mandatory arbitration

A married couple can’t sue Uber over severe injuries they suffered in a 2022 car accident because of a mandatory arbitration provision in the ride-sharing company’s terms of use, according to a ruling issued by the New Jersey Superior Court appellate division.

In November 2023, a lower court denied Uber’s motion to compel arbitration and dismiss the complaint filed by plaintiffs Georgia and John McGinty. But the lower-court ruling was reversed on September 20 in a unanimous decision by three appellate court judges.

Georgia McGinty had agreed to Uber’s arbitration clause long before the accident. But the couple challenged the terms in part because they say their minor daughter, then 12, was the one who clicked the most recent terms agreement when the girl ordered food through Uber Eats. Those newer terms were also allegedly less specific about users waiving the right to a jury trial.

The September 20 ruling says:

Uber’s digital records show that on January 8, 2022, Georgia logged into her Uber account using her password, checked the box next to the statement “I have reviewed and agree to the Terms of Use,” and pressed “Confirm.” In their motion opposition, plaintiffs asserted that it was not Georgia but rather their minor daughter who checked that box and clicked the “Confirm” button—even though it required attesting to Uber that she was at least eighteen years old. Plaintiffs claim that their daughter, while using Georgia’s phone and with Georgia’s permission, confirmed her agreement to the December [2021] Terms before ordering food for plaintiffs to be delivered to them through Uber Eats.

The December Terms to which Georgia agreed—either by herself or through her daughter using her Uber account—contain an arbitration provision. That agreement provides disputes that may arise between Georgia and Uber, including disputes concerning auto accidents or personal injuries, will be resolved through binding arbitration “and not in a court of law.” The agreement also provides that any disputes over arbitrability would be delegated to the arbitrator.

“We hold that the arbitration provision contained in the agreement under review, which Georgia or her minor daughter, while using her cell phone agreed to, is valid and enforceable,” judges wrote.

Lower court said Uber terms were too vague

The case came to the appellate court on appeal from the Superior Court of New Jersey, Law Division, Middlesex County. The lower court found that Uber’s updated terms “fail[ed] to clearly and unambiguously inform plaintiff of her waiver of the right to pursue her claims in a judicial forum,” making it unclear that “arbitration is a substitute for the right to seek relief in our court system.”

While an earlier version of Uber’s terms contained an express jury waiver provision, the newer version did not. The lower court held that the newer agreement “lacks any specificity on what the resolution would look like or what the alternative to such resolution might be.”

Uber argued that even if the newer terms are invalid, the earlier terms would still require arbitration of the dispute, and that Georgia McGinty can’t escape her agreement with Uber by claiming that her daughter agreed to the newer terms on her behalf.

Despite the newer agreement not using the word “jury,” the appellate court said that legal precedent “does not require specific jury trial language to accomplish a waiver of rights.” Judges said the Uber provision requiring disputes to be handled in arbitration “and not in a court of law… clearly and unambiguously evidences a waiver of plaintiffs’ right to pursue any claims against Uber in a court of law and obligates plaintiffs to resolve their claims through binding arbitration.”

“While ‘jury’ is no longer explicitly used in the updated December Terms, magic words are not required for enforceability and the clause clearly intimates that disputes are resolved through arbitration,” the court said.

The question of whether the couple’s daughter was capable of agreeing to the terms must be decided by an arbitrator, according to the ruling:

Georgia certified that her daughter was “capable,” would frequently order food, and she and John were preoccupied with packing, which supports the inference that the daughter acted knowingly on Georgia’s behalf. In summary, the Arbitration Agreement is valid and delegates the threshold question of the scope of the arbitration to the arbitrator. Therefore, Georgia’s reliance on her daughter’s minority to raise an infancy defense shall be determined by the arbitrator.