Kauders v. Uber Techs., Inc.

Citation486 Mass. 557,159 N.E.3d 1033
Decision Date04 January 2021
Docket NumberSJC-12883
Parties Christopher P. KAUDERS & another v. UBER TECHNOLOGIES, INC., & another.
CourtUnited States State Supreme Judicial Court of Massachusetts

Felicia H. Ellsworth, Boston, for the defendants.

W. Paul Needham, Boston, for the plaintiffs.

The following submitted briefs for amici curiae:

Bruce H. Stern, of New Jersey, Jeffrey R. White, of the District of Columbia, Kathy Jo Cook, Thomas R. Murphy, Kevin J. Powers, Kristie A. LaSalle, Lauren G. Barnes, & Michael J. McCann for Massachusetts Academy of Trial Attorneys & another.

Ben Robbins & Martin J. Newhouse, Boston, for New England Legal Foundation.

Archis A. Parasharami, of the District of Columbia, & Steven P. Lehotsky for the Chamber of Commerce of the United States of America.

Karla Gilbride, of the District of Columbia, Rhea Ghosh, of New York, & Stuart Rossman for Public Justice, P.C., & another.

Present: Lenk, Gaziano, Lowy, Budd, Cypher, & Kafker, JJ.3

KAFKER, J.

Plaintiffs Christopher Kauders and Hannah Kauders commenced a lawsuit against defendants Uber Technologies, Inc., and Rasier, LLC (collectively, Uber),4 in the Superior Court, claiming, among other things, that three Uber drivers, in violation of G. L. c. 272, § 98A, refused to provide Christopher Kauders with rides because he was blind and accompanied by a guide dog. Each of the plaintiffs registered with Uber through its cellular telephone application (app). Citing a provision in its terms and conditions, Uber sought to compel arbitration. The plaintiffs opposed arbitration on various grounds, including that there was no enforceable arbitration agreement. The judge granted Uber's motion, and the parties arbitrated their dispute in early 2018. On June 4, 2018, the arbitrator issued findings and a decision, ruling in favor of Uber on all of the plaintiffs' claims.

On June 25, 2018, the United States Court of Appeals for the First Circuit issued a decision in Cullinane v. Uber Techs., Inc., 893 F.3d 53, 62 (1st Cir. 2018) ( Cullinane II ), concluding that Uber's registration process did not create a contract because it did not provide reasonable notice to users of the terms and conditions. Several months later, after Uber moved to confirm the arbitration award, the judge who had granted the motion to compel arbitration allowed a motion for reconsideration and reversed his earlier decision, concluding that there was no enforceable contract requiring arbitration. In this appeal, Uber contends that the judge had no choice but to confirm the arbitration award once the plaintiffs failed to challenge the award within thirty days.

We conclude that the issue of arbitrability5 was preserved for appeal. We also conclude that Uber's terms and conditions did not constitute a contract with the plaintiffs. The app's registration process did not provide users with reasonable notice of the terms and conditions and did not obtain a clear manifestation of assent to the terms, both of which could have been easily achieved. Indeed, a review of the case law reveals that Uber has no trouble providing such reasonable notice and requiring express affirmation from its own drivers. Here, in remarkable contrast, both the notice and the assent are obscured in the registration process. As a result, Uber cannot enforce the terms and conditions against the plaintiffs, including the arbitration agreement at issue here.6

1. Background. We recite the undisputed facts as alleged in the complaint and as alleged by the parties in their filings on Uber's motion to compel arbitration.

a. Uber's registration process. Uber describes itself as a technology company that allows its users to request transportation services from drivers in their geographic area through its app. Before they can request trips, users must register with Uber. Users can register by means of their cellular telephones by using the app.

Christopher Kauders's registration process via the app involved three steps, with each step involving a separate screen. The first screen was titled "CREATE AN ACCOUNT." This title appeared in a gray bar at the top of the screen. The rest of the screen was a dark color. In the middle of the screen, there was white text that stated, "We use your email and mobile number to send you ride confirmations and receipts." Below the text, a keypad appeared by which the user could enter the required information. On this screen, the user was required to enter an e-mail address, a mobile telephone number, and a password. Once the user entered this information, a button in the top right corner of the screen that stated "NEXT" was enabled. All of the information was provided on a single screen; there was no need for the user to scroll to review any information. The user was required to press (or "click") "NEXT" to move to the second screen.

The second screen was titled "CREATE A PROFILE." The title again appeared in a gray bar at the top of the screen. On this screen, which has a similar dark background, the user was required to enter a first and last name and had the option to add a photograph. In the middle of this screen, white text stated, "Your name and photo helps your driver identify you at pickup." As with the first screen, a keypad appeared with which the user could enter the requested information. Also like the first screen, a button in the top right corner that stated "NEXT" was enabled once the user entered the required information.

