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Uber Can’t Force Arbitration Over Pricing Antitrust Claim (bloomberg.com)
78 points by lnguyen on July 30, 2016 | hide | past | web | favorite | 32 comments



Second paragraph:

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

Assumed this meant that if they'd told him a bit further in advance (e.g. 30 days, etc), it'd be fine, but no. Further down the page:

>In the New York case, Rakoff said that Meyer registered with Uber in October 2014 using a Samsung smartphone. The registration form included the words "By creating an Uber account, you agree to the Terms of Service & Privacy Policy," according to the judge.

> The form didn’t require users to click on the "Terms of Service & Privacy Policy" to register. Users who clicked on the link were taken to “nine pages of highly legalistic language that no ordinary consumer could be expected to understand,” Rakoff said. The arbitration clause, which includes a waiver of the right to sue in court, was at the bottom of Page 7, he said.

> Rakoff ruled the registration process didn’t provide sufficient notice to Meyer that he was waiving his right to have his claim heard by a jury in court.

Which seems a lot more interesting.


I'm pleased by the ruling that throwing pages of legal jargon at a layman doesn't constitute sufficient notice. Seriously even if I read every T&C I agreed to I'd likely have difficulty fully understanding it, and I like to think I'm not completely stupid.


Doesn't this imply that most EULAs and TOS agreements are largely unenforceable? They're all done this way.


I can't speak for anyone else, but I know when we've talked to real lawyers about T&Cs for online B2C services (based in England) their view was similar to the judge's comments in this case. In short, if your terms are fair and reasonable then it's a binding agreement and it is likely to be upheld by a court in the event of a dispute. However, if you have an unusual or potentially surprising term then it is more likely to stand up if it's prominently disclosed near the start of the terms, and less likely to stand up if it's buried deep inside. For example, in the terms for a service that was doing something new with a certain technology, we included a short but realistic note about certain known limitations of that technology prominently and early. As an aside, the same legal advice recommended writing in plain English rather than legalese as much as possible.


This is the norm in the EU. Surprising clauses or those that put the customer at a disadvantage are void, and there is lots of leeway for a judge to put clauses in either of these buckets.


Yeah they basically optimize for it. No matter how well-designed the rest of the site is, the TOS will be in some nearly unusable format in an ugly font and capital letters. It's like they all hired lawyers who told them, "well, that's technically informing them, right?"


Yeah, this is a relatively unusual decision to find that a user agreement did not give enough notice of an arbitration clause.


Well, a contract is a "meeting of the minds", and the situation becomes quite interesting when one of those "minds" (as in this case) has (almost certain) knowledge that the other party has not read the "user agreement"...


Actually it's pretty normal. Existing cases have found that the phrasing and website design matters significantly.

See for example:

https://termsfeed.com/blog/how-not-place-i-agree-to-checkbox...

https://en.wikipedia.org/wiki/Nguyen_v._Barnes_%26_Noble,_In....

http://blog.ericgoldman.org/archives/2014/07/23andmes-browse...


Agreed. This is likely the judge "protesting" what he believes to be unjust law, even though he knows his decision will likely be overturned on appeal. EULAs and forced arbitration provisions have been upheld many times.

And just to follow up, "protesting" isn't really the right word. A lot of times district court judges will write opinions supporting minority positions in the law in an attempt to influence higher judges and to provide a "template" legal reasoning for higher judges should they want to overturn precedent.


There's already precedent, but "activist judges"


When I enter into a business contract, I have a lawyer review the documents before I sign them. When I download an app or signup for a web service, I don't–but the legal documents that I'm signing are no less complex in those cases. It's unreasonable to expect a serious understanding of these contracts on the part of the user, and it's unreasonable to expect them to hire a lawyer to be sure they're OK with what they're agreeing to. The costs, multiplied across all customers, would be prohibitive. For mass market services like this, there should be a better way.


> For mass market services like this, there should be a better way.

I think we're starting to see it via cases like this. A convoluted, lengthy, requires-a-law-degree contract like Uber's may start to carry a risk (via judges treating it as malicious and unenforceable) versus a simpler, more fair and balanced one.


> I think we're starting to see it via cases like this.

Not really. This is just one case where you happen to agree with a judge's decision, it hardly means that software companies are going to start including one-page EULA's into their software. For decades these huge EULAs have worked quite well for most companies and this case won't change that.


I'd like to see a standardization of EULAs along the lines of Creative Commons licensing. They have a human readable version of their licensing, logos/icons for each, and you create one by answering a few basic questions.


