Background
Cheryl Walker used her Uber account to arrange a guest ride for her husband, Carroll Walker. Uber sent Carroll a text message containing ride information, a hyperlink to its Terms of Use, and language stating that taking the trip would constitute agreement to those terms. Carroll, who had no Uber account and had not downloaded the app, submitted sworn evidence that he never saw the message.
During the ride, the driver allegedly became distracted by notifications and confused by directions from Uber’s driver app, drove the wrong way into oncoming traffic, and crashed. Carroll suffered severe injuries requiring the amputation of both legs above the knee. Cheryl sued on Carroll’s behalf, asserting negligence, products-liability, and vicarious-liability claims. Uber moved to compel arbitration, arguing that Carroll accepted its terms by taking the ride or, alternatively, was bound by Cheryl’s agreement. The district court denied the motion.
The Court’s Holding
The D.C. Circuit affirmed. Even assuming D.C. law permits contract formation through inquiry notice, Uber failed to establish that Carroll had such notice. Uber could not show that Carroll saw the unsolicited text, and a person has no duty to read contract terms he does not know exist. Mere receipt of a message containing a hyperlink did not establish that Carroll knew or had reason to know that taking the ride would manifest assent.
Cheryl’s contract also did not bind Carroll. Third-party-beneficiary doctrine could permit a beneficiary who sues to enforce a contract to be subject to its arbitration provision, but Carroll asserted independent tort claims rather than Cheryl’s contractual rights. Equitable estoppel did not apply because Carroll lacked knowledge of the contract when accepting the ride, and his claims did not depend on or seek benefits under Cheryl’s agreement with Uber.
Key Takeaways
- An electronic message containing linked terms does not place a recipient on inquiry notice when there is no proof the recipient saw or had to see the message.
- A contract cannot impose arbitration obligations on a purported third-party beneficiary merely because the contracting parties intended to benefit that person.
- A nonsignatory asserting independent tort claims is not equitably estopped from avoiding arbitration when the claims do not depend on the contract and the nonsignatory did not knowingly accept contractual benefits.
Why It Matters
The decision limits efforts by digital platforms to impose terms through unsolicited messages that users need not open or acknowledge. A company may design a frictionless guest-service process, but it cannot treat a guest’s use of the service as assent to terms that were never squarely presented to the guest.
The opinion also distinguishes receiving a practical benefit connected to someone else’s contract from knowingly invoking that contract. For arbitration purposes, familial relationships, third-party-beneficiary language, and factual connections to a contract do not replace proof of assent or a recognized basis for binding a nonsignatory.