Chilutti, S. v. Uber Technologies, Inc.

J-A03009-22
2022 PA Super 172SHANNON CHILUTTI AND KEITH : IN THE SUPERIOR COURT OF
CHILUTTI, H/W : PENNSYLVANIA
:
Appellants :
:
:
v. :
:
: No. 1023 EDA 2021
UBER TECHNOLOGIES, INC., GEGEN :
LLC, RAISER-PA, LLC, RAISER, LLC, :
SARAH'S CAR CARE, INC. :
MOHAMMED BASHEIR :
Appeal from the Order Entered April 26, 2021
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): 200900764
BEFORE: STABILE, J., DUBOW, J., and McCAFFERY, J.
OPINION BY McCAFFERY, J.: FILED OCTOBER 12, 2022
This appeal arises out of a motor vehicle accident that occurred on March
20, 2019. On that date, Shannon Chilutti, who is wheelchair bound, was
injured while riding in a car provided by the transportation service company,
Uber Technologies, Inc. (Uber), on the way home from a medical appointment
in Langhorne, Pennsylvania.1 Central to this case is whether a party should
be deprived of their constitutional right to a jury trial when they purportedly
enter into an arbitration agreement via a set of hyperlinked “terms and
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1 See Complaint, 9/17/20, at 5-6. Her husband, Keith Chilutti, was also in
the vehicle at the time of the accident. Id. We collectively refer to the
Chiluttis as “Appellants.”
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conditions” on a website or smartphone application that they never clicked on,
viewed, or read.
This Commonwealth guarantees its citizens a constitutional right to a
jury trial: “Trial by jury shall be as heretofore, and the right thereof
remain inviolate.” PA CONST. art. 1, § 6 (emphasis added).2 “Inviolate” is
defined as “[f]ree from violation; not broken, infringed, or impaired.” Black’s
Law Dictionary, “INVIOLATE” (11th ed. 2019). Since 1847, the Pennsylvania
Supreme Court has safeguarded this constitutional protection by recognizing
that a victim who has suffered personal injuries is guaranteed the right to a
jury trial:
The bill of rights, which is forever excluded from legislative
invasion, declares that the trial by jury shall remain as heretofore,
and the right thereof be inviolate; that all courts shall be open,
and that every man shall have redress by the due course of law,
and that no man can be deprived of his right, except by the
judgment of his peers or the law of the land.
Brown v. Hummel, 6 Pa. 86, 90 (1847).
As will be discussed below, when Appellants filed the negligence lawsuit,
Uber, Raiser-PA LLC, Raiser, LLC, (collectively, Uber Appellees) moved to
compel arbitration, asserting that the couple’s conduct on the company’s
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2 “This right, as preserved in the Seventh Amendment of the United States
Constitution, ‘is enshrined in the Pennsylvania Constitution,’ and . . . does not
differentiate between civil cases and criminal cases.’” Pisano v. Extendicare
Homes, Inc., 77 A.3d 651, 662 (Pa. Super. 2013), quoting Bruckshaw v.
Frankford Hospital of City of Philadelphia, 58 A.3d 102, 108-09 (Pa.
2012).
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website and application, when they registered for the ridesharing service,
signified that they agreed to be bound by the mandatory arbitration provision
found in the hyperlinked terms and conditions, thereby relinquishing their
right to a jury trial. The trial court granted the petition, determining the
parties had not been forced out of court. In doing so, the court failed to
consider that important and protected constitutional right. Because we
conclude that Appellants are legally entitled to relief, we reverse the trial
court’s order granting Uber Appellees’ petition. We further opine that
Appellants demonstrated there was a lack of a valid agreement to arbitrate;
therefore, they are entitled to invoke their constitutional right to a jury trial.
Accordingly, we reverse and remand for further proceedings.
The trial court recited the relevant facts and procedural history as
follows:
[Appellant] Shannon Chilutti, who uses a wheelchair for mobility
assistance, used the Uber software application to obtain a ride
home from a medical appointment. The driver of the vehicle that
responded to her Uber request, Mohammed Basheir, secured Mrs.
Chilutti’s wheelchair using pre-positioned retractable hooks but
failed to provide a seatbelt for Mrs. Chilutti, despite her request
for one. While driving, Basheir allegedly made an aggressive left-
hand turn, causing Mrs. Chilutti to fall out of her wheelchair and
strike her head, rendering her unconscious. [Appellant] Keith
Chilutti was riding in the vehicle and observed his wife fall and
strike her head.
On September 17, 2020, [Appellants] filed a complaint
seeking to recover for injuries sustained as a result of the March
20, 2019 incident. [Uber Appellees] filed a petition to compel
arbitration in which they argued the terms and conditions of the
Uber application required [Appellants] to arbitrate their claims.
Following extensive briefing by the parties, th[e trial] court
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granted the petition to compel arbitration and stayed this matter
as to [Uber Appellees on April 26, 2021].
Trial Court Opinion, 6/2/21, at 1-2 (citations and some capitalization omitted).
This timely appeal followed.3, 4
Appellants raise one issue on appeal:
Did the trial court err in granting [Appellees’] Petition to
Compel Arbitration where the evidence before the trial court
demonstrated that no valid agreement to arbitrate existed
between the parties because [Appellees] failed to establish that
Uber’s registration process and/or subsequent emails properly
communicated an offer to arbitrate to [Appellants] under
Pennsylvania law?
Appellants’ Brief at 4.
I. Appealability and Pa.R.A.P. 313(b)
Appellants first assert that the trial court’s order compelling arbitration
is immediately appealable as a collateral order pursuant to Pennsylvania Rule
of Appellate Procedure 313(b). See Appellants’ Brief at 26-30.
Since this issue concerns appealability, we must determine whether we
have jurisdiction over this appeal. See N.A.M. v. M.P.W., 168 A.3d 256, 260
(Pa. Super. 2017) (citation omitted). Regarding jurisdiction,
[t]his Court may address the merits of an appeal taken from “(a)
a final order or an order certified as a final order; (2) an
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3 Defendants, Sarah’s Car Care, Inc., and Mohammed Basheir, are not parties
to this appeal.
