Date: 07-02-2018

Case Style:

Case Number: 16-2023

Judge: Torruella

Court: United States Court of Appeals for the First Circuit on appeal from the District of Massachusetts (Suffolk County)

Plaintiff's Attorney: Matt Wessler, Matt Spurlock, John Roddy, Elizabeth Ryan for Appellant

____________________________________


Jennifer D. Bennett, Jonathan D. Selbin, Jason L. Lichtman, Andrew R. Kaufman, Jahan Sagafi, Paul W. Mollica for Publis Justice, P.A. and National Consumer Law Center

Defendant's Attorney: S. Elaine McChesney, Larence T. Stanley, Jr. and Emma D. Hall for Uber

__________________________________________________

Jennifer D. Bennett, Jonathan D. Selbin, Jason L. Lichtman, Andrew R. Kaufman, Jahan Sagafi, Paul W. Mollica for Publis Justice, P.A. and National Consumer Law Center

Ben Robbins and Martin J. Newhouse for New England Legal Foundation in support of appellee

Andrew J. Pincus, Archis A. Parasharami, Daniel E. Jones, Karinanne M. Jones, Kate Comerford Todd, and Warren Postman for Chamber of Commerce of the United States of America in
support of appellee.

Description: This case concerns the
enforceability of an arbitration clause contained in an online
contract. Plaintiffs-Appellants Rachel Cullinane, Jacqueline
Núñez, Elizabeth Schaul, and Ross McDonagh, (collectively,
"Plaintiffs"), filed this putative class action in Massachusetts
Superior Court on behalf of themselves and other users of a ridesharing
service in the Boston area against Defendant-Appellee Uber
Technologies, Inc. ("Uber"). In their complaint, Plaintiffs
alleged that Uber violated a Massachusetts consumer-protection
statute by knowingly imposing certain fictitious or inflated fees.
Uber removed the case to the United States District Court for the
District of Massachusetts, and filed a motion to compel arbitration
and stay or dismiss the case. The district court granted Uber's
motion to compel arbitration and dismissed the complaint. For the
reasons explained below, we reverse and remand.
I. Background
Because Uber's motion to compel arbitration was made in
connection with a motion to dismiss or stay, we draw the relevant
facts from the operative complaint and the documents submitted to
the district court in support of the motion to compel arbitration.
Gove v. Career Sys. Dev. Corp., 689 F.3d 1, 2 (1st Cir. 2012).
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A. Factual Background
Uber provides a ride-sharing service that transports
customers throughout some cities, including Boston, for a fee.
Uber licenses the Uber mobile application (the "Uber App") to the
public so that users may request transportation services from
independent third party providers in the users' local area. To
be able to request and pay for third party transportation services,
Uber App users must first register with Uber by creating an
account. At the time Plaintiffs created their accounts,
prospective users could either register through the Uber App or
register directly through Uber's website.
All four named Plaintiffs downloaded the Uber App on
iPhones and used the Uber App to create Uber accounts between
December 31, 2012 and January 10, 2014. On September 13, 2013,
Plaintiff Jacqueline Núñez ("Núñez") used the Uber App to order
transportation to Boston Logan International Airport ("Logan
Airport") and was charged, in addition to the cost of the
transportation, $8.75 for a Massport Surcharge & Toll 1 (the
"Massport Surcharge"). Plaintiff Rachel Cullinane ("Cullinane")
used the Uber App to request transportation from Logan Airport on
1 According to the Plaintiffs, at the time Uber explained in its
Boston website that the Massport Surcharge "cover[ed] Massport
fees and other costs related to airport trips."
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June 29, 2014, and was charged $5.25 for the East Boston toll2 and
the same $8.75 Massport Surcharge. Plaintiff Elizabeth Schaul
("Schaul") used the Uber App to obtain transportation both to and
from Logan Airport on multiple occasions. Each time, Uber charged
her the $8.75 Massport Surcharge. The last named Plaintiff, Ross
McDonagh ("McDonagh") claims he used the Uber App for several trips
-- not all of them to or from Logan Airport -- and was charged
$5.25 for the East Boston toll and the $8.75 surcharge, even when
he did not travel to or from Logan Airport. The Plaintiffs object
to the Massport Surcharge and the East Boston tool because they
maintain that Uber charged these fees unnecessarily (i.e. there
was no requirement from the Commonwealth of Massachusetts that
