Uber settles arbitration claims

This settlement of a series of arbitrations might prove educational for some readers here:

Uber Settles ‘Majority’ of Arbitrations for at Least $146M

Total settlements are between $146 million and $170 million A “large majority” of the more than 60,000 Uber Inc. drivers filing arbitration claims for employment misclassification will receive settlement payments as part of agreements reached by the company, Uber said in a regulatory filing May 9.

12,501 arbitration claims filed out of a potential 60,000. The filing fees alone could have cost Uber $75 million. Since the arbitrators can get paid as much as $9k a day, well, it’s not exactly hard to figure out why Uber quickly decided to settle for 2x the amount of the filing fees.

Interestingly enough, Uber initially tried to avoid paying the filing fees for the very process they contractually required. Check out this article from December 2018.

Uber fought as hard as any company in America in the past few years to assure the enforceability of its contractual arbitration provisions. When drivers who had signed contracts with Uber attempted to sue the company for wage and hour violations, Uber and its lawyers at Gibson Dunn & Crutcher won key rulings from the 9th U.S. Circuit Court of Appeals that effectively ended the drivers’ quest to litigate their claims in court – or even to arbitrate their claims as a class. For Uber drivers, the only way to go after the company for alleged state and federal employment law violations was to file an independent arbitration claim.

Amazingly, thousands of Uber drivers did just that. Between August and November of this year, about 12,500 drivers, many of whom had been class members in cases in which Uber successfully moved to compel arbitration, served individual arbitration demands on Uber, claiming the company failed to pay them the federally-mandated minimum wage and failed to pay overtime wages. These thousands of drivers filed their arbitration demands at JAMS, as mandated in Uber’s contracts.

But nothing has happened in almost all of the drivers’ cases. Of the 12,500 arbitration demands filed by Uber drivers, the company has paid the requisite JAMS initial filing fee in just 296 cases, according to a newly filed petition by drivers seeking to compel Uber to pay the fees JAMS requires to launch arbitration. So far, arbitrators have been appointed in only 47 of the cases drivers have brought against Uber – and Uber has paid the arbitrator’s nonrefundable $1,500 retainer fee in a mere six cases.

In other words, Uber caved after paying out $67,750, then doing the relevant math and realizing that they were already on the hook for an absolute minimum $34,375,000, which would almost certainly have exploded into at least $318 million even if every single arbitration was kept to three days or less… not including legal fees.

More interesting information, courtesy of an exhibit that quotes the JAMS general counsel and explicitly points out that corporations can’t avoid playing by the rules they impose on their employees and users.

In a Jan. 23 notice to Uber and the drivers, JAMS general counsel and national arbitration committee cochair Sheri Eisner noted Uber’s request that JAMS review the role of the drivers’ firm Keller Lenkner in a consolidated proceeding, before Uber is required to pay initiation fees in all of the cases.

Eisner said that’s not how JAMS procedures work. “While it is not our preference to force the parties to litigate these issues seriatim, our policies and procedures, absent party agreement otherwise, require that we collect a filing fee in each case to be pursued,” she wrote. “Further, the parties’ arbitration agreement appears to clearly prohibit collective determination of any issue absent party agreement … Therefore, absent party agreement otherwise, JAMS must proceed in the normal course, following receipt of filing fees by commencing and appointing an arbitrator to each case.”

As Eisner said in the notice, JAMS had put a hold on arbitration demands for about 8,500 drivers in California while a single arbitration weighed Uber’s opposition to the post hoc vice admission of Keller Lenkner in 40 cases in which Uber has already paid initiation fees. The hearing officer, according to the JAMS notice, has determined that his decision on the pro hac vice application will apply only in the 40 cases before him, not across all of the 8,500 arbitration demands. The JAMS GC said that the hold on thousands of other California arbitrations is now lifted.

Eisner’s notice ended with language that’s extremely important for the future of mass arbitration. “JAMS is mindful of the significant resources (both in time and expense) expended by all parties and counsel in determining the best path forward to resolve these matters in multiple jurisdictions,” she wrote. “JAMS strongly encourages the parties to consider engaging a third party (whether a mediator, arbitrator or administrative representative) to assist the parties in addressing the variety of process issues presented by numerous cases proceeding in multiple jurisdictions.”

JAMS, in other words, isn’t going to help Uber out of the jam it’s facing as a result of imposing mandatory individual arbitration agreements on its drivers. Based on Eisner’s notice, Uber can’t rely on a consolidated JAMS proceeding to decide even recurring threshold issues, such as whether the drivers can rely on the law firm that filed their arbitration demands. For Uber – and any future mass arbitration defendant – hoping to cut the cost of litigating thousands of individual arbitrations by resolving across-the-board concerns in one proceeding, the JAMS letter makes it clear that the arbitration service isn’t going to bend its rules and overlook contract language to allow that.

The lesson, as always, is this: even if you write the contract and stack everything in your favor, you’d better not break it with thousands of people or you’re going to pay a lot of money for the privilege.

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