1st Circuit Affirms Validity of Click-Through Arbitration Provision

The U.S. Court of Appeals for the First Circuit affirmed the dismissal of a putative class action in favor of arbitration of the plaintiff’s individual claim, concluding that the parties had a valid and enforceable agreement to arbitrate, and holding that the arbitration clause was enforceable because it was not unconscionable under Massachusetts law.

The plaintiff drove for the defendant, a company operating a ride-hailing service.  Plaintiff tapped “I accept” on his smartphone when presented with the company’s terms of service agreement, which contained a provision requiring that disputes between the parties be resolved by arbitration.  In this putative class action, the plaintiff alleged that the company violated the Massachusetts Wage Act by classifying Massachusetts drivers as independent contractors rather than as employees.  The company moved to dismiss the complaint and to compel individual arbitration under the Federal Arbitration Act (FAA).  In opposing the motion, the plaintiff argued that the contract was unenforceable under the FAA because the agreement to arbitrate was procedurally and substantively unconscionable under Massachusetts law.  The district court dismissed the case in favor of individual arbitration, and the plaintiff appealed. 

On appeal, the panel rejected the plaintiff’s contention that the agreement to arbitrate was unconscionable.  The plaintiff’s argument that the agreement is substantively unconscionable stemmed from the arbitration clause’s requirement that the plaintiff and company split equally the arbitration’s costs.  The plaintiff argued that he and other drivers cannot afford such high fees and that this arrangement is substantively unconscionable.  The court found that the defendant’s offer before the district court to pay all fees for an arbitration with plaintiff “sinks this argument.”  Accordingly, the panel affirmed the district court’s judgment.