Questions in this Episode
- What is the best mindset to adopt when dealing with such documents?
- What are the drafting best practices for an arbitration section?
- What should drafters take away from Uber’s drafting developments?
- How can drafters create terms that are both user-friendly terms and comprehensive?
- What makes these documents functional?
This document has been reviewed and modified numerous times. It started with a blind man in Massachusetts who attempted to enter three different Uber cars using his seeing-eye dog. He was turned down by all three. He filed a lawsuit alleging disability discrimination. He was forced to go through arbitration, and when he lost, his lawyers filed an appeal.
They were able to come in front of the Massachusetts Supreme Court, which ruled that the litigant did not have to go through arbitration or be bound by it. He was not bound by the terms of service simply because they were available on the app. He did not have to take affirmative action to agree to them, so he was not bound by them. They further point out in the judgment that drivers are only Uber’s contractors who must press two buttons on the website, but this is not the case for passengers.
Reasonability vs Legalese – Choose Wisely
In law school, we learned that an offer can be accepted orally. That makes perfect sense in some cases. For example, if you call your plumber and tell him you have a broken pipe and your bathroom isn’t working, he won’t send over a document to review and sign. He’ll simply come over and perform the service. He accepted this arrangement by completing this work because you promised to pay him something. However, this does not apply to Uber, and the effectiveness of this is dubious for technological companies.
|By accessing or using the Services, you confirm your agreement to be bound by these Terms. If you do not agree to these Terms, you may not access or use the Services. These Terms expressly supersede prior agreements or arrangements with you regarding the use of the Services.
There’s a lot of legalese in these documents, and the terms you’re agreeing to aren’t exactly straightforward. It’s not very effective for Uber to say, “If you get in one of these cars from a third-party provider, it means you agree to all of our terms of service.”
Consider a reasonable standard. The entire interface is experimenting with technology, but how hard is it to add one more button?
Good Practices When Drafting an Arbitration Section
Whether you’re a rider or a user of the app, Uber makes a great deal out of the fact that you’re agreeing to binding arbitration. They spend an entire section on just arbitration, which is unique.
|Please be advised that this agreement contains provisions that govern how claims between you and Uber can be brought, including the arbitration agreement (see section 2 below). Please review the arbitration agreement below carefully, as it requires you to resolve all disputes with Uber on an individual basis and, with limited exceptions, through final and binding arbitration (as described in section 2 below) by entering into this agreement you expressly acknowledge that you have read and understand all of the terms of this agreement and have taken time to consider the consequences of this important decision.
The arbitration part is extensive and it details all of the ways you are waiving your right to a trial.
By using the app and agreeing to the terms of service, you agree to arbitrate, and there are only a few instances in which you can go to trial or bring this in a court of law. One shortcoming is that you’re stuck in arbitration, which entails a lot of things, including heavy fees.
How Documents Develop Over Time
Section (a) is extremely broad. It states that “any dispute, claim, or controversy in any way arising out of or relating to…” which suggests that any claims relating to the terms and previous versions should be resolved by arbitration. It also waives your right to a jury trial and prevents you from participating in class actions.
Section (b) is slightly different as it discusses the exceptions to arbitration and is drafted clearly. It discusses the three specific circumstances in which you can sidestep arbitration and proceed with litigation:
- if you have a small claim,
- If you have been sexually harassed or assaulted, or
- if you need injunctive relief (an arbitrator cannot give that).
The “sexually harassed or assaulted” qualifier has to do with Uber’s early days. There were several examples of drivers assaulting passengers, which coincided with the me-too movement. This is an updated version for 2017, immediately following the case. It may be due to the me-too movement, their own cases, or simply a public relations issue, but it’s a really interesting and distinct circumstance.
Learn From Mistakes
Include all the Details
Section (d) is also one-of-a-kind. As a rider, Uber walks you through what you need to do to initiate arbitration. It includes a thorough instruction manual, which is more than most companies will provide. They tell you what you need to do, which is to file a claim with the AAA, file a demand, and notify Uber’s legal department. They even inform you who will be the arbiter.
Draft User-friendly Terms
Uber is trying to avoid an argument that it would be too prohibitive to arbitrate the case in Maine, Florida or New York and only arbitrate a case in California as it makes things a lot more difficult.
Execution on the app is poor, which is why a Massachusetts judge decided against Uber in the case we previously discussed. It was ruled that just because Uber has everything correct in the arbitration clause does not mean that its users consent to be bound by it. Another thing that Uber did well was to require the person filing the case to pay all of the filing fees. It is a deterrent to the user, especially if they are unfamiliar with arbitration and are unaware of how expensive it can be.