4 The trial court did not order Appellants to file a concise statement of errors
complained of on appeal but did file an opinion in support of its order pursuant
to Pa.R.A.P. 1925(a).
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interlocutory order [appealable] as of right; (3) an interlocutory
order [appealable] by permission; or (4) a collateral order.”
Commerce Bank v. Kessler, 46 A.3d 724, 728 (Pa. Super.
2012), quoting Stahl v. Redcay, 897 A.2d 478, 485 (Pa. Super.
2006) (citations omitted); see also Pa.R.A.P. 341(b). “As a
general rule, only final orders are appealable, and final orders are
defined as orders disposing of all claims and all parties.” Am.
Indep. Ins. Co. v. E.S., 809 A.2d 388, 391 (Pa. Super. 2002);
see also Pa.R.A.P. 341(a) (“[A]n appeal may be taken as of right
from any final order of a government unit or trial court.”).
Haviland v. Kline & Specter, P.C., 182 A.3d 488, 492 (Pa. Super. 2018).
“Thus, to determine whether finality is achieved, ‘we must
consider whether the practical ramification of the order will be to
dispose of the case, making review appropriate.’” Friia v. Friia,
780 A.2d 664, 667 (Pa. Super. 2001) (quoting Kulp[ v. Hrivnak,
765 A.2d 796, 798 (Pa. Super. 2000)]). Typically, a trial court’s
order directing a dispute to arbitration will not be deemed final,
as it does not address the merits of the parties’ claims but merely
transfers their existing dispute to another forum in accordance
with the arbitration provision of the underlying contract. See
Schantz v. Dodgeland, 830 A.2d 1265, 1266-67 (Pa. Super.
2003).
Fastuca v. L.W. Molnar & Assocs., 950 A.2d 980, 986 (Pa. Super. 2008).5
As mentioned above, Appellants contend that we have jurisdiction to
review this appeal as a collateral order pursuant to Rule 313(b). Under Rule
313(b),
[a] collateral order is an order separable from and collateral to the
main cause of action where the right involved is too important to
be denied review and the question presented is such that if review
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5 “There exists, however, a narrow exception to this oft-stated rule for cases
in which the appeal is taken from an order denying a petition to compel
arbitration.” Shadduck v. Christopher J. Kaclik, Inc., 713 A.2d 635, 636
(Pa. Super. 1998) (citations omitted).
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is postponed until final judgment in the case, the claim will be
irreparable lost.
Pa.R.A.P. 313(b).
The Pennsylvania Supreme Court has previously stated:
Rule of Appellate Procedure 313 sets forth a narrow exception to
the general rule that only final orders are subject to appellate
review. Under this exception, an interlocutory order is considered
“final” and immediately appealable if (1) it is separable from and
collateral to the main cause of action; (2) the right involved is too
important to be denied review; and (3) the question presented is
such that if review is postponed until final judgment in the case,
the claimed right will be irreparably lost. This third prong requires
that the matter must effectively be unreviewable on appeal from
final judgment.
Commonwealth v. Wells, 719 A.2d 729, 730 (Pa. 1998) (citations omitted).
See also Beltran v. Piersody, 748 A.2d 715, 718 (Pa. Super. 2000) (relying
on Wells).
Here, the dispute involves the third prong ─ whether the question
presented is such that if review is postponed until final judgment, the claimed
right will be irreparably lost.6 See Beltran, 748 A.2d at 718.
Appellants argue, “If this Court quashes the instant appeal and requires
[Appellants] to arbitrate their claims against the Uber [Appellees] in
accordance with the rule of the American Arbitration Association (“AAA”), it
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6 It is evident that the two other prongs were satisfied: (1) the question of
whether the parties should be compelled to arbitration is separate and
collateral to the main cause of action ─ whether the defendants’ negligence
caused the accident that injured Shannon Chilutti; and (2) the constitutional
right to jury trial is a right too important to be denied review.
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will result in the loss of appellate review regarding whether Uber’s arbitration
provision is valid under Pennsylvania law.” Appellants’ Brief at 28.7
In granting Uber Appellees’ petition to compel arbitration is non-
appealable, the trial court stated:
Applying the long settled precedent as set forth in Maleski[ v.
Mut. Fire, Marine & Inland Ins. Co., 633 A.2d 1143, 1145 (Pa.
1993),8] it is clear this Court’s Order granting the Petition to
Compel Arbitration filed by Defendants Raiser LLC, Raiser-PA LLC,
Gegen LLC, and Uber Technologies Inc. is not appealable at this
time because the parties have not been forced “out of court.”
Trial Court Opinion, 6/2/21, at 2. Notably, the trial court (and the Maleski
Court) did not discuss appealability as a collateral order pursuant to Rule 313.
We find this omission to be critically problematic to the resolution of the
present matter.
Preliminarily, it merits mention that the arbitration agreement in this
case is a matter of common law because the “Dispute Resolution” Section of
Shannon Chilutti’s agreement9 and the “Arbitration Agreement” Section of
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7We recognize that Appellants rely on United Servs. Auto. Ass’n v. Shears,
692 A.2d 161, 163 (Pa. Super. 1997) (en banc), to support its claim.
However, we need not reach the merits of whether that case is applicable
based on Appellants’ overall argument and our ultimate conclusion.
8 In Maleski, the Pennsylvania Supreme Court recognized the following:
“[T]here is no express statutory authority providing for an appeal from an
interlocutory order in a case where arbitration is compelled[.]” Maleski, 633
A.2d at 1146 (footnote omitted).
9 See R.R. 130a-31a.
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Keith Chilutti’s agreement10 provide that any disputes arising under the
agreements are to be submitted to arbitration under the rules of the AAA and
that the agreements are binding. See 42 Pa.C.S. § 7302(a); Runewicz v.
Keystone Ins. Co., 383 A.2d 189, 191 (Pa. 1978) (stating that a clause
providing for arbitration pursuant to AAA and indicating that the parties are
bound by the arbitration represents common law arbitration). See also U.S.
Claims, Inc. v. Dougherty, 914 A.2d 874, 876 (Pa. Super. 2006).
