A passenger of a taxi is seriously hurt in an accident.  A claim is commenced and if the offer of the insurance company is not acceptable, the injured person exercises his or her constitutional rights to a let a jury of peers decide the liability and the monetary award.

A group of workers sue for violations of state or federal wage laws - they take their case to court and make their case to judge and jury. 

Unbeknownst to most Uber customers, drivers or the public, Uber is working overtime trying to deny the right to trial by jury by putting trial waivers and arbitration clauses into the fine print on its app.

  

Plaintiff lawyers know that compulsory arbitration severely lowers the value of a case.   For one reason, arbitrators are employed by private businesses catering to private businesses and get paid by the case.  A multibillion dollar company that gets sued constantly is a goldmine customer.  Arbitrators may strive to be impartial but they know who is buttering their bread.

  

In one recent case, a federal district court judge held that the Uber arbitration clause didn't apply - not because it is unconscionable as the 9th Circuit U.S. District Court held in Mohammed v. Uber Technologies, 109 F.Supp3d 1185, but because the design of the waiver did not make the assent of the user clear -a situation that Uber is trying to remedy by giving click "choices" when downloading the app.  Of course most consumers don't read the fine print of an app - and the "choice" is to simply not use the service at all - a point U.S. District Court Judge Jed S. Rakoff eloquently  acknowledged:

            "[I]n this brave new world, consumers are routinely forced to waive their constitutional right to a jury and their very access to courts, and submit instead to arbitration, on the theory that they have voluntarily agreed to do so in response to endless, turgid, often impenetrable sets of terms and conditions, to which, by pressing a button they have indicated their agreement." Meyer v. Kalanick  & Uber Technologies, Inc. 15 Civ 9796 (S.D.N.Y. July 29, 2016). 

The Meyer case involves a claim of violation of Antitrust law (thousands of drivers who Uber claims are not employees, all surge their prices at once) but the same logic is used in tort cases and labor law cases as well.  Indeed Uber's current app version states that the customer is "required to resolve any claim" against Uber in arbitration.  Uber may yet prevail on its attempt to bypass courts. One reason the case didn't go Uber's way, is that the court applied California Law and not (as Uber wished) New York Law , which more stringently recognizes the validity of arbitration clauses.  Moreover, recent US supreme court cases, such as DIRECTV, Inc. v. Imburgia, strongly favor arbitration clauses.

Uber faces unprecedented litigation, with labor law class actions brought in New York, California and Massachusetts. Indeed Uber faces litigation in almost every jurisdiction it operates.  One of the reasons is that it claims to be beyond the reach of seemingly applicable laws because it is simply a technology company. For example, drivers are told on radio advertisements and billboards that they will get a guaranteed income, not realizing that when the calculations are actually done, with their expenses and hours calculated, many make below minimum wage.  When they go to court, Uber says it is simply a technology application not a transportation company despite spending millions on advertising recruiting drivers and keeping a significant portion of every ride -worse, they may not have the ability to go to court at all, having unknowingly clicked away their rights.  In the Meyer case, Uber argues that antitrust laws don't apply because its supposedly independent drivers are not agreeing to raise their prices at once - a logarithm does it automatically.  Again, it argues that an arbitrator should decide the issue and not a court, because the customers clicked away their rights.

  

Uber bills itself as a "disrupter", presumably of the traditional brick and mortar taxi and livery companies.   There is no question that it has caused harm to those business, to their investors, their drivers, their employees and their lenders. More corrosive, perhaps, is how Uber is trying to disrupt the rights of its own customers, its drivers and traditional understandings of law.

 

Should you need additional information, ple ase contact Ethan B. Gerber  at [email protected]  or (718) 215-5300.