App terms of service said that arbitrator – not court – should determine whether arbitration is proper.

The family of a man killed on a Lime scooter sued Lime over the man’s death. Lime looked to its user agreement – which provided that disputes are subject to arbitration – and asked the court to compel such arbitration. The court granted the motion.

The court found that the agreement structure was not a clickwrap or browsewrap, but instead a “sign-in wrap”. Underneath the Facebook button one can use to sign up within the Lime app was a notice that stated, “[b]y singing up, I confirm that I am at least 18 years old, and that I have read and agreed to Lime’s User Agreement & Terms of Service.” The words “User Agreement” and “Terms of Service” were in darker boldface than the rest of the sentence, and they provided a hyperlink to Lime’s user agreement.

If found that a the hyperlink to the user agreement on Lime’s sign-up screen was reasonably conspicuous and placed the deceased on notice of the user agreement. The sign-up screen was visible on one page, and the hyperlink was in close proximity to the two sign-up buttons. Moreover, the notice was legible, and the hyperlinked words “User Agreement & Terms of Service” were in dark, bold font, making them stand out from both the white screen and the surrounding gray text. Based on these circumstances, the court found, a “reasonably prudent smartphone user” would understand that by signing up for Lime, he or she was assenting to the user agreement.

Further, the court found that compelling arbitration – even for purposes of determining the question of whether arbitration was what the parties had agreed to – was appropriate. By stating that the arbitration provider’s rules would govern the arbitration proceedings, the parties “clearly and unmistakably” reserved the determination of arbitrability for the arbitrator.

Phillips v. Neutron Holdings, Inc., No. 18-3382, 2019 WL 4861435 (N.D. Texas, October 2, 2019)