On The Case

‘This hypocrisy will not be blessed’: Judge orders DoorDash to arbitrate 5,000 couriers’ claims

(Reuters) - U.S. District Judge William Alsup of San Francisco spoke a brutal truth in a short opinion Monday night, ordering the delivery service DoorDash to arbitrate wage-and-hour claims by 5,010 couriers.

For decades, the judge said, employers and their lawyers have litigated to narrow workers’ opportunities to enforce their rights. Thanks to successes at the U.S. Supreme Court, companies now have nearly unfettered power to force employees to agree to resolve their disputes in individual arbitration, “thus taking away their ability to join collectively to vindicate common rights,” Judge Alsup wrote.

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But when thousands of DoorDash couriers exercised what Judge Alsup called “the remnant of procedural rights left to them,” filing individual demands for arbitration at the American Arbitration Association, DoorDash balked. AAA told DoorDash last fall that the company owed about $12 million in nonrefundable fees to launch its workers’ cases. DoorDash’s counsel at Gibson Dunn & Crutcher questioned the tactics of the workers’ lawyers at Keller Lenkner and the legitimacy of its couriers’ cases. Or, as Judge Alsup put it in Monday’s opinion: “Faced with having to actually honor its side of the bargain, (DoorDash) 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 of paying the requisite AAA fees, DoorDash opted for the very device it had forced its workers to surrender. The company used a pending state-court class action under California’s Private Attorney General Act – a case in which DoorDash once attempted to compel arbitration – to settle couriers’ wage-and-hour claims for $39.5 million. And when Keller Lenkner – which is trying to block approval of the class action – went to federal court in San Francisco to compel DoorDash to honor the arbitration provision in its workers’ contracts, DoorDash asked Judge Alsup to stay arbitration until the class action is approved and couriers decide whether to participate in it.

Calling that argument “irony upon irony,” Judge Alsup smacked DoorDash in stark language: “This hypocrisy will not be blessed.”

In an email statement, DoorDash said, “We stand ready and willing to defend legitimate arbitration demands. As the court recognized, however, the company should only be responsible for arbitrating legitimate claims.”

What’s striking about Alsup’s DoorDash order, aside from its harsh words, is that the judge put the focus of the debate over mass arbitration on workers, who, as Alsup emphasized, are using the only avenue they have to vindicate their rights. I’ve written a lot over the past several months about the incipient tactic of mass arbitration, in which hordes of workers (or consumers!) swamp companies with arbitration demands, putting companies on the hook for millions of dollars in requisite fees. Quite often, the workers and consumers are represented by Keller Lenkner and the companies are represented by Gibson Dunn. And often, the litigation has featured Gibson Dunn asserting that Keller Lenkner has engaged in improper tactics, racking up thousands of dubious cases in order to take advantage of the leverage of million-dollar arbitration fees. Keller Lenkner, meanwhile, has highlighted the other side’s questionable maneuvers, from allegedly defying court orders to attempting to switch arbitration providers in the face of AAA fee demands.

That was certainly the dynamic in the DoorDash case. It began with Keller Lenkner asking Judge Alsup for a restraining order to block DoorDash from requiring couriers to agree to a new contract specifying the International Institute for Conflict Prevention and Resolution as their arbitration service. Keller Lenkner withdrew the injunction request after DoorDash said its clients could opt out of the CPR provision, leaving AAA as their arbitration forum, but successfully pressed for discovery to find out how Gibson Dunn and DoorDash affected CPR’s development of the new mass arbitration protocol.

Gibson Dunn, in turn, convinced Judge Alsup to ascertain Keller Lenkner’s claims about its clients. The judge required the plaintiffs’ firm to obtain and file sworn declarations from all of its clients, attesting that they worked for DoorDash and clicked their assent to arbitration. Keller Lenkner’s original motion to compel arbitration cited 6,250 demands filed at AAA. Ultimately, as Judge Alsup recounted in Monday’s order, Keller Lenkner filed the declarations Alsup required for 5,010 clients. (The firm filed sworn witness statements for another 869 clients, but Alsup said those statements weren’t good enough and refused to compel arbitration for those couriers.)

Gibson Dunn pushed arguments about Keller Lenkner throughout the case, insisting in a brief just last week that Keller Lenkner “used a telemarketer to generate a ‘client list’ and does not maintain contact with its purported clients.” At a hearing Monday, before Judge Alsup issued his order, Joshua Lipshutz of Gibson Dunn asserted that 400 DoorDash couriers purportedly represented by Keller Lenkner are also apparently represented by other plaintiffs' firms.

Judge Alsup glancingly acknowledged DoorDash’s protestations in Monday’s order, holding that Keller Lenkner will be responsible for paying DoorDash’s costs “if it turns out that Keller Lenkner has overstated its authority, or for any procedural reason, petitioners have not perfected their right to arbitrate.” He also reminded the plaintiffs’ firm that “it would be a serious problem” to initiate arbitration without a client’s informed consent or to claim a client relationship with couriers who have not authorized Keller Lenkner to represent them.

But the judge refused to be distracted by mudslinging. He concentrated on the thousands of workers who believe they have been underpaid by DoorDash and attempted to follow DoorDash’s own rules to stake a claim, only to see the company try to wriggle away from the very procedures it forced its employees to accept. “The vast majority of these are legit,” he said at Monday’s hearing. “And I’m not going to hold up relief that you forced on them - you forced it on them to go to arbitration … The only thing they’ve got left is the right to arbitrate. And now you want to take that away from them.”

In Judge Alsup’s courtroom, that’s not going to happen.

Keller Lenkner’s Travis Lenkner said his firm, which has teamed up with Quinn Emanuel Urquhart & Sullivan, is eager to begin arbitrating the claims of the 5,010 DoorDash couriers whose cases Judge Alsup ordered to arbitration. The firm, he said, is considering its options for the 869 clients whose motions to compel arbitration were denied.

Lenkner said he was gratified that Judge Alsup refused to be swayed by DoorDash’s arguments. “He saw DoorDash’s opposition for what it was – an attempt to delay and ultimately evade liability,” Lenkner said. Gibson Dunn, he added, has repeatedly cast aspersions on Keller Lenkner, “wildly and without evidence.” But with Judge Alsup’s order – and his oral instructions at Monday’s hearing that DoorDash pay AAA’s multimillion-dollar fee demand – Keller Lenkner will have a chance to show the merits of its clients’ cases, Lenkner said.

“AAA can handle it and we can handle it,” he said.