The standard of review for a common law arbitration is very
limited:
The award of an arbitrator in a nonjudicial arbitration which
is not subject to (statutory arbitration) or [to] a similar
statute regulating nonjudicial arbitration proceedings is
binding and may not be vacated or modified unless it
is clearly shown that a party was denied a hearing or
that fraud, misconduct, corruption or other
irregularity caused the rendition of an unjust,
inequitable or unconscionable award.
The arbitrators are the final judges of both law and fact, and
an arbitration award is not subject to reversal for a mistake
of either. A trial court order confirming a common law arbitration
award will be reversed only for an abuse o[f] discretion or an error
of law.
Sage v. Greenspan, 765 A.2d 1139, 1142 (Pa. Super.2000) (citations
omitted; emphases added).
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10 See R.R. 172a-73a.
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In accordance with Sage, a party must first demonstrate that a fraud,
misconduct, corruption or other irregularity occurred,11 before establishing
that those malfeasances caused an unjust, inequitable or unconscionable
arbitration award. The first part of this test focuses on “malfeasance” that led
to the arbitration award. Notably, in a situation like here, an arbitrator’s
enforcement of an arbitration provision when the arbitration provision either
failed to meet basic contract principles or violated a party’s constitutional right
to a jury trial cannot be considered a malfeasance; rather, it is an incorrect
legal conclusion. Consequently, if the plaintiff cannot appeal the trial court’s
decision to enforce an arbitration provision, the plaintiff cannot challenge the
legality of the arbitration provision because the arbitrator’s interpretation of
the legality of the arbitration is not the result of fraud, misconduct, corruption
or other irregularity. Rather, it is a misinterpretation of legal principles.
Moreover, the second part of the test ─ that those malfeasances caused
an unjust, inequitable or unconscionable arbitration award ─ is also
problematic. The logical fallacy is that if a court determines there was no
agreement to arbitrate, and that a party submitted to arbitration only because
they were compelled to do so, the court could vacate an award based on a
finding that the award was unjust, inequitable or unconscionable ─ and thus,
the party would not irreparably lose their claim. However, there is always the
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11The question of whether Appellants were denied a hearing is not at issue in
the present matter.
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possibility that a court may find a subsequent arbitration award was fair ─
meaning it was not unjust, inequitable, or unconscionable ─ even if there was
no agreement to arbitrate between the parties; resultingly, the award would
remain binding on the parties. In that scenario, a party is denied their
constitutional right to a jury trial, and accordingly, is “forced out of court.”
See Maleski, supra. We find it should be clear that a party must be provided
every opportunity for a court to review the merits of the claims rather than
jumping over these extremely high hurdles to seek judicial review of an
arbitration award. Accordingly, we conclude that the third requirement for an
appealable collateral order is satisfied because postponing review until final
judgment in the case may result in the irreparable loss of Appellants’ claims.
Therefore, the matter is properly before us.
II. Arbitration Provisions, Browsewrap Agreements, and
the Right to a Jury Trial
Appellants next argue that the court erred in compelling them to
arbitrate their claims against Uber Appellees because no valid agreement to
arbitrate exists between the parties. See Appellants’ Brief at 30-45. They
state that Uber Appellees “failed to demonstrate that they properly
communicated an offer to arbitrate to [Appellants] under Pennsylvania law.”
Id. at 32. Appellants point to the assertion that there “was no meeting of the
minds . . . regarding an agreement to arbitrate[,] and “[a]t best, when [they]
registered to use Uber’s services, they agreed to exchange money for either
transportation or food delivery services from Uber.” Id. at 34-35.
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Appellants’ argument focuses on the registration process. They contend
that “Uber’s registration process failed to adequately communicate an offer to
arbitrate in a definite manner, so as to create a meeting of the minds on a
material and necessary detail of the bargained for exchange.” Appellants’
Brief at 35. They state:
When Mrs. Chilutti registered for an Uber account in 2016,
there was nothing on Uber’s website which conveyed an offer to
arbitrate or notified her that Uber’s Terms of Use contained an
arbitration provision which would require her to waive her right to
a jury trial. Nor was it by any means obvious to an individual, like
Mr. Chilutti, who signed up to use Uber’s rideshare services in
September 2018 that doing so would be accompanied by
extensive terms and conditions, which included a mandatory,
binding arbitration provision.
Id. Appellants also assert Uber Appellees failed to properly communicate
amendments and revisions to the arbitration provisions in their subsequent
communications. Id. at 39-45.
To determine whether arbitration should be compelled, we employ a
two-part test: “The first determination is whether a valid agreement to
arbitrate exists. The second determination is whether the dispute is within
the scope of the agreement.” Smay v. E.R. Stuebner, Inc., 864 A.2d 1266,
1270 (Pa. Super. 2004) (citations omitted). “Whether an agreement to
arbitrate disputes exists is a question of law.” Neuhard v. Travelers Ins.
Co., 831 A.2d 602, 604 (Pa. Super. 2003). “When we review questions of law,
our standard of review is limited to determining whether the trial court
committed an error of law.” Id.- 11 -
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To thoroughly analyze this argument, we begin with the interplay of
arbitration agreements and the constitutional right to a jury trial (a right that
has not been amended or modified for hundreds of years). We recognize the
following:
Pennsylvania has a well-established public policy that favors
arbitration, and this policy aligns with the federal approach
expressed in the Federal Arbitration Act [(“FAA”)]. [T]he
fundamental purpose of the Federal Arbitration Act is to relieve
the parties from expensive litigation and to help ease the current
congestion of court calendars. Its passage was a congressional
declaration of a liberal federal policy favoring arbitration
agreements.
This policy, however, was not intended to render arbitration
agreements more enforceable than other contracts, and the FAA
had not been designed to preempt all state law related to
arbitration. Rather, when addressing the specific issue of whether
there is a valid agreement to arbitrate, courts generally should
apply ordinary state-law principles that govern the formation of
contracts, but in doing so, must give due regard to the federal
policy favoring arbitration.7
_________________________
7 The FAA, however, does preempt state law that
categorically prohibits arbitration of particular types of
claims, which is contrary to the terms and coverage of the
FAA.
