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Cullinane v. UBER Technologies, Inc.

United States District Court, D. Massachusetts

July 11, 2016

RACHEL CULLINANE, JACQUELINE NUNEZ, ELIZABETH SCHAUL, AND ROSS McDONAGH, on behalf of themselves and all others similarly situated, Plaintiffs,



         The practice of avoiding consumer class action litigation through the use of arbitration agreements is the subject of current scholarly disapproval[1] and skeptical investigative journalism.[2] It appears that at least one agency of the federal government is considering regulating the use of such agreements in so far as the subject matter is within its jurisdiction.[3] Nevertheless, the legal foundation provided in Supreme Court jurisprudence regarding the Federal Arbitration Act[4] for construction of arbitration agreements that bar consumer class actions is firmly embedded. Even Justices who question the practice find themselves bound to adhere to the blueprint opinions the Court has provided.[5]

         The plaintiff in this case extends an invitation to disassemble the judicial construct permitting a bar to class action litigation for consumer arbitration agreements. The invitation suggests teasing out distinctions that truly make no difference. This is not an institutionally authorized nor intellectually honest way to change practice and legal policy regarding the permissible scope of arbitration. Change, if it is to come, must be effected by a refinement through legislation and/or regulation that imposes restrictions on arbitration agreements, or by a reversal of direction on the part of the Supreme Court. It is not within the writ of the lower courts to replot the contours of arbitration law when the metes and bounds have been set clearly, unambiguously and recently by the Supreme Court.

         The plaintiffs in this putative class action are a group of users of the ride-sharing phone application designed and managed by defendant Uber Technologies. They allege that Uber overcharged them for travel to and from Boston Logan Airport and East Boston by imposing fictitious fees hidden in charges for legitimate local tolls. The plaintiffs seek class action relief pursuant to Mass. Gen. Laws ch. 93A, § 9, and accuse Uber of unjust enrichment. In response, Uber has filed the motion before me, seeking to compel arbitration of the dispute pursuant to 9 U.S.C. § 1 et seq, also known as the Federal Arbitration Act ("FAA"). I will allow that motion and dismiss this case.

         I. BACKGROUND

         A. Factual Background

         1. The Parties

         Uber Technologies ("Uber") is a ride-sharing service that transports customers throughout Boston for a fee. [2d Am. Compl., Doc. 54 ¶ 1] Uber's customers call for Uber vehicles, and pay for the requested ride, through use of Uber's smartphone app. [Id. ¶ 1]

         The named plaintiffs seek to represent a class of customers of Uber residing in Suffolk and Middlesex Counties, Massachusetts. [Id. ¶¶ 9-13] Each downloaded the Uber application and created an account at some point from 2012 to 2014. [Id. ¶¶ 16-19; Doc. 34 ¶¶ 7-10] Plaintiff Jacqueline Nunez used the app to hail a ride from Logan Airport on September 13, 2013, and was charged an $8.75 "Massport Surcharge and Toll" ("Surcharge"). [Id. ¶¶ 41-42] Plaintiff Rachel Cullinane used the Uber app to call a ride from Logan Airport on June 29, 2014, and was charged a $5.25 toll and the $8.75 Surcharge. [Id. ¶¶ 44-46]. Plaintiff Elizabeth Schaul used Uber to obtain transportation to and from Logan airport on numerous occasions between December 20, 2013 and December 1, 2014, and alleges that, each time, she was charged for an inflated toll and the Surcharge. [Id. ¶¶ 47-54] Plaintiff Ross McDonagh has used Uber to hail taxis to and from East Boston and Logan Airport, and alleges that he was charged the Surcharge and other fees multiple times between May 21, 2014 and March 27, 2015. [Id. ¶¶ 55-65]. The named plaintiffs purport to represent a putative class of plaintiffs composed of all Massachusetts residents who, since October 18, 2011, have been charged either the allegedly inflated toll fees or the Surcharge. [Id. ¶ 78]

         2. Account Creation Process

         In order to use the Uber application to call for transportation, users must first create an account, either through Uber's website, or through its smartphone app. [Doc. 32-1 ¶ 4] Each plaintiff created his or her account through the smartphone app. [Doc. 54 ¶¶ 16-19; Doc. 32-1 ¶¶ 7-10]

         In order to create an account, a user must proceed through three steps, each with its own screen inside the smartphone app. [Doc. 32-1 Ex. A-D] The first screen, entitled "Create an Account", prompts the user to input an e-mail address and mobile phone number, and to create a password for the account she is attempting to create. [Doc. 32-1 Ex. A-1, B-1, C-1, D-1] This screen also contains gray text on a black background immediately below the blank white input boxes and above the phone keyboard that says, "We use your email and mobile number to send you ride confirmations and receipts." [Id.]

         A second screen, entitled "Create a Profile", prompts users to enter their first and last names and to submit a photograph. [Doc. 32-1 Ex. A-2, B-2, C-2, D-2] This screen contains gray text on a black background that says, "Your name and photo helps [sic] your driver to identify you at pickup". [Id.] This text is in the same location as the gray text from the previous screen.

