff’s ruling is consistent with the Second Circuit’s finding in Nicosia. Applying that ruling to the Uber case may mean parsing the prominence of the hyperlink on the Uber app compared to the Amazon website. The hyperlink to Amazon’s terms was neither bold nor capitalized, according to Chin’s decision, and drew little attention on a page with numerous other links. Uber’s registration page has a simpler design.

A group of 51 law professors and nonprofit public interest group Public Justice filed amici briefs in the case in support of Meyer, arguing that the link to Uber’s terms of service was not obvious and rejecting the defendants’ arguments that Rakoff’s decision showed antipathy toward arbitration.

The U.S. Chamber of Commerce filed an amicus brief in the case in support of Uber, arguing that Rakoff’s decision “undermines recognized principles for online contract formation” and “impermissibly created a heightened standard for enforcement of arbitration agreements.”

The Internet Association and the Consumer Technology Association also filed amici briefs in support of Uber, arguing that Rakoff’s standard for enforceable arbitration agreements erodes the predictability of consumer contracts.

Uber’s legal team also includes Gibson Dunn partners Daniel Swanson, Cynthia Richman, Joshua Lipshutz and Reed Brodsky.

Uber CEO Travis Kalanick is represented by Boies Schiller Flexner partners Karen Dunn, William Isaacson and Peter Skinner.

In addition to Wadsworth, Meyer’s legal team includes Harter Secrest partners Brian Feldman and Edwin Larkin and associate Gregory Dickinson; McKool Smith principals John Briody and James Smith; Cafferty Clobes Meriwether & Sprengel partners Bryan Clobes and Ellen Meriwether; and Constantine Cannon partners Matthew Cantor and Ankur Kapoor.

In a case that could sharpen the law around arbitration contracts used by apps and websites, judges from the U.S. Court of Appeals for the Second Circuit are considering whether to sign off on an arbitration agreement that Uber Technologies Inc. wrapped into the terms of service for individuals who use the app to seek rides.

At least one judge said the agreement would have been strengthened if Uber had required users to click a button expressly agreeing to the terms. However, the panel also appeared dubious on March 24 that the plaintiff in a price-fixing lawsuit against Uber could have been unaware that he was entering into a contract with the company when signing up for its ride-hailing app.

“Most individuals will understand they’re entering some kind of contract,” said Judge  Denny Chin .

Chin, along with Judges Susan Carney and  Reena Raggi , heard arguments in Uber’s appeal from Southern District Judge Jed Rakoff’s decision last year to deny a motion to compel arbitration in a suit that accuses Uber of fixing prices with its algorithm-based fare model. Rakoff’s ruling took great issue with the fact that the arbitration agreement was not directly presented to consumers but buried in the terms and conditions on a separate page accessible by clicking a hyperlink.

Chin said that the question of notice would be cleared up if the registration screen where users enter their payment information required users to click a button labeled “I Agree,” acknowledging their consent to the contract.

Gibson, Dunn & Crutcher  partner Theodore Boutrous Jr., who argued for Uber, said that Spencer Meyer, the lead plaintiff in Meyer v. Kalanick, 15-cv-9797, has not claimed that he had trouble accessing or reading the contract. He used the app for rides 10 times before filing suit, Boutrous said, adding: “This is someone who knew what he was doing.”

In the underlying case, Uber lost a motion to dismiss the price-fixing case and then moved to direct the case into arbitration.

Harter Secrest & Emery  partner Jeffrey Wadsworth, one of Meyer’s attorneys, told the panel that it was “not at all” obvious to a reasonable person that signing up for the Uber app includes agreeing to a contract.

The Meyer case is not the first time that Chin has been presented with the issue of arbitration clauses in online contracts: He authored the court’s decision in  Nicosia v. Amazon  ,  834 F. 3d 220 , in which the court reinstated a class-action suit against  Amazon.com Inc.  and rejected the company’s argument that the plaintiff in the case assented to resolve disputes through arbitration.

Meyer’s lawyers have argued that Rakoff’s ruling is consistent with the Second Circuit’s finding in Nicosia. Applying that ruling to the Uber case may mean parsing the prominence of the hyperlink on the Uber app compared to the Amazon website. The hyperlink to Amazon’s terms was neither bold nor capitalized, according to Chin’s decision, and drew little attention on a page with numerous other links. Uber’s registration page has a simpler design.

A group of 51 law professors and nonprofit public interest group Public Justice filed amici briefs in the case in support of Meyer, arguing that the link to Uber’s terms of service was not obvious and rejecting the defendants’ arguments that Rakoff’s decision showed antipathy toward arbitration.

The U.S. Chamber of Commerce filed an amicus brief in the case in support of Uber, arguing that Rakoff’s decision “undermines recognized principles for online contract formation” and “impermissibly created a heightened standard for enforcement of arbitration agreements.”

The Internet Association and the Consumer Technology Association also filed amici briefs in support of Uber, arguing that Rakoff’s standard for enforceable arbitration agreements erodes the predictability of consumer contracts.

Uber’s legal team also includes  Gibson Dunn  partners Daniel Swanson, Cynthia Richman, Joshua Lipshutz and Reed Brodsky.

Uber CEO Travis Kalanick is represented by  Boies Schiller Flexner  partners Karen Dunn, William Isaacson and Peter Skinner.

In addition to Wadsworth, Meyer’s legal team includes  Harter Secrest  partners Brian Feldman and Edwin Larkin and associate Gregory Dickinson;  McKool Smith  principals John Briody and James Smith; Cafferty Clobes Meriwether & Sprengel partners Bryan Clobes and Ellen Meriwether; and  Constantine Cannon  partners Matthew Cantor and Ankur Kapoor.