No Sealing + Harsh Words About Employer-Mandated Arbitration in Doordash Case

"The district court should not be a party to concealing this information from the public, especially as it concerns an arbitration organization that holds itself out to the public as impartial. These documents would be useful to the public in evaluating the true extent to which the organization is impartial."

Some excerpts from Judge William Alsup in Abernathy v. Doordash, Inc. (N.D. Cal.); I can't speak to whether the analysis of the arbitration matters is sound, but I thought it worth noting:

Petitioners are 5,879 couriers who work for respondent, DoorDash, Inc. In order to make deliveries for respondent, petitioners allegedly each clicked through a contract that contained a "Mutual Arbitration Provision," that required among other things, that … the arbitrations … be administered by the American Arbitration Association (AAA)…. In turn, AAA's Commercial Arbitration Rules require each individual to pay a filing fee of $300 and the responding company to pay a filing fee of $1,900.

Petitioner couriers say they have been improperly classified as independent contractors rather than employees. Accordingly, in August 2019, petitioners' counsel filed individual demands for arbitration with the AAA on behalf of 2,250 individuals (Abernathy petitioners) claiming violations of statutes such as the Fair Labor Standards Act and the California Labor Code. In September 2019, petitioners' counsel filed further demands on behalf of 4,000 more individuals with the AAA (Boyd petitioners) making the same claims. Petitioner couriers paid over $1.2 million in filing fees.

AAA then imposed a deadline of October 28 for respondent DoorDash to pay its share of the fees for the Abernathy arbitrations and a deadline of November 7 for the Boyd arbitrations. On October 28, respondent's counsel emailed AAA and petitioners' counsel stating they had "determined that there are significant deficiencies with the claimants' filings," and that "Doordash is under no obligation to, and will not at this time, tender to AAA the nearly $12 million in administrative fees." On November 8, AAA emailed the parties and stated, "Respondent has failed to submit the previous requested fees for the 6,250 individual matters; accordingly, we have administratively closed our files." …

[After the demands were filed,] DoorDash had begun to require couriers, in order to sign in for new work, to click through a new agreement that required arbitration with the International Institute for Conflict Prevention & Resolution (CPR), instead of AAA. At [a court] hearing, however, respondent DoorDash represented that couriers could opt out of the new arbitration agreement, and instead continue to arbitrate under AAA if they so desired, so petitioners withdrew their motion for temporary restraining order….

[P]etitioner couriers have … filed an amended motion to compel arbitration with the AAA which seeks to compel arbitration on behalf of 5,879 individuals….

The court granted the motion to compel arbitration through AAA for the 5,010 petitioners who "signed declarations attesting to 'click[ing] through' DoorDash's AAA arbitration agreement." There was apparently some dispute about "the authority of petitioners' counsel to represent certain other petitioners and seek relief on their behalf," and the court left them to the AAA arbitration, adding,

If it turns out that Keller Lenkner [the firm representing the petitioners] has overstated its authority, or for any procedural reason, petitioners have not perfected their right to arbitrate, this order imposes on Keller Lenkner a requirement to fully reimburse DoorDash for all arbitration fees and attorney's fees and expenses incurred by DoorDash in defending the arbitration, and the arbitrator shall so award them.

The court also added:

[1.] Petitioners have filed an unopposed motion to file under seal certain portions of their reply brief [and an accompanying declaration and exhibits]. CPR has designated these materials as confidential purporting that they contain, among other things, trade secrets, proprietary information, and sensitive information. The materials sought to be sealed here all relate to email communications between CPR and respondent's counsel, Gibson Dunn, in 2019.

In short, the emails track the following events: in May 2019, Gibson Dunn reached out to CPR to discuss issues DoorDash was having with filing fees for mass arbitrations, and to find a solution to prevent "an abuse of process." In October 2019, CPR provided Gibson Dunn with a draft of a mass arbitration protocol for discussion. A week later, CPR provided Gibson Dunn with another draft of the protocol based on their discussion. Gibson Dunn "interlineated comments, questions, and recommendations" in the new draft. CPR and Gibson Dunn traded additional drafts and revisions in the following weeks. On November 4, CPR notified Gibson Dunn that it had posted the finalized new protocol and asked to be notified when the new DoorDash contracts providing for arbitration under CPR were distributed.

