Uber’s Arbitration Addiction Could Be Death by 60k Cuts(bloomberg.com)
bloomberg.com
Uber’s Arbitration Addiction Could Be Death by 60k Cuts
https://www.bloomberg.com/news/articles/2019-05-08/uber-s-arbitration-addiction-could-be-death-by-60-000-cuts
124 comments
Why complain to uber ? It's the driver's fault.
What would be the corrective action anyway ? That none of their drivers ever make any mistake ?
What would be the corrective action anyway ? That none of their drivers ever make any mistake ?
An analogy: Why complain to BP when one of their employees hits the wrong button and blows up an oil rig, spilling massive amounts of oil into the Gulf of Mexico? It's the employee's fault.
The reason to hold an employer liable for an employee's actions when acting in the course of employment is that this creates good incentives for the employer to institute good policies and procedures, and proper discipline of employees when they are on the job. This is a well-established legal doctrine called "respondeat superior."
Now, the $100 question: are Uber drivers employees? And in either case, how much liability flows up to Uber for a driver's malfeasance? I believe that's still unsettled, but I don't think it's just as simple as "if you have a problem with a driver, that's on the driver, not on Uber." Uber should have some responsibility for establishing standards for their drivers, and they should be held responsible when they are breached.
The reason to hold an employer liable for an employee's actions when acting in the course of employment is that this creates good incentives for the employer to institute good policies and procedures, and proper discipline of employees when they are on the job. This is a well-established legal doctrine called "respondeat superior."
Now, the $100 question: are Uber drivers employees? And in either case, how much liability flows up to Uber for a driver's malfeasance? I believe that's still unsettled, but I don't think it's just as simple as "if you have a problem with a driver, that's on the driver, not on Uber." Uber should have some responsibility for establishing standards for their drivers, and they should be held responsible when they are breached.
I see Uber more like providing the network and the app, not like the service provider. The service is provided by an independant contracter on which Uber has little control over.
In fact, a lot of drivers use several apps like Uber, and sometime even contract privately.
Imagine the same incident happen, but suddenly the Uber app crashes. You ask for a ride again, but on Lyft, but it's the same car arriving.
Now what ? Lyft is responsible ?
In fact, a lot of drivers use several apps like Uber, and sometime even contract privately.
Imagine the same incident happen, but suddenly the Uber app crashes. You ask for a ride again, but on Lyft, but it's the same car arriving.
Now what ? Lyft is responsible ?
Yes. At that point you would be using Lyft, with an expectation that they vetted their drivers and would protect you from common problems. If I mess up your food at Wendy's, the fact that I happen to also work at McDonald's doesn't change anything. As a business, you are definitely liable for independent contractors you hire -- that's gotten hammered into me hard at every place I've ever worked.
To poke a hole in the service provider argument, think about the experience of buying something from a real service provider. Stripe charges me fees to move my money around. That's it -- they don't choose the price of the item, they don't change my fees depending on whether or not the item was shipped or delivered digitally. My Internet service provider charges me a flat fee or a usage-based fee depending on how much Internet I use. Similarly, if I want to advertise on a billboard, I pay for the billboard -- not a percentage of each sale I make. Even in the Internet advertising business, I pay for impressions, and clickthroughs -- not for what happens after a customer is connected to me.
In short, you pay for the thing you buy, and companies are liable for the thing they sell you. Stripe is liable if they mess up transferring money, since that's what they charged me for. They're not liable if my item gets shipped wrong, because they tangibly, observably didn't have anything to do with that.
So on Uber, the price is fixed by the app and I'm charged based on the distance I travel. Drivers don't set the price-per-mile, Uber does. Uber then directly collects money from me based on the distance I traveled, and separately pays a percentage to the driver after the fact. Optionally, I can tip the driver just like I would tip a normal taxi driver.
That doesn't sound like Uber is charging a fee to connect me to someone. It's not a fixed monthly payment to use the app -- it's not based on whether or not the driver uses the Uber GPS or how much data they use. I'm not paying per ride-request. I'm paying Uber for the ride itself. It's a direct mirror of how I'm charged for a normal taxi.
So I'm contacting Uber and saying, "I want a ride", and they're charging me directly for a ride, based on attributes of the ride itself and not based on my usage of the app -- and then they want to claim that they're somehow not involved at all when something goes wrong with that ride? No, I am buying a ride from Uber, not from the contractor, and thus Uber is responsible for the quality of that ride.
To poke a hole in the service provider argument, think about the experience of buying something from a real service provider. Stripe charges me fees to move my money around. That's it -- they don't choose the price of the item, they don't change my fees depending on whether or not the item was shipped or delivered digitally. My Internet service provider charges me a flat fee or a usage-based fee depending on how much Internet I use. Similarly, if I want to advertise on a billboard, I pay for the billboard -- not a percentage of each sale I make. Even in the Internet advertising business, I pay for impressions, and clickthroughs -- not for what happens after a customer is connected to me.
In short, you pay for the thing you buy, and companies are liable for the thing they sell you. Stripe is liable if they mess up transferring money, since that's what they charged me for. They're not liable if my item gets shipped wrong, because they tangibly, observably didn't have anything to do with that.
So on Uber, the price is fixed by the app and I'm charged based on the distance I travel. Drivers don't set the price-per-mile, Uber does. Uber then directly collects money from me based on the distance I traveled, and separately pays a percentage to the driver after the fact. Optionally, I can tip the driver just like I would tip a normal taxi driver.
That doesn't sound like Uber is charging a fee to connect me to someone. It's not a fixed monthly payment to use the app -- it's not based on whether or not the driver uses the Uber GPS or how much data they use. I'm not paying per ride-request. I'm paying Uber for the ride itself. It's a direct mirror of how I'm charged for a normal taxi.
So I'm contacting Uber and saying, "I want a ride", and they're charging me directly for a ride, based on attributes of the ride itself and not based on my usage of the app -- and then they want to claim that they're somehow not involved at all when something goes wrong with that ride? No, I am buying a ride from Uber, not from the contractor, and thus Uber is responsible for the quality of that ride.
Uber drivers are not employees of Uber. It’s more like finding a plumber on craigslist and then suing them for damages caused by the plumber.
