Facts
- William Good used Uber Technologies, Inc.’s ride-sharing mobile application.
- When Good opened the Uber rider app, Uber presented him with a blocking screen stating, “We’ve updated our terms,” which prevented further use unless he completed the screen.
- The screen included text encouraging users to read Uber’s updated terms, along with clearly labeled hyperlinks to the “Terms of Use” and “Privacy Notice.”
- The screen also used visual cues associated with contracting, including a clipboard-and-pencil graphic with an “X” suggesting a signature line.
- To proceed, Good had to take two separate actions: (1) click a checkbox stating that he had reviewed and agreed to the Terms of Use and acknowledged the Privacy Notice, and (2) press a separate “Confirm” button.
- Good clicked the checkbox and then clicked “Confirm,” after which he could continue using the app.
- The Terms of Use (accessible through the hyperlink) contained an arbitration agreement requiring disputes with Uber to be resolved through binding arbitration rather than in court, and stated it was governed by the Federal Arbitration Act (FAA) because it involved interstate commerce.
- Five days later, Good requested a ride through the app with driver Jonas Yohou.
- During the ride, Yohou’s vehicle collided with another vehicle, and Good suffered catastrophic neck and spinal injuries that left him paralyzed.
- Good filed suit in Massachusetts Superior Court against Uber (including its related entity Rasier, LLC) and Yohou, seeking damages.
- Uber moved to stay the court action and compel arbitration based on the in-app Terms of Use.
- The Superior Court denied the motion, reasoning that Good lacked reasonable notice of the arbitration provision and therefore had not agreed to arbitrate.
- Uber appealed; the Supreme Judicial Court transferred the case from the Appeals Court on its own initiative.
Issues
- Whether Uber’s blocking “clickwrap” screen provided Good with reasonable notice of the Terms of Use, including the arbitration agreement, under Massachusetts contract-formation principles.
- Whether Good objectively manifested assent to the Terms of Use (and the arbitration agreement) by checking the box and clicking “Confirm.”
- If a contract was formed, whether the FAA-required enforcement of the arbitration agreement warranted an order compelling arbitration and staying the judicial action.
Decision
- The Supreme Judicial Court reversed the Superior Court’s order denying Uber’s motion to compel arbitration.
- The court held Uber proved contract formation: the app’s blocking clickwrap screen gave reasonable notice of the Terms of Use and communicated that continued use required agreement.
- The court held Good objectively manifested assent by taking the required affirmative steps—checking the agreement box and clicking “Confirm.”
- The court concluded the arbitration agreement applied and must be enforced under the FAA.
- The case was remanded for entry of an order compelling arbitration and for appropriate further proceedings consistent with that ruling (including staying the court case as needed).
Legal Principles
- A party seeking to enforce online terms must show (1) reasonable notice of the terms and (2) objective manifestation of assent.
- Reasonable notice is evaluated based on what a reasonably prudent user would understand from the design and content of the interface, including the clarity of contractual language, the prominence of hyperlinks to the full terms, and whether acceptance is required to proceed.
- A blocking clickwrap process that requires affirmative actions (such as checking a box stating agreement and clicking a confirmation button) is strong evidence of assent to the linked terms, even if the user did not read them.
- Courts apply ordinary contract-formation principles to standard-form, nonnegotiable online terms; the focus is on what the user was told and what the user did, not on subjective understanding.
- When a valid arbitration agreement governed by the FAA covers the dispute, courts must enforce it according to its terms and compel arbitration.
Conclusion
The Massachusetts Supreme Judicial Court held that Uber’s blocking clickwrap screen gave William Good reasonable notice of the Terms of Use and that his checkbox-and-confirm actions showed assent, so the FAA-governed arbitration agreement was enforceable and his claims had to proceed in arbitration rather than in court.