In today’s digital age, few things are as prevalent and overlooked as the “Terms of Service” agreements. But as we’ve seen in a growing number of recent cases, these click-through agreements can wield significant power, binding consumers to unexpected legal obligations, often without their full understanding. A recent New Jersey appellate court ruling provides a striking example of how arbitration agreements can limit legal recourse. In this case, a couple was seriously injured in a car accident when their Uber driver ran a red light and caused a T-bone collision. Despite the severity of their injuries, the court ruled they could not sue Uber because of an arbitration agreement. This agreement was accepted 2 months earlier—not by the couple themselves, but by their minor daughter, who unknowingly agreed to the terms while placing an Uber Eats order.
This case not only raises questions about the binding nature of arbitration clauses but also shines a spotlight on the broader implications of how these agreements function in the modern legal landscape. As the number of services we interact with grows daily, so too does the likelihood of being unknowingly bound to a far-reaching arbitration clause.
Understanding Arbitration Agreements
At the heart of this issue is the widespread use of arbitration clauses in consumer contracts. These clauses often force disputes into private arbitration rather than public courts, leaving consumers with limited recourse. The civil justice system is set up to have the merits of every case decided by a jury of the parties’ peers. In arbitration, that jury is replaced with an arbitrator. While companies may argue that arbitration is a more efficient way to resolve disputes, the reality is that it often tilts the scales in favor of businesses. In arbitration, consumers may face limited discovery, reduced transparency, and the inability to appeal.
In the above Uber case, the appellate court determined that the company’s terms, which mandated arbitration for personal injury claims, were “valid and enforceable.” This is not an isolated case. Arbitration clauses are increasingly embedded in terms of service across a wide variety of industries, from ridesharing, streaming services, fitness apps and so on. And unless you simply give up modern convivences and refuse to use these products, there are really no way around them. You are “mandated” to click the “I agree” button.
Uber and Uber Eats: Different Services, Different Regulations
The differences between Uber and Uber Eats add another layer to the conversation. In Virginia, for example, Uber is classified as a Transportation Network Company (TNC), subject to specific regulations designed to protect consumers and ensure driver safety. Uber Eats, on the other hand, functions as a property carrier, a classification that comes with different obligations.
While this classification might seem like a technicality, it could have significant ramifications for how cases are handled. Personal injury cases involving Uber rides are governed by a distinct set of laws and insurance coverages, designed specifically for rideshare services. But when Uber bundles its terms of service across platforms, as it did here, it blurs the lines between these different legal frameworks, potentially allowing companies to evade accountability in ways consumers don’t anticipate.
The Disney Case And Public Pushback
Similarly, Disney also recently attempted to argue that an arbitration clause from a Disney+ subscription should apply to a completely unrelated matter, a woman’s death from an allergic reaction at one of their restaurants. This move sparked outrage and concern, as it represented a bold attempt to expand the reach of arbitration clauses to areas where they would seem inappropriate.
Disney eventually backed down, allowing the case to proceed in court, likely due to the public backlash. However, this incident underscores the growing trend of corporations trying to use arbitration clauses as a shield from public accountability, even in cases involving serious harm or death.
Alternative Strategies When Arbitration Blocks Your Path
In a released statement, Uber Technologies stated that its arbitration motion does not impact the plaintiffs’ claim against the driver, for whom Uber has a state-mandated $1.5 million auto liability policy, or “50 times more coverage than a typical driver is required to carry.” This is a valid point, as in some cases, choosing not to sue Uber or any large company with an arbitration clause can be a strategic decision. Pursuing claims directly solely against the driver or person at fault, may provide a more straightforward and efficient path to compensation.
Future of Arbitration Agreements
As more cases like the Uber and Disney disputes come to light, the public is becoming increasingly aware of how these clauses limit their legal rights. It’s clear that we’re approaching a tipping point. All it may take is one major court decision to either begin dismantling or further affirming the use of wide net arbitration clauses.
What to Do If You’re Affected by Arbitration Clauses
The enforceability of arbitration clauses is based on state law, and requires a lawyer that is well versed in that state’s laws. In cases like these, navigating the unfairness of arbitration clauses and determining the best strategy for compensation can be overwhelming. A personal injury law firm like ours, with experience in fighting big corporations and working around arbitration clauses can make all the difference. If you or someone you know is facing a similar situation, we can help guide you through the legal process to ensure you get the compensation you deserve.
