In a highly-anticipated decision (at least for those in the arbitration world), the Second Circuit yesterday vacated the district court’s opinion in Meyer v. Kalanick, 200 F. Supp.3d 408 (S.D.N.Y. 2016), which was authored by the well-known Judge Jed Rakoff.  The Second Circuit, in Meyer v. Uber Technologies, 2017 WL 3526682 (Aug. 17, 2017), found that plaintiffs, a putative class of Uber riders asserting price-fixing claims against Uber and its former CEO Travis Kalanick, received sufficient notice of an arbitration clause when they downloaded the Uber App.

The Court of Appeals noted that a user, when downloading the app and setting up an Uber account, must click through a payment page containing the text: “By creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY.”  (The Terms of Service are hyperlinked to the actual terms of the contract.) {Read the full opinion for the details of the download process and the various screens a user would have to click through to establish an Uber account.}

The Second Circuit, applying California law, found that plaintiffs, by downloading the App and clicking through the payment screen, received “reasonably conspicuous notice of the existence of contract terms” and the act of downloading and opening an account was “unambiguous manifestation of assent to those terms” such that a valid contract was formed.

I am not at all surprised at the outcome here; Judge Rakoff was one of the very few district court judges who concluded that downloading the Uber App and clicking through the various screens was NOT a manifestation of assent to be bound to Uber’s Terms of Service.  To date, lawsuits involving Uber have generated 189 federal and state court opinions (75 in the last year alone); many of them addressing the enforceability of its arbitration clause. Virtually every court has enforced that clause, which now also includes a delegation clause, delegating arbitrability decisions to arbitrators.

One interesting tidbit in the opinion is the court’s recognition of the universality of smartphone usage by  Americans everyday. The court wrote: “when considering the perspective of a reasonable smartphone user, we need not presume that the user has never before encountered an app or entered into a contract using a smartphone. Moreover, a reasonably prudent smartphone user knows that text that is highlighted in blue and underlined is hyperlinked to another webpage where additional information will be found.”  So, for those whose first app download is Uber, the courts deem you to have downloaded many apps in the past with Terms of Service that are hyperlinked and include an arbitration clause.

In addition to many rides to and from airports, we now can thank Uber for its vast contribution to US arbitration jurisprudence!

Jill Gross is a Professor of Law and the Director of the Investor Rights Clinic at Pace Law. She teaches the Investor Rights Clinic and Seminar, Mediation and Arbitration, Professional Responsibility, and Securities Litigation and Enforcement. She has published numerous law review articles in the area of dispute resolution and investor justice, and has been quoted in the national media on issues relating to securities arbitration. She is also a contributor to ADR Prof Blog.