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Judge Denies Uber Motion to Compel Arbitration in Surge-Pricing Lawsuit

July 29, 2016, 11:59 PM UTC
New York Uber Drivers Protest Rate Cuts
NEW YORK, NY - FEBRUARY 01: Uber headquarters stands in Queens as hundreds of Uber drivers protest the company's recent fare cuts and went on strike in front of the car service's New York offices on February 1, 2016 in New York City. The drivers say Uber continues to cut into their earnings without cutting into its own take from each ride. In claiming fare reduction would mean more work for drivers, the San Francisco based company cut its prices by 15 percent last week.
Photograph by Spencer Platt — Getty Images

A federal judge on Friday denied a motion by Uber (UBER) to compel arbitration in a passenger lawsuit over so-called surge pricing brought against the ride-hailing company’s chief executive.

Spencer Meyer, a Connecticut passenger and the lead plaintiff who filed the lawsuit, was subject to a user agreement requiring that disputes with San Francisco-based Uber be arbitrated. Although Meyer sued only CEO Travis Kalanick, the company requested arbitration after Uber was added as a defendant to the lawsuit last month.

U.S. District Judge Jed Rakoff in Manhattan said in his decision that consumers are often “allegedly consenting to an entire lengthy set of terms and conditions … by the mere act of accessing a service” but never explicitly asked.

He denied Uber’s request for arbitration. “The Court finds that the plaintiff here never agreed to waive his right to a jury trial or to submit to mandatory arbitration,” Rakoff wrote.

The lawsuit, which was filed in December and sought class-action status on behalf of passengers nationwide, alleges Kalanick engaged in a price-fixing scheme with Uber drivers to raise prices during periods of heavy demand. Uber takes a share of drivers’ earnings.