Arbitration: Be Careful What You Wish For

It's no secret that many companies use arbitration agreements with class-action bans not because they want to arbitrate claims, but because they want to avoid claims altogether. When large numbers of consumers or employees share a claim and can't bring a class action, defendants can usually expect that few if any will come forward and present their claims in arbitration.

But what happens if injured plaintiffs in large numbers do demand arbitration, and do it individually, as their arbitration agreements require? It's happened a few times, and usually the company tries to resist, sometimes blocking arbitrations from going forward by refusing to pay required fees to the arbitration provider. Plaintiffs' lawyers then find themselves in the unfamiliar position of going to court to make the company fish or cut bait or, in legal parlance, to compel arbitration. Yesterday, Judge Alsup of the U.S. District Court for the Northern District of California decided such a case in the plaintiffs' favor, compelling Doordash, Inc., to arbitrate claims brought by some 5,000 of its workers who claim it misclassified them as independent contractors and denied them their rights under federal and state wage-and-hour laws.

Doordash had required its drivers to click through an electronic contract providing for arbitration of all claims against it before the American Arbitration Association. Last year, over 5,000 of them, through counsel, demanded arbitration and paid, collectively, over $1.2 million in filing fees to AAA. Doordash, however, refused to pay its share of the fees, and AAA closed the cases. The drivers then filed court actions to compel arbitration. Doordash, in its zeal to avoid complying with its own arbitration agreement, tried to institute a new arbitration agreement with a different arbitration provider. It also sought to have arbitration deferred pending the possible settlement of a class action brought by other attorneys on behalf of a class of drivers that would include the 5,000 who sought arbitration (unless they opted out of the class, which they would have the right to do). Of course, Doordash had earlier sought to have that class action dismissed in favor of individual arbitration. 

Judge Alsup would have none of it. He concluded his order granting the motion to compel arbitration of claims of 5,010 drivers with these words:

For decades, the employer-side bar and their employer clients have forced arbitration clauses upon workers, thus taking away their right to go to court, and forced class-action waivers upon them too, thus taking away their ability to join collectively to vindicate common rights. The employer-side bar has succeeded in the United States Supreme Court to sustain such provisions. The irony, in this case, is that the workers wish to enforce the very provisions forced on them by seeking, even if by the thousands, individual arbitrations, the remnant of procedural rights left to them. The employer here, DoorDash, faced with having to actually honor its side of the bargain, now blanches at the cost of the filing fees it agreed to pay in the arbitration clause. No doubt, DoorDash never expected that so many would actually seek arbitration. Instead, in irony upon irony, DoorDash now wishes to resort to a class-wide lawsuit, the very device it denied to the workers, to avoid its duty to arbitrate. This hypocrisy will not be blessed, at least by this order.


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