In this episode of Contract Teardown from Law Insider, contract lawyer and litigator Farva Jafri tears down the arbitration clause in Uber’s terms of service. Uber has put a lot of care into covering the little details in their arbitration clause, but some states have said that’s still not enough, so let’s tear it down.
THE GUEST: Farva Jafri is a few things: a lawyer, an alternative home-builder, but most importantly, a zealous advocate for her clients. She has owned and operated legal funding, tech and real estate businesses. Jafri is also a visiting professor of business at universities. She can be reached on LinkedIn or through email at email@example.com.
THE HOST: Mike Whelan is the author of Lawyer Forward: Finding Your Place in the Future of Law and host of the Lawyer Forward community. Learn more about his work for attorneys at www.lawyerforward.com.
If you are interested in being a guest on Contract Teardown, please email us at firstname.lastname@example.org.
Mike Whelan [00:00:26] Hey, everybody, welcome back to the Contract Teardown Show from Law Insider. I’m Mike Whalen. The purpose in the show is exactly what it sounds like. We take contracts, we beat them up. We are mean to them, we insult them and their families, and then we’re nice to them. At the end, we lift them up a little bit emotionally. I hang out with smart friends like Farva Jafri Farva, How are you today?
Farva Jafri [00:00:46] I’m well, how are you?
Farva Jafri [00:01:19] That’s correct.
Mike Whelan [00:01:19] OK. So we’re looking at this document before we get started, Farva, tell me what this thing is. When are we going to run into it as a lawyer? When might we draft something like this? What is this document?
Mike Whelan [00:01:45] Yeah, it’s a common, pretty common click through-y agreement and I said, click through on purpose. We’ll talk about that later. But before we get to that Farva, tell me about you, what’s your background? What brings you to this kind of document?
Farva Jafri [00:01:57] So I’m a contract lawyer, I’m based in New York, I practice in New York, New Jersey, Illinois, Massachusetts and Maine, so I review different types of contracts for small businesses, for larger businesses, mid-sized businesses, typically tech companies, but sometimes just small businesses as well. So that’s me
Mike Whelan [00:02:16] Awesome, and you do some litigating if I am,.
Farva Jafri [00:02:19] Yes, I am.
Mike Whelan [00:02:20] So that’s sort of the a bit the interesting take that we’re we’re going to pull on this because we’re going to look at this as a document and you’re going to give some critique of this thing as a document, but also in the context of some litigation that went on in Massachusetts that we’re going to talk a little bit about. Before we get to that story, let’s start with the beginning of this thing and some big bolded words about arbitration. How do you feel about this early? Let’s get it out of the way you’re waiving your right to a normal trial. Good practice?
Farva Jafri [00:02:50] I would say for the company, it’s a good practice and also sort of for the consumer, it’s a good practice as well because you know what you’re getting right up front. I don’t know how effective it is and every single court, but they do. Uber does make a really big deal out of the fact that you are signing up for binding arbitration, whether you’re a rider or any user of the app. So they have it in the first section and then they go on to it and spend an entire second section on just arbitration alone, which is very unique.
Mike Whelan [00:03:19] Yeah, we’re going to dig into that. Give us the context a little bit. I know we talked a little bit. There’s this trial in Massachusetts will make sure to include an article in the blog post about this that details this this trial. But tell us about what happened in Massachusetts and what it kind of spun on for for this document.
Farva Jafri [00:03:37] So a Massachusetts man who was blind, he tried to get into three different Ubers with his seeing eye dog, and he was rejected from all three Uber cars. So he sued Uber for disability discrimination, and he had to go through arbitration. And when he lost in arbitration, his lawyers then appealed, and they were able to get in front of the Supreme Court of Massachusetts, which state court that stated that the the litigant. He did not actually have to go through arbitration. He was not bound by arbitration because just because there’s a terms of service available on the app, he didn’t have to take any sort of affirmative action to agree to those terms of services and therefore he was not bound by them.
Mike Whelan [00:04:22] Yeah, and they make a really interesting comparison to the drivers, right? Because famously, Uber is really purposeful about making sure everybody knows that the drivers are not employees, they are contractors. And so, you know, they point out in in that ruling that the drivers have to push two buttons to say, I get it, I really get it. But for the passengers, they just said no and I, I would point people to the very top of this thing. The second paragraph says by accessing or using the services, you confirm your agreement to be bound by these terms. If you do not agree, don’t use the services. For you, you know, when you’re dealing with looking at contracts like this or even drafting contracts like this, what do you feel about these sort of deemed to have accepted things? It seems like sometimes there’s a use for that kind of thing, right? Like if you’re doing, I don’t know if you’re if you’re accepting delivery of a product, for example, the idea that everybody is going to stand around and read documents not realistic. When might you use this kind of deemed to have read language versus not?
