January 25, 2019 / 9:24 PM / 9 months ago

JAMS to Uber: Our rules and your contracts demand individual arbitrations

(Reuters) - For more than a month, Uber has been in an epic showdown with lawyers for more than 12,500 drivers who have demanded the ride-hailing company pay JAMS arbitration fees so they can pursue wage-and-hour claims in individual arbitration – the vehicle Uber insisted upon in their contract.

Uber and the drivers’ lawyers, as I’ve been reporting, strenuously disagree about whether Uber must front the entire $18 million it will cost to allow each driver to open an arbitration case at JAMS. The drivers said in a motion to compel arbitration filed in San Francisco federal court that Uber is trying to squirm out of its pledge to pay the fees for individual arbitration. Uber responded that some issues, including the fitness of the drivers’ lawyers, cut across the cases and should be decided in a consolidated proceeding. It asked JAMS to stay more than 8,000 cases in California until the arbitration service decides whether one of the drivers’ law firms can be admitted to practice in the state.

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What we hadn’t heard in the first several weeks of this portentous fight over mass arbitration is what JAMS thinks. Would the arbitration service enforce the terms of Uber’s contracts with its drivers, which bar collective proceedings? Or would it be swayed by the inefficiency of serial litigation of the same threshold issues in thousands of cases?

We now have a some insight, courtesy of an exhibit filed with the drivers’ reply brief.

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.

It’s also true that plaintiffs’ firms don’t want to spend the money to litigate the same threshold issues over and over again. In fact, the drivers’ reply brief indicates that the drivers proposed a plan to resolve the drivers’ claims en masse: They’d litigate nine bellwether arbitrations, then engage in mediation with one another and, if they couldn’t reach a global deal, allow a single arbitrator to extrapolate the bellwether arbitration results to apply to other drivers. According to the drivers’ brief, Uber rejected the proposal.

There’s a lot of extraneous noise in the Uber mass arbitration case. Keller Lenkner, as you may recall, has a partner who previously worked alongside Uber when he was a litigator at the U.S. Chamber of Commerce. Uber has succeeded in disqualifying the law firm from representing limousine companies that allege in a class action that the ride-hailing company enjoys an unfair business advantage because it classifies drivers as contractors. Uber wants to knock Keller Lenkner out of the mass arbitrations as well. It has also suggested that the firm representing drivers in the motion to compel arbitration, Larson O’Brien, is tainted by its association with Keller Lenkner.

Uber moreover contends that drivers must pay $400 of the $1500 fee to initiate arbitration. The drivers’ reply brief outlines how the company’s position on drivers’ share of the fees has changed over the last few months; the drivers’ lawyers contend it’s up to individual arbitrators to decide whether their clients should bear some of the cost of initiating cases – but that those determinations can’t be made until Uber fronts the money to launch cases. These idiosyncratic issues will eventually be sorted out by U.S. District Judge Edward Chen of San Francisco and by JAMS arbitrators in individual cases.

But in the big picture, in which enterprising law firms sign up thousands of employees to demand individual arbitrations, using the leverage of filing fees and arbitration expenses to obtain concessions from employers, the JAMS notice is a really significant development. It says that companies can’t ignore contracts to pick and choose when they want to arbitrate collectively. Mass arbitration remains a strategy.

Uber declined to comment on the drivers’ reply brief or the JAMS notice.

The views expressed in this article are not those of Reuters News.

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