Uber EULA precludes jury trial

A New Jersey couple who was injured while taking a ride they arranged through Uber was found to be legally precluded from litigation because of a clause in Uber's terms of service that requires waiver of any right to a jury trial. Instead, they were required to submit to binding arbitration.

Background

On March 31, 2022, Georgia McGinty and her husband, John McGinty, hailed a ride through the ride-sharing app Uber. The driver of their car ran a red light and hit another vehicle. As a result, the couple sustained "serious physical, psychological, and financial damages". The McGintys filed suit on February 23, 2023, naming Uber and one of its subsidiaries as defendants.

Uber's terms of service

The relevant portion of Uber's terms of service is, as quoted by the appellate court (alterations in original):

You and Uber agree that any dispute, claim or controversy in any way arising out of or relating to… (ii) your access to or use of the Services at any time, [or] (iii) incidents or accidents resulting in personal injury that you allege occurred in connection with your use of the Services… will be settled by binding arbitration between you and Uber, and not in a court of law.

Trial-court proceedings

Uber moved to dismiss the complaint and to compel arbitration, arguing that the McGintys had agreed to Uber's terms of use, and that it contained a provision whereby the McGintys had agreed to arbitration in lieu of filing suit. Specifically, Uber alleged that the McGintys had confirmed their agreement to Uber's terms of service using the Uber Eats app on two occasions: (1) initially on April 1, 2021, and then (2) again on January 8, 2022, when those terms were revised. The McGintys responded by saying that they had no recollection of agreeing to Uber's new terms on January 8, 2022. Instead, they suggested that their daughter had used the app and may have agreed instead.

The trial court denied Uber's motion. It concluded that the wording of the arbitration agreement did not "clearly and unambiguously inform plaintiff of her waiver of the right to pursue her claims in a judicial forum". Specifically, the court found that Uber's terms of service were not clear as to whether arbitration was "a substitute for the right to seek relief" through a lawsuit It noted, for example, that the earlier terms of service from 2021 specifically stated that, by agreeing to them, a customer waived their right to a jury trial. On the other hand, the revised terms in 2022 did contain this provision.

Appeal

Uber appealed the court's decision to the Appellate Division of the Superior Court of New Jersey. There were three issues decided on appeal: (1) whether the arbitration provision in Uber's terms of service was enforceable, (2) whether the McGintys were bound by their daughter's accepting the terms, and (3) whether John McGinty was bound by an agreement made on his wife's account.

The appellate court found in favor of Uber on the first two points, and that the third must be decided by the (eventual) arbitrator.

The arbitration provision

First, terms of service and other such agreements are generally treated as contracts.

The Superior Court disagreed with the trial court's conclusion that the terms were ambiguous as to whether the plaintiffs would be agreeing to waive their right to a jury trial. While noting that "New Jersey has a long-standing policy of protecting the right to access its courts" such that "waivers must be knowing, intelligent, and voluntary", prior decisions by the New Jersey Supreme Court also state that an arbitration requirement does not have to contain any specific set of words to be enforceable.

The Superior Court then noted that the terms of service specifically state that any claims against Uber will be settled by arbitration "and not in a court of law". This language, the court held, was sufficiently clear to put the plaintiffs on notice that by agreeing to the terms, they would be waiving their right to file suit.

The daughter's acceptance

Uber argued that the plaintiffs' daughter had been given actual and apparent authority to agree to the terms of service on plaintiffs' behalf.

Here, the appellate court concluded that the plaintiffs' daughter knowingly acted on their behalf. It noted that Mrs. McGinty had agreed that her daughter was "capable," and that she would frequently order food on the family's behalf. She also acknowledged that, at the time the revised terms were agreed to in January 2022, she and her husband had been busy packing, which further suggested to the court that the plaintiffs' daughter had acted on plaintiffs' behalf and with their permission.

Mr. McGinty

As relevant here, Uber's terms of service state that the arbitration agreement is also binding on "any claims brought by or against any third parties". The court did not specifically decide this question. It did, however, explain that an arbitration agreement signed by one person may be enforceable against another where that individual is what is known as a third-party beneficiary to the contract containing the arbitration agreement. Whether Mr. McGinty is subject to Uber's terms of service as agreed to by his wife was found to be a question of the scope of the agreement between Uber and Mrs. McGinty. Per the provisions of those terms, such a question must be decided by the arbitrator.