Uber Rider Urges 2nd Circ. To Uphold Arbitration Denial in Price-Fixing Lawsuit

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An Uber rider is urging the Second Circuit Appeals Court to affirm a New York federal judge’s ruling that the ride-sharing company cannot force customers to arbitrate a putative antitrust class action lawsuit.

In July, U.S. District Judge Jed Rakoff said that Uber’s online user agreement didn’t provide plaintiff Spencer Meyer with sufficient notice of its arbitration policy for it to be binding.

He “properly” denied Uber’s request to throw out the antitrust lawsuit over the company’s practice of raising prices during periods of high demand and have the matter sent to an arbitrator, the motion states.

“Applying well-established California contract law and Second Circuit precedent, the court concluded that the small and relatively obscure text on Uber’s payment screen did not provide reasonably conspicuous notice to Plaintiff that he was agreeing to contractual terms merely by entering his payment information and pressing a ‘Register’ button,” Meyer said.

Meyer pointed out that just three months ago the Second Circuit appeals court in Nicosia v. Amazon.com Inc. “reiterated its skepticism that such screens could bind users to arbitration and overturned district court’s conclusion to the contrary.”

Similar to the Second Circuit’s precedent in Nicosia, the court found that the “key words were in much smaller font an not in any way highlighted, that the terms-of-service hyperlink was not in close proximity to the register button, and that there was no ‘I agree’ button or any other aspect of the screen design from which to find an unambiguous manifestation of assent.”

Meyer, an Uber customer from Connecticut, sued the ride share company’s CEO Travis Kalanick in December for allegedly participating in a price-fixing scheme with drivers that reportedly raised Uber prices during periods of high demand.

Because Uber takes a certain percentage of every driver’s earnings, the lawsuit claimed both Uber and its drivers benefited from the allegedly calculated rise in prices.

Although the consumer lawsuit was initially filed only against Kalanick, the complaint was later amended to include Uber as a defendant, a move that prompted Uber to ask the court to compel arbitration.

However, Meyer claims he never consented to arbitration when he registered as an Uber customer.

In his July 29 order, Judge Rakoff agreed with Meyer finding that the arbitration clause was too concealed for the plaintiff to have reasonably agreed to it. Applying California law, the judge ruled that consumers registering for Uber service were not obligated to visit or click through those terms in the app version at issue, and therefore never assented to arbitration.

Uber and Kalanick appealed the ruling a week later, and in August, Judge Rakoff granted a request by Uber to put the price-fixing lawsuit on hold, while the ride-sharing company appealed his refusal to let them arbitrate the dispute.

The lawsuit was marred in controversy in August when it was revealed that Uber hired a private investigation firm Ergo to investigate Meyer and his counsel. However, Ergo told Judge Rakoff they were under the impression that Uber hired them over a security matter and not for purposes of this case.

Meyer is represented in the appeal by Brian Marc Feldman, Edwin Michael Larkin III and Jeffrey A. Wadsworth of Harter Secrest & Emery LLP, Matthew L. Cantor and Ankur Kapoor of Constantine Cannon LLP and Bryan L. Clobes and Ellen Meriwether of Cafferty Clobes Meriwether & Sprengel LLP.

The Uber Price-Fixing Class Action Lawsuit is Meyer v. Kalanick and Uber Technologies, Case No. 16-2750, in the U.S. Court of Appeals for the Second Circuit.