In Applebaum v. Lyft, 2017 WL 2774153 (S.D.N.Y. June 26, 2017), the U.S. District Court for the Southern District of New York (per Judge John Koeltl) departed from a recent trend of enforcing “clickwrap” agreements by declining to enforce the arbitration provision contained within Lyft’s “clickwrap” agreement but nonetheless compelling arbitration based on Lyft’s subsequent “scrollwrap” agreement. In a scrollwrap agreement, a user must scroll through or view an agreement to proceed. With a clickwrap agreement, by contrast, a user need only click a button to indicate his acceptance, and might never view the agreement itself, before proceeding. At issue in Applebaum was an arbitration agreement contained within Lyft’s terms of service, initially conveyed by a clickwrap agreement but with an update presented as a scrollwrap agreement. Even though clickwrap agreements generally have been held enforceable, see, e.g., Cullinane v. Uber Technologies, 2016 WL 3751652, at *6 (D. Mass. July 11, 2016), the court in Applebaum found that Lyft’s initial clickwrap agreement was not enforceable due to the small print and ambiguity as to what the user was agreeing to. In line with recent precedent, the court did enforce the subsequent terms of service when presented as a scrollwrap agreement. See, e.g., Bekele v. Lyft, 199 F. Supp. 3d 284, 288, 290 (D. Mass 2016); Loewen v. Lyft, 129 F. Supp. 3d 945, 948-49 (N.D. Cal. 2015).
Background
In April 2016, plaintiff Josh Applebaum filed a class action lawsuit against Lyft, claiming that it charged passengers the non-discounted cash price for tolls rather than the discounted toll price that Lyft drivers pay through their use of “E-Z Pass.” Lyft moved to dismiss the action or, in the alternative, to compel arbitration on the basis of a mandatory arbitration clause included in its terms of service agreement. The plaintiff contended that he never knowingly agreed to Lyft’s terms of service, including the mandatory arbitration agreement. Arbitration clauses within two different terms of service were at issue: a Feb. 8, 2016 Terms of Service presented as a clickwrap agreement, and an updated Sept. 30, 2016 Terms of Service presented as a scrollwrap agreement.
