At Gerber Ciano Kelly Brady, we fight hard to protect our clients’ interests, and we do so by staying ahead of the law and using the latest court decisions to our clients’ advantage.
In today’s economy, most consumers are familiar with compulsory arbitration provisions when making online purchases. These provisions are typically embedded in “Terms and Conditions” that a user must accept before completing a transaction. Companies rely on these agreements because they reduce the cost, delay, and uncertainty associated with litigating in multiple courts. Plaintiffs, by contrast, often seek to avoid arbitration and push cases into court, where a judge or jury may be more susceptible to sympathy-driven arguments.
A recent landmark decision by the Pennsylvania Supreme Court significantly strengthens the enforceability of these arbitration provisions and provides important protection for companies that use them.
In Chilutti v. Uber Technologies, the Pennsylvania Supreme Court reversed a lower appellate ruling that had moved too quickly to invalidate so-called “clickwrap” arbitration agreements contained within online terms of service. The Court temporarily upheld Uber’s mandatory arbitration clause, an agreement materially similar to those used by other major platforms, including Airbnb.
This decision is expected to have immediate consequences for pending cases involving Airbnb, many of which were decided or stayed based on the now overturned Superior Court ruling.
The Supreme Court’s unanimous opinion held that the plaintiffs could not challenge the enforceability or outcome of the arbitration clause because they had not yet proceeded through arbitration. As the Court made clear, any appeal was premature. If arbitration ultimately resulted in an unfavorable outcome, the plaintiffs could then seek appellate review. The Court further held that the Superior Court erred in treating the order compelling arbitration as an immediately appealable collateral order and directed that the appeal be quashed.
The common thread in the Uber and Airbnb agreements is the use of “browsewrap” or “clickwrap” provisions that bind users to mandatory arbitration. Airbnb routinely moves to stay trial court litigation in favor of arbitration in Pennsylvania and other jurisdictions. The now-overturned Superior Court decision found Airbnb’s provision unenforceable due to allegedly insufficient notice that users were waiving their right to a jury trial. That reasoning no longer applies.
As a result, we expect Airbnb to renew motions to compel arbitration in trial courts across Pennsylvania. While plaintiffs have responded by seeking stays of those proceedings, the enforceability and application of arbitration clauses will now be addressed on a case-by-case basis under the Supreme Court’s clarified guidance.
Aggressively defending our clients by leveraging the most current and controlling legal authority is what we do at Gerber Ciano Kelly Brady. We will continue to monitor these developments closely and keep our clients informed as the law continues to evolve.
Please contact Thomas Bona at tbona@gerberciano.com, Frank Ciano at fciano@gerberciano.com, or Michael Brophy at mbrophy@gerberciano.com.
