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Meyer v. Uber Technologies, Inc.

United States Court of Appeals, Second Circuit

August 17, 2017

Spencer Meyer, Individually and on behalf of those similarly situated, Plaintiff-Counter-Defendant-Appellee,
v.
Uber Technologies, Inc., Defendant-Counter-Claimant-Appellant, Travis Kalanick, Defendant-Appellant, Ergo, Third-Party Defendant.

          Argued: March 24, 2017

         On Appeal from the United States District Court for the Southern District of New York

         In this putative class action filed in the United States District Court for the Southern District of New York (Rakoff, J.), a user of a technology company's car service smartphone application alleges that the company and its former chief executive engaged in illegal price fixing. Defendants moved in the district court to compel arbitration, contending that the user agreed to a mandatory arbitration provision in the company's terms of service when he registered for an account using the application. The district court denied the motions. In these consolidated appeals, defendants contend, inter alia, that the district court erred in concluding that the notice of the Terms of Service was not reasonably conspicuous and that the user did not unambiguously manifest assent to the arbitration provision by registering for an account.

          Jeffrey A. Wadsworth (Brian Marc Feldman, Edwin Michael Larkin, III, Gregory M. Dickinson, on the brief), Harter Secrest & Emery LLP, Rochester, New York, and Bryan L. Clobes, Ellen Meriwether, Cafferty Clobes Meriwether & Sprengel LLP, Philadelphia, Pennsylvania, and Matthew L. Cantor, Ankur Kapoor, Constantine Cannon LLP, New York, New York, for Plaintiff- Counter-Defendant-Appellee Spencer Meyer.

          Theodore J. Boutrous Jr. (Daniel G. Swanson, Cynthia E. Richman, Joshua S. Lipshutz, Reed Brodsky, on the brief), Gibson, Dunn & Crutcher LLP, Los Angeles, California, Washington, D.C., and New York, New York, for Defendant-Counter-Claimant- Appellant Uber Technologies, Inc.

          Karen L. Dunn, William A. Isaacson, Ryan Y. Park, Peter M. Skinner, Boies, Schiller & Flexner LLP, Washington, D.C. and New York, New York, for Defendant-Appellant Travis Kalanick.

          Jonathan D. Selbin, Jason L. Lichtman, Lieff Cabraser, Heimann & Bernstein, LLP, New York, New York, and Jahan Sagafi, Paul W. Mollica, Outten & Golden LLP, San Francisco, California and Chicago, Illinois, for Amicus Curiae Public Justice, P.C.

          Alexander H. Schmidt, Wolf Haldenstein Adler Freeman & Herz LLP, New York, New York, for Amici Curiae Law Professors.

          Rees F. Morgan, Mark L. Hejinian, Skye D. Langs, Coblentz Patch Duffy and Bass LLP, San Francisco, California, for Amici Curiae Internet Association and Consumer Technology Association.

          Kate Comerford Todd, Warren Postman, U.S. Chamber Litigation Center, Washington, D.C., and Andrew J. Pincus, Evan M. Tager, Archis A. Parasharami, Mayer Brown LLP, Washington, D.C., for Amicus Curiae The Chamber of Commerce of the United States of America.

          Before: Raggi, Chin, and Carney, Circuit Judges.

          CHIN, CIRCUIT JUDGE

         In 2014, plaintiff-counter-defendant-appellee Spencer Meyer downloaded onto his smartphone a software application offered by defendant-counter-claimant-appellant Uber Technologies, Inc. ("Uber"), a technology company that operates, among other things, a ride-hailing service. Meyer then registered for an Uber account with his smartphone. After using the application approximately ten times, Meyer brought this action on behalf of himself and other similarly situated Uber accountholders against Uber's co-founder and former Chief Executive Officer, defendant-appellant Travis Kalanick, alleging that the Uber application allows third-party drivers to illegally fix prices. The district court joined Uber as a defendant and denied motions by Kalanick and Uber to compel arbitration. In doing so, the district court concluded that Meyer did not have reasonably conspicuous notice of and did not unambiguously manifest assent to Uber's Terms of Service when he registered. The district court held that Meyer therefore was not bound by the mandatory arbitration provision contained in the Terms of Service.