Just because such information has been designated as confidential does not mean that it deserves to be kept from the public once filed in the federal district court. The district court should not be a party to concealing this information from the public, especially as it concerns an arbitration organization that holds itself out to the public as impartial. These documents would be useful to the public in evaluating the true extent to which the organization is impartial. The motion to seal is accordingly DENIED….

[2.] For decades, the employer-side bar and their employer clients have forced arbitration clauses upon workers, thus taking away their right to go to court, and forced class-action waivers upon them too, thus taking away their ability to join collectively to vindicate common rights. The employer-side bar has succeeded in the United States Supreme Court to sustain such provisions. The irony, in this case, is that the workers wish to enforce the very provisions forced on them by seeking, even if by the thousands, individual arbitrations, the remnant of procedural rights left to them. The employer here, DoorDash, faced with having to actually honor its side of the bargain, 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, in irony upon irony, DoorDash now wishes to resort to a class-wide lawsuit, the very device it denied to the workers, to avoid its duty to arbitrate. This hypocrisy will not be blessed, at least by this order….

 

Comments

[bernard11]

I would understand this better if I knew who Aaron Zigler was, and what CPR stands for.

[UVaGrad]

DoorDash originally had an arbitration clause that (1) required arbitration before a provider known as AAA and (2) barred class arbitrations, in favor of individual arbitrations.

After 5000 drivers filed individual arbitration requests, DoorDash asked AAA about consolidating them into a class arbitration. AAA said no dice, because the arbitration clauses didn’t allow for those. So DoorDash worked with another arbitration provider, CPR, to come up with rules that would govern a class arbitration. DoorDash then entered into a contract with CPR for class arbitrations. After that was sorted out, DoorDash told its drivers (including those 5000 who had already filed individual requests) that it was changing the arbitration clause, and their relationship with DoorDash would be terminated unless they agreed to classwide arbitration of claims before CPR instead of individual arbitration of claims before AAA. The Court did not like this course of conduct.

Zigler is counsel for the drivers. It appears his declaration attached copies of the CPR class arbitration rules, which CPR sought to permanently seal on the grounds that they are confidential. As the judge notes, keeping the rules of the arbitration confidential doesn’t exactly instill confidence that everything is on the up and up.

[jph12]

"It appears his declaration attached copies of the CPR class arbitration rules, which CPR sought to permanently seal on the grounds that they are confidential. As the judge notes, keeping the rules of the arbitration confidential doesn’t exactly instill confidence that everything is on the up and up."

I don't read it as them trying to keep the final rules confidential, but as instead trying to keep their negotiations with Gibson Dunn (representing Door Dash) secret. Those would be the "email communications between CPR and respondent's counsel, Gibson Dunn, in 2019."

[Á àß äẞç ãþÇđ âÞ¢Đæ ǎB€Ðëf ảhf]

Part of the kerfuffle is that those 6000+ petitioners paid $300 each, per contract, and DoorDash was supposed to pay $1200 per each petitioner, all going to AAA arbitration agency; DoorDash refused to do so. AAA said "Respondent has failed to submit the previous requested fees for the 6,250 individual matters; accordingly, we have administratively closed our files." which is not clear to me; did the petitioners win, get their $300 back, or what?

At any rate, it sure seems like DoorDash is behaving poorly.

[Robert Beckman]

That too seemed a bit strange, and suggests that the AAA doesn’t have a clause that says “any party that fails to adhere to its obligations under this arbitration agreement will be summarily ruled against as the losing party in every action” or similar. They really ought to, if they want to keep up even the veneer of legitimacy (unlike CPR, which clearly has no legitimacy).