Pisano, 77 A.3d at 661 (citations and quotation marks omitted).12 See also
Marmet Health Care Center, Inc. v. Brown, 565 U.S. 530, 531-33 (2012).
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12 “Prior to the 1925 enactment of the FAA, courts across the country
disparaged arbitration as a renegade form of adjudication, and refused to
enforce private arbitration agreements.” Taylor v. Extendicare Health
Facilities, Inc., 147 A.3d 490, 500-01 (Pa. 2016) (citations omitted).
(Footnote Continued Next Page)
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Nevertheless, it must be noted that the evolution and effect of
arbitration provisions has substantially weakened the constitutional right to
jury trial in civil proceedings. The Pennsylvania Supreme Court recognized
this development in Taylor, supra, opining:
One of the striking consequences of the shift away from the
civil justice system and toward private adjudication is that
corporations are routinely stripping individuals of their
constitutional right to a jury trial. See U.S. Const. amend. VII
(preserving the right to a trial by jury); Pa. Const. art. 1, § 6
(same). While one’s right to a jury trial may be waived, it is not
at all apparent that signatories to arbitration agreements are
aware that they waive their right to a jury trial upon the execution
of an arbitration agreement.
Taylor, 147 A.3d at 508 (footnote omitted).
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“During this time, when arbitration occurred primarily in the commercial
context between businesses of equal bargaining power, the business
interests that favored the enforcement of private arbitration agreements
began to lobby state governments and Congress for legislation compelling the
courts to enforce their bargains.” Id. (emphasis added; citations omitted).
Congress responded by enacting the FAA. Indeed,
[t]he FAA was designed to overrule the judiciary’s
longstanding refusal to enforce agreements to arbitrate,
and to place such agreements upon the same footing as other
contracts[.] While Congress was no doubt aware that the Act
would encourage the expeditious resolution of disputes, its
passage was motivated, first and foremost, by a congressional
desire to enforce agreements into which parties had
entered.
Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland Stanford Junior
Univ., 489 U.S. 468, 478 (1989) (emphasis added; citations and quotations
marks omitted).
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The sluggish recognition regarding the copious usage of arbitration
agreements in present day contracts and the ramifications of these
agreements on a party’s right to a jury trial raises concern, especially in the
context of Internet contracts like the one at issue herein where the parties are
of purported unequal bargaining power. To that end, Pennsylvania courts
have taken a small bite from the proverbial apple of arbitration law with
respect to wrongful death actions involving negligent nursing center facilities.
See i.e., Pisano, 77 A.3d at 661-62 (“compelling arbitration upon individuals
who did not waive their right to a jury trial would infringe upon wrongful death
claimants’ constitutional rights”); see also Taylor, supra.13 Nonetheless,
the need for greater scrutiny regarding a party’s waiver of their constitutional
right to a jury trial in terms of these arbitration agreement matters is
imperative.
By comparison, we highlight the strict scrutiny that confessions of
judgment are accorded by Pennsylvania courts. A confession of judgment,
like an arbitration agreement, takes place in the commercial transaction
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13 See also Valentino v. Phila. Triathlon, LLC, 150 A.3d 483, 494 (Pa.
Super. 2016) (en banc) (stating, “A non-signatory wrongful death claimant .
. . cannot be compelled to present his claim to an arbitrator since he has not
consented to arbitration and since he possesses an independent, non-
derivative right to air his claim in the forum of his choice”), aff’d by equally
divided court, 209 A.3d 941 (Pa. 2019).
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setting. This Court has previously described the compliance requirements for
a confession as follows:
Historically, Pennsylvania law has recognized and permitted
entry of confessed judgments pursuant to the authority of a
warrant of attorney contained in a written agreement. [A] warrant
of attorney is a contractual agreement between the parties and
the parties are free to determine the manner in which the warrant
may be exercised. Entry of a valid judgment by confession
must be made in rigid adherence to the provisions of the
warrant of attorney; otherwise, such judgment will be
stricken. A warrant to confess judgment must be explicit and
will be strictly construed, with any ambiguities resolved against
the party in whose favor the warrant is given. A warrant of
attorney to confess judgment must be self-sustaining and to be
self-sustaining the warrant must be in writing and signed by
the person to be bound by it. The requisite signature must
bear a direct relation to the warrant of attorney and may not
be implied.
Midwest Fin. Acceptance Corp. v. Lopez, 78 A.3d 614, 623 (Pa. Super.
2013) (citations and quotation marks omitted; emphases added). “There
should be no doubt that the lessee signed the warrant and that he was
conscious of the fact that he was conferring a warrant upon the lessor to
confess judgment in the event of breach.” Ferrick v. Bianchini, 69 A.3d
642, 651 (Pa. Super. 2013). For example, in Graystone Bank v. Grove
Estates, LP., 58 A.3d 1277 (Pa. Super. 2012), a panel of this Court concluded
that a warrant of attorney was valid because it “appeared conspicuously in all
caps on the very bottom of the penultimate page of the agreement and
immediately preceded where the executor . . . signed at the top of the
following, final page.” Id. at 1283 (italics in original). The Graystone Court
“distinguish[ed]” the case “from precedent[,]” in which the warrant of
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attorney was “located either altogether outside the body of the agreement,
too remote from the signature, or on pages subsequent to the signature.” Id.A court will only enforce a confession of judgment provision when the
court is satisfied that the party agreeing to it is aware that they waived their
right to a jury trial. Generally, the courts make the “enforcement”
determination when the agreement clearly and plainly states that the party is
waiving, inter alia, their right to a jury trial. Similarly, a court should not
enforce an arbitration provision in an Internet purchase agreement unless the
court finds that the party agreeing to an arbitration provision was aware that
he was waiving the right. It is reasonable to assume that if the arbitration
provision is buried deep in webpages in tiny print, the person was not aware
of the provision and it is unenforceable.
However, Internet arbitration agreements are reviewed with
considerably less stringent requirements. As will be discussed below, a waiver
of a right to a jury trial in the context of an Internet arbitration agreement:
(1) can be inconspicuous; (2) may be contained in a hyperlink that is separate
from the binding action like a “click” of a “I agree to these terms” button; (3)
may not require a party’s signature to be in direct relation to the waiver; and
(4) may not require that a party even review the agreement to be bound by
it.