The third screen was titled "LINK PAYMENT." Like the first two screens, the third screen had a dark background with a gray bar across the top. Under the gray bar, there was a white, rectangular field in which the user was required to enter a credit card number. Under the box, white, boldface text stated "scan your card" and "enter promo code." In the middle of the screen, below the word "OR" in white text, there was a large, dark button labeled "PayPal" that provided another mechanism for entering payment information.7

At the bottom of the screen, there was white text that stated, "By creating an Uber account, you agree to the Terms & Conditions and Privacy Policy." This text was oddly divided into two parts. The first part of the sentence, which informed the user, "By creating an Uber account, you agree to the," was far less prominently displayed than the words "Terms & Conditions and Privacy Policy," which followed. The second part of the sentence -- "Terms & Conditions and Privacy Policy" -- was in a rectangular box and in boldface font. According to Uber, this presentation was used to indicate that the box was a clickable hyperlink. If a user clicked this box, the user would be taken to a screen that contained other clickable buttons, labeled "Terms & Conditions" and "Privacy Policy." Once at this linked screen, if the user clicked the "Terms & Conditions" button, the terms and conditions would appear on the screen.

If the user interacted with the rectangular field at the top of the third screen, a number keypad appeared in the bottom half of the screen. The user could use the number keypad to enter credit card information. Once this keypad appeared, the white text and the link from the bottom of the screen moved to the middle of the screen between the rectangular box and the keypad. After a user filled in the credit card information, a button labeled "DONE" became clickable in the top right corner. Once the user clicked "DONE," the user completed the account creation process.

Using this process, Christopher Kauders registered with Uber through the app on June 27, 2014. He used a cellular telephone to do so. Hannah Kauders registered with Uber sometime around October 2015.8

b. Uber's terms and conditions.9 Uber's terms and conditions are extensive and far reaching, touching on a wide variety of topics. Uber can amend the terms and conditions whenever it wants and without notice to the users that have already agreed to them. In fact, under the terms and conditions, the burden is on the user to frequently check to see if any changes have been made.10 Yet, even if a user somehow detects a change, there is no way for the user to object to or contest any of the changes, as the changes are automatically binding on the user.

The terms and conditions contain numerous provisions, many of which are extremely favorable to Uber. There is a broad limitation of liability provision. This provision purports to release Uber from all liability for

"ANY INDIRECT, PUNITIVE, SPECIAL, EXEMPLARY, INCIDENTAL, CONSEQUENTIAL OR OTHER DAMAGES OF ANY TYPE OR KIND (INCLUDING PERSONAL
INJURY, LOSS OF DATA, REVENUE, PROFITS, USE OR OTHER ECONOMIC ADVANTAGE). [UBER] SHALL NOT BE LIABLE FOR ANY LOSS, DAMAGE OR INJURY WHICH MAY BE INCURRED BY YOU .... YOU EXPRESSLY WAIVE AND RELEASE [UBER] FROM ANY AND ALL ANY [sic ] LIABILITY, CLAIMS OR DAMAGES ARISING FROM OR IN ANY WAY RELATED TO THE THIRD PARTY TRANSPORTATION PROVIDER."

As the judge below recognized, this provision "totally extinguishes any possible remedy" against Uber.11

Uber also seeks to separate itself entirely from the drivers providing the ride services. The terms and conditions state in capital letters:

"[UBER] DOES NOT PROVIDE TRANSPORTATION SERVICES, AND [UBER] IS NOT A TRANSPORTATION CARRIER. IT IS UP TO THE THIRD PARTY TRANSPORTATION
PROVIDER, DRIVER OR VEHICLE OPERATOR TO OFFER TRANSPORTATION SERVICES WHICH MAY BE SCHEDULED THROUGH USE OF THE APPLICATION OR SERVICE. [UBER] OFFERS INFORMATION AND A METHOD TO OBTAIN SUCH THIRD PARTY TRANSPORTATION SERVICES, BUT DOES NOT AND DOES NOT INTEND TO PROVIDE TRANSPORTATION SERVICES OR ACT IN ANY WAY AS A TRANSPORTATION CARRIER, AND HAS NO RESPONSIBILITY OR LIABILITY FOR ANY TRANSPORTATION SERVICES PROVIDED TO YOU BY SUCH THIRD PARTIES."

The terms and conditions also include a strict no-refund policy. They disclaim all warranties "to the maximum extent permitted by law," including any warranties as to the "reliability, safety, timeliness, [or] quality" of any services...

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