The same reason I complain to any other company when I have a problem with their service: it’s their responsibility and they are the ones who can make it right. Why would I complain to the driver?
The corrective action would be that Uber pays for the dress, obviously.
Where does this philosophy of yours end? "Well, yes, that cop did kill your son, when your son was unarmed and innocent. Why complain to the police department? It was the officer's fault. What would be the corrective action, anyway? That no police officer ever makes a mistake?"
Where does this philosophy of yours end? "Well, yes, that cop did kill your son, when your son was unarmed and innocent. Why complain to the police department? It was the officer's fault. What would be the corrective action, anyway? That no police officer ever makes a mistake?"
Why not take them to small claims?
I suspect that a successful small claims suit would also result in a ban from Uber.
Unfortunately I still use Uber occasionally, so I'd rather not risk getting banned.
Unfortunately I still use Uber occasionally, so I'd rather not risk getting banned.
This customer service just baffles me.
Why not just pay their cleaning bill and be done with it, instead of trying to deal with court and lose/ban the customer and all their future business?
Why not just pay their cleaning bill and be done with it, instead of trying to deal with court and lose/ban the customer and all their future business?
Uber's philosophy is to cast themselves as an abstract service that merely connects drivers with riders, and anything that goes on between them is not their problem. Any admission of culpability or recognizing that users are patronizing "Uber" and not "FungibleDriver23815" erodes that narrative, and pushes them into higher overhead territory (aka it's not "scalable").
Sounds like Uber won here: they didn't pay out, the customer didn't sue, and the customer was happy enough about shitty clothes with no redress that they are continuing to use the service. Job well done, Uber!
Someone is clearly not voting with their wallet. The question is, who else isn't?
Uber is the perfect proof that the "customers will vote with their wallets" argument doesn't work. This case is just one small example in their long and well-documented history of sociopathic behaviour, and they still are around and happily growing.
Some % of their customers did vote with their wallet, the Delete Uber campaign was measured to have a significant impact and it's most likely what motivated them to have a very large cleanup of their executives after all the scandals. Yes, still growing, but that changed their growing curve and gave larger marketshare to Lyft.
https://www.vox.com/2017/11/8/16617798/uber-delete-uber-lyft...
Customer activism can still have some impact at scale.
Why the OP did not decide to switch out of Uber after this incident also baffles me, but to each their own. Crazy how people will let a multi-billion dollar corporation do anything to them and will keep giving them money.
Why the OP did not decide to switch out of Uber after this incident also baffles me, but to each their own. Crazy how people will let a multi-billion dollar corporation do anything to them and will keep giving them money.
Uber is customers voting with their wallets... because they're cheaper than Taxis! Here, we're simply facing the unfortunatey reality of network effects / moats (barriers to entry).
>Uber is the perfect proof that the "customers will vote with their wallets" argument doesn't work.
How is this not a perfect example of the "customer voting with their wallet"? Maybe its not the vote you or I would have made. Clearly the customer values continued access to the network more than buying new clothes once. That is a vote for Uber's shitty [;P] business practices.
How is this not a perfect example of the "customer voting with their wallet"? Maybe its not the vote you or I would have made. Clearly the customer values continued access to the network more than buying new clothes once. That is a vote for Uber's shitty [;P] business practices.
I did, but that probably $100 they have missed out on, while everyone else I know uses them more and more.
> Sounds like Uber won here: they didn't pay out, the customer didn't sue, and the customer was happy enough about shitty clothes with no redress that they are continuing to use the service. Job well done, Uber!
Also, free advertising and reputational damage!
I've literally never used Uber because of stuff like this, and I discourage others from using them also. I mostly drive myself, but I'm content to use regular taxis and occasionally Lyft.
Also, free advertising and reputational damage!
I've literally never used Uber because of stuff like this, and I discourage others from using them also. I mostly drive myself, but I'm content to use regular taxis and occasionally Lyft.
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I reinstall Uber for company-related travel because it's integrated with our billing app. As soon as the trip is over, the app is removed. It's really not that much trouble.
I suspect it’s not customer service making the call. Legal comes up with this agreement and says that it must be part of any such transaction, and that policy can’t be overridden.
Yep. Uber is more than one person or team. Competing priorities.
The customer service team's priority is maximizing customer satisfication.
The legal team's priority is minimizing legal liability.
The customer service team's priority is maximizing customer satisfication.
The legal team's priority is minimizing legal liability.
> The legal team's priority is minimizing legal liability.
If that were literally true Uber wouldn't currently exist. They were knowingly breaking laws and arguably continue to do so.
Uber's lawyers are interested in advocating for Uber, period. In most organizations the legal department can and will be overridden when it's in the company's financial interests. Saying that something is non-negotiable is the oldest negotiating tactic in the book. If Uber refuses to bargain over a settlement it's because (a) you're not bargaining hard enough or (b) they're prepared to go to court. You can never know without forcing the issue.
The Anglo-American legal system, and to a lesser extent most other legal systems, principally evolved to adjudicate disputes among aristocrats and merchants. Neither group is shy about advocating for themselves. If they want the maximum benefit of the law, neither should regular individuals be shy.
If that were literally true Uber wouldn't currently exist. They were knowingly breaking laws and arguably continue to do so.
Uber's lawyers are interested in advocating for Uber, period. In most organizations the legal department can and will be overridden when it's in the company's financial interests. Saying that something is non-negotiable is the oldest negotiating tactic in the book. If Uber refuses to bargain over a settlement it's because (a) you're not bargaining hard enough or (b) they're prepared to go to court. You can never know without forcing the issue.
The Anglo-American legal system, and to a lesser extent most other legal systems, principally evolved to adjudicate disputes among aristocrats and merchants. Neither group is shy about advocating for themselves. If they want the maximum benefit of the law, neither should regular individuals be shy.
And I am 100% sure the impetus was not from the legal team.
That was from the business strategy and distribution folks. And then legal does the best they can with what they have.
Point being.... Don't be surprised by unoptimal actions if they are local optimums for the people involved. Thus the overreaching contract for $100 incident.
That was from the business strategy and distribution folks. And then legal does the best they can with what they have.
