Applebaum v. Lyft, Inc. - 263 F. Supp. 3d 454 (S.D.N.Y. 2017)

Rule:

Courts consistently find scrollwrap agreements enforceable because they present the consumer with a realistic opportunity to review the terms of the contract and they require a physical manifestation of assent. By comparison, courts scrutinize the circumstances surrounding an alleged assent to a clickwrap agreement, which does not require the user to review the terms of the proposed agreement; nevertheless, courts generally find clickwrap agreements enforceable because by requiring a physical manifestation of assent, a user is said to be put on inquiry notice of the terms assented to. However, courts are not consistent in distinguishing between scrollwrap and clickwrap agreements. For example, the United States Court of Appeals for the Second Circuit recently described clickwrap agreements as typically requiring users to click an I agree box after being presented with a list of terms or conditions of use.

Facts:

Plaintiff, Josh Applebaum, on behalf of a purported class, filed a complaint against defendant, Lyft, Inc., a transportation company that was connecting consumers to drivers through its mobile application (the “Lyft App”). According to the plaintiff, Lyft was overcharging its New York City metropolitan area consumers by charging them the non-discounted cash price for tolls, as opposed to the discounted rate that Lyft’s drivers may receive by using “E-Z Pass.” The plaintiff has asserted claims for violation of N.Y. Gen. Bus. L. § 349 and unjust enrichment. Lyft has moved to dismiss or, in the alternative, stay the action, and to compel arbitration based on the February 8, 2016 Terms of Service. Lyft argued that the plaintiff’s acceptance of the September 30, 2016 Terms of Service showed that the latter had no opposition to arbitrating his claims pursuant to the February 8, 2016 Terms of Service. On the other hand, the plaintiff contended that he never read any portion of the February 8, 2016 Terms of Service, and that he never knowingly agreed to its provisions. 

Issue:

Should Lyft’s motion to compel be granted?

Answer:

Yes.

Conclusion:

The Court first noted that Lyft failed to show that Applebaum assented to the arbitration provisions of the February 8, 2016 Terms of Service, where there was no requirement that the rider click on a hyperlink to view the terms of service before proceeding, the registration process did not alert a reasonably prudent consumer to the gravity of clicking a "Next" bar, the text of the statement agreeing to the terms of service was difficult to read, and the screen asking for a phone number was structure as part of a process to verify a phone number, not to enter a detailed contractual agreement. However, Lyft was able to prove that Applebaum assented to the arbitration provisions of a later online terms of service where the terms were presented on a separate screen and the text explicitly stated that accepting the terms of service was required to proceed. Courts consistently find scrollwrap agreements enforceable because they present the consumer with a realistic opportunity to review the terms of the contract and they require a physical manifestation of assent. Hence, the motion to compel arbitration was granted.