these fees be charged to Uber passengers). Now, the Plaintiffs
seek to represent a class of Massachusetts-resident Uber
passengers who have been charged the Massport Surcharge and East
Boston toll, and have not received a refund for these charges.
B. Uber App Registration Process
All prospective Uber passengers must go through Uber's
registration process. When Plaintiffs used the Uber App to
register, the process included three different screens that asked
for user information. The first screen, titled "Create an
2 Also according to the Plaintiffs, Uber charged an East Boston
toll to passengers traveling through East Boston.
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Account," asked users to enter an e-mail address, a mobile phone
number, and a password for the account. Immediately above the
phone's keyboard -- which occupied half of the phone screen --
written in dark gray against a black background, was the text: "We
use your email and mobile number to send you ride confirmations
and receipts."
The second screen, entitled "Create a Profile," prompted
the user to enter their first and last name, and to upload a
picture. This screen also included dark gray text on a black
background which read: "Your name and photo helps [sic] your driver
identify you at pickup."
The third screen varied slightly during the thirteenmonth
period during which the Plaintiffs registered. The first
two plaintiffs to register, Núñez and Schaul, saw a third screen
titled "Link Card." The last two plaintiffs to register,
Cullinane and McDonagh, saw a third screen titled "Link Payment."
Irrespective of its title, the third and final screen prompted the
user to enter the appropriate payment information for Uber's
services. Because the design and content of both versions of the
third screen are particularly relevant to this case, we discuss
them in greater detail.
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1. "Link Card"
When confronted with the third screen, Núñez and Schaul
were presented with the "Link Card" screen. This is what it looked
like:3
As depicted in the screenshot above, the screen
contained a thick gray bar at the top of the screen with the title
"Link Card." To the left of the title was a "CANCEL" button and
to the right was an inoperative and barely visible "DONE" button.
3 The parties do not dispute that the screenshots attached to
Uber's motion to compel arbitration accurately depict the content
of the Uber App screens presented to the Plaintiffs. The
screenshots, however, are larger than the actual size of the
average smartphone's display. Because the Plaintiffs contend that
the iPhones they used to register with Uber had 3.5-inch displays,
we reproduce the screenshots found in the record as they would
appear in a smartphone's display that is approximately 3.5 inches,
measured diagonally. Uber does not concede that the Plaintiffs'
iPhone displays were this size.
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Below the thick gray title bar was a blank text field where users
could enter their credit card information. The blank text field
was white, contrasting with the black background, horizontally
traversing the screen, and included some light gray numbers to
exemplify the type of information required. In addition, at the
beginning of the blank text field, and to the left of the light
gray numbers, there was an icon representing a credit card. The
"Link Card" screen automatically included a number pad, covering
half of the screen, for users to type their credit card information
into the blank text field.
The screen also included text, just below the blank text
field, that instructed users to "scan your card" and "enter promo
code." This text was written in light gray bolded font. The
"scan your card" text had a bright blue camera icon to its left,
and the "enter promo code" had a bright blue bullet-shaped icon
enclosed in a circle. The record is unclear as to whether the
"scan your card" and "enter promo code" texts were clickable
buttons.4
Finally, the "Link Card" screen also included dark gray
text which read: "By creating an Uber account, you agree to the."
4 A clickable button is "[a]n icon on screen that is 'pressed' by
clicking it with the mouse or, if a touchscreen, tapping it with a
finger." PC Mag., https://www.pcmag.com/encyclopedia/term/39092/
button (last visited June 15, 2018).
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Below this text was the phrase "Terms of Service & Privacy Policy"
in bold white text enclosed in a gray rectangle. According to