Point being.... Don't be surprised by unoptimal actions if they are local optimums for the people involved. Thus the overreaching contract for $100 incident.
It is true. The part that makes it consistent with Uber's flouting of the law is that there's another team above the legal team, and that team's job is to find ways to maximize income.
It's a function of priority: make money > minimize legal liability > satisfy customers.
It's a function of priority: make money > minimize legal liability > satisfy customers.
Because people take advantage when the policy is "just pay out."
Not often.
Work in a small town sometime and realize the respect you get - people take advantage of your company out of vengeance more than anything else - which is why most people here would be happy to exploit any justification to lower their cable bill.
Work in a small town sometime and realize the respect you get - people take advantage of your company out of vengeance more than anything else - which is why most people here would be happy to exploit any justification to lower their cable bill.
This is not a sustainable mindset.
I think it's pretty reasonable. It forces people to ask if their relationship with Uber is worth a claim that they're making. If Uber doesn't add $100 of value to your life, then claim the $100.
This feels like the logic of an extortionist.
I'm more interested in what logic is than what it feels like.
I think it's the same logic I'd use if I sat in gum at a discount theater, and the owner responded with "I'll pay for your pants, but only if you never come back here. I can't implement a process that keeps you from sitting in gum. We don't have that budget, and you should have been fully aware of that by looking at how dumpy this place is. And if you can't take responsibility for sitting in gum yourself, then I don't want to see what else you will do that you try to hold me liable for." Then I'd have to decide if the discount theater was worth it or not.
I think it's the same logic I'd use if I sat in gum at a discount theater, and the owner responded with "I'll pay for your pants, but only if you never come back here. I can't implement a process that keeps you from sitting in gum. We don't have that budget, and you should have been fully aware of that by looking at how dumpy this place is. And if you can't take responsibility for sitting in gum yourself, then I don't want to see what else you will do that you try to hold me liable for." Then I'd have to decide if the discount theater was worth it or not.
If you get banned, just use someone else's account. I don't use Uber much, so I don't know if there are significant disadvantages to this, though I've heard of people using someone else's account (sharing accounts).
Couldn't you trivially make a new email account and then a new uber account as well?
You would need a new phone number as well. (And many services now block Google Voice and similar)
This might be of interest not only for a burner number but also as a cheap and secure mobile line to use as dedicated 2-FA where SMS is the required, and only, available method.
Ting (ting.com) offers mobile service for $6/mo/line. They sell SIM cards for $1 so buy a few, then you can always spin up a new line on-demand. They support TOTP/U2F 2-FA, toggling call/text/data service, block porting, multiple call forward options, device auth/deauth/activation/suspention, # port blocking, etc., competent friendly humans provide on-demand phone support, and unlimited hassle free referral bonuses (you get $50 for initial referral $25 for unlimited others, people you refer get $25).
Ting (ting.com) offers mobile service for $6/mo/line. They sell SIM cards for $1 so buy a few, then you can always spin up a new line on-demand. They support TOTP/U2F 2-FA, toggling call/text/data service, block porting, multiple call forward options, device auth/deauth/activation/suspention, # port blocking, etc., competent friendly humans provide on-demand phone support, and unlimited hassle free referral bonuses (you get $50 for initial referral $25 for unlimited others, people you refer get $25).
That's also pretty easy to get.
I think you would have a lot of journalists eager to publicize that story if that was actually the case.
Who cares about being banned? Why would one continue to be a customer for a business that behaves this way? By the time you're at the point of suing a company or issuing a credit card chargeback, you've already burned the bridge and decided you never want to deal with the company again.
I've done a credit card chargeback about 3 times in my life, and in none of those cases did I ever worry, "Gosh, if these guys ban me, I'll never be able to give them my money again!"
I've done a credit card chargeback about 3 times in my life, and in none of those cases did I ever worry, "Gosh, if these guys ban me, I'll never be able to give them my money again!"
I feel like this story and being able to tell it might also be more valuable than the crap you'd need to go to if you actually wanted them to pony up that 100$.
Also, declining the token payment leaves a lawsuit open down the line if more serious complications develop from the incident.
Also, declining the token payment leaves a lawsuit open down the line if more serious complications develop from the incident.
Why not use Lyft?
Stip no ban in your case.
Wouldn't they more logically react by paying off such a small suit?
Even if not I suggest you show some backbone and do it anyway.
Even if not I suggest you show some backbone and do it anyway.
Because any action in small claims court would be summarily dismissed. Uber's TOS includes an Arbitration Agreement.[1]
[1] Paragraph 2: https://www.uber.com/legal/terms/us/
[1] Paragraph 2: https://www.uber.com/legal/terms/us/
For 100 bucks?
"We couldn't agree to the NDA even if we wanted"
Why would that be the case? The NDA would be fore going forward.
Why would that be the case? The NDA would be fore going forward.
> I don't think we could agree to the NDA even if we wanted to because I already tweeted about the incident before being offered compensation
NDAs usually exclude from the definition of confidential information anything disclosed before the fact. They also don’t typically restrict you from letting regulators, et cetera know things.
Unless you were planning on writing a book about the experience, the NDA probably wasn’t restricting you. Unless you were planning on going to court, the arbitration clause probably made your ability to seek redress cheaper.
Note: I am not a lawyer. This is not legal advice.
NDAs usually exclude from the definition of confidential information anything disclosed before the fact. They also don’t typically restrict you from letting regulators, et cetera know things.
Unless you were planning on writing a book about the experience, the NDA probably wasn’t restricting you. Unless you were planning on going to court, the arbitration clause probably made your ability to seek redress cheaper.
Note: I am not a lawyer. This is not legal advice.
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Sorry for the experience, but this is great comic material. LMAO.
How clean will these cars be when they are fully automated? Funny to think Tesla wants you to send your personal car off to a taxi fleet when not in use.
How clean will these cars be when they are fully automated? Funny to think Tesla wants you to send your personal car off to a taxi fleet when not in use.
Operating at scale means you have to get good at handling the corner cases. Whether it’s AirBnB or Uber or Tesla, shit happens and they need to be able to deal with it quickly and professionally.
If cars getting dirty is the worst problem Tesla has with their Fleet, they would be doing pretty tremendously well at that point.
