242 F. Supp. 3d 541
W.D. Tex.2017Background
- Plaintiff Melissa Cubría created an Uber rider account via the app in October 2013, entered personal and payment information, clicked a “DONE” button on the final screen that stated: “By creating an Uber account, you agree to the Terms of Service & Privacy Policy,” and then used Uber’s services 300+ times.
- Uber issued later revised Terms and Conditions (2016 TACs) containing an arbitration clause (including class-action waiver) and a California choice-of-law clause; the 2016 TACs incorporate the AAA Commercial Rules and Supplementary Procedures for Consumer Related Disputes.
- Cubría filed a putative class action under the TCPA alleging unsolicited automated political text messages; Uber moved to compel arbitration and to dismiss or stay the case.
- Key contested issues: whether Cubría agreed to the arbitration provision (and to later TACs), whether the parties delegated gateway arbitrability questions to an arbitrator, and whether arbitration is enforceable (scope/unconscionability).
- The court found Cubría had inquiry notice of the 2013 TACs, was bound by future amendments (including the 2016 TACs), the 2016 TACs clearly and unmistakably delegated arbitrability by incorporating the AAA rules, and the assertion of arbitrability was not wholly groundless.
- Ruling: Court granted Uber’s motion to compel arbitration and stayed the case pending the arbitrator’s decision; parties must file arbitration status reports every 90 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Cubría agreed to Uber’s Terms (and later TACs) | She did not manifest assent; clicking “DONE” was insufficient and she never agreed to arbitration | Signup screen gave notice (“By creating an Uber account, you agree…”) and repeated use (300+ rides) confirms assent | Court: signup provided inquiry notice; Cubría manifestly assented to 2013 TACs and is bound by later amendments (2016 TACs) |
| Choice of law to decide contract formation | Implicitly urged Texas law because plaintiff is Texas resident and 2013 TACs lacked clause | Uber: either law yields same result; 2016 TACs contain California choice-of-law | Court: applies California law per 2016 TACs; analysis would be same under either state |
| Who decides arbitrability (delegation) | Plaintiff: incorporation of AAA rules is insufficient for unsophisticated consumer; no clear delegation | Uber: 2016 TACs incorporate AAA rules, which clearly and unmistakably delegate arbitrability to the arbitrator | Court: incorporation of AAA rules is clear and unmistakable; delegation valid; arbitrator decides arbitrability |
| Whether arbitration should be stayed given plausibility of scope/unconscionability challenges | Arbitration should not be compelled because the TCPA claim falls outside clause and the clause is procedurally/substantively unconscionable | Arbitration covers disputes “arising out of or relating to” the Terms; clause contains safeguards and cost protections | Court: scope and unconscionability challenges are plausible (not wholly groundless) but, because delegation is valid, these issues go to the arbitrator; court stays case pending arbitration |
Key Cases Cited
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (2010) (parties may contractually delegate arbitrability questions to arbitrator)
- Crawford Prof’l Drugs, Inc. v. CVS Caremark Corp., 748 F.3d 249 (5th Cir.) (ordinarily courts decide arbitrability; incorporation of AAA rules can show delegation)
- Douglas v. Regions Bank, 757 F.3d 460 (5th Cir.) (delegation applicable when parties clearly intended and assertion of arbitrability is not wholly groundless)
- Petrofac, Inc. v. DynMcDermott Petroleum Operations Co., 687 F.3d 671 (5th Cir.) (incorporation of institutional rules evidences intent to arbitrate arbitrability)
- Kubala v. Supreme Prod. Servs., Inc., 830 F.3d 199 (5th Cir.) (delegation enforced unless arbitration argument is wholly groundless)
- Norcia v. Samsung Telecomm. Am., LLC, 845 F.3d 1279 (9th Cir.) (party bound by contract is bound by its terms even if not read; inquiry-notice standards for online agreements)