Uber, this rectangular box indicated that this phrase was a
"clickable button."
2. "Link Payment"
Plaintiffs Cullinane and McDonagh confronted a third
screen that looked like this:
The "Link Payment" screen was very similar to the "Link
Card" screen, except that it provided for an additional payment
option that altered the screen's initial presentation. Instead
of a blank text field for credit card information and the
aforementioned number pad, the "Link Payment" screen displayed the
blank text field and a large blue button with the PayPal logo.5
5 PayPal is "an internet service to pay for transactions online."
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The blue PayPal button was located immediately below a centralized
dark gray text reading "OR," indicating the existence of two
payment options. Below the PayPal button, at the bottom of the
screen, the texts "[b]y creating an Uber account you agree to the"
and "Terms of Service & Privacy Policy" were presented in the same
manner as previously described.
If the user selected the blank text field to input his
or her credit card information, the user would then "engage[] the
keyboard" and the "Link Payment" screen would resemble the "Link
Card" screen.
Notwithstanding the differences in the third screen, the
design and general mechanics of the Uber App interface remained
fairly uniform. For example, all screens included a gray bar at
the top. Within this bar the user was presented with the screen
title written in capital letters in a dark colored font. Below
the title, but within the gray bar, was an illustration of three
circles connected by a green line. These circles indicated the
user's progress through Uber's registration process.
In addition, on all screens, the gray bar incorporated
two buttons: one to the left and one to the right of the screen's
title. The left button was a "CANCEL" button, written in all
United States v. Frechette, 583 F.3d 374, 377 n.1 (6th Cir. 2009).
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capital letters. This button was enabled throughout the
registration process, even before the user interacted with the
screen. On the first two screens the right button was a "NEXT"
button, also written in all capital letters. The "NEXT" button
would remain barely visible and inoperative until after the user
had entered the required information for each screen. In both
versions of the third screen, the "NEXT" button was replaced by a
"DONE" button. This "DONE" button also remained inoperative and
barely visible until the user had entered the requested payment
information.
C. Uber's Terms and Conditions
Uber's Terms and Conditions (the "Agreement")6 consisted
of an approximately ten-page document7 that was available to Uber
App users during the registration process via hyperlink. If the
user "clicked" on the "Terms of Service & Privacy Policy" button8
6 During the time relevant to this case there were two versions
of the Agreement. One version was in effect between September 21,
2012 and May 16, 2013 and the other was in effect from May 17,
2013, onward. The only difference between these two documents was
the size of the headings for each section.
7 Plaintiffs allege that "[m]ost Uber users would have accessed
this document on a mobile phone" converting the document to over
thirty-five pages of text on a 4.7-inch iPhone screen. However,
the parties dispute the actual size of Plaintiffs' iPhone displays.
8 In this sense, Uber's "Terms of Service & Privacy Policy" button
was a hyperlink. "[When accessed on a computer a] hyperlink is a
'string of text or a computer graphic that a user can 'click' with
the mouse pointer' to open a new browser page." iLOR, LLC v.
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in either version of the third screen, he or she would be taken to
another screen that contained two additional clickable buttons
entitled "Terms & Conditions" and "Privacy Policy." The Agreement
was displayed on the user's screen once the "Terms & Conditions"
button was clicked. However, the Uber App did not require
prospective users to "click" any of these buttons or access the
Agreement before they could complete the registration process.
The Agreement contained a "Dispute Resolution" section
that provided that the user and Uber:
[A]gree that any dispute, claim or controversy
arising out of or relating to this Agreement or the
breach, termination, enforcement, interpretation or
validity thereof or the use of the Service or
Application (collectively, "Disputes") will be
settled by binding arbitration . . . . You acknowledge