Farva Jafri [00:05:26] Well, if you remember in law school, for most of us, we really saw that sort of contract exchange early on that that oral contract exchange, basically, you can accept an offer by committing some sort of overt act. So in some cases, that totally makes sense. So if I call my plumber and I tell my plumber, Hey, I’ve got a broken pipe here or my bathroom is not working, he’s not going to send over a document for me to review and sign. He’s just going to come over and perform the service and basically him performing the service was him accepting the agreement and me promising to pay him something. However, in this case in Uber, I don’t think the same thing applies here, and I don’t know how effective it would be for many technology companies. It’s just very there’s a lot of legalese that go into these documents. The the terms you’re agreeing to are not exactly straightforward. So I don’t think that it’s going to — it really works for Uber to say if you get in one of these cars of a third party provider, that means that you agree to all of our terms in service terms of service. I think it’s important that they keep making that distinction, that drivers are these third parties. But you agree to everything that we’re telling you by getting into those cars. It doesn’t really make sense. Yeah.
Mike Whelan [00:06:38] And I’m sort of thinking like a reasonableness standard, like you’re using a technology that the whole interface is you’re playing with the technology. Put one more button in there. How hard is this? But you know, the case really hinged on arbitration. This is such a hotly contested issue, so I want to dig into. You, the arbitration section of this document, lead me into that. Tell me about the arbitration section, the scope of it, the breadth of it. How do you feel about it? What do you think about this arbitration section?
Mike Whelan [00:07:46] Yeah. So I assume A sort of is a setting, you’re in arbitration as kind of the default background thing and then B talks about exceptions to the arbitration. Tell me about A and B the relationship and what do you think about the language and B in terms of exceptions?
Farva Jafri [00:08:01] So in a basically it’s very it seems like it’s very broad. It says, you know, any dispute, any claim or controversy in any way that’s arising out of these terms or any previous versions, you have to bring those claims in arbitration. So section one is actually extremely broad. But and section one is also where they tell you that you’re waiving the right to a trial by jury. It also tells you that you can’t be a member of any sort of class action. Section two is slightly different, so Section two talks about the exceptions to the arbitration, and I think this is actually drafted pretty well. It basically talks about the three singular cases where you can sidestep arbitration and you can go into litigation so you can go to any court that’s in your state. They’re not even telling you you have to come to California. They’re saying that if you have a small claim, if you have been sexually harassed or sexually assaulted, or if you’re seeking injunctive relief, which of course, an arbitrator cannot give to you, that’s only something that a court of law can give to you. Those three circumstances are the only circumstances in which you can go to court. And I think that’s actually very tight and it’s done pretty well.
Mike Whelan [00:09:09] Yeah, I’m wondering. I mean, there’s got to be a story behind why sexual harassment and sexual assault claims are not brought through arbitration. You know, I would assume maybe there’s a legislative there’s there’s a rule somewhere. And one of the states that Uber operates in, I don’t know, is that unusual to carve out something that’s specific in this kind of I mean, to your point, you know, if you’re looking for injunctive relief or if you’re doing small claims, that makes sense. But do you have any idea what the background is on the sexual harassment section?
Farva Jafri [00:09:38] I think the background actually comes from something specifically with Uber. There is a lot of cases, I think early on in the days of Uber, where drivers were sexually assaulting passengers. And so obviously there was the MeToo movement, obviously. So I think that they there was an amended version of Uber’s Terms of Service and in 2017, which is which is the version that’s currently on their website. Right after MeToo, right after a lot of these cases came out about Uber drivers assaulting, you know, women who were getting into these cars. I think that’s when they made an amendment and said, you know, in those cases, you don’t have to take that to binding arbitration that can go into a court of law. It might have been a PR thing. It might have been know terms of a settlement. But it is very interesting that that’s a distinct circumstance.
Mike Whelan [00:10:24] And I remember all those stories. OK, so moving to C, the rule, so A says it’s almost always going to play, B says. Here’s the few cases it doesn’t. C, we get into the rules and governing law talking about the AAA rules. What do you think about C?
Mike Whelan [00:11:48] Yeah, I mean, you would know this better than I do, but I’m imagining, you know, sometimes you can tell in an agreement. Did outside counsel write this or that in-house counsel write this right? The outside counsel will just cover every basis it’s in like another language. But when in-house counsel does it, you can almost see the stories coming out of it, right? You can see that we tried this, it didn’t work. We did something else. And you get these very specific instances. And I’m getting the vibe from this like this has been well and thoroughly reviewed. Take us down to D again. This is more of the process stuff. Yeah, for if you decide to go to arbitration.