At least you never need to worry about background checking the driver.
If cars getting dirty is the worst problem Tesla has with their Fleet, they would be doing pretty tremendously well at that point.
At least you never need to worry about background checking the driver.
I agree, dirty cars are the least of many problems that Tesla won't solve.
Yeah, but it’s YOUR car getting dirty, not Teslas. Tesla wants your car to become part of the fleet when you are not driving it.
That's adding a huge amount of wear and tear - what is the compensation for this?
That you get paid for fleeting your car?
Tesla claims up to $30k per year. You could easily just buy new seats and mats each year.
I mean, you would theoretically be getting paid good money, your car is going to get dirty.
I mean, you would theoretically be getting paid good money, your car is going to get dirty.
That's a significant chunk of possibly passive change. For some reason I doubt it'll be that simple, but if it does work out to be a matter of cleaning it once in a while and doing some routine maintenance, that's more than enough money to convince people to quickly pay off their Tesla I'm sure. Buy a couple, and they pay for themselves!
I assume that their hope is that small companies will pop up that build up a fleet of cars and clean them in house - they'd basically just be the most disgusting part of running a taxi business.
I nearly fell off my chair reading that agreement. The scope is unreal. Especially considering the settlement amount is a mere $100. For example, the non-disparagement clause isn't limited to the incident. You'd have keep any negative opinions about Uber to yourself for the rest of eternity.
I thought it was odd that only you were a party to the agreement and not your fiance and then I got to paragraph 5 and realized their request is even crazier... they want you to indemnify, defend, and hold them harmless from any other liabilities that might arise from the incident. If it turned out your fiance contracted a deadly illness from her contact with human waste and she sued Uber (or worse, her insurance company sued Uber for reimbursement) not only would you be on the hook for the damages, you would have to pay all of their legal fees during the process.
For a $100 settlement.
I have to imagine you are in the small minority of people who even reads these contracts of adhesion so I'd bet most people who sign these have no idea what they're giving up.
That is truly unconscionable.
I thought it was odd that only you were a party to the agreement and not your fiance and then I got to paragraph 5 and realized their request is even crazier... they want you to indemnify, defend, and hold them harmless from any other liabilities that might arise from the incident. If it turned out your fiance contracted a deadly illness from her contact with human waste and she sued Uber (or worse, her insurance company sued Uber for reimbursement) not only would you be on the hook for the damages, you would have to pay all of their legal fees during the process.
For a $100 settlement.
I have to imagine you are in the small minority of people who even reads these contracts of adhesion so I'd bet most people who sign these have no idea what they're giving up.
That is truly unconscionable.
I suspect that agreements like this don't actually hold in court. They are made just in attempt to intimidate.
Such an indemnity clause is nearly universal and as a general rule enforceable. Otherwise, what are they paying you $100 for? The person in the best position to know what the damages are is you. Uber doesn't want to pay you $100 just so you can come back later and take another bite at the apple.
Imagine if you walked out of a store having paid $10 for some merchandise, only to have the merchant come knocking at your door two weeks later saying that you need to pay another $10. One of the principle purposes of all contracts, and the law generally, is to provide finality. In the case of a settlement, there's little if any finality for the defendant if you don't agree to indemnify.
If $100 isn't enough to cover your future risk, then propose amendments (e.g. larger payment, a more explicitly circumscribed indemnity, etc) and if necessary take them to small claims court where you can recover for the immediate harm while preserving your future options.
There are general limitations on such clauses, accumulated over hundreds of years of legal evolution which bends, ever so slightly, toward fair outcomes. There's also supplementing legislative protections, typically stylized "consumer protections" when involving the hoi polloi. I wouldn't venture to say whether the indemnity clause would protect Uber if the claimant came down with an STD; it might or it might not, depending on the state, the context, and possibly even the sentiments of a jury. (In the case that it would protect Uber, consider that it's unlikely Uber who smeared the feces, so it's hardly that unfair from a moral standpoint unless there was gross negligence involved, such as the driver knowing the feces was there or Uber knowing that a driver was regularly in such incidents.)
What makes arbitration clauses problematic, as opposed to indemnification, is that the Federal Arbitration Act has been reinterpreted (beginning ~75 years after the fact) by a conservative court to foreclose state-based protections regarding fair enforcement of such clauses, and there are few if any federal-based limitations.
Imagine if you walked out of a store having paid $10 for some merchandise, only to have the merchant come knocking at your door two weeks later saying that you need to pay another $10. One of the principle purposes of all contracts, and the law generally, is to provide finality. In the case of a settlement, there's little if any finality for the defendant if you don't agree to indemnify.
If $100 isn't enough to cover your future risk, then propose amendments (e.g. larger payment, a more explicitly circumscribed indemnity, etc) and if necessary take them to small claims court where you can recover for the immediate harm while preserving your future options.
There are general limitations on such clauses, accumulated over hundreds of years of legal evolution which bends, ever so slightly, toward fair outcomes. There's also supplementing legislative protections, typically stylized "consumer protections" when involving the hoi polloi. I wouldn't venture to say whether the indemnity clause would protect Uber if the claimant came down with an STD; it might or it might not, depending on the state, the context, and possibly even the sentiments of a jury. (In the case that it would protect Uber, consider that it's unlikely Uber who smeared the feces, so it's hardly that unfair from a moral standpoint unless there was gross negligence involved, such as the driver knowing the feces was there or Uber knowing that a driver was regularly in such incidents.)
What makes arbitration clauses problematic, as opposed to indemnification, is that the Federal Arbitration Act has been reinterpreted (beginning ~75 years after the fact) by a conservative court to foreclose state-based protections regarding fair enforcement of such clauses, and there are few if any federal-based limitations.
In a way this is even worse as it further disenfranchises individuals from the legal system.
What's really needed is legislation that assigns direct punitive liability to drafters/pushers of contracts that continue to include outright nonsensical terms. Failing that it would be interesting if someone tried going after the practice as improperly providing incorrect legal advice - its basic goal is to mislead the opposing party into not knowing their own rights.
