What happens when you agree to the “Terms and Conditions” and are told you can’t sue them?
Well, it seems a little bit far fetched.
Unfortunately, this is something that can happen to real people. What happens when we get into that type of scenario?
William Good was a cook at a restaurant in downtown Boston. He worked until late at night and he needed a ride home. He ordered an Uber and they sent someone out to his restaurant in Boston to take him home to Somerville.
There’s not as much traffic. So Mr. Good got into the Uber car and they rode out to Somerville. Once they got into Somerville, the driver got into an accident. He hit a car and he hit it very hard and Mr. Good seriously, permanently injured himself.
He had a broken neck and was permanently injured. So that sounds cut and dry. This person was driving. They got into an accident. Why is this become such an issue?
Well, what happened is when Mr. Good or his family sued Uber, Uber said, hey, wait a minute. No, you can’t sue us.”
One night before this accident, Mr. Good went to update. his Uber. The app would not allow rides to be booked without agreeing to the new Terms of Service. So Mr. Good, did that. They wouldn’t let him use Uber anymore unless he clicked a couple of buttons and so he did that.
They said, no, you can’t sue us. If you do, you’ve already agreed to these terms and conditions.
Mr. Good and his family were put off by this fact but they went ahead and they sued Uber anyhow. And Uber filed a motion to dismiss the case. The court said, You know what? Mr. Good didn’t read the terms of service, but he wasn’t required to read the terms and conditions.
So what can these companies do to make sure that people are actually reading this? Because if you’re clicking, I agree to the terms of service is like, isn’t that you consenting? Is it really on the company to be responsible for whether or not you actually read that? Well, what you’re saying makes sense.
But we’re talking about what happened in court here. And the court looked deeply into this. Uber argued if they are going to use the service, they’re responsible for reading the terms and conditions.
We’re going to go by the terms that the court saw when the court looked at Uber’s interface. Things the court said were important. Let’s look at whether it’s a click grab or a scroll wrap.
Well, what’s a click wrap?
A click wrap requires a user to consent to terms and conditions by clicking on a dialog box to go to the next step. Note The user might not actually view the language to which they are assenting, so in other words, they’ve got to click something, but they don’t necessarily have to read it.
Click wrap is distinguished from scroll wrap.
What is a scroll wrap?
A scroll wrap requires users to physically scroll through the Internet agreement in order to click the I agree button. And the user must at least scroll through the language they may or may not actually read it.
They said if you don’t even have to read the terms, then how can the company, whether it’s Uber here or a social media site, expect a binding contract have been formed.
The exact language that was used by Uber said, “We encourage you to read our updated terms in full notice.” They didn’t say you have to. All right. So that’s the top of the interface. Then below that, there were two links in blue, their terms of use and their privacy.
Those were links that you could opt to use. You didn’t really have to. And in fact, the problem in this case was that in Uber’s interface, it said at the bottom, by checking this box, I have reviewed and agreed to the terms of use and acknowledged the privacy notice.
So the important thing here is that Uber was saying, here’s our terms of use. If you want to update your contract with us. There they are.” But you can check this box here and and click confirm without ever even having read it. And the reason is because the court actually looked into old, old, old contract law. Contract law is something that goes back centuries and centuries back to England. And our ancestors brought it over from England to the United States. And there have to be certain elements in the contract. There has to be an offer, there has to be an acceptance, and there has to be consideration.
Part of accepting a contract is being on notice of the terms and conditions. Unless the person is on notice of the terms, contract law says there’s no contract. So let’s take a look at how the court looked at this and the court said notice and assent are important for a contract to be formed. And this is this actually goes back hundreds of years.
But the application here is a relatively recent thing with all the computer interfaces that we see. The court said for there to be a valid contract, there have to be two things. Notice: the app or the company must reasonably notify the user that there are terms to which the user will be bound and give the user the opportunity to review those terms.
The second element is that there must be assent. In other words, this requires an affirmative act such as clicking a button that states. I agree. This alerts the users to the significance of their actions and it shows that in fact there is reasonable assent. Well, that sounds great, but I guess like my main confusion with this is that they went through, you know, they didn’t have it properly set up.
They didn’t make sure that this was presented to the person that the person’s agreeing with it. They, in modern terms, took the oath. It was a big loss for them. You know, they should have had this set but they didn’t.
So why not have insurance just pay the scenario?
Well, that’s a good point. Yes, Legislators in most of the states have imposed insurance regulations on shares. That’s not the issue we’re talking about here. The issue that we’re talking about here is they don’t want to be responsible. They don’t want you to have that insurance. But yes, insurance is require.
Massachusetts law requires rideshare cars logged into the network, but not actually carrying any passengers to carry liability insurance with limits of $5,000 per person and $1,000 per accident for bodily injury caused by an accident. When the driver actually carries a passenger, the required insurance must cover up to $1 million that covers death, bodily and property damage in a single accident.
Now, that was just Massachusetts. New Hampshire is a little bit of a different state because New Hampshire, you’re not actually legally required to have insurance for your car. So because New Hampshire has no mandatory auto insurance law in general right here, drivers still must carry auto insurance. So even if you’re not carrying a passenger, as long as you’re logged in, they must carry liability insurance with limits of $50,000 per person or $100,000 per accident.