At this juncture, we point out that courts have not addressed the
importance of ensuring that a party is aware of the consequences of waiving
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a civil jury trial as they have in criminal proceedings. Notably, in criminal
matters, a defendant’s waiver to a jury trial must be explicit. A defendant
“may waive a jury trial with approval by a judge of the court in which the case
is pending.” Commonwealth v. Houck, 948 A.2d 780, 787 (Pa. 2008)
(citation omitted). Moreover, the Rules of Criminal Procedure mandate “[t]he
judge shall ascertain from the defendant whether this is a knowing and
intelligent waiver, and such colloquy shall appear on the record. The waiver
shall be in writing, made a part of the record, and signed by the defendant,
the attorney for the Commonwealth, the judge, and the defendant’s attorney
as a witness.” Pa.R.Crim.P. 620. We advocate that in both contexts ─ criminal
and civil matters ─ it is critical that a party be fully informed of their right to
a jury trial and the effect of waiving that right. We are not suggesting that an
on-the-record colloquy is necessary in civil litigation like in criminal
proceedings ─ just that, again, waiver must be clearly described and
understood to be giving up a constitutional right to a jury trial.
With this in mind, we highlight that we live in an age where Internet
users are asked to form contracts with companies on a daily basis using web-
based or mobile application technology. These agreements run the gamut
from a mortgage loan to a clothing sales transaction to registration for a
transportation or ride-hailing service. Notably, “[d]ifferent Internet products
lead to different expectations and applications of legal doctrine.” Paul J.
Morrow, Esq., Cyberlaw: The Unconscionability/Unenforceability of Contracts
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(Shrink-Wrap, Clickwrap, and Browse-Wrap) on the Internet: A Multidistrict
Analysis Showing the Need for Oversight, 11 U.P.H. J. Tech. L. Pol’y 7 (Spring
2011). With these Internet contracts, it is now easier than ever for
corporations to bind inexperienced, unaware, and unsuspecting consumers to
arbitration agreements with the simple click or swipe of their finger ─ all from
the convenience of 3-inch by 6-inch smartphone screen.
Under Pennsylvania law, the elements of an enforceable contract are an
“offer, acceptance, consideration, consideration or mutual meeting of the
minds.” Schreiber v. Olan Mills, 627 A.2d 806, 808 (Pa. Super 1993)
(citation and quotation marks omitted). “[T]here must be a meeting of the
minds; the very essence of an agreement is that the parties mutually assent
to the same thing.” Id. (some punctuation omitted). “Whether particular
conduct expresses an offer and acceptance must be determined on the basis
of what a reasonable person in the position of the parties would be led to
understand by such conduct under all of the surrounding circumstances.”
Mountain Properties, Inc. v. Tyler Hill Realty Corp., 767 A.2d 1096, 1101
(Pa. Super. 2001), quoting Temple University Hospital, Inc. v. Healthcare
Management Alternatives, Inc., 764 A.2d 587 (Pa. Super. 2000).
The United States Court of Appeals for the Ninth Circuit has recently
described the two primary kinds of Internet contracts as follows:
The[ ] elemental principles of contract formation apply with
equal force to contracts formed online. Thus, if a website offers
contractual terms to those who use the site, and a user engages
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in conduct that manifests her acceptance of those terms, an
enforceable agreement can be formed.
The most straightforward application of these principles in
the online world involves so-called “clickwrap” agreements, in
which a website presents users with specified contractual terms
on a pop-up screen and users must check a box explicitly stating
“I agree” in order to proceed. In that scenario, the consumer has
received notice of the terms being offered and, in the words of the
Restatement, “knows or has reason to know that the other party
may infer from his conduct that he assents” to those terms.
Restatement (Second) of Contracts § 19(2). As a result, courts
have routinely found clickwrap agreements enforceable.
At the other end of the spectrum are so-called “browsewrap”
agreements, in which a website offers terms that are disclosed
only through a hyperlink and the user supposedly manifests
assent to those terms simply by continuing to use the website.
Courts are more reluctant to enforce browsewrap agreements
because consumers are frequently left unaware that contractual
terms were even offered, much less that continued use of the
website will be deemed to manifest acceptance of those terms.
To avoid the unfairness of enforcing contractual terms that
consumers never intended to accept, courts confronted with
online agreements such as those at issue here have devised rules
to determine whether meaningful assent has been given. Unless
the website operator can show that a consumer has actual
knowledge of the agreement, an enforceable contract will be found
based on an inquiry notice theory only if: (1) the website provides
reasonably conspicuous notice of the terms to which the consumer
will be bound; and (2) the consumer takes some action, such as
clicking a button or checking a box, that unambiguously manifests
his or her assent to those terms.
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Berman v. Freedom Fin. Network, LLC, 30 F.4th 849, 855-56 (U.S. 9th
Cir. 2022) (some citations omitted).14 See also Nguyen v. Barnes & Noble
Inc., 763 F.3d 1171, 1175-76 (9th Cir. 2014).
This leads us to the agreements at issue in this case.
Shannon Chilutti’s 2016 Uber Account
Shannon Chilutti registered for an Uber rider account in February 2016
via the company’s website. R.R. 113a, 118a. The registration page requires
the user to input certain personal information and click on a blue “Create
Account” button at the bottom of the webpage. R.R. 113a-14a, 120a. Below
the “Create Account” button, a putative user would have seen the following:
“By clicking ‘Create Account’, you agree to Uber’s Terms and Conditions and
Privacy Policy.” R.R. 120a. The words, “Terms and Conditions” and “Privacy
Policy” were hyperlinks, which, if clicked on, would have redirected the user
to another website that would then display a 12-page document. R.R. 114a.
The hyperlinks are smaller than the other wording on the webpage and in a
blue-colored font that was not underlined. R.R. 114a, 207a-08a. Starting on
the ninth page, the “Terms and Conditions” contain a “Dispute Resolution”
Section, which provided the following provision:
____________________________________________
14 Although decisions of the Ninth Circuit Court of Appeals, “the federal district
courts, and our sister states are not binding on this Court, they may provide
persuasive authority,” especially because there is limited case law on this
issue. Century Indem. Co. v. OneBeacon Ins. Co., 173 A.3d 784, 792 n.
