Uber Eats Order Leads to Compelled Arbitration After Uber Car Accident

We have been commenting regularly lately on what I have called arbitration clause bootstrapping and David Horton (right — updated but still youthful) has alternatively called Infinite Arbitration Clauses and Accidental Arbitration. There was the case of Disney invoking arbitration with respect to an incident at a Disney-owned restaurant based on a family member’s prior registration for a trial subscription to the Disney + streaming service. Disney eventually abandoned that argument after it generated a lot of negative attention. There was Airbnb’s attempt to compel arbitration in a suit brought by a man injured in a fall at a party at a house that the party’s host had rented on Airbnb. The injured man was a guest, not a party to the rental agreement, but he had once registered on Airbnb’s site, although he never used the site. Airbnb’s motion was denied, but there was a dissent.

Third time’s the charm. In McGinty v. Zheng, a New Jersey appellate court granted Uber’s motion to compel arbitration. The McGintys got in an Uber on March 31, 2022. Their driver ran a red light and hit another car. The McGintys suffered serious injuries. Georgia McGinty was unable to work for one year. John McGinty suffered broken bones and sill suffers from diminished use and sensation in his left wrist. They sued the driver and Uber. Uber filed a motion to compel arbitration.

As Uber users know, when Uber updates its terms of use, you get a warning on the welcome screen. There is no way to use the app unless you agree to the updated terms, and the terms relevant to the McGinty’s use of the app included a conspicuous arbitration clause. So an easy case.

But not so easy. It turns out, there is just one app for both Uber rides and Uber Eats, and the McGintys claimed that it was not them but their twelve-year-old daughter who manifested asset to Uber’s terms when she ordered take-out on her mother’s account with her mother’s consent. In addition, the McGintys pointed out that Uber’s updated terms made no mention of a waiver of the right to a jury trial.

As to the latter issue, New Jersey requires no “magic words” when assessing whether an arbitration clause effects notice that one is waiving the right to a jury trial. Here Uber’s emphatic language that disputes were to be settled in arbitration and not in a court of law sufficed. Cases like this cause me to muse on the cavalier ways in which courts allow for the shedding of some constitutional rights but not others in some contexts but not others. So, would a court be as blasé about the boilerplate click-through and, to borrow David Horton’s language, infinite and accidental relinquishment of 1st or 2nd Amendment rights? And as we know from the Jarkesy case, the right to a civil jury matters when the alternative is proceedings before an administrative tribunal, but for some reason, not here.

Image by DALL-E

As to the child, the Court treated that as an agency issue and left that for the arbiter to resolve. The arbiter should also determine whether John is bound as a third-party beneficiary to the terms of service to which Georgia (or her daughter) agreed.

This all seems right under existing law, but the law is an ass. There is no good reason why a party should be bound to arbitrate claims against Uber for a car accident because one once ordered delivery through Uber Eats. The transactions are unrelated; the businesses are not at all alike. The risks from car accidents are likely much higher than the risks from food delivery services. And there is no reason why courts can’t demand separate agreements for each entity or for each transaction. If people don’t want to be asked whether they want to arbitrate each time they use the app, give them the option to click a box and not be given the menu each time. They can click a box and be bound until the next version of the Terms of Service come out.

I had successfully resisted getting the Uber app until last year. I went to a conference in Tallahassee. I always use cabs to get around when public transportation is unavailable and I don’t have a car. I don’t like ride-share companies because I don’t like having another app on my phone tracking my every move and action. I don’t think such companies are a force for good in the universe, so I prefer alternatives. But in Tallahassee, I learned, there were no alternatives. No public transport from the airport to the city center, no cabs, at least none at the airport.

So I got the app and was confronted with the same screen that the McGinty’s saw. The only way to get to my hotel from the airport involved agreeing, now and forever, that I would not sue Uber in court. That is not freedom of contract. It’s not freedom. We, and our courts, have built cages in which we are confined.

But there are ways out. Other countries don’t do things this way. Because courts have federalized arbitration law, states are powerless to intervene. We need national consumer protection legislation to combat arbitration-clause bootstrapping. I don’t see it happening any time soon, but the party that undertakes this reform will be doing something that is actually popular. They just need to make it seem populist, even as billionaire tech-bros denounce it as an act of the nanny state.