What's really needed is legislation that assigns direct punitive liability to drafters/pushers of contracts that continue to include outright nonsensical terms. Failing that it would be interesting if someone tried going after the practice as improperly providing incorrect legal advice - its basic goal is to mislead the opposing party into not knowing their own rights.
Unfortunately this puts a huge burden on small businesses and individuals, as it requires them to know precisely what is and isn't enforceable in a contract, as they'd no longer be able to rely on templates. For example, the vast majority of leases are templates, and almost all include unenforceable terms.
Further, contract law is primarily based in common law, which means a lot of terms that are inserted aren't definitively legal or illegal and it comes down to whether or not they are "reasonable". In this example, almost all of the demands from Uber could be reasonable in an NDA, but are pretty clearly not reasonable in this case. However, when and where terms are reasonable isn't exactly codified anywhere.
It's absolutely a problem, but punitive liability on the drafters on contracts just creates a power imbalance somewhere else.
Further, contract law is primarily based in common law, which means a lot of terms that are inserted aren't definitively legal or illegal and it comes down to whether or not they are "reasonable". In this example, almost all of the demands from Uber could be reasonable in an NDA, but are pretty clearly not reasonable in this case. However, when and where terms are reasonable isn't exactly codified anywhere.
It's absolutely a problem, but punitive liability on the drafters on contracts just creates a power imbalance somewhere else.
It wouldn't be a burden on small businesses and individuals who are already doing the right thing and not asking customers to agree to crazy, unenforceable terms. And for those companies using boilerplate templates, what stops them from just using a template that only includes reasonable, obviously enforceable terms? Given the choice between downloading the "minimal, enforceable" template and the "questionable, you might get sued over this" template, which one would they go with?
Unfortunately, templates aren't sorted that way.
I always thought a good way to go would be to build a standard set of "debugged" contracts, that can be filled out "mad libs" style. The terms of service on almost every app could be 90% built from a short list of common components, mosttypical employment contracts are pretty much identical.
When one of those contracts hits the court, almost all the technical details have been thoroughly discussed, leaving loads of precedent to stand on. The consumers know there's no surprises in it, and the businesses know they're going to have a quick and predictable time if there's a dispute. Eventually, people would start to look at you very suspiciously if you didn't want to use a standard contract-- what scam are you trying to work on?
The concept of "let's let anyone write arbitrary contracts and sort it out later" feels strangely 19th-century-quaint today. It relies on nicities of a different era: The two parties probably had reasonably equal access to legal support and knowledge, the negotiations were being done in good faith rather than as a land grab for maximum indemnity/payout, there was a full opportunity to negotiate instead of take-it-or-leave-it clickthroughs.
When one of those contracts hits the court, almost all the technical details have been thoroughly discussed, leaving loads of precedent to stand on. The consumers know there's no surprises in it, and the businesses know they're going to have a quick and predictable time if there's a dispute. Eventually, people would start to look at you very suspiciously if you didn't want to use a standard contract-- what scam are you trying to work on?
The concept of "let's let anyone write arbitrary contracts and sort it out later" feels strangely 19th-century-quaint today. It relies on nicities of a different era: The two parties probably had reasonably equal access to legal support and knowledge, the negotiations were being done in good faith rather than as a land grab for maximum indemnity/payout, there was a full opportunity to negotiate instead of take-it-or-leave-it clickthroughs.
> For example, the vast majority of leases are templates, and almost all include unenforceable terms.
One way to avoid this is to pass legislation making the entire contract void if there are unenforceable terms.
You can just sue for the specific term and if the judge agrees then the entire contract is null.
This would stop lawyers from sticking them in there...
One way to avoid this is to pass legislation making the entire contract void if there are unenforceable terms.
You can just sue for the specific term and if the judge agrees then the entire contract is null.
This would stop lawyers from sticking them in there...
That sounds terrible. The law isn't cut and dry like that: it's interpreted by judges, who are legal experts.
You're basically making contracts extremely risky to use for their intended purpose, or at least any contract that isn't a cookie cutter agreement for a well-investigated issue.
You're basically making contracts extremely risky to use for their intended purpose, or at least any contract that isn't a cookie cutter agreement for a well-investigated issue.
This also puts a huge burden on small businesses and individuals.
If they are relying on templates you could introduce certification of templates and change the system that way.
I do understand how we got to this present condition, but it still does not justify the ongoing harm from the practice.
I'm not talking about terms that merely could be at odds or attempt to carve out a narrow exception from prevailing law, but rather wholesale contradiction. Templates aren't a problem, but rather the solution.
Landlords are some of the worst offenders, actually. How many tenants have a dispute, read over their lease, and incorrectly think they have no options but to submit?
http://www.law.harvard.edu/programs/olin_center/fellows_pape...
I'm not talking about terms that merely could be at odds or attempt to carve out a narrow exception from prevailing law, but rather wholesale contradiction. Templates aren't a problem, but rather the solution.
Landlords are some of the worst offenders, actually. How many tenants have a dispute, read over their lease, and incorrectly think they have no options but to submit?
http://www.law.harvard.edu/programs/olin_center/fellows_pape...
Landlords can suck, but most leases are templates, and are not actually written by the landlord. Putting liability on them means that landlords suddenly are required to have a legal understanding of contract law (which, as I mentioned, is riddled with concepts like "ordinary wear and tear" and "reasonable accommodations" that aren't cut and dried). What that will do is disincentive individuals from going into the rental market, and consolidate the industry further towards those who have the resources to employ lawyers to draft said contracts and take disputes to court.
I don't mean to derail this even further but I'm going to anyway. My gut reaction is...So what?
Landlords will absolutely hammer tenants over even the slightest thing in a lease (so will tenants, for certain). To require that the contract the landlord puts forward be actually legal and reasonable does not move me in the slightest. The landlord has almost all of the power, both economic and market-moving, and is under no requirement to fairly negotiate a lease with a prospective tenant. This might not be a problem in areas with a glut of rental properties but it is for sure a problem in areas with a glut of prospective tenants.
By way of example, I'm living under a lease right now that was presented on take-it-or-leave-it conditions but that I cannot ever fulfill due to at least four requirements I read in it. The most hilarious is the requirement that my pet be covered by a pet license "issued by [local county] for household pets" and failure to have such a license is deemed "a material violation of the lease," subject to immediate notice to vacate when the landlord so chooses. The problem is, I can't ever do that because the county listed happens to contain the city I am in but the county does not issue pet licenses to residents of my city. Only my city does, but the lease does not require a city license; only a county one.
