Second Circuit Reverses Decision Concerning Online Contract Formation

Courts Second Circuit Appellate Arbitration Contracts

On August 17, 2017, the Second Circuit Court of Appeals vacated and remanded a district court order denying a defendant's motion to compel arbitration where the plaintiff had accepted an arbitration agreement through a smart phone application. See Meyer v. Uber Technologies Inc., et al., 2017 WL 3526682, (2d Cir. 2017). There, the plaintiff had created an account with the defendant by entering personal and payment information into a mobile application. On the final account creation screen, the application presented a button marked “REGISTER,” below which was black text advising users that “[b]y creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY.” The capitalized language was a hyperlink, which led to a copy of an agreement containing an arbitration clause. The trial court held that this notice was not “reasonably conspicuous” and, therefore, the plaintiff did not—unambiguously—manifest assent to the arbitration provision by registering an account. On appeal, the Second Circuit reversed, finding that a “reasonably prudent smartphone user” would have been on “reasonably conspicuous notice” of the terms and conditions of service and that the text beneath the registration button put the plaintiff on notice that clicking “REGISTER” meant acceptance of those terms—regardless of whether he actually reviewed them. Relevant to the court’s analysis were proximity of the hyperlink to the “REGISTER” button and the absence of clutter, which might have otherwise impaired the plaintiff’s ability to locate the hyperlink.