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San Diego Business Contracts: More on Contract Formation for Online and Phone Apps

The US District Court up in San Francisco recently handed down a decision with respect to an Uber user on the issue of contract formation. According to Uber, an Uber-ride user — Christopher Ziers — downloaded the Uber app to his smart phone running Android and set up a ride. Shortly after setting up the ride, Ziers canceled it. In the litigation, Ziers claimed that he never used the phone app, never downloaded the app, and never registered for Uber services.

Believing that Ziers had registered, Uber began sending text messages to him. Ziers subsequently filed a lawsuit as a class representative claiming that Uber was sending unsolicited emails in violation of a federal anti-robocall statute. Uber responded by arguing that the case had to go to arbitration since mandatory arbitration was required by the Terms of Service Agreement for the phone app.

The federal district court denied Uber’s motion to compel arbitration because Uber could not properly authenticate that Ziers had registered via the Uber phone app. See news report here. The case is In Re Uber Text Messaging, Case No. 4:18-cv-02931 (US Dist. N.D.Cal., June 18, 2019). In support of its motion to compel arbitration, Uber provided the following:

  • Declarations from two Uber employees stating that “Uber’s records showed that Ziers ordered and cancelled a ride on June 23.”
  • Various screenshots from Uber’s database showing registration, the ride Ziers ordered, his cancellation of the ride, and a credit card number provided by Ziers to Uber

In response, Ziers provided transcripts of deposition testimony from the Uber’s software engineer in which the engineer admitted that he did not know where Uber kept its data, how or who maintained the data, how or who could modify Uber’s data. The engineer also admitted that he had no idea whether the data at issue had been modified.

Based on the foregoing, the court denied the motion to compel arbitration. Uber will have another opportunity to seek arbitration, but — for now — the case will proceed in federal court.

Legal Lessons

First, a party seeking to prove the existence of a contract has the burden of proving that the contract was formed if the other party challenges formation. If there is no contract formation, there is no contract for the courts to enforce. Second, good record-keeping is essential, particularly with respect to online transactions. Record-keeping will take on added significance and legal importance once the California Consumer Protection Act takes effect beginning on January 1, 2020. Third, it is crucial to present the evidence of contract formation to the court in the proper format with the proper witnesses. To ensure your San Diego business contracts are enforceable, an experienced San Diego corporate attorney is essential.

Contact San Diego Corporate Law

For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard focuses his practice on business law, transactional, and corporate matters, and he proudly provides legal services to business owners in San Diego and the surrounding communities. Mr. Leonard can be reached at (858) 483-9200 or via email. Like us on Facebook.

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