         For the reasons set forth below, we vacate and remand for further proceedings consistent with this opinion.

         BACKGROUND

         A. The Facts

         The facts are undisputed and are summarized as follows: Uber offers a software application for smartphones (the "Uber App") that allows riders to request rides from third-party drivers. On October 18, 2014, Meyer registered for an Uber account with the Uber App on a Samsung Galaxy S5 phone running an Android operating system. After registering, Meyer took ten rides with Uber drivers in New York, Connecticut, Washington, D.C., and Paris.

         In support of its motion to compel arbitration, Uber submitted a declaration from Senior Software Engineer Vincent Mi, in which Mi represented that Uber maintained records of when and how its users registered for the service and that, from his review of those records, Mi was able to identify the dates and methods by which Meyer registered for a user account. Attached to the declaration were screenshots of the two screens that a user registering in October 2014 with an Android-operated smartphone would have seen during the registration process.[1]

         The first screen, at which the user arrives after downloading the application and clicking a button marked "Register/ is labeled "Register" and includes fields for the user to enter his or her name, email address, phone number, and a password (the "Registration Screen"). The Registration Screen also offers the user the option to register via a Google or Facebook account. According to Uber's records, Meyer did not sign up using either Google or Facebook and would have had to enter manually his personal information.[2]

         After completing the information on the Registration Screen and clicking "Next, " the user advances to a second screen labeled "Payment" (the "Payment Screen"), on which the user can enter credit card details or elect to make payments using PayPal or Google Wallet, third-party payment services. According to Uber's records, Meyer entered his credit card information to pay for rides. To complete the process, the prospective user must click the button marked "REGISTER" in the middle of the Payment Screen.

         Below the input fields and buttons on the Payment Screen is black text advising users that "[b]y creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY." See Addendum B. The capitalized phrase, which is bright blue and underlined, was a hyperlink that, when clicked, took the user to a third screen containing a button that, in turn, when clicked, would then display the current version of both Uber's Terms of Service and Privacy Policy.[3] Meyer recalls entering his contact information and credit card details before registering, but does not recall seeing or following the hyperlink to the Terms and Conditions. He declares that he did not read the Terms and Conditions, including the arbitration provision.

         When Meyer registered for an account, the Terms of Service contained the following mandatory arbitration clause:

Dispute Resolution
You and Company agree that any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof or the use of the Service or Application (collectively, "Disputes") will be settled by binding arbitration, except that each party retains the right to bring an individual action in small claims court and the right to seek injunctive or other equitable relief in a court of competent jurisdiction to prevent the actual or threatened infringement, misappropriation or violation of a party's copyrights, trademarks, trade secrets, patents or other intellectual property rights. You acknowledge and agree that you and Company are each waiving the right to a trial by jury or to participate as a plaintiff or class User in any purported class action or representative proceeding. Further, unless both you and Company otherwise agree in writing, the arbitrator may not consolidate more than one person's claims, and may not otherwise preside over any form of any class or representative proceeding. If this specific paragraph is held unenforceable, then the entirety of this "Dispute Resolution" section will be deemed void. Except as provided in the preceding sentence, this "Dispute Resolution" section will survive any termination of this Agreement.

Appellants' App. at 111-12.[4] The Terms of Service further provided that the American Arbitration Association ("AAA") would hear any dispute, and that the AAA Commercial Arbitration Rules would govern any arbitration proceeding.

         B. The District Court Proceedings

         On December 16, 2015, Meyer, on behalf of a putative class of Uber riders, filed this action against Kalanick, alleging that the Uber App allows drivers to fix prices amongst themselves, in violation of the Sherman Act, 15 U.S.C. § 1, and the Donnelly Act, N.Y. Gen. Bus. Law § 340. Meyer amended his complaint on January ...


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