BikeTown Is a Rarity: A Portland City Service That Bars Users From Suing

Commissioner Steve Novick says he wishes the city had read the fine print.

Evan Hanczor was eager to explore Portland on a BikeTown ride.

The Brooklyn, N.Y., resident rented two bicycles last weekend from Portland's brand-new, bright orange bike-share system. But he had no idea that by clicking "yes" on the contract in the BikeTown phone app, he was waiving his right to sue the bike share.

"That's troubling," Hanczor said July 22. "When you're hopping on a bike, you're agreeing to some risk. But if it was a clear malfunction of the equipment, whoever runs this should have some sort of exposure."

Last week's launch of a long-awaited Portland bike-share system was by many measures a success. In its first six days, 5,500 people made 13,023 trips on the rental bikes.

But within 48 hours of the BikeTown debut, a Portland personal injury lawyer made an alarming discovery: an obscure clause in the contract, barring riders from suing BikeTown in court.

Buried about three-quarters of the way through the bike share's user agreement, a clause stipulates that users must waive their right to a civil jury trial if something goes wrong on a ride. Instead, the contract forces them into private arbitration with the bike share's operator, New York-based company Motivate.

"You agree that any dispute or claim relating in any way to your use of the services will be resolved by binding arbitration, rather than in court," the agreement reads. It also bars customers from joining a class action lawsuit.

The clause, first reported July 20 by the website BikePortland, is a rare instance—possibly the only one—where a contractor providing publicly funded Portland city services has locked out its customers from suing, even if they get hurt or have their property damaged. Five arbitration experts, as well as numerous city officials, interviewed by WW could think of no other local examples.

Those legal observers were troubled.

"The city spent time developing this, using employees' time, using money from the citizens of Portland," says Lake Perriguey, a leading Portland civil rights lawyer. "To access government services, generally you don't have to waive your constitutional rights."

Portlanders can sue their water and sewer providers. They can sue other transportation services: TriMet, the operators of the SmartPark garages, and even the aerial tram. They can sue rec centers and public pools.

WW could find just one contractor receiving city money that has an arbitration clause similar to BikeTown's: Active Network, which provides services for Portland Parks & Recreation's website. (A trash-pickup company contracting with regional government Metro has a similar clause, but with an exception for injuries or property damage.)

Private arbitration clauses in contracts are used to shield corporations from consumer lawsuits, says Phil Goldsmith, a Portland lawyer and mediator.

In the 1990s, "businesses started doing arbitration as a way to gain advantages over their nonunion employees," says Goldsmith. "The stronger party writes the terms, the weaker party gets to say yes or no."

Legal experts say arbitration stacks the deck against consumers.

"Arbitrations are typically run by these private arbitration companies," says Mark Ginsberg, the Portland personal injury lawyer who spotted the BikeTown clause. "They are very pro-corporation-biased. They are not fair, they are not a level playing field. They are not even close."

In a statement, a Motivate spokeswoman defended the company's practices.

"We believe arbitration is the most efficient and expedient process for resolving disputes," Motivate tells WW in a company statement. "The process assigns a neutral arbitrator to each case and provides an option for either part to have a new arbitrator assigned if there is any doubt about the first one. And, consistent with best practices, we provide an opportunity for any members who prefer not to arbitrate to opt out."

There is a way out of BikeTown's arbitration clause: Email with the subject line, "ARBITRATION AND CLASS ACTION WAIVER OPT-OUT" within 30 days.

But Goldsmith says few people will bother.

"It's a fig leaf," Goldsmith tells WW. "Some number in the high 90 percent of people never read it."

Mandatory arbitration clauses are common in private companies' contracts, appearing in user agreements for companies from Microsoft to American Express and apps such as Pokémon Go.

But they've received increased scrutiny and backlash since a 2015 New York Times investigation.

This spring, the Consumer Federal Protection Bureau proposed new rules to ban financial companies from putting the clauses in contracts with customers. New rules proposed last month by the Department of Education would ban the clauses in the contracts of any educational institution that receives federal funding. Chicago's city council is currently considering a proposal to ban any company that uses the clauses from doing business with the city.

When city officials launched BikeTown last week, they praised it as an ideal public-private partnership.

Officials lauded the fact that the program will not require taxpayer money for its day-to-day operation, instead relying on a five-year, $10 million sponsorship deal with Nike. The project began in 2011 with $2 million in federal grant money, allocated by Metro. The placement of its racks, bicycles and terminals was organized by the Portland Bureau of Transportation, and the state contributed $42,000 for a BikeTown rack at Union Station.

Yet city transportation officials say they did not know that Motivate was placing an arbitration clause in the BikeTown contract.

"Throughout the process of launching BikeTown, we have been careful not to discuss the ins and outs of the contract negotiations," says PBOT spokesman Dylan Rivera. "We feel this is important in order to preserve the integrity of both past and future negotiations. We do encourage all people who use BikeTown to read the user agreement."

City Commissioner Steve Novick, who oversees the bureau, now says keeping a distance from contract details was a mistake.

"When the city attorney and PBOT negotiated with Motivate, I now wish the city had considered asking for stronger language concerning legal remedies," Novick says. "We should keep this in mind with all city contracts. These mandatory arbitration clauses are now rampant, and that is disturbing."

Ginsberg says he was disappointed to discover the clause in a city program he otherwise supports.

"I really do want BikeTown to succeed," Ginsberg says. "[But] that type of agreement is not needed to run a bike-share program."

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