Landlords will absolutely hammer tenants over even the slightest thing in a lease (so will tenants, for certain). To require that the contract the landlord puts forward be actually legal and reasonable does not move me in the slightest. The landlord has almost all of the power, both economic and market-moving, and is under no requirement to fairly negotiate a lease with a prospective tenant. This might not be a problem in areas with a glut of rental properties but it is for sure a problem in areas with a glut of prospective tenants.
By way of example, I'm living under a lease right now that was presented on take-it-or-leave-it conditions but that I cannot ever fulfill due to at least four requirements I read in it. The most hilarious is the requirement that my pet be covered by a pet license "issued by [local county] for household pets" and failure to have such a license is deemed "a material violation of the lease," subject to immediate notice to vacate when the landlord so chooses. The problem is, I can't ever do that because the county listed happens to contain the city I am in but the county does not issue pet licenses to residents of my city. Only my city does, but the lease does not require a city license; only a county one.
The point is that increasing the regulatory compliance burden actually gives landlords more power, as it will consolidate property ownership amongst those who have the ability to employ lawyers to argue for the reasonableness of their terms.
Nonsense, it simply means they switch to templates which don't contain abusive, unenforceable clauses.
Lawyers would of course have to draft those templates. But they would rapidly end up being offered for $199 on document-prep websites which sell them already, along with divorce papers and bankruptcy filings.
Lawyers would of course have to draft those templates. But they would rapidly end up being offered for $199 on document-prep websites which sell them already, along with divorce papers and bankruptcy filings.
I've personally seen two terrible ones in recent history, and they were terrible precisely because they weren't standard templates. One was a long-winded attorney-crafted legalese designed to mislead tenants. The other was basically a DIY anti-precedent screed against tenant's rights, that loved to use that word indemnify. I was starting to wonder if that landlord had forgone buying property insurance or what.
A "template" supplied by an attorney, Nolo, or Staples is not going to create liability for a landlord. That's a complete red herring. Read the pdf I linked for a classification methodology to grade just how brazenly in conflict some clauses can be.
A "template" supplied by an attorney, Nolo, or Staples is not going to create liability for a landlord. That's a complete red herring. Read the pdf I linked for a classification methodology to grade just how brazenly in conflict some clauses can be.
I'd have redlined the hell out of the agreement (basically striking everything but "I agree not to disclose this"), added "I agree <legalese> to release Uber from all future claims related to my wife's clothing related to this trip", sent it back, and seen what happened. I doubt they'd have accepted it, but it could have been interesting to see their response.
Contracts are increasingly provided in electronic format only.
Makes markup difficult.
(As it does providing you a copy.)
Makes markup difficult.
(As it does providing you a copy.)
It's pretty amusing that their use of arbitration to prevent class actions is now being used against them. The nice thing about a class action from the company's perspective is that they only have to deal with one court case against a class being represented by a plaintiff as opposed to cases from every single member of the class. Sending all the members of the class through arbitration one-by-one ends up costing far more than the class action would have.
I think we'll see forced arbitration go away if more classes band together and go through arbitration one-by-one.
I think we'll see forced arbitration go away if more classes band together and go through arbitration one-by-one.
I'm loving it, too. It's a cheeky strategy, and I hope to see it used at other companies that make workers sign binding arbitration agreements, then screw them over. But then I read this:
> Lawyers who claim to represent more than 12,000 drivers who have filed arbitration demands have sued Uber, arguing the company has refused to pay obligatory filing fees to get the process started.
So apparently Uber can just say "we're not gonna" if they decide that arbitration is no longer working in their favor. Does that open them up to a class action suit on behalf of all the drivers who were denied arbitration? I have no idea, IANAL.
> Lawyers who claim to represent more than 12,000 drivers who have filed arbitration demands have sued Uber, arguing the company has refused to pay obligatory filing fees to get the process started.
So apparently Uber can just say "we're not gonna" if they decide that arbitration is no longer working in their favor. Does that open them up to a class action suit on behalf of all the drivers who were denied arbitration? I have no idea, IANAL.
Yes, it does open them to litigation. Failure to pay arbitration fees is now considered wavier of a contractual term to demand arbitration in many jurisdictions.[1][2][3]
The American Arbitration Association has been cracking down on companies which refuse to pay. They send out letters to companies telling them that not only does the AAA reject this arbitration, the company can no longer use AAA services at all. This throws the case back into the judicial system.
"The cost of arbitration is turning out to be real leverage for plaintiffs' lawyers who are smart enough to adapt to the privatization of litigation. It may not be long before companies like Uber start wishing for the good old days of class actions."
[1] http://www.outsourcingjustice.com/11th-circuit-hernandez-aco... [2] https://demlplaw.com/firm-blog/new-decision-failure-pay-arbi... [3] https://www.publicjustice.net/bait-and-switch-many-corporati...
The American Arbitration Association has been cracking down on companies which refuse to pay. They send out letters to companies telling them that not only does the AAA reject this arbitration, the company can no longer use AAA services at all. This throws the case back into the judicial system.
"The cost of arbitration is turning out to be real leverage for plaintiffs' lawyers who are smart enough to adapt to the privatization of litigation. It may not be long before companies like Uber start wishing for the good old days of class actions."
[1] http://www.outsourcingjustice.com/11th-circuit-hernandez-aco... [2] https://demlplaw.com/firm-blog/new-decision-failure-pay-arbi... [3] https://www.publicjustice.net/bait-and-switch-many-corporati...
Not necessarily. It depends on why the arbitration agreement was considered binding in the courts. If it's because it's assumed to be a parallel legal process then I could see a class action being undertaken with the argument that Uber is using the arbitration clause to deny the class their due process rights. I am also not a lawyer but I'm assuming that the courts are presided over by reasonable people which is usually the case.
Only for major claims though. If Uber stole $25 from me, it isn't worth taking a day off work to go to the arbitration session.
> If Uber stole $25 from me, it isn't worth taking a day off work to go to the arbitration session.