I imagine this would end up in a situation where most companies ask for everything, just like the privacy / permissions requests we see when installing mobile apps.

It seems like it would be a lot better than what we currently have, though. At least there would be a market for companies that aren't shitty about it.


This is a laudable goal, but sadly not a realistic one. The potential search space is infinite, and unlike CC, you couldn't have "Use another licence if none of these works for you" as an option without undermining the entire system.

I'd definitely be in favour of standardising some basic assumptions that all suppliers and all customers of some common types of product or service could rely on unless they explicitly and prominently agreed otherwise, though. It doesn't take a 10 page legalese monster to buy a loaf of bread from my local store, but there are still rules to protect both the store and me in that transaction.


> The arbitration clause, which includes a waiver of the right to sue in court, was at the bottom of Page 7, he said.

Can we just go ahead and start restricting the use of these clauses? They have a place in a reasonable contract between businesses, but using them to prevent customers suing or participating in class actions is completely ridiculous and should be illegal.


Ok, non-lawyer here. I keep on hearing about arbitration clauses being a bad thing. Isn't arbitration kind of like a privatized court system that's also legally binding? Isn't this much faster than using the traditional court system? I would imagine this would be a GOOD thing. What is the disadvantage of arbitration from a consumer's point of view?


> What is the disadvantage of arbitration from a consumer's point of view?

Chiefly, that the arbitrator is almost universally chosen by the company or for the benefit of the company and the customer (I object, strenuously, to being called a "consumer") almost never wins.

http://www.nytimes.com/2015/11/02/business/dealbook/in-arbit...


I don't get it, isn't the arbitrator supposed to be an unbiased third party? Whether or not he's chosen by the company should be irrelevant.


Yes, but for a someone to be truely unbiased they need to be completely independent. If there's any sort of relationship to either party they will be biased somehow.

A good approach would be the random selection of a few members of the general populace, or the use of a third party skilled in legal matters with payment guaranteed no matter what the verdict.

It's like we've seen this problem before


Do you think the arbitrator would like to be chosen by the company again in future?


> Whether or not he's chosen by the company should be irrelevant.

This only holds if the people at that company are morally-perfect robots who never make choices subtly biased in their own favor.


In a perfect world it wouldn't matter, because the arbiter would be neutral.


"A perfect world" is irrelevant.


One aspect is that arbitration agreements almost always block class action lawsuits which can be hugely advantageous to a company. If a group of people have their rights or contacts violated, each must now pursue it individually, at potentially high personal expense in a system the company has more control over. Class action lawsuits are far from flawed, but they can be a terrifying prospect to companies. With arbitration, they now get to fight N people one on one instead of a talented team of big time lawyers indirectly representing all wronged parties (and keeping all the money usually, but it still punishes the company, and you can at least still bring your own suit).


You're waiving your right to have your case be heard by a judge and jury. You can still opt for arbitration without waiving those rights, but you can be guaranteed that there is a reason you're being asked to waive them by a large company (it's so they can ignore the law and the resulting costs & settlements lean in their favor slightly or significantly better than they would from actual litigation).


"Arbitration: The Good, The Bad, And The Ugly"

http://apps.americanbar.org/buslaw/newsletter/0038/materials...


While I'm against binding arbitration agreements for person to business agreements, this seems like the exact kind of frivolous lawsuit arbitration is designed to protect companies against. It's 2016 and people are still upset at surge pricing?


People have many reasons to be upset at surge pricing. For example, how transparently do they use surge pricing? How can we be certain it's due to demand and not arbitrarily adding it? Why is it fair that if I'm out at New Years at 12-1am, or Halloween at the same time, that I should pay 6-7-10x the normal price, which could turn a $10-$20 ride into a multiple hundred dollar ride? Is it fair because an algorithm put it in place, and just because it may be "fair", does that make it right, e.g. the terrorist attacks in Australia when demand when through the roof and surge pricing went up to 9x? Are we sure that every part of that surge price is going to the driver, which it's supposed to?

Of course there are valid reasons for surge pricing, one of which is to keep supply with demand and ensure that the driver feels justly compensated for going somewhere they might not want to, but to say people aren't justified in their being upset at it because "it's 2016" is disrespecting the reality of the arguments against it.


I don't know about this one. No one reads the terms of services for simple web services or apps. But I feel that drivers should have read the TOS because Uber is paying them and it is common sense to read any and all papers when doing business.




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