         The third and final screen in the account creation process, entitled "Link Payment", prompts the user to enter a credit card number to link a card to ride requests for payment. [Doc. 32-1 Ex. A-3, B-3, C-3, D-3, D-4]. In the most recent version of the screen, a version only used by Mr. McDonagh, this screen also provides an option to link a Paypal account in lieu of a credit card. [Doc. 32-1 Ex. D-3]. Immediately below the credit card information input box, and above the keyboard, appear the words "By creating an Uber account, you agree to the Terms of Service & Privacy Policy". [Doc. 32-1 Ex. A-3, B-3, C-3, D-3, D-4] The words "Terms of Service & Privacy Policy" appear in bold white lettering on a black background, and are surrounded by a gray box, indicating a button. [Id.; Doc. 32-1 ¶ 15] The other words are in gray lettering. [Id.] If a user clicks the button that says "Terms of Service & Privacy Policy", the Terms of Service then in effect are displayed on the phone. [Doc. 32-1 ¶ 15].

         After entering payment information, the user must then click a button with the word "Done" in the top-right-hand corner of the screen in order to create an account. [Doc. 32-1 Ex. A3, B-3, C-3, D-3, D-4; Doc. 32-1 ¶ 15] This button is grayed out and unclickable until the user enters her payment information. [Doc. 32-1 Ex. A-3, B-3, C-3, D-3, D-4] Users must complete all of the information requested in the input boxes on each screen and click the "Done" button on the last screen in order to create an account. [Doc. 32-1 ¶ 15].

         3. Uber Terms and Conditions

         The Uber Terms & Conditions ("Agreement") are contained in a 10-page document available to users who click on the box containing the phrase "Terms of Service & Privacy Policy" on the final screen of the account creation process. [Doc. 32-6 Ex. A-B, 32-1 ¶ 15] The Agreement contains many headings, each of which lays out certain terms of use for users of Uber's app. [Doc. 32-6 Ex. A-B] Uber changed its Agreement on May 17, 2013. [Doc. 32-6 Ex. B] As a result, the Agreement that Ms. Nunez would have seen had she clicked on the button on the last screen (nothing in the complaint indicates than any of the plaintiffs did click through) would have taken her to a different document than that available to the other plaintiffs. [Doc. 32-6 ¶¶ 4-5] However, the only relevant difference between the two documents is that the earlier Agreement had slightly larger headings for each section. [Doc. 32-6 Ex. A-B]

         The Agreement states that it "constitute[s] a legal agreement between [user] and Uber. . . . In order to use the Service [] and the associated Application [], you must agree to the terms and conditions that are set out below." [Doc. 32-6 Ex. A-B at 1] The contract also states that, by using any of Uber's services, the user "expressly acknowledge[s] and agree[s] to be bound by the terms and conditions of the Agreement." [Id.]

         The Agreement contains a section starting on page 9 (page 8 of the newer agreement) under the heading "Dispute Resolution." [Doc. 32-6 Ex. A at 9-10; Doc. 32-6 Ex. B at 8-10]. This section provides that the user and Uber

agree that any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof or the use of the Service or Application (collectively, "Disputes") will be settled by binding arbitration, except that each party retains the right to bring an individual action in small claims court. . . . You acknowledge and agree that you and Company are each waiving the right to a trial by jury or to participate as a plaintiff or class User in any purported class action or representative proceeding. Further, unless both you and Company otherwise agree in writing, the arbitrator may not consolidate more than one person's claims, and may not otherwise preside over any form of any class or representative proceeding.

[Doc. 32-6 Ex. A-B at 9] (emphasis in original). Under a sub-heading entitled "Arbitration Rules and Governing Law", the Agreement states, "The arbitration will be administered by the American Arbitration Association ("AAA") in accordance with the Commercial Arbitration Rules and the Supplementary Procedures for Consumer Related Disputes (the "AAA Rules") then in effect. . . . The Federal Arbitration Act will govern the interpretation and enforcement of this section." [Id.] The Agreement also provides that, should a user's claim be for an amount under $75, 000, Uber will pay any arbitration-related fees. [Id.]

         B. Procedural History

         Plaintiffs Cullinane and Nunez, on behalf of themselves and a putative class, filed this case in Massachusetts Superior Court. [Doc. 1-1, Original Complaint] The Original Complaint alleged five causes of action, four of which contained contract-related claims that have since been dropped by plaintiffs. [Id. ¶¶ 52-63] The fifth claim was the remaining claim of unjust enrichment. [Id. ¶¶ 60-63]

         Uber removed the case to this Court pursuant to the Class Action Fairness Act (CAFA), 28 U.S.C. § 1332(d). Plaintiffs responded with a motion to remand to State Court for lack of subject matter jurisdiction, claiming that Uber had not shown that this dispute would meet CAFA's amount in controversy requirement of $5 million. I denied that motion.

         Plaintiffs have successively filed two amended complaints. The first amended complaint added Schaul and McDonagh as named plaintiffs, and added the East Boston toll (experienced by Mr. McDonagh) claim to the claims based on the Surcharge. The plaintiffs also added a sixth count to their complaint, alleging that the hidden charges constitute unfair and deceptive acts in violation of Chapter 93A of the Massachusetts General Laws. The plaintiffs thereafter filed a Second Amended Class Action Complaint, which is currently the operative complaint, dropping the counts based on breach of contract, leaving only a Chapter 93A claim (Count I)[6] and a common law unjust enrichment claim (Count II). [Doc. 54, ¶¶ 85-91].

         For its part, Uber filed a motion to compel arbitration and stay or, in the alternative, to dismiss. The threshold question whether arbitration must be compelled will be addressed in this Memorandum. Because I conclude the answer to that question is "yes, " it is for the arbitration tribunal to determine the merits of the claim. Since arbitration must be compelled and nothing else remains for ...

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