14 (Pa. Super. 2017).
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Arbitration
You agree that any dispute, claim or controversy arising out of or
relating to these Terms or the breach, termination, enforcement,
interpretation or validity thereof or the use of the Services
(collectively, “Disputes”) will be settled by binding arbitration
between you and Uber, except that each party retains the right to
bring an individual action in small claims court and the right to
seek injunctive or other equitable relief in a court of competent
jurisdiction to prevent the actual or threatened infringement,
misappropriation or violation of a party’s copyrights, trademarks,
trade secrets, patents or other intellectual property rights. You
acknowledge and agree that you and Uber are each waiving the
right to a trial by jury or to participate as a plaintiff or class in any
purported class action or representative proceeding. Further,
unless both you and Uber otherwise agree in writing, the arbitrator
may not consolidate more than one person’s claims, and may not
otherwise preside over any form of any class or representative
proceeding. If this specific paragraph is held unenforceable, then
the entirety of this “Dispute Resolution” section will be deemed
void. Except as provided in the preceding sentence, this “Dispute
Resolution” section will survive any termination of these Terms.
Arbitration Rules and Governing Law
Arbitration Rules and Governing Law
The arbitration will be administered by the American Arbitration
Association (“AAA”) in accordance with the Commercial Arbitration
Rule and the Supplementary Procedures for Consumer Related
Disputes (the “AAA Rules”) then in effect, except as modified by
this “Dispute Resolution” section. . . . The Federal Arbitration Act
will govern the interpretation and enforcement of this Section.
R.R. 130a-31a. Uber’s legal program manager, Ryan R. Buoscio, admitted,
during his deposition, that a purported user could create an account with Uber
on its 2016 website without viewing the “Terms and Conditions” document.
R.R. 208a (“Depending on the device you’re using . . . if you did not complete
scrolling to the bottom of this page, it’s possible you may have not seen a
component of the page.”). Buoscio also acknowledged the website made no
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reference to the fact that the “Terms and Conditions” document contained an
arbitration provision. Id. Lastly, he admitted that the terms, “arbitration,”
“waiver of jury trial,” and “waiver of constitutional rights” do not appear
anywhere on the general website. Id.Shannon Chilutti averred in an affidavit that she did “not see any
hyperlinks[,]” “click on any hyperlinks[,]” or “review” the “Terms and
Conditions” or “Privacy Policy” during the registration process and she was not
required to review them to complete the registration process. R.R. 222a.15
During her deposition, Shannon Chilutti testified that she did not see any
hyperlinks; rather, she only recalled clicking on the blue box to create the
account. R.R. 231a-32a.
Keith Chilutti’s 2018 Uber Account
Keith Chilutti registered for an Uber rider account in September 2018
with the Uber Rider App on his IPhone. R.R. 167a, 169a. When registering,
he provided personal information. R.R. 185a-86a, 189a-98a. Prior to his
account being created, Keith viewed a screen, which stated, “By tapping the
arrow below, you agree to Uber’s Term of Use and acknowledge that you have
read the Privacy Policy.” R.R. 200a. Below, in smaller font, it stated: “To
learn more, see our Terms of Use and Privacy Policy.” Id. “Terms of Use”
____________________________________________
15She also indicated that she did not receive, open, or read a November 2016
email from Uber, in which it provided its users with its updated terms and
conditions. R.R. 222a.
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and “Privacy Policy” were blue-colored hyperlinks that were not underlined.
R.R. 200a, 256a. To proceed with the process of registering, a user would not
have to click on the links to proceed to the next screen. R.R. 258. The “Terms
of Use” was a ten-page document that contained an “Arbitration Agreement”
on the second page. The provision stated, in pertinent part:
By agreeing to the Terms, you agree that you are required
to resolve any claim that you may have against Uber on an
individual basis in arbitration, as set forth in this
Arbitration Agreement. This will preclude you from
bringing any class, collective, or representative action
against Uber, and also preclude you from participating in
or recovering relief under any current or future class,
collective, consolidated, or representative action brought
against Uber by someone else.
Agreement to Binding Arbitration Between You and Uber.
You and Uber agree that any dispute, claim or controversy arising
out of or relating to (a) these Terms or the existence, breach,
termination, enforcement, interpretation or validity thereof, or (b)
your access to or use of the Services at any time, whether before
or after the date you agreed to the Terms, will be settled by
binding arbitration between you and Uber, and not in a court of
law.
You acknowledge and agree that you and Uber are each waiving
the right to a trial by jury or to participate as a plaintiff or class
member in any purported class action or representative
proceeding. Unless both you and Uber otherwise agree in writing,
any arbitration will be conducted only on an individual basis and
not in a class, collective, consolidated, or representative
proceeding. However, you and Uber each retain the right to bring
an individual action in small claims court and the right to seek
injunctive or other equitable relief in a court of competent
jurisdiction to prevent the actual or threatened infringement,
misappropriation or violation of a party’s copyrights, trademarks,
trade secrets, patents or other intellectual property rights.
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Rules and Governing Law.
The arbitration will be administered by the American Arbitration
Association (“AAA”) in accordance with the AAA’s Consumer
Arbitration Rules and the Supplementary Procedures for
Consumer Related Disputes (the “AAA Rules”) then in effect,
except as modified by this Arbitration Agreement. The AAA Rules
are available at www.adr.org/arb_med or by calling the AAA at 1-
800-778-7879. . . .
R.R. 172a-73a (emphasis in original).
At his deposition, Keith Chilutti testified that he did not click on either
hyperlink during the registration process, so he never reviewed the
documents. R.R. 266a-67a.
Based on the nature of the Uber’s two interfaces, it is clear the contracts
qualify as “browsewrap agreements” because both Appellants were “left
unaware that contractual terms were even offered, much less that continued
use of the website [would] be deemed to manifest acceptance of those terms.”
Berman, 30 F.4th at 856. Thus, we are faced with the question of whether:
“(1) the website provide[d] reasonably conspicuous notice of the terms to
which the consumer will be bound; and (2) the consumer [took] some action,
such as clicking a button or checking a box, that unambiguously manifest[ed]
his or her assent to those terms.” Id.
