Sarchi v. Uber Technologies, Inc.

• Decision Date: 27 January 2022
• Docket Number: Docket: Cum-21-117
• Citation: 2022 ME 8,268 A.3d 258
• Parties: Patricia SARCHI, et al. v. UBER TECHNOLOGIES, INC., et al.
• Court: Maine Supreme Court

268 A.3d 258

2022 ME 8

Patricia SARCHI, et al.

v.UBER TECHNOLOGIES, INC., et al.

Docket: Cum-21-117

Supreme Judicial Court of Maine.

Argued: October 6, 2021

Decided: January 27, 2022

Jesse E. Weisshaar, Esq., Shook, Hardy & Bacon L.L.P., Washington, District of Columbia; Daniel B. Rogers, Esq. (orally), Shook, Hardy & Bacon L.L.P., Miami, Florida; and Riley C. Mendoza, Esq., Shook, Hardy & Bacon L.L.P., Chicago, Illinois, for appellants Uber Technologies, Inc., and Rasier, LLC

Kristin L. Aiello, Esq. (orally), Disability Rights Maine, Augusta, for appellee Patricia Sarchi

Barbara Archer Hirsch, Esq., Maine Human Rights Commission, Augusta, for appellee Maine Human Rights Commission

Panel: STANFILL, C.J., and MEAD, GORMAN, JABAR, HUMPHREY, HORTON, and CONNORS, JJ.

HORTON, J.

[¶1] Uber Technologies, Inc., and Rasier, LLC, (collectively, Uber) appeal from an order denying their motion to compel arbitration entered by the Superior Court (Cumberland County, McKeon, J. ). Uber moved to compel arbitration pursuant to the Terms and Conditions (Terms) of its user agreement after Patricia Sarchi, a user of Uber's ride-sharing service, and the Maine Human Rights Commission (the Commission)¹ filed a complaint against Uber for violating the Maine Human Rights Act, 5 M.R.S. §§ 4592(8), 4633(2) (2021). We agree with Sarchi's contention that the Terms were not binding upon her under the circumstances and affirm the court's denial of Uber's motion to compel arbitration.

I. BACKGROUND

[¶2] The following undisputed facts are drawn from the motion court's order. Uber Technologies, Inc., is a business that offers a ride-sharing service through software applications (apps) for smartphones, including the Uber driver app and the Uber rider app, that enable registered riders to arrange and obtain rides from registered drivers. Rasier, LLC, is a wholly owned subsidiary of Uber Technologies, Inc., that contracts with persons who use the Uber driver app to register as Uber drivers and provide rides to registered Uber riders. Patricia Sarchi is blind and uses a guide dog. With the help of her son, Sarchi registered for an Uber rider account in June 2015 through the Uber app on her phone.

[¶3] The Uber rider app enables a user to register for an Uber rider account by interacting with a series of screens. The third screen in the registration process displays the heading "LINK PAYMENT" at the top in black font with a light background. The background of the screen beneath the heading is black. Under the heading, a white bar appears and indicates that the user should enter a credit or debit card number. Directly under the white bar, bright blue text reads "scan your card" and "enter promo code." At the bottom of the screen, light gray text reads "By creating an Uber account, you agree to the" and beneath that text is darker gray text, which is enclosed in a finely outlined gray box, that reads "Terms & Conditions and Privacy Policy." The darker gray text in the box is hyperlinked to a screen containing additional hyperlinks to the referenced Terms and Privacy Policy.

[¶4] Once the user clicks on the white bar to enter the credit card information, a keyboard pops up at the bottom of the screen, pushing the gray and darker gray text at the bottom upward toward the middle of the screen, as appears below in Figure 1. When the user has entered payment information, a small "DONE" button at the top right of the screen becomes clickable. Clicking "DONE" finalizes the creation of the user's account, although this is not specifically indicated anywhere on the screen. Thus, a user can complete the registration process and create a rider account without clicking on the hyperlink to the Terms and without reading or affirmatively acknowledging the Terms.

[¶5] At the time Sarchi registered, the Terms included the following language:

You agree that any dispute, claim or controversy arising out of or relating to these Terms or the breach, termination, enforcement, interpretation or validity thereof or the use of the Services (collectively, ‘Disputes ’) will be settled by binding arbitration between you and Uber .... You acknowledge and agree that you and Uber are each waiving the right to a trial by jury ....

[¶6] In contrast to Uber's app for registering riders, its app for registering drivers required express assent to the terms and conditions of Uber's driver contracts. The driver registration process required, first, that the user click a button labeled "YES, I AGREE" below the statement "By clicking below you represent that you have reviewed all the documents above and that you agree to all the contracts above." Then, after the user clicked "YES, I AGREE," a pop-up box with the words "PLEASE CONFIRM THAT YOU HAVE REVIEWED ALL THE DOCUMENTS AND AGREE TO ALL THE NEW CONTRACTS" appeared, requiring the user to click another "YES, I AGREE" button.