and agree that you and [Uber] 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.
(Emphasis in original). Furthermore, the Agreement
stipulated that "[t]he arbitration [would] be administered by the
American Arbitration Association ('AAA') in accordance with the
Commercial Arbitration Rules and the Supplementary Procedures for
Consumer Related Disputes (the 'AAA Rules')" and that the Federal
Google, Inc., 631 F.3d 1372, 1374 (Fed. Cir. 2011) (citation
omitted). And hyperlinks found on phone applications (like the
Uber App) can generally be accessed with the mere touch of the
finger. See PC Mag., supra n.4.
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Arbitration Act ("FAA") would govern the interpretation and
enforcement of the Agreement's arbitration.
D. Procedural Background
In November 2014, plaintiffs filed this putative class
action against Uber in Massachusetts Superior Court. The complaint
was originally filed by plaintiffs Cullinane and Núñez and alleged
five causes of action. By the end of December 2014, Uber filed a
Notice of Removal to the United States District Court for the
District of Massachusetts pursuant to the Class Action Fairness
Act (CAFA), 28 U.S.C. § 1332(d). Plaintiffs first moved to remand
to state court,9 but then filed an amended complaint adding Schaul
and McDonagh as plaintiffs and including a new cause of action for
unfair and deceptive practice pursuant to Massachusetts General
Laws chapter 93A. On May 4, 2015, Uber moved to compel arbitration
and stay proceedings or, in the alternative, to dismiss the case,
relying on the arbitration clause of the Agreement. Plaintiffs
then filed a second amended complaint on August 4, 2015, dropping
all but two causes of action, the chapter 93A violation and a claim
for common law unjust enrichment.
9 This motion was denied on June 22, 2015.
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After a hearing, the district court granted Uber's
motion to compel arbitration and dismissed the case. This timely
appeal followed.
II. Standard of Review
We review "de novo an order compelling arbitration where
the appeal involves solely legal issues as to the enforceability
of an arbitration clause." Pelletier v. Yellow Transp., Inc., 549
F.3d 578, 580 (1st Cir. 2008). We, of course, "focus only on the
threshold issue of arbitrability [and] do not rule on the merits
of the underlying claims." Unite Here Local 217 v. Sage Hosp.
Res., 642 F.3d 255, 259 (1st Cir. 2011). Because the facts at
issue in this case are undisputed, the question of whether the
parties contractually bound themselves to arbitration is a
question of law for the court also subject to de novo review. See
TLT Constr. Corp. v. RI, Inc., 484 F.3d 130, 135 (1st Cir. 2007)
(citation omitted) (quoting Lambert v. Kysar, 983 F.2d 1110, 1114
n.4 (1st Cir. 1993)). Had that not been the case, we would have
had to review factual determinations for clear error. Id.
III. Discussion
Under the FAA, "[a] written provision in . . . a contract
. . . to settle by arbitration a controversy thereafter arising
out of such contract . . . shall be valid, irrevocable, and
enforceable." 9 U.S.C. § 2 (2012). The Supreme Court has stated
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that the FAA reflects "a federal liberal policy favoring
arbitration agreements." AT&T Mobility LLC v. Concepción, 563
U.S. 333, 346 (2011) (quoting Moses H. Cone Mem'l Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 24 (1983)). It was Congress's intention
to "place arbitration agreements 'upon the same footing as other
contracts.'" Scherk v. Alberto-Culver Co., 417 U.S. 506, 511
(1974) (quoting H.R. Rep. No. 68-96, at 2 (1924)). Nevertheless,
the "FAA does not require parties to arbitrate when they have not
agreed to do so." Volt Info. Scis., Inc. v. Bd. of Trs. of Leland
Stanford Jr. Univ., 489 U.S. 468, 478 (1989). Therefore, in
deciding a motion to compel arbitration, a court must first
determine "whether '. . . there exists a written agreement to
arbitrate.'" Combined Energies v. CCI, Inc., 514 F.3d 168, 171
(1st Cir. 2008) (quoting Bangor Hydro-Elec. Co. v. New Eng. Tel.
& Tel. Co., 62 F. Supp. 2d 152, 155 (D. Me. 1999)). The burden
of making that showing lies on the party seeking to compel
arbitration. See Dialysis Access Ctr., LLC v. RMS Lifeline, Inc.,
638 F.3d 367, 375 (1st Cir. 2011) ("A party seeking to compel
arbitration under the FAA must demonstrate 'that a valid agreement
to arbitrate exists, that the movant is entitled to invoke the
arbitration clause, that the other party is bound by that clause,
