New York’s highest court recently issued a decision enforcing Uber’s arbitration clause. Wu v. Uber Technologies, Inc., No. 90 (N.Y. Nov. 25, 2024) (click here for a copy of the decision). The plaintiff commenced a personal injury action in court two months before she agreed to updated terms of use containing an arbitration clause. The arbitration clause, which was broadly drafted, contained a delegation provision by which an arbitrator has “exclusive authority” to rule on the clause’s applicability and enforceability. According to a majority of the court, an arbitrator must decide whether the arbitration clause covers her pre-existing, pending personal injury claims.
A strong dissent characterized this case as involving a contract formation problem, as opposed to a problem involving the scope of an existing arbitration clause, and courts resolve formation issues. According to the dissent, a reasonable person would not have understood the updated terms to cover pre-existing claims already filed in court. The update used prospective language stating the terms would go into effect at a future date, and the update provided a method for filing disputes, as opposed to handling pre-existing, already-filed disputes. Also, the dissent observed that under professional ethics rules governing lawyers, the arbitration clause should have been presented to the plaintiff’s counsel, not directly to the plaintiff.