Many non-unionized companies now require employees and independent contractors to agree to arbitrate all their claims against the company instead of going to court. Most of the time, the arbitration agreements also have class action waivers which forbid the employees and contractors to bring any kind of class or collective action against the company. However, some plaintiffs’ attorneys are now filing multiple individual claims in lieu of class actions, making some companies second-guess the wisdom of requiring class action waivers. In one case of wish fulfillment gone wrong, DoorDash, the food delivery company, recently found itself in the position of arguing against the enforcement of the mandatory arbitration and class action waiver agreements it had required of all of its delivery couriers to adopt.
In an order issued on February 10, 2020, United States District Court Judge William Alsup (Northern District of California) required DoorDash to comply with the arbitration agreements it had required for all its drivers. The case is Abernathy v. DoorDash, Docket No. C 19-007545. The arbitration agreements that governed DoorDash couriers required that they resolve all disputes with DoorDash through arbitration with the American Arbitration Association (AAA) and also contained a class action waiver that provided that the parties “waive their right to have any dispute or claim brought, heard or arbitrated as, or to participate in, a class action, collective action and/or representative action.”
Yet DoorDash balked at complying with the arbitration agreements when 5,879 of its couriers filed individual claims at AAA in which they contended that DoorDash misclassified them as independent contractors and violated the federal Fair Labor Standards Act and the California Labor Code. Each of the couriers paid the $300 filing fee required for the couriers under the AAA’s Commercial Arbitration rules, amounting to over $1.2 million in fees. The AAA rules required DoorDash, as a responding company, to pay $1900 in filing fees for each of the claims filed, which added up to almost $12 million. DoorDash refused to pay the filing fees, contending that there were “significant deficiencies with the claimants’ filings.” Because of DoorDash’s failure to pay, AAA closed out the cases. The couriers then went to federal district court to compel arbitration in November, 2019.
The court found that 869 of the couriers did not have a valid arbitration agreement with DoorDash, but compelled arbitration for the remaining 5,010 petitioners-couriers. The court ordered DoorDash to “immediately commence AAA arbitration with these petitioners.” This means, presumably, that DoorDash must pay the filing fees necessary to get the cases started. The court declined to apply a California state law retroactively that had gone into effect on January 1, 2020 that could have also required DoorDash to pay attorney’s fees and costs for breaching the arbitration agreement when it failed to pay the required fees.
Judge Alsup summed up his decision:
“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.”