You're sending a pretty strong signal there. Do you know who's listening for it?
I bet that this personal data, that you are giving away money is really valuable to some 3rd party.
You're sending a pretty strong signal there. Do you know who's listening for it?
I bet that this personal data, that you are giving away money is really valuable to some 3rd party.
Is the signal "is employed?"
Minimum wage workers make $50+ dollars a day. Even part time, most shifts are at least long enough to make $25.
Minimum wage workers make $50+ dollars a day. Even part time, most shifts are at least long enough to make $25.
Its not like PTO is a thing or you can ask to be scheduled Monday off instead of Tuesday this way and lose zero money.
Your sarcasm is noted, but not everyone has that flexibility.
Nor is taking PTO to sit in arbitration for a while for $25 an appealing option for many people.
Nor is taking PTO to sit in arbitration for a while for $25 an appealing option for many people.
Not being screwed over in the future is pretty appealing.
Let me clarify, the signal is that you can be swindled for $25 and won't be fighting back.
Those same minimum wage workers also couldn't really afford to lose that $25 in the first place
Society need altruistic punishers of antisocial behaviour. I would probably not do it for 25 usd if I demanded it of them even though it would be good if I did, but surely if someone demanded 25 of me.
That depends entirely on what your motivation is.
If your motivation is to get back $25 then you're right -- it isn't worth your time to coordinate with other people to DDOS Uber with mass-arbitration.
But if your goal is to fuck over Uber out of principle for them fucking you over that is something you can't really put a price on.
On top of that knowing that you're using their scummy forced arbitration clause against them is a cherry on top of the schadenfreude sunday.
If your motivation is to get back $25 then you're right -- it isn't worth your time to coordinate with other people to DDOS Uber with mass-arbitration.
But if your goal is to fuck over Uber out of principle for them fucking you over that is something you can't really put a price on.
On top of that knowing that you're using their scummy forced arbitration clause against them is a cherry on top of the schadenfreude sunday.
Most people not making upper 5 or 6 figure salaries don't have the luxury of taking a day off work just to stick it to the man.
I anticipated a response like this but I don't think it applies in this situation.
According to the article around 60,000 people have found the time to make this happen.
What we are seeing is a fundamental aspect of human nature and that is that spite is a great motivator.
You're right, most people can't afford to do this, but many can. Enough that it is hitting Uber where it hurts -- the bottom line.
And as someone who favours stronger protections for workers that is most pleasing.
According to the article around 60,000 people have found the time to make this happen.
What we are seeing is a fundamental aspect of human nature and that is that spite is a great motivator.
You're right, most people can't afford to do this, but many can. Enough that it is hitting Uber where it hurts -- the bottom line.
And as someone who favours stronger protections for workers that is most pleasing.
>spite is a great motivator.
This is exactly why spite is a great motivator - it encourages people to do better game theory (in the context of the ancestral evolutionary environment, at least). If you never go after the $25 someone owes you just out of spite, people will repeatedly take advantage of you in ways that aren't worth remedying.
This is exactly why spite is a great motivator - it encourages people to do better game theory (in the context of the ancestral evolutionary environment, at least). If you never go after the $25 someone owes you just out of spite, people will repeatedly take advantage of you in ways that aren't worth remedying.
I wouldn't say that spite is the only thing at work here. Humans are incredibly tied to fairness, of which I think spite is a partial sub-set.
Some people will spend more cash to remedy the unfairness of the situation
https://www.psychologicalscience.org/news/releases/are-human...
Some people will spend more cash to remedy the unfairness of the situation
https://www.psychologicalscience.org/news/releases/are-human...
In a more just world, there would be a way for common people to avail the benefits of our legal system without sacrificing a day of work, mailing snail-mail letters and faxing forms in triplicate. If a company owes me $25, why can't I just take them to small claims court with a simple E-mail to my county court?
The man knows this, and this is why the man gets away with screwing you over.
If it’s not worth going to arbitration for $25, then it’s not worth going to court, either, so what’s the difference?
Is it worth sending big lawyers who will get millions? You'll probably only get a coupon for a free ride. You're still not going to get your $25 back, but at least you'll get to sic big lawyers on the company.
It isn't an accident that arbitration clauses come with class action waivers.
It isn't an accident that arbitration clauses come with class action waivers.
You can play chicken about actually going to court over the matter, too, by writing a professional-looking demand letter stating your claim and mailing it return-receipt requested to the corporation's service agent.
Costs about $10 (not including labor, because IMO it's personally satisfying), and has roughly a one-in-three chance of them simply paying you to avoid the expense of small claims court.
Costs about $10 (not including labor, because IMO it's personally satisfying), and has roughly a one-in-three chance of them simply paying you to avoid the expense of small claims court.
You can do a credit card chargeback. I've done that against both Uber and Lyft when they screwed up my ride but still charged me, and refused a refund through-app.
I didn't get banned, American Express handled the negotiation for me, and I got my money back and with a canned apology email from the companies.
I didn't get banned, American Express handled the negotiation for me, and I got my money back and with a canned apology email from the companies.
I'd take the time to start he arbitration process and then just not show up (for the same reason as you). They likely still incur most of the costs as if you did, minus whatever payout would result.
I view this is as a good thing. Corporations love to strip out the ability to get disputes against them settled by a court of law. The arbitration process is secretive and designed for companies to win, eventually.
Let their swords against just and favourable conditions of work be used against them.
Let their swords against just and favourable conditions of work be used against them.
In this case (as well as many potentially similar ones), I'm pretty glad this is happening. That said, are there no SLAAP protections in arbitration cases? As I alluded to earlier, I imagine Uber has enough reasonable cases for arbitration that SLAAP-like laws wouldn't protect them, but I can imagine other situations where a company could be bombarded with frivolous arbitration claims.
I think I'm sympathetic to the idea that if you insert a binding arbitration clause, you've chosen to forgo protections like SLAAP. However, say you didn't insert a binding arbitration clause, but didn't expressly forbid it and offer it as an option. Couldn't a coordinated campaign cost a company huge sums of money, as the company bears most of the arbitration costs?
Again, I don't think this is happening in this situation, and I can't say I've heard of it happening, but it's something that came to mind.
