The Hidden Risk of Your Next Uber Ride

If you're one of the millions who frequently rely on Uber for convenient transportation, you might be unaware of the hidden dangers lurking beneath the surface. Beyond the potential for traffic accidents, there's an even more insidious risk: the arbitration clauses buried in the rideshare app's Terms of Use.

These clauses can strip you of your right to a court trial, as the McGinty family from New Jersey discovered after a devastating accident in 2022. Their story reveals how a simple click-through agreement can have far-reaching consequences, leaving you to navigate a complex and often unfriendly arbitration process.

Traffic Troubles

One day in March of 2022, the McGintys ordered an Uber in New Jersey, and driver Jia Wen Zheng came to pick them up. The couple got into the rear seats, and Zheng proceeded onto State Highway 130 South. At the intersection of State Highway 522, Zheng ran a red light. Unfortunately, it wasn’t a no-harm-no-foul situation at all, because the perpendicular vehicles had started moving. Zheng ended up T-boning a vehicle driven by Jerinson Peralta but owned by Brachy Felizdelapaz.

The collision caused extensive damage to Zheng's vehicle and resulted in serious physical, psychological, and financial damages to the plaintiffs. Georgia sustained multiple injuries, including fractures to her cervix, spine, ribs, and lumbar region, a protruding hernia, and other traumatic injuries. She underwent several surgeries and was unable to work for a year. John sustained a fractured sternum and severe fractures to his left arm and wrist, requiring surgery and resulting in diminished use and sensation in his left wrist.

Lawsuit Stopped in its Tracks

The following February, nearly a year after the crash, the McGintys filed a lawsuit in a New Jersey state trial court, seeking damages for the injuries and losses they suffered due to the accident, and naming many different defendants.

As individual defendants, they named the driver, Zheng, as well as the driver and owner of the other vehicle, Peralta and Felizdelapaz. Corporate defendants named were Uber Technologies as well as a company called Raiser, which is a subsidiary of Uber that sub-licenses Uber's technology to independent drivers and pays them their wages.

The case didn’t get very far before Uber said “not so fast.” The defendants soon filed a motion to compel arbitration and to dismiss the plaintiffs' complaint.

Uber Compels Arbitration

Arbitration is an alternative dispute resolution method where the parties present their case to a neutral third-party arbitrator, who then makes a binding decision. Arbitration can be faster and less costly than court proceedings, and it is often chosen for its confidentiality and flexibility. However, it also means that the parties waive their right to a trial by jury and may have limited options for appealing the arbitrator's decision.

Here, Uber was asking the court to order the McGintys to settle matters out of court. This kind of motion is typically filed when one party believes that the dispute falls within the scope of an arbitration agreement previously agreed upon by the parties, such as a clause in a contract. If the court grants the motion to compel arbitration, the parties must resolve their dispute through the arbitration process rather than litigation.

Uber argued that Georgia had agreed to Uber's Terms of Use, which included an Arbitration Agreement. That agreement laid out disputes that may arise between Uber and the account holder—in this case, Georgia. The list included disputes over car accidents or personal injuries. The agreement established that disputes on that list would be resolved through binding arbitration "and not in a court of law." The agreement further established that if there was a dispute as to whether a matter was appropriate for arbitration or a court, that question would be answered by the arbitrator. If that strikes you as a little suspect, the McGinty's agree.

Uber maintained that Georgia had agreed to the terms multiple times, including on January 8, 2022, when she confirmed the agreement to the updated Terms of Use. Uber’s records show that on that date, Georgia’s Uber account was logged into using her password, and a box next to the statement "I have reviewed and agree to the Terms of Use” was pressed before hitting the “confirm” button.

According to the McGintys, though, it wasn’t that simple.

Who Signed What?

The McGintys said they did not recall seeing a pop-up with the terms-of-use agreement, and asserted that it was actually their daughter who had checked the box before placing the order.

The McGintys testified in court that on the evening of January 8, 2022, they were packing for a skip when their daughter, a minor, asked to order food. Georgia gave her daughter permission to use her phone and her Uber account to order food via Uber Eats, which is a food delivery service provided within the same platform as the Uber rideshare service. The daughter apparently selected the button agreeing to the terms of use and confirming even though this required attesting that she was at least eighteen years old.

The McGintys thus filed a motion in opposition to Uber’s motion to compel arbitration, asserting that it was not Georgia but rather their child who had agreed to any terms.

Uber and Raiser argued that Georgia could not escape her agreement with Uber by claiming that her daughter agreed to the December terms on her behalf. They asserted that actual and apparent authority was created when Georgia gave her daughter the cell phone to use her Uber account. Additionally, they contended that the daughter's age was not relevant to the question of her capacity to enter a contract because the daughter did not enter the Terms of Use on her own behalf. Under this basis, they argued, a so-called “infancy defense” does not apply when the minor misrepresents that she is an adult.

Court Decides the Big Question

To decide the question of who had effectively agreed to the arbitration agreement, the court used principles of agency law, specifically, “actual authority” and “apparent authority.” It noted that actual authority occurs when the agent (here, the daughter) reasonably believes, based on the principal's (here, Georgia) manifestations, that the principal wishes the agent to act in a certain way. Apparent authority arises when a third party (here, Uber) reasonably believes the actor (the daughter) has authority to act on behalf of the principal (Georgia), and that belief is traceable to the principal's manifestations.

That's a lot of legal mumbo jumbo, so we’ll put it differently: the court decided that even if it was Georgia’s daughter who was agreeing the terms, that was still binding on Georgia. Georgia had certified that her daughter was capable and frequently ordered food. That, along with the fact that Georgia and John were preoccupied with packing, supported the inference that the daughter acted knowingly on Georgia's behalf. Therefore, the court concluded that the arbitration agreement was valid.

The court decided to let the entire matter go to arbitration, and that includes of course the threshold question of the scope of the arbitration. Consequently, Georgia's reliance on her daughter's minority to raise an infancy defense would be determined by the arbitrator. This came as a big blow to the McGintys, because courts and juries are typically more friendly to plaintiffs than arbitrators.

Shocked Plaintiffs Continue to Fight

The McGintys were "really shocked" by the court's decision. Georgia expressed incredulity that the court could interpret the situation in a way that a click-through by their daughter to order a pizza could mean they couldn't recover for their serious injuries and financial harm from the car accident. They plan to appeal the decision, although the path forward could be challenging. "We just want to ensure this doesn't happen to anyone else," Goergia said. "People deserve to have their day in court."

The McGinty’s story has sparked a conversation about the need for clearer, more accessible terms-of-service agreements. Consumer advocacy groups are calling for legislative reforms to protect individuals from unknowingly waiving their rights. Legal experts warn that the increasing prevalence of such clauses could limit consumers' access to jury trials, a cornerstone of the American legal system.

As the McGintys brace for the challenging path ahead, their case underscores a growing concern over the reach of arbitration agreements in everyday transactions. The McGintys' attorney, Evan Lide, emphasized the broader implications of the court's decision. "This isn't just about one family," he said. "It's about the erosion of fundamental rights through fine print that most people don't read or understand."

Related Resources:

• Do I Need an LLC to Work for Uber or Lyft? (FindLaw's Learn About the Law)
• Will Uber and Lyft Catch a Ride Out of Minneapolis? (FindLaw's Law and Daily Life)
• Arbitration Legal Basics (FindLaw's Learn About the Law)