Uber’s New Litigation Funding Terms Would Hinder Accountability
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Uber Technologies Inc. faces mountains of lawsuits seeking to hold the company accountable, including suits from more than 3,000 alleged victims of sexual assault by Uber drivers and a high-profile case brought by California drivers recently kicked off the platform. Uber recently updated its terms of service in an apparent attempt to scare away the funders who make such lawsuits possible.
Uber’s new terms aim to require any Uber user who sues the company to disclose information regarding any litigation funders involved in their lawsuit. Litigation funders provide money to attorneys and plaintiffs, who typically owe nothing unless they win their case. Plaintiffs and attorneys in resource-intensive mass tort cases — such as Uber’s multidistrict sexual assault lawsuit — often rely on litigation funding.
If Uber’s new terms and conditions are enforced, users who sue the company will be forced, among other things, to disclose to the company any litigation funding agreements, and to “waive any attorney client privilege, work product privilege, common interest privilege,” and “any claim of confidentiality” over all communications with litigation funders.
Those documents could be extremely valuable to Uber. They might reveal, for instance, an attorney’s evaluation of a case’s strengths or weaknesses. Disclosure could be even more harmful to litigation funders themselves, as they might reveal sensitive business information.
Are Uber’s funding disclosure terms enforceable? Probably not. But they may still end up quashing meritorious lawsuits.
Uber’s Terms
Uber’s terms are dubious at best. Take its attempt to force users to waive work product protection. That doctrine protects from disclosure documents “prepared in anticipation of litigation or trial by or for another party or its representative.” The majority of courts to consider the issue have extended the protection to documents shared with litigation funders — particularly those reflecting attorneys’ mental impressions, conclusions, or opinions, which are afforded heightened protections.
Uber’s terms ignore the law on waiver. A litigant waives work product protection only where they voluntarily disclose privileged material to their adversary or disclose material in a manner “inconsistent with maintaining secrecy from possible adversaries.” Assuming Uber users don’t voluntarily hand over their funder communications to Uber or disclose them without regard for secrecy, there’s no doctrinal hook for Uber’s attempted waiver.
Then, take what may be Uber’s boldest move: its attempt to require litigants to disclaim confidentiality over communications with litigation funders. This broadly worded provision could seriously undermine typical protections against disclosure: Both the attorney-client privilege and the common interest doctrine hinge on “confidential” communications. Documents are confidential only if a party has a “reasonable expectation” that the document will, in fact, be confidential — a fact-intensive analysis that considers “the circumstances and context of the communications.”
Uber buried its unannounced revisions in a 14,000-word-long clickwrap agreement few users ever read. Neither logic nor law suggests those terms could eliminate users’ “reasonable expectation” of confidentiality over their communications with attorneys and litigation funders. Courts, for instance, have found that company policies permitting email monitoring didn’t destroy employees’ expectations of confidentiality over emails where the employee had no reason to know the policy existed.
Uber’s best support on this point may be the highly publicized ruling in United States v. Heppnerearlier this year. There, Judge Jed Rakoff determined that a criminal defendant’s chats with Claude weren’t confidential since Claude’s privacy policy reserved the right to give those inputs to third parties. But even if Heppner is right (and it’s been criticized), it found Claude’s terms defeated confidentiality for voluntary inputs to Claude’s platform. Uber’s terms and conditions would need to defeat confidentiality for communications with parties other than Uber. The doctrine doesn’t stretch that far.
Some courts have upheld forced arbitration clauses in Uber’s clickwrap terms (though plenty of courts have gone the other way on that issue, typically finding a lack of consumer assent). Uber might argue its update should receive the same treatment. It’s an untested theory. But it’s hard to believe that courts would side with Uber. Clauses dictating arbitration as the dispute-forum are one thing; one-sided, adhesive terms forcing plaintiffs to arm their adversary are another — indeed, they look like textbook candidates for unconscionability.
The Potential Impact
Nonetheless, Uber’s disclosure-forcing terms may scare off funders. Nearly unheard of in the aughts, the litigation investment market had grown to over $20 billion by 2025 and is projected to more than double by 2036. Its rapid growth has inspired scrutiny (particularly of mass tort funding), catalyzed by business interests with a record of advocating for tort reforms that make it harder to sue big companies.
These efforts appear to be working. Last month, North Carolina became the first state to ban third-party litigation funding. Ohio soon followed with a law banning outright any funding from foreign corporations. Congress is weighing multiple bills designed to rein in the industry, big law firms are reportedly growing wary of accepting litigation financing, and investors in litigation finance companies are “pulling back.”
Given this opposition, litigation funders may be hesitant to involve themselves in cases that are almost certain to be tied up in litigation as courts consider whether Uber’s terms can be enforced — particularly if there’s a chance, however slim, that their documents could be made public. Many funders may prefer not to be named in a motion (even one they ultimately win) given the current climate.
Some scrutiny of third-party litigation funding is likely warranted. High interest rates can eat away at plaintiffs’ recoveries, and litigation funders have at times exercised undue control over litigation decisions, despite operating “in the shadows.”
That’s what makes Uber’s revised terms so pernicious. They come at a time when animosity toward litigation finance is gaining momentum. But given Uber’s previous attempts to shut down litigants, its tactics don’t appear to be aimed at consumer protection, transparency, or even preventing conflicts. Instead, they look like a self-interested attempt to shoo funders away from lawsuits intended to hold the company accountable. Those lawsuits deserve a day in court. If funders bow out, they won’t have it.
This article does not necessarily reflect the opinion of Bloomberg Industry Group Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.
Author Information
Brianne Holland-Stergar is an incoming assistant professor at the University of Montana Alexander Blewett III School of Law and a nonresident fellow at Stanford Law School’s Deborah L. Rhode Center on the Legal Profession.
Interested in writing? Review our author guidelines, and submit pitches to Insights@bloombergindustry.com.
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