(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Alison Frankel

Nov 26 (Reuters) - New York's highest state court on

Monday joined the nationwide consensus in state and federal

courts that consumers can be compelled to arbitrate claims if

they have been offered a real opportunity to review online

contract terms and have clicked their assent.

But that, as I'll explain, may not be the end of the story.

The New York Court of Appeals ruled 5-2 that Emily Wu, who

was struck by a car and suffered serious injuries when her Uber ( UBER )

driver dropped her off in the midst of traffic, must arbitrate

her personal injury claims against Uber ( UBER ) because she consented to

mandatory arbitration in an online contract in 2021. The state

high court rejected arguments by Wu's lawyer, Josh Kelner of

Kelner & Kelner, that Wu cannot be bound by contract terms that

were misleadingly characterized and impossible for an ordinary

consumer to parse.

"For essentially as long as there have been written

contracts, parties have entered them without first carefully

reviewing their terms," wrote Judge Anthony Cannataro for the

five-judge majority. "That failure can have legal consequences,

whether the party is a sophisticated entity or an ordinary

consumer, and whether the contract is presented on paper or

through an electronic pop-up window."

The court's endorsement of so-called clickwrap agreements

isn't much of a surprise. As Uber's ( UBER ) lawyers at Perkins Coie

noted in their Court of Appeals brief, and the U.S. Chamber of

Commerce's Mayer Brown team echoed in an amicus brief, courts

around the country, after years of litigation over the minutiae

of online contracts, now generally agree that the agreements are

binding as long as companies offer consumers a fair and easy way

to review contract terms and require users to click to confirm

their consent.

More intriguingly, the Court of Appeals majority also said

that under the terms of Wu's binding contract with Uber ( UBER ), she

cannot contest the enforceability of the agreement in court.

Wu's lawyer had strenuously pushed for the court to deem the

contract unenforceable because of the unusual circumstances of

the case.

Wu was a frequent Uber ( UBER ) user who had consented to the

company's 2016 terms of service. After her accident, she filed a

lawsuit against Uber ( UBER ) in November 2020. She served the company

with her complaint at its New York office.

Uber ( UBER ) contends it never saw the complaint because its New

York office was closed under pandemic regulations. The company

insists that it learned of the suit only in March 2021, when Wu

moved for a default judgment.

By then, Wu had clicked her assent to Uber's ( UBER ) revised service

terms - which included a provision requiring pending personal

injury lawsuits to be resolved in arbitration.

Wu counsel Kelner has asserted throughout the litigation

that Uber ( UBER ) should be sanctioned for asking his client to consent

to contract terms that affected her personal injury suit without

notifying him.

Wu, he argues, could not be expected to anticipate that Uber ( UBER )

would cloak a retroactive provision requiring her to arbitrate

in what appeared to her to be a routine update to its service

rules.

"She was entitled to assume that matters relating to her

pending lawsuit would be directed to her counsel," Kelner said

in Wu's brief to the Court of Appeals. "There is no such thing

as contract by trickery."

Kelner obtained evidence that Uber ( UBER ) responded to dozens of

other lawsuits served at its New York office when that office

was closed for the pandemic, but a trial judge in New York State

Supreme Court in the Bronx concluded that Uber ( UBER ) was not aware of

Wu's lawsuit when the company asked her and its other users to

consent to the updated contract.

The trial judge also ruled that Wu was not entitled to

sanctions based on Uber's ( UBER ) allegedly improper exparte contact

because (among other reasons) it was Wu who initiated contact

with Uber ( UBER ) by requesting a ride.

Both the trial court and the intermediate appellate court

concluded that because the Uber ( UBER ) clickwrap contract included a

provision requiring an arbitrator to decide threshold challenges

to the agreement, they were not empowered to rule on whether the

contract was enforceable in light of Kelner's claims of trickery

and deception.

At the Court of Appeals, advocacy group Public Citizen filed

a brief backing Kelner's argument that the court must hold Wu's

contract invalid because it was "obtained under misleading and

coercive circumstances." The Chamber of Commerce, meanwhile,

cautioned the New York high court that if it adopted Wu's

position, companies would face a heavy burden of carving out

every litigation adversary from routine contract updates.

The Court of Appeals majority did not rule on the merits of

Wu's enforceability challenge, instead concluding that it's a

matter for the arbitrator because of the delegation clause in

the contract she entered.

In a dissent joined by Chief Judge Rowan Wilson, Judge Jenny

Rivera said Wu cannot be bound by Uber's ( UBER ) contract because she

did not know of the impact it would have on her lawsuit - in

part because Uber ( UBER ) did not inform her lawyer of the update to its

terms of service.

In an email statement on the decision, Wu counsel Kelner

cited that dissent. His client, he said, "had the right to

expect that communications about her lawsuit would be directed

to her lawyer," adding that courts should protect plaintiffs in

these circumstances. Kelner said he is confident an arbitrator

will ultimately agree that it's "flagrantly improper and

unconscionable for a sophisticated corporation to weaponize its

terms of use."

Uber ( UBER ) lawyer Michael Huston of Perkins Coie said in an email

statement that the evidence in the case showed Wu had agreed to

Uber's ( UBER ) terms, including mandatory arbitration, multiple times

before and after the accident in 2020. "We're confident that the

arbitration process will allow all parties to resolve this

matter in a fair and timely manner," the statement said.

Read more:

Sending your kid to public school isn't consenting to

arbitration, Calif judge says

Friend bought you a ticket to the big game? You still have

to arbitrate, says US appeals court