[Bored Lawyer]

Actually, the AAA has a clause that says exactly the opposite -- they will not enter default for failure to pay the fee by the respondent (their equivalent of the defendant).

Lots of people have complained about it. It lets respondents like DoorDash game the system. Your only relief is a civil action to compel arbitration, and then if they still refuse, the court will order that they denied arbitration and you may proceed with a civil court action.

[David Bremer]

The flip side is that AAA is extremely expensive. So much so that the arbitration fees alone can become a significant burden (and way to bludgeon your opponent, especially in cases where one side either has more resources or gets reduced fees).

If a party has meritorious claims or defenses, but runs out of money and cannot pay AAA fees, why should that result in an automatic award against it?

[jubulent]

I think it makes sense to impose a default judgment against the party that cannot (or will not) pay the AAA fees if they are the one that demanded the arbitration in the first place (particularly when there is no meaningful negotiation as to that clause).

[Commenter_XY]

Yeah, that is unbelievable. DoorDash made the rules, and their bluff was called. So pony up the 12MM.

Why isn't the District Court saying: Tough shit, cough up the dough?

[jph12]

They mostly are.

"The motion to compel arbitration is GRANTED as to the 5,010 petitioners who submitted declarations. DoorDash is ordered to immediately commence AAA arbitration with these petitioners. The motion is DENIED as to the 869 petitioners who submitted mere witness statements."

After another skim through the order, I have a bit more sympathy for Door Dash than I did before. The Order obfuscates the timing, but there was already a class action lawsuit (by a different law firm) ongoing before the arbitration demands at issue here. The petitioners here are among the unnamed plaintiffs in that lawsuit (which gives them the right to opt out).

[Dilan Esper]

I agree that makes DD slightly more sympathetic, but only slightly.

They still crafted a one-sided arbitration clause. And they didn't think through its implications. Just because the Supreme Court lets you do all these things with arbitration clauses doesn't mean that it's necessarily smart to do so.

If DoorDash had thought in terms of "what might actually be a fair and efficient method of resolving disputes" rather than "how can we be as one sided as possible to deter legal actions", they wouldn't be in this mess right now.

[bernard11]

Thank you.

[Eugene Volokh]

bernard11: Sorry -- overedited the discussion a bit as to CPR; just added that back. And the order didn't discuss Zigler in detail (he's one of the lawyers for the petitioners), so I just edited his name out to avoid distraction.

[Krychek_2]

This is a stunning example of why contracts requiring consumers and employees to arbitrate should be unenforceable. All it accomplishes is to make it more difficult for consumer and employees to have their day in court.

[Á àß äẞç ãþÇđ âÞ¢Đæ ǎB€Ðëf ảhf]

The problem is that AAA did not enforce DoorDash's contract to pony up the $12M arbitration fees. And you think the solution is to make such contracts unenforceable? Wherefore your logic?

[Krychek_2]

It's not entirely clear that the AAA has either the authority or the practical ability to force DoorDash to pay all those filing fees. But assuming for sake of argument that it does, my logic is that this particular set of shenanigans is only the tip of the iceberg. Corporations have a long history of abusing the arbitration process, and this case is actually relatively tame.

For one thing, the entity that wrote the contract requiring arbitration also gets to pick which arbitration company will be used. Arbitration companies know this, and also know that if they rule in favor of consumers and employees, they're not going to continue to be used. If you don't think that affects the outcome, I've got a bridge to sell you, and it's not the one over troubled waters.

For another thing, most of the time you don't get to do discovery if you're in arbitration, or very limited discovery, which means the plaintiff -- who has the burden of proof -- is often going to have a very difficult time proving the case.

For a third thing, a $300 plaintiff's filing fee is actually pretty cheap compared to some I've seen. They often run into the thousands of dollars. A lot of plaintiffs don't have that kind of money, and a lot of law firms are too small to front that kind of money.

