Employers—it’s time to check your arbitration and class-action waiver provisions. The United States District Court for the Northern District of California recently granted DoorDash drivers’ motion to compel arbitration, which may ultimately cost DoorDash nearly $12 million in American Arbitration Association (AAA) filing fees.
When a driver signs up to deliver through DoorDash, they click through and electronically sign an employment agreement containing a “Mutual Arbitration Provision” and a class-action waiver. Like many other employers with similar contracts, DoorDash’s employment agreement requires all disputes to be arbitrated by, and pursuant to, AAA rules. One of those rules requires individuals to pay a $300 filing fee and responding companies to pay a $1,900 filing fee. For years, employers have used these arbitration provisions to individually arbitrate disputes as well as avoid class-action lawsuits and courtroom litigation.
The plaintiffs-bar fired back, fronting over $1.2 million in arbitration filing fees for more than 5,000 DoorDash drivers to pursue individual arbitration proceedings. In response, DoorDash refused to pay its filing fees, totaling nearly $12 million, claiming the arbitration demands were deficient. In the alternative, DoorDash argued that, should the claims go forward, they should be decided in a class-action lawsuit.
The Court disagreed, granting the DoorDash drivers’ motion to compel arbitration. The Court criticized DoorDash for its refusal to arbitrate and its demand that the drivers present their claims in the form of a class-action lawsuit:
The irony, in this case, is that the workers wish to enforce the very provisions forced on them . . . . [I]n irony upon irony, DoorDash now wishes to resort to a class-wide lawsuit, the very device it denied workers, to avoid its duty to arbitrate. The hypocrisy will not be blessed, at least by this order.
This decision is a strong reminder for employers to revisit their arbitration and class-waiver provisions. Employers should take notice of which arbitration rules they have incorporated into their agreements, including any applicable filing and case management fees, as well as how different rules may impact employee disputes and the business.
Stay tuned for more! GrubHub is similarly facing arbitration woes, with its drivers asserting they are exempt from arbitration based on the Federal Arbitration Act’s exemption for transportation workers. The Seventh Circuit heard oral arguments on the matter on February 12, 2020.