and that the claim asserted comes within the clause's scope.'"
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(quoting InterGen N.V. v. Grina, 344 F.3d 134, 142 (1st Cir.
2003))).
It is well settled that "arbitration is a matter of
contract." Rent-a-Center, West, Inc. v. Jackson, 561 U.S. 63, 67
(2010). "When deciding whether the parties agreed to arbitrate a
certain matter (including arbitrability), courts generally . . .
should apply ordinary state-law principles that govern the
formation of contracts." First Options of Chi., Inc. v. Kaplan,
514 U.S. 938, 944 (1995). The district court applied Massachusetts
law and the parties do not challenge that decision. Cullinane v.
Uber Techs., Inc., 2016 WL 3751652, at *5. In any event, we agree
with the district court that Massachusetts contract law applies.
The Massachusetts Supreme Judicial Court ("SJC") has not
addressed the issue of contract formation for online agreements.10
10 Judge Weinstein of the District Court for the Eastern District
of New York has described the four general types of online
contracts. These are: (1) Browsewrap; (2) Clickwrap; (3)
Scrollwrap; and (4) Sign-in-wrap agreements. Berkson v. Gogo LLC,
97 F. Supp. 3d 359, 394-402 (E.D.N.Y. 2015). Briefly summarized:
Browsewrap exists where the online host dictates that
assent is given merely by using the site. Clickwrap
refers to the assent process by which a user must click
"I agree," but not necessarily view the contract to which
she is assenting. Scrollwrap requires users to
physically scroll through an internet agreement and
click on a separate "I agree" button in order to assent
to the terms and conditions of the host website. Signin-
wrap couples assent to the terms of a website with
signing up for use of the site's services . . . .
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However, in Ajemian v. Yahoo!, Inc., 987 N.E.2d 604, 611-15 (Mass.
App. Ct. 2013), the Massachusetts Appeals Court ("Appeals Court")
addressed the enforceability of forum selection and limitation
clauses within an online contract and that court's decision is
"trustworthy data for ascertaining state law." Losacco v. F.D.
Rich Constr. Co., 992 F.2d 382, 384 (1st Cir.), cert. denied, 510
U.S. 923 (1993); see also Candelario Del Moral v. UBS Fin. Servs.
Inc. of P.R., 699 F.3d 93, 103 n.7 (1st Cir. 2012) (citing Fid.
Union Trust Co. v. Field, 311 U.S. 169, 177-78 (1940)). While the
clauses at issue in Ajemian did not include an arbitration clause,
"the essential question presented was the same: what level of
notice and assent is required in order for a court to enforce an
online adhesion contract?" Cullinane, 2016 WL 3751652, at *6.
Consequently, we apply the principles stated in Ajemian.
In Ajemian, the Appeals Court determined that there was
"no reason to apply different legal principles [of contract
enforcement] simply because a forum selection clause . . . is
contained in an online contract." 987 N.E.2d at 612. Therefore,
Id. at 394–95 (emphasis omitted). Yet, our analysis regarding the
existence of an arbitration agreement is not affected by how we
categorize the online contract at issue here. "While new commerce
on the Internet has exposed courts to many new situations, it has
not fundamentally changed the principles of contract."
Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 403 (2d Cir.
2004).
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"such clauses will be enforced provided they have been reasonably
communicated and accepted." Id. at 611. The Appeals Court explained
that "[r]easonably conspicuous notice of the existence of contract
terms and unambiguous manifestation of assent to those terms by
consumers are essential if electronic bargaining is to have
integrity and credibility." Id. at 612. (emphasis added) (internal
quotations marks omitted) (quoting Specht v. Netscape Commc'ns
Corp., 306 F.3d 17, 35 (2d Cir. 2002)). With this in mind, the
Appeals Court set forth a two-step inquiry for the enforceability
of forum selection clauses in online agreements. The first
inquiry is whether the contract terms were "reasonably
communicated to the plaintiffs." Id. at 612. The second is
whether the record shows that those terms were "accepted and, if
so, the manner of acceptance." Id. at 613. The court further
clarified that the burden to show that the terms were reasonably
communicated and accepted lies on the party seeking to enforce the
forum selection clause. See id. at 611.
With the legal framework determined, we proceed to our
analysis keeping in mind that our sole focus is on the
