On The Case

DoorDash accused of changing driver rules to block mass arbitration campaign

(Reuters) - The plaintiffs' firm Keller Lenkner moved this week for temporary restraining orders in state and federal court against the delivery service DoorDash, arguing that the company is improperly requiring drivers who have sought arbitration to agree to new contracts with overly burdensome restrictions.

The firm’s motion in San Francisco federal court was filed on Monday on behalf of 2,236 DoorDash drivers who have asserted federal wage-and-hour claims in their arbitration demands. On Tuesday, Keller Lenkner and co-counsel from Quinn Emanuel Urquhart & Sullivan filed a second TRO motion, this one in San Francisco Superior Court on behalf of about 4,000 other DoorDash drivers who are asserting only state-law claims. The motions seek to bar DoorDash from requiring workers who represented by counsel to accept new contracts that change the rules of arbitration against the company.

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If it seems like I’m writing an awful lot about mass arbitration lately, it’s because we’re witnessing companies try to adapt on the fly to a new tactic to restore leverage to workers who can’t band together in class actions. Keller Lenkner and other plaintiffs’ firms engaged in mass arbitration recognized how to capitalize on arbitration fees – under standard AAA rules, it costs companies $1,900 to launch a case – to force companies to pay attention to workers’ demands. Companies, meanwhile, are searching to a way to counter the tactic.

Keller Lenkner, which has also orchestrated mass arbitration campaigns against the gig economy companies Uber, Lyft and Postmates, represents more than 6,000 DoorDash delivery workers who filed arbitration demands in August at the American Arbitration Association, as specified in their contracts. DoorDash had previously paid arbitration fees to launch AAA cases by 250 delivery workers – they’re known as Dashers – also represented by Keller Lenkner, according to the firm's motion to compel arbitration. But the company, according to Keller Lenkner’s motion, refused to pay the millions of dollars AAA said it owed to begin thousands of additional arbitrations.

DoorDash, represented by Gibson, Dunn & Crutcher, told AAA that it was not obliged to pay the fees because it had “determined that there are significant deficiencies with the claimants’ filings," according to an email attached as an exhibit to the drivers’ motion. In a different email to AAA, DoorDash said it wanted to delay payment of fees until AAA adopted a new fee structure for mass arbitrations.

Because of DoorDash’s failure to pay the fees to launch the arbitrations drivers demanded in August, AAA terminated their cases on Nov. 8. The next day, according to papers filed by Keller Lenkner, DoorDash began the rollout of a new contract for Dashers. The new contract required Dashers to file their individual arbitration demands not at AAA but at the much smaller International Institute for Conflict Prevention & Resolution. IICPR, according to Keller Lenkner, has recently adopted mass arbitration procedures that call for the initial arbitration of just 10 test cases. All similar cases against the same defendant are to be stayed until resolution of the test arbitrations. According to Keller Lenkner, the IICPR procedures would permit long delays in the arbitration of Dashers’ claims.

“Put simply, the new arbitration agreement purports to eliminate the legal right to proceed with arbitration before AAA, which petitioners had already invoked months ago and seek to enforce in this action, and to replace it with an inferior process,” the federal-court TRO motion said.

The TRO motions assert that by requiring Dashers – including those who have already filed AAA arbitration demands – to agree to the new contract in order to continue working for the company, DoorDash breached the contractual covenant of good faith and fair dealing. The motion also asserts that DoorDash counsel “violated ethical rules” because they allowed the company to send workers who are represented by counsel a contract that would materially alter their rights without notifying the workers’ lawyers.

DoorDash counsel Joshua Lipshutz of Gibson Dunn did not immediately respond to an email request for comment. DoorDash also did not immediately respond to my query. Lipshutz previously said in a Nov. 14 email to Keller Lenkner that DoorDash lawyers were “more than satisfied” that they had complied with ethical obligations. The email also said that DoorDash was rolling out the new contract “in the ordinary course of business. As you know, DoorDash periodically rolls out revisions to the Agreement, and this was the latest such rollout.” If Keller Lenkner clients were notified about the new agreement, Lipshutz said in the email, it was only because they chose to use the DoorDash app for Dashers. They received the same notification as all other DoorDash workers on the app, the email said.

Keller Lenkner, however, wants restraining orders to enjoin DoorDash from “continuing to force petitioners and other Dashers represented by (Keller Lenkner) to sign the new agreements.” Judge Ethan Schulman of San Francisco Superior Court has scheduled a hearing on the Dashers’ TRO motion for Thursday. U.S. District Judge William Alsup of San Francisco will hear the federal-court TRO bid on Monday.

Companies targeted in mass arbitration campaigns have tried a few different strategies to combat them. Uber, Lyft and Postmates have all argued, for instance, that Keller Lenkner is not litigating in good faith, asserting that the firm fails to vet clients adequately and that, as a 15-lawyer shop, it has no intention of actually litigating thousands of arbitrations at a time. Keller Lenkner, in response, has steadfastly defended its client vetting and retention procedures and has pointed out that it can always bring in co-counsel to assist in arbitrating cases, as it has with Quinn Emanuel in the DoorDash case.

In any event, it doesn’t seem as though defendants’ attacks on the firm are a winning tactic. Last spring, in the run up to its IPO, Uber agreed to pay between $146 million and $170 million to settle claims by drivers who had filed arbitration demands. Lyft has never publicly announced a resolution of arbitrations by its drivers, but last February and March, the company and Keller Lenkner dropped suits against one another, suggesting a global settlement.

I told you earlier this week that Postmates, facing the prospect of arbitration demands from as many as 16,000 couriers, resorted to a class action to settle their claims – an attempt to take advantage of the very litigation tactic that its contracts prohibit couriers from using. And now DoorDash is allegedly trying to change the rules on its Dashers in the middle of a mass arbitration campaign.

In the long run, we don’t know if workers and their lawyers will continue to be able to leverage arbitration fees. Filings in the DoorDash case in federal court suggest that AAA is thinking about changing its rules to reduce companies’ fees to $300 a case, rather than $1,900, when workers assert masses of arbitration demands. Other prospective defendants may, like DoorDash, require workers to agree to arbitrate in forums with rules that curb mass filings.

The next week, with a hearing on the fairness of the proposed Postmates class action settlement and two hearings on TRO motions against DoorDash, should provide some answers at least about the short-term future of mass arbitration.