In Berman, the Ninth Circuit addressed the issue of: “Under what
circumstances can the use of a website bind a consumer to a set of hyperlinked
‘terms and conditions’ that the consumer never saw or read?” Berman, 30
F.4th at 853 (citation omitted). The case involved a defendant-digital
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marketing company “that generate[d] leads for its clients by collecting
information about customers who visit[ed]” the company’s websites. Id. The
website offered “rewards like gift cards and free product samples as an
enticement to get consumers to provide their contact information and answer
survey questions.” Id. The plaintiffs visited websites operated by the
defendant that “contained a set of hyperlinked terms and conditions that
included a mandatory arbitration provision[.]” Id. After the defendant
received the information from the customers, it then used that data to conduct
a telemarketing campaign on behalf of a debit relief company, placing
“unsolicited telephone calls and text messages to hundreds of thousands of
customers,” including the plaintiffs. Id. at 854. Plaintiffs filed a putative class
action on behalf of consumers who received these calls and texts, alleging the
calls and texts were made without their consent and violated the Telephone
Consumer Protection Act.16 Id. The defendant moved to compel arbitration,
arguing that “by clicking on the ‘continue’ buttons, [the plaintiffs] had agreed
to the hyperlinked terms and conditions, including the mandatory arbitration
provision.” Id. The district court denied the motion, concluding “that the
content and design of the webpages did not conspicuously indicate to users
that, by clicking on the ‘continue’ button, they were agreeing to [the
defendant’s] terms and conditions.” Id.
____________________________________________
16 See 47 U.S.C. § 227 et seq.
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On appeal, the Ninth Circuit initially pointed out that the defendant did
not argue in its motion to compel that the “plaintiffs had actual knowledge of
any agreement to arbitrate.” Berman, 30 F.4th at 856. The Ninth Circuit
then opined that the defendant “failed to show” that both “conditions
necessary for finding an enforceable agreement based on inquiry notice were
satisfied.” Id. Regarding whether the website provided “reasonably
conspicuous notice” of the terms to which the consumer will be bound, the
Court opined:
First, to be conspicuous in this context, a notice must be displayed
in a font size and format such that the court can fairly assume
that a reasonably prudent Internet user would have seen it. The
text disclosing the existence of the terms and conditions on these
websites is the antithesis of conspicuous. It is printed in a tiny
gray font considerably smaller than the font used in the
surrounding website elements, and indeed in a font so small that
it is barely legible to the naked eye. The comparatively larger font
used in all of the surrounding text naturally directs the user’s
attention everywhere else. And the textual notice is further
deemphasized by the overall design of the webpage, in which
other visual elements draw the user’s attention away from the
barely readable critical text. Far from meeting the requirement
that a webpage must take steps “to capture the user’s attention
and secure her assent,” the design and content of these webpages
draw the user’s attention away from the most important part of
the page.
Website users are entitled to assume that important
provisions—such as those that disclose the existence of proposed
contractual terms—will be prominently displayed, not buried in
fine print. Because “online providers have complete control over
the design of their websites,” “the onus must be on website
owners to put users on notice of the terms to which they wish to
bind consumers[.”] The designer of the webpages at issue here
did not take that obligation to heart.
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Second, while it is permissible to disclose terms and
conditions through a hyperlink, the fact that a hyperlink is present
must be readily apparent. Simply underscoring words or phrases,
as in the webpages at issue here, will often be insufficient to alert
a reasonably prudent user that a clickable link exists. Because
our inquiry notice standard demands conspicuousness tailored to
the reasonably prudent Internet user, not to the expert user, the
design of the hyperlinks must put such a user on notice of their
existence.
A web designer must do more than simply underscore the
hyperlinked text in order to ensure that it is sufficiently “set apart”
from the surrounding text. Customary design elements denoting
the existence of a hyperlink include the use of a contrasting font
color (typically blue) and the use of all capital letters, both of
which can alert a user that the particular text differs from other
plain text in that it provides a clickable pathway to another
webpage. Consumers cannot be required to hover their mouse
over otherwise plain-looking text or aimlessly click on words on a
page in an effort to “ferret out hyperlinks.” The failure to clearly
denote the hyperlinks here fails our conspicuousness test.
Id. at 856-67 (citations omitted).
In determining whether the plaintiffs took some action that
unambiguously manifested their assent, the Court determined:
In using the websites, [the plaintiffs] did not take any action that
unambiguously manifested their assent to be bound by the terms
and conditions. [The defendant relies] on plaintiffs’ act of clicking
on the large green “continue” buttons as manifestation of their
assent, but merely clicking on a button on a webpage, viewed in
the abstract, does not signify a user’s agreement to anything. A
user’s click of a button can be construed as an unambiguous
manifestation of assent only if the user is explicitly advised that
the act of clicking will constitute assent to the terms and
conditions of an agreement. The presence of “an explicit textual
notice that continued use will act as a manifestation of the user’s
intent to be bound” is critical to the enforceability of any
browsewrap-type agreement.
The webpages here did provide advisals concerning the
terms and conditions in proximity to the “continue” buttons. On
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the webpage [a plaintiff] visited, the notice appeared directly
above the button, and on the webpage [the other plaintiff] visited
it appeared above the button separated by several intervening
lines of text. But “even close proximity of the hyperlink to relevant
buttons users must click on—without more—is insufficient to give
rise to constructive notice.”
Rather, the notice must explicitly notify a user of the legal
significance of the action she must take to enter into a contractual
agreement. The notice did not do so here. Both webpages stated,
“I understand and agree to the Terms & Conditions,” but they did
not indicate to the user what action would constitute assent to
those terms and conditions. Likewise, the text of the button itself
gave no indication that it would bind plaintiffs to a set of terms
and conditions. This notice defect could easily have been
remedied by including language such as, “By clicking the Continue
>> button, you agree to the Terms & Conditions.”
