Sunday, March 15, 2020

Workers’ Compensation Protected by Potential for Arbitration Swarm?

Last month, DoorDash made news when thousands of the company’s worker-“Dashers” decided to pursue misclassification claims in arbitration, one-by-one, a concept known as “swarming.” (Companies appear to be popping up to assist plaintiffs’ counsel in setting up swarming practices). This maneuver apparently so overwhelmed the “platform”-- after all, most of these cases are supposed to just go away when claimants become disheartened by being forced into arbitration -- that when the Dashers put up their 1.2 million dollars in filing fees, for arbitration of 6,000 individual claims, management blanched at the prospect of plunking down its 11 million dollar share of filing fees under the arbitration agreement. Eventually the delay forced AAA—the “chosen” arbitration outfit—to cancel the arbitrations. Amusingly, the Dashers then sued DoorDash in federal court to compel arbitration. (The hearing transcript in which DoorDash’s counsel was required to explain why arbitration should not be compelled—after no doubt having made the argument repeatedly in his career that low-wage workers’ arbitration agreements must be enforced—is a gem, and I recommend every word of it to you).

The gist of what seems to be going on in this new twist in the arbitration-shenanigans wars is that new methods of advocacy appear to be arising that may improve the odds of workers winning in arbitration. The plaintiffs’ counsel in the DoorDash arbitrations has suggested (see here at pages 17-18) that many of the 6000 cases are very strong. (Several look to me like they have problems, but most don’t). The Gibson Dunn firm (or, rather, its client DoorDash) was apparently in no position to individually arbitrate 6000 claims. At one point—again, somewhat amusingly—DoorDash suggested that the arbitrations be put on hold because of the pendency of a related court class-action suit. Got that—efficient arbitration should wait for inefficient class action litigation(!). Judge Alsup (District Court for the Northern District of California) was not pleased.

This all has me thinking about the arbitration of workers’ compensation cases. There is simply no question that employers could compel employees to arbitrate workers’ compensation claims if they wanted to do so. If anyone wants to call me on the phone and argue the point I’ll happily engage in a “live” debate (well, probably from home since I’m presently in a spring-break/virus “pause”). But read Kindred Nursing Centers first. The point I want to make is that at some juncture the efficiency of arbitration—even for those writing the rules—may break down. At some point, AAA fees may get so expensive that your transaction costs get out of whack, and your local workers’ compensation board looks like a pretty good deal. Furthermore, even if you win or achieve positive outcomes in most cases, you won’t win them all, and eventually the swarm may come to town.

Postmates finds itself in a similar bind. As reported in JD Supra, “Judge Saundra Brown Armstrong of the United States District Court in Oakland has refused to stay her order requiring Postmates to conduct more than 5,000 individual arbitrations, which Postmates argued would require it to pay more than $10 million just in arbitration filing fees.” One management-side firm estimates that fees for an individual arbitration are typically about $60,000. In my neighborhood, $60,000 x 5000 = $300,000,000. Think it will all settle?    

I suppose I should also mention that DoorDash has decided not to retain AAA any longer and has enlisted a cheaper arbitration outfit. As explained in the American Prospect, “Now the International Institute for Conflict Prevention & Resolution, known as CPR, was the forum of choice. And the new forum was offering a whole new program: Plain-vanilla arbitration was available to the Dashers, as it always had been. But so was something called the “CPR Employment-Related Mass Claims Protocol.”  Judge Alsup would really like you to know about it (see page 26 of the transcript). You really can’t make this stuff up. Well, you could, but it wouldn’t be as entertaining.

Michael C. Duff

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