Uber, other companies with online terms and conditions need to stop sneaking stuff into them, court rules

The Supreme Judicial Court ruled today that Uber did a crappy job of alerting new users that by creating an account they were agreeing to a host of conditions they might not even realize existed, at least not until they sued Uber over something and the company pulled out those conditions and did the legal equivalent of "gotcha!"

Although the ruling comes in the case of just one company with a mobile sign-up page, the court put other companies doing business online that they're going to have to take a hard look at how they present their terms of service to Massachusetts consumers, under a two-pronged test the court developed to determine the validity of online contracts - "whether there is reasonable notice of the terms and a reasonable manifestation of assent to those terms."

In its ruling today, the state's highest court ruled that the way Uber displayed a link to its terms and conditions - on the third page of its signup process, and in a way that a person could complete account registration without ever seeing them - means Uber did not have an enforceable contract with Massachusetts residents who signed up for its service - and so it could not enforce a clause that mandates users with issues agree to binding arbitration rather than filing a suit. Corporations love arbitration, rather than lawsuits that can stretch out for years and sometimes go against them.

At the heart of the issue is a suit by Christopher Kauders, who is blind and has a guide dog, alleging that Uber failed to do anything about drivers who kept refusing to pick him up in 2015 and 2016, in violation of his rights under the Americans with Disabilities Act. Based on the Uber terms and conditions, a judge told him he had to go to private arbitration, where an arbitrator sided with Uber, saying it did not have a sufficient connection to its drivers to be responsible for their refusal to pick him up.

But just three weeks after the arbitrator's ruling, the federal Court of Appeals for the First Circuit in Boston ruled, in another case, that Uber customers were not forced to go to arbitration because they never got "reasonable" notice of the company's terms and conditions when signing up for the service. Kauders filed a request for reconsideration in his case, and a state judge agreed to reverse the arbitration because of the federal case.

In its ruling today, the SJC swept aside Uber's arguments that users have grown accustomed to online agreements that link out to voluminous terms and conditions and that the federal ruling shouldn't apply to Massachusetts law.

The court, in essence, said Uber's case disappears as easily as the link to its terms and conditions on its current signup pages.

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.

More specifically, the interface provided no way to prove that a user actually looked at any of the terms of what Uber said was a contract, which the court said included one clause that essentially waived all the user's rights to blame Uber for anything whatsoever and another that let Uber make changes to the agreement without notifying the user, who would have no way to even know about them, short of constantly downloading the agreement and scanning it for changes.

The court said it found it surprising that Uber did not create a signup process that requires users to, at a minimum, scan the agreement and provide assent, because it's built such a system for its drivers, whose online agreement required them to at least pretend to read terms and click "YES, I AGREE" before continuing to the next part of the sign-up process.

The court then dipped its toe into the specifics of mobile interface design to buttress its case that when it comes to Uber's online terms and conditions, the company was bad and should feel bad:

We also consider the specific placement in the app of the link to the terms and conditions. On all three screens that a user was required to fill out, the top of the screen was where the user was required to focus and fill in information. It was not until the third screen that any reference to the terms and conditions appeared. The hyperlink to the terms and conditions was also at the very bottom of this "LINK PAYMENT" screen. The purpose of the screen, as indicated by the title at the top, was for the user to enter payment information. The place to enter that information -- a white field set apart against a dark background -- was at the top of the screen. Under that field, there were two separate pieces of text in boldface, white font that related to the payment purpose of the screen. There was also a large button in the middle of the screen that provided another mechanism through which a user could link a payment. Nothing about this third screen, therefore, conveyed to a user that he or she should open a link that would reveal an extensive set of terms and conditions at the bottom of the screen to which the user was agreeing. As discussed previously, the statement explaining the connection between creating the account and agreeing to the terms, which would encourage opening and reviewing the terms, was displayed less prominently than the other information on the screen.

Similarly, the title of the screen, as well as much of the information on the screen, focused on payment information, not the terms and conditions. Other words on the screen also appeared as prominently as the link, if not more so. For example, the phrases "scan your card" and "enter promo code" appeared to be in boldface as well as the same size as the link. Further, the PayPal button appeared in the middle of the screen in a different color and in what appeared to be a larger box than the terms and conditions link. Put succinctly, "the presence of other terms on the same screen with a similar or larger size, typeface, and with more noticeable attributes diminished the hyperlink's capability to grab the user's attention." Cullinane II, 893 F.3d at 64.

We also observe that a user could complete the "LINK PAYMENT" screen and the account creation process without ever focusing on the link or the notice on the screen. Similarly, the title of the screen, as well as much of the information on the screen, focused on payment information, not the terms and conditions. Other words on the screen also appeared as prominently as the link, if not more so. For example, the phrases "scan your card" and "enter promo code."

And so, the court concluded:

In such a transaction, a user may reasonably believe he or she is simply signing up for a service without understanding that he or she is entering into a significant contractual relationship governed by wide-ranging terms of use. Instead of requiring its users to review those terms and conditions as it appears to do with its drivers, Uber has designed an interface that allows the registration to be completed without reviewing or even acknowledging the terms and conditions.In these circumstances, Uber has failed to show that it provided the plaintiffs with reasonable notice of the terms and conditions. As we conclude that there was not reasonable notice of the terms, a contract cannot have been formed here. We nonetheless observe that the interface here also obscured the manifestation of assent to those terms. The interface did state in one sentence broken into two parts, one more prominent than the other, "By creating an Uber account,you agree to the Terms & Conditions and Privacy Policy."The words "Terms & Conditions and Privacy Policy" were more prominently displayed than what it meant to create the account. Uber claims this highlights the terms and conditions. A reasonable alternative interpretation is that it downplays the legal significance of creating the account.

The ruling sends Kauder's specific allegations back to Suffolk Superior Court for hearings and a potential trial.