How One Clause in Uber’s Terms of Use Could Overload U.S. Courts

Content Warning: Sexual Assault

Lindsay Nako, Impact Fund Executive Director

The Non-Consolidation Clause

If you’ve ever ridden in an Uber, you’ve ‘agreed’ to their non-negotiable terms of use. One of those terms, called the Non-Consolidation Clause, waives your right to participate in “consolidated proceedings,” group proceedings like class action lawsuits and multi-district litigation. Basically, Uber is requiring all customers to bring cases individually, regardless of what the case is about or what kind of proceeding it is. If successful, this new corporate mechanism has the potential to overload our already taxed courts.

 Judge Breyer’s Opinion

Last month, federal District Court Judge Charles R. Breyer issued an opinion declining to enforce Uber’s Non-Consolidation Clause – In re Uber Technologies, Inc., Passenger Sexual Assault Litigation, MDL No. 3084 CRB, 2024 WL 2269321 (N.D. Cal. May 20, 2024). Uber has been facing a growing number of allegations and civil lawsuits from rideshare passengers alleging that Uber drivers sexually assaulted them. The lawsuits against Uber allege that the company should be held liable for these sexual assaults because it negligently failed to properly screen its drivers. If the Non-Consolidation Clause is enforced, each of these people would have to pursue their claims individually, a burdensome and potentially re-traumatizing experience.

In his opinion, Judge Breyer ruled that, while parties can decide where to bring disputes, they can't change the procedural rules of federal court. By removing the option for mass litigation, specifically multidistrict litigation, the Court held that the Non-Consolidation Clause went beyond contractual limits, stripping courts of essential procedural tools. This made the clause unenforceable, according to Judge Breyer.

The Clause and Uber’s Argument

If you’ve used Uber’s app, you’ve already agreed to the “Non-Consolidation Clause” in their terms of use.

Uber’s Non-Consolidation Clause waives the right to “bring such claims as a class, collective, coordinated, consolidated, mass and/or representative action against Uber. For the avoidance of doubt, this precludes you from bringing claims as or participating in any kind of any class, collective, coordinated, consolidated, mass and/or representative or other kind of group, multi-plaintiff or joint action against Uber and no action brought by you may be consolidated or joined in any fashion with any other proceeding.”  

Uber tried to enforce the Non-Consolidation Clause in court, arguing that the Clause is “no different from other kinds of agreements that circumscribe the way in which claims may be litigated, like arbitration clauses, forum selection clauses, choice of law clauses, and class or collective action waivers.” As we all know, arbitration clauses and class action waivers have spread like weeds over the past decade, as companies use every available tactic to prevent large, public damages awards.

The Court’s Decision

Judge Breyer’s decision begins with an historical and practical overview of multidistrict litigation, before distinguishing the Non-Consolidation Clause from arbitration clauses, class action waivers, and other similar provisions. The Court writes, “[T]he Non-Consolidation Clause is not like these other kinds of provisions. The Non-Consolidation Clause’s primary effect is to strip courts of well-established procedural tools for managing their dockets – tools that are essential to complex and mass litigation as well as run-of-the-mill case management.”

The decision goes on to clearly state that parties to a private contract “cannot pick and choose which rules of [judicial] procedure apply to their cases.”

“Parties may be able to bargain away their right to bring actions on behalf of others, but they cannot bargain away a court's power to manage a large number of individual cases before it.”

The Court distinguished the Non-Consolidation Clause from class action waivers because parties to litigation can already choose among procedural options, but “coordination and consolidation are primarily the prerogative of the judiciary.”

Courtroom Efficiency

Judge Breyer’s thorough and detailed opinion describes the potential impact that Uber’s Non-Consolidation Clause could have on the multidistrict litigation (MDL) system. MDLs allow for the consolidation of thousands of cases to a single proceeding before one judge, dramatically reducing the burden on the federal court system. If Uber can successfully avoid consolidation, we will surely see a rapid proliferation of non-consolidation clauses in corporate agreements – and many thousands of individual actions entering the judicial system.

What’s Next?

Given its history and the stakes at hand, Uber will likely appeal to the Ninth Circuit. Judge Breyer seems alert to that possibility, as his careful and thoughtful opinion seems to be written as much for the appellate court and the public, as it is for the parties. Regardless of the outcome, Judge Breyer’s words will have a profound impact on future litigation around this issue.