On November 25, 2024, the Court of Appeals issued a decision in Wu v. Uber Tech., Inc., 2024 NY Slip Op 05869, holding that whether a click-wrap agreement subjecting a claim already being litigated to arbitration is unenforceable is a question for the arbitrator, explaining:
Plaintiff argues that her assent to the arbitration agreement was not effective, or should not be enforced, because Uber knew, or should have known, that she would never agree to arbitrate claims already pending in court and, further, that neither the January 2021 email nor the pop-up screen drew her attention to that aspect of the agreement’s alleged scope. She relies on the Restatement (Second) of Contracts, which provides that standardized agreements should be enforced with respect to the terms included in the writing, except that where the offeror has reason to believe that the party manifesting assent would not do so if he knew that the writing contained a particular term, the term is not part of the agreement. Plaintiff further asserts that Uber’s communications and the January 2021 terms were actively misleading because they implied that the arbitration agreement would only apply to future claims against the company, and the language covering accrued personal injury claims was buried in the agreement. As will be explained, these questions are for the arbitrator to resolve, because they neither call into question the formation of the arbitration agreement nor directly challenge the delegation provision contained in that agreement.
Contrary to plaintiff’s assertions, her arguments do not raise an issue of contract formation. Uber’s clickwrap process satisfied the contract-formation requirements of offer and acceptance. Although plaintiff’s accusations of misrepresentations or unconscionable conduct may raise questions as to the enforceability of the provision of the arbitration agreement purporting to cover preexisting claims, the Supreme Court has made clear that those are not formation questions. Rather, at their core, these questions ask whether [the arbitration agreement] is legally binding, as opposed to whether it was in fact agreed to.
The very Restatement section on which plaintiff relies makes clear that its requirements do not go to the question of contract formation. As noted above, the specified consequence of a violation of section 211 is that the particular term is not part of the agreement—not that no agreement was formed. Put differently, the offending term is unenforceable and effectively severed from the contract formed by the parties’ manifestations of assent, which is otherwise unaffected. Formation defects, by contrast, prevent the creation of any contract at all. This distinction is critical when it comes to arbitration agreements like this one, with broad delegation provisions. If no agreement was ever formed, it would be improper for this Court to enforce any provision set forth therein, including a delegation provision. But if the problem is solely with the enforceability of a particular term—here, the language requiring plaintiff to arbitrate personal-injury claims that occurred or accrued before or after the date she agreed to the Terms—the severable delegation provision is not affected.
(Internal quotations and citations omitted).