enforceability of Uber's mandatory arbitration clause found in the
Agreement.
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A. Reasonable Notice
Uber makes no claim that any of the Plaintiffs actually
saw the arbitration clause or even clicked on the "Terms of Service
& Privacy Policy" button. Rather, it relies solely on a claim
that its online presentation was sufficiently conspicuous as to
bind the Plaintiffs whether or not they chose to click through the
relevant terms. Therefore, we must determine whether the terms
of the Agreement were "reasonably communicated" to the Plaintiffs.
We note that "in the context of web-based contracts . . . clarity
and conspicuousness are a function of the design and content of
the relevant interface." Meyer v. Uber Techs., Inc., 868 F.3d 66,
75 (2d Cir. 2017).
Under Massachusetts law, "conspicuous" means that a
terms is "so written, displayed or presented that a reasonable
person against which it is to operate ought to have noticed it."
Mass. Gen. Laws ch. 106, § 1-201(b)(10); see also Mass. Gen. Laws
ch. 156 D, § 1.40 (defining the term "conspicuous" as "written so
that a reasonable person against whom the writing is to operate
should have noticed it"). Whether or not a term is conspicuous
is for the court to decide. Mass. Gen. Laws ch. 106, § 1-
201(b)(10). Several nonexhaustive examples of general
characteristics that make a term conspicuous include using larger
and contrasting font, the use of headings in capitals, or somehow
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setting off the term from the surrounding text by the use of
symbols or other marks. Id.
In addition, when the terms of the agreement are only
available by following a link, the court must examine "the language
that was used to notify users that the terms of their arrangement
with [the service provider] could be found by following the link,
how prominently displayed the link was, and any other information
that would bear on the reasonableness of communicating [the
terms]." Ajemian, 987 N.E.2d at 612.
After reviewing the Uber App registration process, we
find that the Plaintiffs were not reasonably notified of the terms
of the Agreement. We note at the outset that Uber chose not to
use a common method of conspicuously informing users of the
existence and location of terms and conditions: requiring users to
click a box stating that they agree to a set of terms, often
provided by hyperlink, before continuing to the next screen.
Instead, Uber chose to rely on simply displaying a notice of deemed
acquiescence and a link to the terms. In order to determine
whether that approach reasonably notified users of the Agreement,
we begin our analysis with how this link was displayed.
Uber contends that the gray rectangular box with the
language "Terms of Service & Privacy Policy" was reasonably
conspicuous, both visually and contextually, because it was
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displayed in a larger font, in bold, contrasting in color, and
highlighted by the box around it. Furthermore, Uber argues that
the screen contained a total of twenty-six words, making it
difficult for a user to miss it.
While the language and the number of words found on the
"Link Card" and "Link Payment" screens could be seen to favor
Uber's position, the reading of Uber's "Terms of Service & Privacy
Policy" hyperlink must be contextualized. That is, it may not be
read in a vacuum. Other similarly displayed terms presented
simultaneously to the user in both versions of the third screen
diminished the conspicuousness of the "Terms of Service & Privacy
Policy" hyperlink. We explain.
First, Uber's "Terms of Service & Privacy Policy"
hyperlink did not have the common appearance of a hyperlink. While
not all hyperlinks need to have the same characteristics, they are
"commonly blue and underlined." CR Assocs. L.P. v. Sparefoot,
Inc., No. 17-10551-LTS, 2018 WL 988056, at *4 n.4 (D. Mass.
Feb. 20, 2018); see also e.g., Meyer, 868 F.3d at 78 ("[T]he
hyperlinks are in blue and underlined."); Adelson v. Harris, 774
F.3d 803, 808 (2d Cir. 2014) ("[T]he hyperlinks were not hidden
but visible in the customary manner, that is, by being embedded in
blue, underlined text."); Fteja v. Facebook, Inc., 841 F. Supp. 2d
829, 835 (S.D.N.Y. 2012) ("The phrase 'Terms of Service' is
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underlined, an indication that the phrase is a hyperlink, a phrase
that is 'usually highlighted or underlined' and 'sends users who
click on it directly to a new location—usually an internet address