I think I'm sympathetic to the idea that if you insert a binding arbitration clause, you've chosen to forgo protections like SLAAP. However, say you didn't insert a binding arbitration clause, but didn't expressly forbid it and offer it as an option. Couldn't a coordinated campaign cost a company huge sums of money, as the company bears most of the arbitration costs?
Again, I don't think this is happening in this situation, and I can't say I've heard of it happening, but it's something that came to mind.
I wonder how successful a company that specializes in fighting and negotiating in arbitration proceedings would need to be such that the customer's cost in participating would be affordable: a sort of tech-enabled law firm. Arbitration-as-a-Service.
As the article states, the company already pays the cost of arbitration. You can go into arbitration without paying anything.
How do you guarantee that the arbiter that you aren’t paying for will treat you fairly?
Are there penalties for filing frivolous arbitration suits? Or suits that are just reasonable enough but aren’t likely to win?
How do you define "frivolous"?
I’m interested in the answer to this question for a variety of definitions.
One time uber’s UI glitched out causing an unwanted purchase and their customer service refunded me a day later. Could I have just sued them instead of trying to reach customer service?
Could I sue them for something I thought they did with no reasonable proof?
I’m wondering if there are limitations to abuse not for the purpose of extracting wealth from a company but for attacking the arbitration system.
One time uber’s UI glitched out causing an unwanted purchase and their customer service refunded me a day later. Could I have just sued them instead of trying to reach customer service?
Could I sue them for something I thought they did with no reasonable proof?
I’m wondering if there are limitations to abuse not for the purpose of extracting wealth from a company but for attacking the arbitration system.
The amount you'd be suing/arbitrating for would be something small, right? The cost of one ride? They'd probably just choose to give you your money back rather than go through any more involved process.
And keep in mind, it's a lot of hassle to file suit or arbitration. And you need to be able to show in good faith that you tried using reasonable channels to resolve the dispute first, i.e. if you never even contacted customer support with your complaints then that's not good for you.
As an example, I recently had a Lyft to the airport that was priced up front at $80 but was billed at $120 post-arrival. Part of the problem was the airport drop-off zone was under a roof and the GPS signal probably didn't work and the ride kept running for at least 10 minutes after I'd been dropped off. It took all of two minutes to contact customer support and get refunded the extra $40. I'm not going to go to arbitration in this case which costs me two orders of magnitude more effort and has a lower chance of getting my money back, because I would've never even have notified them of the issue prior to escalating too high.
And keep in mind, it's a lot of hassle to file suit or arbitration. And you need to be able to show in good faith that you tried using reasonable channels to resolve the dispute first, i.e. if you never even contacted customer support with your complaints then that's not good for you.
As an example, I recently had a Lyft to the airport that was priced up front at $80 but was billed at $120 post-arrival. Part of the problem was the airport drop-off zone was under a roof and the GPS signal probably didn't work and the ride kept running for at least 10 minutes after I'd been dropped off. It took all of two minutes to contact customer support and get refunded the extra $40. I'm not going to go to arbitration in this case which costs me two orders of magnitude more effort and has a lower chance of getting my money back, because I would've never even have notified them of the issue prior to escalating too high.
Why does Uber agree to pay most of the arbitration fee? Why don't they write a contract that requires drivers to pay it?
NAL but speculating: I assume it was because arbitration clauses (contrary to the popular perception) have to make some attempt at fairness in order to hold up in court, so Uber's lawyers figured that, by making Uber responsible for the fee, it would look more like a reasonable arrangement that a driver with actual bargaining power might agree to.
Especially given that Uber chooses the arbiter.
Arbitration clauses don't work as intended if the company can't choose a biased arbiter to rule in their favor, so this is always part of the contract.
Arbitration clauses don't work as intended if the company can't choose a biased arbiter to rule in their favor, so this is always part of the contract.
Uber having sole choice over the arbiter would go against my explanation being the right one. Biased selection of the arbiter is also a reason why (AIUI) such a contract wouldn't hold up in court.
I meant that the contract would seem especially unfair if Uber could choose an arbiter they didn't have to pay for.
Even if they didn't outright choose an expensive one to squash claims, it would be unfair to make an individual pay for a service they can and want to get cheaper elsewhere (on less favorable terms for Uber).
Unless there's blatant cronyism and abuse of power, I don't think biased arbitration by itself would fail to hold up. Judges are humans with personal ideologies too, so you can pick some that do everything by the book and still skew the result in your favor (especially averaged over 60,000 cases)
Even if they didn't outright choose an expensive one to squash claims, it would be unfair to make an individual pay for a service they can and want to get cheaper elsewhere (on less favorable terms for Uber).
Unless there's blatant cronyism and abuse of power, I don't think biased arbitration by itself would fail to hold up. Judges are humans with personal ideologies too, so you can pick some that do everything by the book and still skew the result in your favor (especially averaged over 60,000 cases)
Presumably because they wanted to make sure the arbitration company was strongly biased towards them - obviously the arbitrator will lose the contract from Uber if they don't decide most cases in Uber's favor.
It was a good plan with the only flaw being they didn't anticipate so many drivers banding together to file for arbitration that the fees themselves are annoyingly high.
It was a good plan with the only flaw being they didn't anticipate so many drivers banding together to file for arbitration that the fees themselves are annoyingly high.
We were out late one night and we called an Uber to get back home. After a very long wait and an odd delay where the driver stayed in the same position on the map for 10 minutes, they started driving again and then arrived. (We suspect that during this time one of the passengers shit themselves)
My fianceé sat down and immediately felt excrement all over her clothing. It was very dark so she did not see this until after she entered the car and sat down. We also noticed that the other supposed passenger mentioned in the Uber app already bailed.
We were never compensated as we would not agree to the NDA. I don't think we could agree to the NDA even if we wanted to because I already tweeted about the incident before being offered compensation.[2]
Uber mentioned that the NDA isn't required in cases of sexual assault, but it's still required even if you are potentially exposed to sexually transmitted diseases through human excrement. What the fuck?
1. https://go.eligrey.com/t/uber-nda.pdf
2. https://twitter.com/sephr/status/1068251146676891649