[The defendant asserts] that the presence of the phrase
“which includes mandatory arbitration” in the textual notice
distinguishes the webpages at issue here from those rejected by
other courts. This argument is unavailing, as it fails to appreciate
the key issue in this appeal. The question before us is not whether
[the plaintiffs] may have been aware of the mandatory arbitration
provision in particular, but rather whether they can be deemed to
have manifested assent to any of the terms and conditions in the
first place. Because the textual notice was not conspicuous and
did not explicitly inform [the plaintiffs] that by clicking on the
“continue” button they would be bound by the terms and
conditions, the presence of the words “which includes mandatory
arbitration” in the notice is of no relevance to the outcome of this
appeal.
Berman, 30 F.4th at 857-58 (citations omitted). The Court of Appeals then
concluded the district court properly denied the motion to compel because
“the design and content of the webpages [the plaintiffs] visited did not
adequately call to their attention either the existence of the terms and
conditions or the fact that, by clicking on the ‘continue’ button, they were
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agreeing to be bound by those terms[,]” and therefore, “an enforceable
agreement to arbitrate was never formed.” Id. at 858.
Turing to the present matter, we conclude that Uber’s website and
application did not provide reasonably conspicuous notice of the terms to
which Appellants were bound. For example, in Shannon Chillutti’s case, the
“terms and conditions” agreement was encapsulated in tiny, blue font at the
very bottom of a cluttered webpage. The relevant text was not underlined or
capitalized. With respect to Keith Chillutti, he was on the fifth screen of the
registration process, after he had already provided substantive personal
information, when the “Terms and Conditions” page could be reviewed in small
font that, again, was not underlined or capitalized. Like in Berman, “[t]he
comparatively larger font used in all of the surrounding text naturally directs
the user’s attention everywhere else. And the textual notice is further
deemphasized by the overall design of the webpage, in which other visual
elements draw the user’s attention away from the barely readable critical
text.” Berman, 30 F.4th at 857.
Thus, the matter now turns on whether Appellants took any action that
unambiguously manifested their assent to be bound by the terms and
conditions. We acknowledge that the two agreements at issue herein would
arguably meet the standard recited by the Berman Court, which stated: “This
notice defect could easily have been remedied by including language such as,
‘By clicking the Continue >> button, you agree to the Terms & Conditions.’”
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Berman, 30 F.4th at 858 (citation omitted).17 Here, the text did include
language like “By clicking ‘Create Account,’ you agree to Uber’s Terms and
Conditions” and “By tapping the arrow below, you agree to Uber’s Term of
Use[.]” R.R. 120a, 200a.
However, as indicated above, because the constitutional right to a jury
trial should be afforded the greatest protection under the courts of this
Commonwealth, we conclude that the Berman standard is insufficient under
Pennsylvania law, and a stricter burden of proof is necessary to demonstrate
a party’s unambiguous manifestation of assent to arbitration. 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.
____________________________________________
17 See also Meyer v. Uber Techs., Inc., 868 F.3d 66, 79-80 (2d Cir. 2017)
(stating that “[a] reasonable user would know that by clicking the registration
button, he was agreeing to the terms and conditions accessible via the
hyperlink, whether he clicked on the hyperlink or not” and concluding there
was an enforceable contract, in which the text on the screen “expressly
warned the user that by creating an Uber account, the user was agreeing to
be bound by the linked terms.”).
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Indeed, as indicated in the record before us, Appellants did not click on
or access the terms and conditions before their registration process was
completed. These facts were admitted by the Uber representatives. Rather,
the evidence merely shows that they created a user account for the ride-
sharing service.18 Furthermore, we point out that the definition of arbitration
is not contained in the agreement and there is no link to the definition. R.R
130a-31a; R.R. 171a-72a. Likewise, there is no explanation as to the
difference between binding and non-binding arbitration in the agreement.
See id. Notably, if a party wants to review the AAA Rules that govern the
process, they are required to click on a second hyperlink to access that
document. See R.R. 131a, R.R. 172a. Further, we believe that the term,
“arbitration,” is ambiguous in that there is nothing to explain its meaning and
any non-lawyer subscriber could easily believe that arbitration is simply
another step in the litigation process that does not involve relinquishing the
constitutional right to a jury trial in its entirety. As such, Appellants were not
____________________________________________
18We recognize there was purportedly a third account created by Appellants,
an “Uber Eats” account, which is for a food delivery service. See Appellant’s
Brief at 15-16. The account was apparently created by Appellants’ daughter
using Shannon Chillutti’s smartphone. R.R. 236a. We need not reach a
determination on this account based on the above-stated analysis.
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informed in an explicit and upfront manner that they were giving up a
constitutional right to seek damages through a jury trial proceeding.19
Finally, we note that if the issue before us on appeal was a confession
of money judgment, this Court would have no qualms in finding the
circumstances require an opening or striking of said judgment based on the
inconspicuous use of the provision in question. The same would apply to a
criminal conviction where no colloquy was provided, or the defendant was not
advised of his right to a jury trial. We see no reason why the same analysis
should not be afforded herein where a constitutional right a jury trial in a civil
action is “clicked away” without the benefit of any protections the law
provides.
Accordingly, we hold that the trial court erred in granting Appellees’
petition to compel arbitration, and Appellants demonstrated there was a lack
____________________________________________
19 Furthermore, it should be noted that the agreements themselves are
ambiguous as to what each party believes the terms mean. For example, the
arbitration provision in the Shannon Chillutti agreement states it relates to
“disputes” related to “THESE terms” regarding the breach of the use of the
services. R.R. 130. However, this language could plainly be interpreted as
limited to claims for payment for services rendered. Moreover, there is
language in the terms and conditions for both contracts that carves out
arbitration to allow either party to proceed in small claims court but does not
explain the specifics of what circumstances would warrant that proceeding.
R.R. 10, 172. Lastly, nowhere does it say in either agreement that a consumer
is giving up a constitutional right to seek damages through a jury trial for
injuries sustained by the negligent provision of services.
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of a valid agreement to arbitrate, and therefore, they are entitled to invoke
their constitutional right to a jury trial.
Order reversed. Case remanded for further proceedings. Jurisdiction
relinquished.
Judge Dubow joins the Opinion.
Judge Stabile files a Dissenting Opinion.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/12/2022
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