or a program of some sort.'"). Here, the "Terms of Service &
Privacy Policy" hyperlink was presented in a gray rectangular box
in white bold text. Though not dispositive, the characteristics
of the hyperlink raise concerns as to whether a reasonable user
would have been aware that the gray rectangular box was actually
a hyperlink.
Next, the overall content of the "Link Card" and "Link
Payment" screens show that the "Terms of Service & Privacy Policy"
hyperlink was not a conspicuous term as defined by Massachusetts
law. Again, this hyperlink was displayed in white bold font within
a gray rectangular box. While these features may have been
sufficient to accentuate a hyperlink found within a registration
process interface with a plain design and limited content, that
was not the case here.
Along with the "Terms of Service & Privacy Policy"
hyperlink, the "Link Card" and "Link Payment" screens contained
other terms displayed with similar features. For example, the
terms "scan your card" and "enter promo code" were also written in
bold and with a similarly sized font as the hyperlink. Both
versions of the third screen also included the words "CANCEL" and
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"DONE," -- the latter being barely visible until the user had
entered the required payment information -- in all capital letters
and dark colored font. Meanwhile, the top of the screens featured
the terms "Link Card" or "Link Payment" in large capital letters
and dark colored font. These had the largest-sized font in both
versions of the third screen.
Uber's "Terms of Service & Privacy Policy" hyperlink was
even less conspicuous on the "Link Payment" screen. The inclusion
of the additional payment option and the placement of a large blue
PayPal button in the middle of the screen were more attentiongrabbing
and displaced the hyperlink to the bottom of the screen.
It is thus the design and content of the "Link Card" and
"Link Payment" screens of the Uber App interface that lead us to
conclude that Uber's "Terms of Service & Privacy Policy" hyperlink
was not conspicuous. Even though the hyperlink did possess some
of the characteristics that make a term conspicuous, the presence
of other terms on the same screen with a similar or larger size,
typeface, and with more noticeable attributes diminished the
hyperlink's capability to grab the user's attention. If everything
on the screen is written with conspicuous features, then nothing
is conspicuous. See Stevenson v. TRW Inc., 987 F.2d 288, 296 (5th
Cir. 1993) (interpreting the Uniform Commercial Code's definition
of the term "conspicuous" in the context of a disclaimer and
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stating that a "disclaimer is not conspicuous . . . when it is the
same size and typeface as the terms around it"); Boeing Airplane
Co. v. O'Malley, 329 F.2d 585, 593 (8th Cir. 1964) (interpreting
a state statute that contained a similar definition for the term
"conspicuous" as the Massachusetts Uniform Commercial Code and
finding that if a term "is merely in the same color and size of
other type used for the other provisions," it fails to be a
conspicuous term).
Furthermore, when we consider the characteristics of the
text used to notify potential users that the creation of an Uber
account would bind them to the linked terms, we note that this
phrase was even less conspicuous than the "Terms of Service &
Privacy Policy" hyperlink. This notice was displayed in a dark
gray small-sized non-bolded font against a black background. The
notice simply did not have any distinguishable feature that would
set it apart from all the other terms surrounding it.
Because both the "Link Card" and "Link Payment" screens
were filled with other very noticeable terms that diminished the
conspicuousness of the "Terms of Service & Privacy Policy"
hyperlink and the notice, we find that the terms of the Agreement
were not reasonably communicated to the Plaintiffs. As such,
Uber's motion to compel arbitration fails.
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IV. Conclusion
Because the Plaintiffs were not reasonably notified of
the terms of the Agreement, they did not provide their unambiguous
assent to those terms. We therefore find that Uber has failed to
carry its burden on its motion to compel arbitration. For these
reasons we reverse the district court's grant of Uber's motion to
compel arbitration, and remand the case for further proceedings
consistent with this opinion.

Outcome: Reversed and Remanded.

Plaintiff's Experts:

Defendant's Experts:

Comments: