Court: No Online Waiver of Pennsylvania Jury Rights Without Meeting Very Specific Requirements

The Superior Court of Pennsylvania has stated prerequisites for companies to enforce their online arbitration agreements against Pennsylvania citizens. For failure to meet these procedural requirements, the appeals court reversed an order to compel a dispute to arbitration. Companies that rely on online terms to secure consumer agreement for arbitration should closely examine the decision, which is at odds with traditional case law in this area nationwide.

Case Background

In Chilutti v. Uber Technologies, Inc., plaintiff Shannon Chilutti had used the app provided by Uber Technologies (Uber) to arrange a ride to a medical appointment. The car was then in a motor vehicle accident, with Shannon Chilutti and her husband Keith Chilutti onboard.

The Chiluttis sued Uber in Pennsylvania state court. Uber moved to compel arbitration. Uber showed that anyone who registered for the app received notice as part of the registration process that they were agreeing to Uber's Terms and Conditions (the Terms). These Terms were hyperlinked to the registration form in a different color text to indicate that a hyperlink was present. The Terms included a binding agreement to submit all disputes to individual, non-class arbitration. The plaintiffs opposed the motion. Shannon Chilutti submitted a declaration that they had never read the Terms and had no actual knowledge that they contained any arbitration agreement. Keith Chilutti also testified that he did not click on any hyperlink during the registration process, so he never reviewed the documents.

Motion to Compel Arbitration

The trial court granted the motion to compel arbitration. A three-judge panel of the Superior Court reversed. Uber moved for en banc review. Reargument before the entire Superior Court was granted. The full Court agreed with the three-member panel and reversed the trial court decision, vacating the arbitration order. Six judges joined in the majority opinion written by Judge Daniel McCaffery, with three judges in dissent.

The Court first stressed that the Commonwealth of Pennsylvania "guarantees its citizens a constitutional right to a jury trial: 'Trial by jury shall be as heretofore, and the right thereof remain inviolate.'" Decision at p. 2, quoting and citing PA CONST. art. 1, § 6.

The Court found that any waiver of such right must be informed. As to Uber's registration process, the Court specifically noted that "the hyperlinks [to the Terms] are smaller than the other wording on the webpage and in a blue-colored font that was not underlined. Starting on the ninth page, the 'Terms and Conditions' contain a 'Dispute Resolution' Section," which included the arbitration language relied upon. Decision at 23. The court found that this presentation of the arbitration agreement did not secure informed consent.

Specifically, "because the constitutional right to a jury trial should be afforded the greatest protection under the courts of this Commonwealth," the Court found that a "stricter burden of proof is necessary to demonstrate a party's unambiguous manifestation of assent to arbitration." Decision at 33. According to the Court, "This is accomplished by the following: (1) explicitly stating on the registration websites and application screens that a consumer is waiving a right to a jury trial when they agree to the company's 'terms and conditions,' and the registration process cannot be completed until the consumer is fully informed of that waiver; and (2) when the agreements are available for viewing after a user has clicked on the hyperlink, the waiver should not be hidden in the 'terms and conditions' provision but should appear at the top of the first page in bold, capitalized text." Decision at 34.

Thus, the Court reversed the trial court order and remanded for further proceedings. There was a dissenting opinion. The dissenting opinion, written by Judge Victor Stabile and joined by two other judges, did not contest the substantive conclusions made by the majority. Instead, the dissent focused on whether the Court has jurisdiction over an appeal of an interlocutory order compelling arbitration. The dissenting judges concluded that under Pennsylvania law, there was no express authority allowing for an appeal from an interlocutory order where arbitration is compelled.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.