Rideshare Scrollwrap Agreement Sufficient To Compel Arbitration of Plaintiff’s Personal Injury Claims

• Posted on: Jul 24 2024

By: Jeffrey M. Haber

In the world of e-commerce, a person cannot buy something online, subscribe to a service, or join a club or organization without agreeing to the provider’s “terms of service”. These terms are often lengthy and difficult to read. For these reasons, among others, most people simply click the “I agree” button or link without reading the text or thinking about what they agreed to.

Many consumer advocates argue that electronic terms of service should not be binding because important terms, such as arbitration requirements or other conditions precedent to filing a claim, are often buried in legalese that consumers do not read or understand. Thus, argue these advocates, it is unfair to bind consumers to agreements that are nothing more than contracts of adhesion.

Courts do not, however, share these views. Indeed, courts have held that “[t]here is nothing automatically offensive about such agreements, as long as the layout and language of the site give the user reasonable notice that a click will manifest assent to an agreement.” For this reason, “[c]ourts around the country have recognized that [an] electronic ‘click’ can suffice to signify the acceptance of a contract.” 

There are many types of electronic-wrap agreements. Each provides a different manner of assent by the user. For example, clickwrap requires users to click an “I agree” box after being presented with a list of terms and conditions of use, while browsewrap requires the user to click on a hyperlink at the bottom of the screen that takes the user to the terms and conditions on a website. Scrollwrap agreements—the subject of today’s article—require the user to scroll through the terms before the user can indicate his/her assent by clicking “I agree.” Other electronic-wrap agreements notify the user of the existence of the website’s terms of use and, instead of providing an “I agree” button, advise the user that he/she is agreeing to the terms of service when registering or signing up. 

Courts routinely uphold electronic-wrap agreements for the principal reason that the user has affirmatively assented to the terms of agreement by clicking “I agree.” “Under New York law, [electronic-wrap] contracts are enforced so long as the consumer is given a sufficient opportunity to read the [contract], and assents thereto after being provided with an unambiguous method of accepting or declining the offer.” “Claims that a consumer was not aware of the agreement or did not actually read it must be disregarded where … the agreement was acknowledged and accepted by clicking on the relevant icon.” 

In Berroa v. Nasimov, 2024 N.Y. Slip Op. 50931(U) (Sup. Ct., Kings County July 19, 2024) (here), the court dismissed a personal injury complaint against Lyft, Inc. involving a scrollwrap agreement containing an arbitration clause, finding that the plaintiff was bound by the terms and conditions in the agreement.

[Eds. Note: the factual discussion below comes from Lyft’s motion papers and the court’s decision and order.]

Berroa arose from a July 20, 2020 car accident in which plaintiff allegedly sustained personal injuries (the “Accident”). At the time of the Accident, plaintiff was a passenger in the car, which was operated by the individual defendant. Plaintiff arranged for the car through the Lyft rideshare platform.

In addition to bringing claims against the individual defendant, plaintiff sued Lyft for vicarious liability, which was based on defendant’s alleged negligent operation of his vehicle while active on the Lyft platform (the “Lyft Platform”).

To use the Lyft Platform, a user must create an account via the Lyft App. This process requires the user to, inter alia, accept Lyft’s terms of service (“Terms of Service”), which include a conspicuous arbitration clause requiring Lyft and the user to submit all disputes between them to binding arbitration—expressly including those arising out of or related to the Lyft Platform and rideshare services arranged on the platform. Users cannot complete the account creation process or purchase rideshare services through the Lyft App unless they affirmatively accept and agree to be bound by Lyft’s Terms of Service.

After creating an account, users are prompted periodically to reaffirm their acceptance of Lyft’s updated Terms of Service if they want to continue using the Lyft Platform. Plaintiff affirmatively accepted Lyft’s Terms of Service within the Lyft App on four separate occasions. Each update contained a materially identical arbitration agreement providing that Lyft and plaintiff would submit all disputes between them to binding arbitration.

The arbitration agreement expressly governed “any dispute, claim or controversy … arising out of or relating to … the Lyft Platform,” “Rideshare Services” (defined as the “driving services provided by Drivers to Riders”) and “all other federal and state statutory and common law claims.”

The agreement also included (1) a provision making it clear that any dispute “concerning the arbitrability of a Claim (including disputes about the scope, applicability, enforceability, revocability or validity of the Arbitration Agreement) [would] be decided by the arbitrator” (except in a narrow set of circumstances not applicable to the court’s decision); and (2) a choice-of law provision, providing that the arbitration agreement would be “governed by the Federal Arbitration Act ….”

Defendant Lyft moved to dismiss, or, in the alternative, to stay the action with respect to the claims against it, and to compel plaintiff to arbitrate the claims against Lyft pursuant to the Federal Arbitration Act, 9 U.S.C. § 1, et seq. The court granted the motion.

First, the court held that the parties were bound by the arbitration clause in the Terms of Service. The court found that “[t]he unrebutted evidence reflect[ed] that Plaintiff affirmatively consented to be bound by the August 26, 2019 Terms of Service [which were operative at the time of the Accident] — along with the conspicuous arbitration agreement therein — when he was presented with the full text of Lyft’s Terms and Service directly on the screen in his Lyft App and clicked the button labeled ‘I Agree.’” Thus, concluded the court, “Lyft satisfied its burden of demonstrating that the parties had an explicit and unequivocal agreement to arbitrate.”

Second, the court held that “[p]laintiff’s claims [arose] out of his use of the Lyft Platform and thus [fell] within the scope of the arbitration clause.” In so holding, the court noted that “[p]laintiff’s claims arose out of the motor vehicle accident that occurred while he was riding in [defendant’s] vehicle after connecting with [defendant] via the Lyft Platform … and thus fell squarely within the scope of the arbitration clause.”

The court also held that even if the scope of the agreement was at dispute, the result—ordering the case to arbitration—would not be different because the arbitration clause contained a delegation provision “that explicitly reserve[d] debate over the scope of the arbitration clause for the arbitrator.” 

[Eds. Note: this Blog previously examined the enforceability of clickwrap agreements, here.]

Takeaway

The courts have been clear that the “making of contracts over the internet ‘has not fundamentally changed the principles of contract.’” Accordingly, parties seeking to enforce an electronic contract must demonstrate “an offer, acceptance, consideration, mutual assent and intent to be bound.” As shown in Berroa, these elements are satisfied with respect to clickwrap and scrollwrap agreements because the terms and conditions are available for the user to review and require the user to affirmatively declare their assent to them before the user can use the app or access the website.

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Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.