[¶7] In November 2016, Uber sent Sarchi and other registered riders an email notifying them of updates to the arbitration provision and providing a hyperlink to the updated Terms. Rather than requiring the user expressly to signify assent to the updated Terms, Uber's email stated that continued use of Uber constituted the user's agreement to the updated Terms. The updated language read as follows:

You and Uber agree that any dispute, claim or controversy arising out of or relating to (a) these Terms or the existence, breach, termination, enforcement, interpretation, or validity thereof, or (b) your access to or use of the Services at any time, whether before or after the date you agreed to the Terms, will be settled by binding arbitration between you and Uber, and not in a court of law.

[¶8] The email did not require users to open it or to read or acknowledge the updated Terms in order to remain registered or to use Uber's services, and Sarchi never became aware of the email or the updated Terms.

[¶9] On January 5, 2017, Sarchi, accompanied by her guide dog, attended a manicure appointment. After the appointment, she asked her manicurist to call her a taxi, and he suggested that she use Uber. Despite having downloaded the app in 2015, Sarchi had not used Uber. The manicurist used Sarchi's Uber app to request a ride for her. When the Uber driver arrived, he refused to drive Sarchi because of her guide dog.

[¶10] Sarchi and the Commission filed a complaint on April 23, 2020, alleging that Uber, through the act of its driver, had violated subsections 4592(8) and 4633(2) of the Maine Human Rights Act, 5 M.R.S. §§ 4592(8), 4633(2). Uber moved to compel Sarchi to arbitrate, and to dismiss or stay the action pending arbitration pursuant to the Federal Arbitration Act (FAA), 9 U.S.C.S. §§ 1 - 307 (LEXIS through Pub. L. 117-80, approved December 27, 2021, with a gap of Pub. L. 117-58 ), and, alternatively, the Maine Uniform Arbitration Act (MUAA), 14 M.R.S. §§ 5927 - 5949 (2021).

[¶11] The motion court held a nontestimonial hearing and denied the motion to compel on March 20, 2021.² The court concluded that Sarchi did not become bound by either the original Terms during the registration process in June 2015 or the updated Terms referenced in the November 2016 email. Noting the absence of Maine precedent on the enforceability of online contracts, the motion court rested its analysis on the traditional contract principle of mutual assent and echoed the reasoning of the Massachusetts Supreme Judicial Court in Kauders v. Uber Technologies, Inc. , which discussed a very similar Uber rider interface. 486 Mass. 557, 159 N.E.3d 1033, 1040 (2021).

[¶12] Uber timely appealed.³ 14 M.R.S. §§ 1851, 5945(1)(A) (2021) ; M.R. App. P. 2B(c)(1).

II. DISCUSSION

A. Standard of Review

[¶13] "We review the denial of a motion to compel arbitration for errors of law and for facts not supported by substantial evidence in the record."⁴ Snow v. Bernstein, Shur, Sawyer & Nelson, P.A. , 2017 ME 239, ¶ 7, 176 A.3d 729 (quotation marks omitted).

B. Applicable Substantive Law

[¶14] This case involves issues of arbitration law and contract law. Both the FAA and the MUAA promote arbitration.⁵ See, e.g. , Snow , 2017 ME 239, ¶ 10, 176 A.3d 729 (stating that the "Maine legislature[ has a] strong policy favoring arbitration" (quotation marks omitted)); AT&T Mobility LLC v. Concepcion , 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (describing that the FAA "reflect[s] ... a liberal federal policy favoring arbitration" (quotation marks omitted)). However, to be enforceable, an arbitration agreement must constitute a validly formed contract. See Nisbet v. Faunce , 432 A.2d 779, 782 (Me. 1981) (holding that under the MUAA "parties to a dispute cannot be compelled to submit the controversy to arbitration unless they have manifested in writing a contractual intent to be bound to do so").⁶ Substantive arbitrability is governed by traditional rules of contract law. See, e.g. , V.I.P., Inc. v. First Tree Dev. Ltd. Liab. Co. , 2001 ME 73, ¶ 3, 770 A.2d 95 (holding that the MUAA renders arbitration invalid if "the parties did not agree to arbitrate," a determination to which "[g]eneral rules of contract interpretation apply"); First Options of Chi., Inc. v. Kaplan , 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) (explaining that "[w]hen deciding whether the parties agreed to arbitrate a certain matter ..., courts generally ... should apply ordinary state-law principles that govern formation of contracts").

[¶15] Under Maine contract law principles, "[a] contract exists when the parties mutually assent to be bound by all its material terms [and] the assent is either expressly or impliedly manifested in the contract." McClare v. Rocha , 2014 ME 4, ¶ 16, 86 A.3d 22 (quotation marks omitted). "It is essential to the formation of a valid and enforceable contract that there be a meeting of the minds of the parties to the contract, i.e. a mutual assent to be bound by its terms ...." Ouellette v. Bolduc , 440 A.2d 1042, 1045 (Me. 1982). We have held, however, that a party...