When engaged with the rideshare passenger, the mandatory insurance level rises to $300,000, including coverage for death, bodily injury and property damage. So accidents involving rideshare vehicles can bring in at least three insurance companies. And that’s a lot of work for these companies to be going through. And I make sense that they wouldn’t want to be dealing with that.
You know, the reason that they can bring in three different insurance companies is if you think about it, when you’re in an Uber or Lyft or any other rideshare, you’re a passenger in a car and suppose you’re in an intersection accident, well, suppose that the car is hit by somebody who ran the stop sign. Now you’re talking about the insurance company for the third party, the person that that hit the Uber.
But what if the Uber driver may have gone through a really pregnant yellow light? We’ve all seen those people right. And so now in intersection accidents, frequently there’s a question of liability.
So now there’s a question, was it the other car? Was it the driver of Uber or was it Uber itself? Because as you just pointed out in reading that the driver and Uber are two different entities, both of whom are required to have insurance. So it can get complicated. It can require that you’re dealing with three insurance companies.
I’ve dealt with cases like that where you’re dealing with three insurance companies, not to mention Massachusetts is a no fault state. So your medical bills, even if the other guy is 100% at fault, your own insurance company is going to be responsible for your medical bills. So it can get a little bit complicated. But I wanted to sidestep a little bit because the issue here is not that they do have insurance, but that they don’t be they don’t want to be responsible.
They’re doing everything they can to throw these screens up at you and then hold it against you whether you read it or not.
In the old days we would actually go to the stationery store and we would buy programs. I mean, this is ancient. I know now we download everything on our iPhones and our computers, but in the old days, we would go to the store and buy these programs and it’s on a disk on the inside.
But you can’t get to the disk unless you open the package, right? Mm. Well, okay, now I’ve opened the package and I’ve, in the old view a lot of corporate attorneys and contract attorneys said, Oh, just by opening that box you have assented to our terms and conditions. That’s what this case is all about. No, you have to at least have the terms there.
So in terms of the computer, when you sign up for an app or renew your app with Uber or Lyft, they can’t just do what Uber did here. They can’t just say, Oh, well, you know, you’re on notice that there are changes to the terms and conditions. No, they have to actually make you scroll through it even if you don’t read it.
If you scroll all the way through it and get to the bottom and then click I accept, it may seem like a small point, but at least you’ve had the opportunity to read it. So that’s that’s their point of view and that’s what the court said about their point of view.
Remember that this isn’t just like some kind of an esoteric legal argument that we’re having here. I mean, this fellow was a hard working guy. He had worked all day at his shift in a Boston restaurant. It was after midnight and he got into this car with the Uber driver.
And because of the negligence of the Uber driver, he was he broke his neck and he’s a paraplegic for life. He’s got a serious permanent disability. And so it’s not it’s not just us sitting here talking, Oh, isn’t that interesting? Isn’t that a nice legal point? I mean, in this in this case, he was seriously injured and he’ll never be the same.
Uber probably has a lot of liability in this case because it turned out after the accident that when people went in to this drivers driver’s record, which is public, by the way, there were 20 violations. He had 20 moving violations in his driving record. So Uber knew or should have known that the guy had a very serious driving record.
He had had violations 20 of them before. And so Uber shares the responsibility to for allowing this guy to drive for them. Do you think that it is Uber’s responsibility if they’re hiring these independent contractors to make sure that, you know, like ultimately these people you can anybody can sign up for Uber? Does Uber legally have a responsibility to make sure that these people are in a bad drivers, bad drivers?
You’re stating their argument perfectly. I believe Uber goes back to 2009 when they were first set up. They said, Oh, we don’t have anything to do with transportation. We’re just a software company. We just provide the software and then people can drive if they want.
Apparently, it’s very simple to get a ride. How long does it take when your iPhone to set it up? You can just log in with your existing accounts like Google that you have already. It takes from 5 minutes from downloading the app and getting a ride.
So it’s very, very quick and simple. So that’s fine and I may do it. But in your situation where you want a ride home or a lot of people like myself have medical appointments and they want to get somewhere, when you call through their software, even if they say, Oh, we’re only software and our drivers are all independent contractors, don’t you want to have assurance that they know who’s driving for them?
When you call for an Uber driver who you’ve never met before, would you want somebody to come pick you up who has 20 violations on their record? If this were a taxi company, that wouldn’t even be a consideration. I can’t imagine that people would be able to get a job at a taxi company if they had any type of history.
No, of course not. No, of course not. But Uber tried at first to get around that by saying, Oh, we’re an independent contractor, but that argument is going away. Pretty much that argument is going away with more and more cases like the one we’re talking about here. So now that you think that Uber has had this issue, we imagine that they would be doing something to at least try to remedy this, that they’re trying to make improvements.
I was just reading the newspaper the other day, Wall Street Journal just just the other day I was reading this and one of their chief executives, who is the executive head of driver operations, gave a four hour zoom meeting with company executives.
Her name is Carrol Chang. And in a 227 slide presentation to all the Uber executives nationwide, she outlined three of the company’s competing objectives and I’m quoting “The objectives are keeping costs low, avoiding legal risks and attracting drivers.” So if they only have three big, major goals and one of them is avoiding legal risks, we’ll see if they’re able to follow through.
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