Employee Remaining on the Job is Assent to Arbitration Agreement

The California Court of Appeals in Diaz v. Sohnen Enterprises, Inc. overturned a district court decision denying a motion to compel arbitration agreement.

Sohnen Enterprises held a meeting at which it informed employees that it was introducing a new arbitration agreement. Sohnen told employees that if they chose not to sign the new agreement but continued to work then that would mean they accepted the arbitration agreement. Erika Diaz refused to sign the arbitration agreement but continued to work for Sohnen from December 2 to 23. She then had her lawyer send her employer a letter saying that she planned to keep working but did not accept the arbitration agreement. After bringing a workplace discrimination case, Diaz challenged the employer’s motion to compel arguing that she never assented to the new agreement. The court of appeals, over a dissent, disagreed saying that her decision to continue work was an implied assent to the agreement. By the time her lawyer sent a letter Diaz was already bound.

National Law Review and Manatt discuss the case.

E-Signature Results in Enforceable Agreement to Arbitrate

The 3rd Circuit affirmed a district court ruling granting Kaplan University's motion to compel the student to arbitrate. The 3rd Circuit concluded that the e-signature was a valid method of assent and the student was bound regardless of whether or not she read the enrollment packet.

Buckley LLP discusses the case further.

Uber Class-Waiver Arbitration Agreement Unenforceable

The First Circuit recently held that an arbitration clause contained in the online contract of the ride sharing app, Uber Technologies, Inc., is unenforceable under Massachusetts law. Cullinane v. Uber Technologies, Inc., No. 16-2023 (1st Cir. June 25, 2018).

In this case, plaintiffs, Uber riders, filed a class action in Massachusetts state court, challenging certain fees Uber charged as violations of state consumer protection laws. Uber removed the case to federal court and moved to compel arbitration based on an arbitration clause in Uber’s Terms of Service. In order to use the Uber app, the customers had to register for an Uber account and to agree to the company’s Terms of Service & Privacy Policy. The Terms of Service included an arbitration clause which required customers to resolve any disputes with Uber through binding arbitration and also contained a class action waiver. The district court granted Uber’s motion to compel arbitration and dismissed the lawsuit. The plaintiffs appealled to the First Circuit.

As Jeanne Kohler of Carlton Fields writes, the First Circuit found that Uber had not reasonably communicated its Terms of Service, including the mandatory arbitration clause, to its customers because the link to the Terms was not sufficiently conspicuous. The Court noted that Uber did not use a common method of conspicuously informing online app users of its terms by requiring users to click a box stating that they agree to the terms before continuing to the next screen. Instead, Uber displayed, on an enrollment screen, a rectangular box with the language “Terms of Service,” which customers were not required to click in order to review the contract. The Court noted that Uber’s terms were not conspicuously disclosed to its users because the link was not designed in a way that most users associate with hyperlinks and thus did not have the appearance of a hyperlink. Further, the hyperlink box was not sufficiently distinct from the rest of the screen, which had other links in bold with similarly sized font that were “more noticeable.”

Court Declines to Enforce Website's Arbitration Clause

The 9th Circuit yesterday declined to enforce an arbitration agreement contained in Barnes & Noble’s website’s Terms of Use.

The appellate court said “We agree with the district court that Barnes & Noble did not provide reasonable notice of its Terms of Use, and that Nguyen therefore did not unambiguously manifest assent to the arbitration provision contained therein.”

Good commentary by Technology & Marketing Law Blog.