Mike Whelan [00:13:34] Yeah. E! It talks about location and procedure. And I’m thinking about even down in seven. We talked about this a little bit beforehand that, you know, they really seem to be trying to get near you. What, what do you think about the location and procedure portion in E?
Mike Whelan [00:14:44] Yeah, yeah. I mean, we’ll talk about this a little bit, but we had done a previous episode about Amazon local drivers and how that impacted an arbitration clause. Just an interesting thing how they they really seem to think about how burdensome is the arbitration experience in terms of enforceability in a court. But before we get to that big picture, I just wanted to ask you, is there anything else that you wanted to bring up about this particular document and how they handle arbitration? It sounds like you like it. You think this is pretty good, pretty good practice.
Farva Jafri [00:15:13] Yeah, for the most part, I think it’s it’s good. But the way that it was executed or the way it’s been executed in the app was poor. And that’s why the Massachusetts court had ruled against Uber in that case and said, You know, even though you have everything right in your arbitration clause, it doesn’t mean that you’re your users are actually agreeing to this to be bound by this. I think the other thing that Uber did pretty well was that it it spells out that you have to pay all of these filing fees. I mean, it’s sort of a deterrent to the user, especially if they’re not really used to or they’re not accustomed to arbitration and they don’t understand how expensive it can be and that you’re paying a judge by the hour or you’re paying the jams or the staff by the hour. But they do tell you that explicitly and this agreement that you’re going to be paying and responsible for all these different fees.
Mike Whelan [00:16:07] Hmm. I mean, as a practical matter, like stepping back and thinking about the bigger picture of drafting arbitration clauses and trying to get them to freakin work like it seems like every time I have a conversation with somebody about arbitration clauses in this context, it it didn’t work. And obviously, that’s the only time it sort of comes into our into our view. But I assume the majority of arbitration cases, I mean, the fact that this is one of few that then went through a state court and it actually worked. I assume there are very few people who could actually afford to go chase it down an arbitration. And then when that doesn’t work, let’s go through the state court. I assume that this case was probably funded in some, you know, to make an example out of this thing. If I’m the company and I want arbitration to work, it sounds like Uber did an awful lot to make this thing work. And if the only criticism that the court had was, hey, make people push some buttons as a functional matter for them to have had to push the button, that probably wouldn’t have changed the actual notice to this person, either. I feel a little bit like clients, you know, companies that are trying to make these things enforceable. It’s a bit of a blind jumping through hoops. What what advice would you have for lawyers who are drafting these kinds of things to make sure that they’re actually enforceable? If this is the way that everybody wants to handle these kinds of disputes?
Mike Whelan [00:19:00] they had thought it, all we have to do is put a button on there, they would have absolutely put a button on their right. That wouldn’t have been hard. I’m again, I’m sort of thinking of the big picture context of if you I assume that these companies are looking at, OK, if we go through regular state court for every dispute across 50 states and wherever else we are, then here’s all the litigation we’re going to have to deal with. And here are the costs of that litigation vs. OK. Every once in a while, one is going to have to come up. We’re going to have to clean up the document. I’m assuming that cost, you know, analysis between the two. It is probably still cheaper for them to keep editing this dang thing, to try to get it right and check all the all the boxes.
Farva Jafri [00:19:42] Absolutely. I mean, they have to, I think, you know, in order to avoid the same problem twice. I mean, this is a public company now. So I mean, shareholders are going to be pretty angry if they make a mistake and then they don’t clean it up in, how’s that legal? I mean, at least a lot of people selling off the stock.
Mike Whelan [00:19:57] Yeah. Maybe just for expectation setting. If you’re going to tell your client you’re going to incorporate arbitration, you better warn them that you’re going to have to do some edits because you’ve got to get the homes in there, right? And the heretofore is and everybody needs those in the right order. Well, thank you for joining us. For people who want to learn more about your practice in New York and what you do for companies, what’s the best way to reach out to you?
Farva Jafri [00:20:19] Email is the best way I’m at Farva@Jafrilawfirm.com.
Mike Whelan [00:20:23] Awesome. Will include far as contact information, as well as a link to this particular document and some of the stuff about the news, stories and the the case that had happened before. That will all be at lawinsider.com/resources. And if you want to be a guest on the Contract Teardown show and help us beat up some documents in a super mean way. Just email us. We are at Community@LawInsider.com. Thank you again.