And finally, even as a libertarian you recognize that providing courts to resolve disputes so people don't resolve them by force is one of the core government functions. Depriving people of access to the courts just strikes me as incompatible with a rights-based society. There's an outer limit on just how oppressive money and power are allowed to be -- I cannot, for example, require my secretary to allow me to have sex with her 12 year old as a condition of her continued employment. There are outer limits on how badly the big guys are allowed to treat the little guys. And given the above, I think arbitration clauses cross that line.

[David Nieporent]

It’s not entirely clear that the AAA has either the authority or the practical ability to force DoorDash to pay all those filing fees.

You are correct here; it does not. AAA can only do one of two things: it could simply refuse to hear the arbitration (which is what it does), or it could issue a default against the company. The employee can go to court to get a court order compelling arbitration; if DoorDash refuses to comply with that then it can be held in contempt.

For another thing, most of the time you don’t get to do discovery if you’re in arbitration, or very limited discovery, which means the plaintiff — who has the burden of proof — is often going to have a very difficult time proving the case.

AAA arbitration rules for employment cases provide for discovery.

For a third thing, a $300 plaintiff’s filing fee is actually pretty cheap compared to some I’ve seen. They often run into the thousands of dollars. A lot of plaintiffs don’t have that kind of money, and a lot of law firms are too small to front that kind of money.

AAA arbitration rules for employment-related matters require employers to pay all the costs except that nominal filing fee.

[Krychek_2]

AAA arbitration rules for employment cases are not all arbitration rules for all arbitration companies for all types of cases.

[Dilan Esper]

David:

If I read OP right, apparently DoorDash, in its wisdom, chose the Commercial Arbitration Rules, and not the rules for employment matters.

[Robert Beckman]

Assuming that wasn’t out of incompetence, it’s because from DDs perspective this isn’t an employment case - it’s a disagreement between businesses - DD on one side and the Dilan Esper Company (unincorporated).

That our historical labor laws don’t deal with the new models of work like DD (or Uber, Lyft, etc) is the problem. Drivers aren’t really employees - they choose when to work, if to work, and where to work, nor are they rally contractors in that all of their work is done at the explicit direction of the company.

[Krychek_2]

Robert, I agree with you, although my solution of making arbitration clauses unenforceable fixes that problem.

[Bored Lawyer]

"AAA can only do one of two things: it could simply refuse to hear the arbitration (which is what it does), or it could issue a default against the company."

As I said above, the AAA rules expressly state that they will not do a default. I had this very issue come up last year in one case.

[David Nieporent]

Right; I acknowledged that. I was just talking about what it (or any arbitrator) had the option to do. It can’t hale someone into arbitration at gunpoint.

[ReaderY]

Why didn’t the dip rivers ask to go to court? What DoorDash did could easily be interpreted as declining arbitration under the arbitration clause. Why doesn’t its behavior free the drivers to go to court? And wouldn’t they get a better shake in court? It seems foolish to try to compel arbitration under these circumstances when DoorDash has made clear it is not accepting it.

[phoqueue]

I've seen cases saying the remedy for fee non-payment by a party able to pay them is an order to compel arbitration. Are there cases that come out the way you suggest?

[Beldar]

I am intrigued by this paragraph:

If it turns out that Keller Lenkner [the firm representing the petitioners] has overstated its authority, or for any procedural reason, petitioners have not perfected their right to arbitrate, this order imposes on Keller Lenkner a requirement to fully reimburse DoorDash for all arbitration fees and attorney's fees and expenses incurred by DoorDash in defending the arbitration, and the arbitrator shall so award them.

I'm no expert in arbitrability, but I wonder if there's authority for a court to conditionally bind a merits arbitration panel this way. I'm skeptical.

I'm also concerned that as a matter of policy, the court has just re-written that firm's employment contract(s) with its clients, in a fashion that makes the firm — and possibly its principals in their individual capacities — personal guarantors of their clients' success. The court has just saddled lawyers and clients with a huge potential conflict of interest, apparently with neither notice to nor consent from either. I appreciate that the judge might think he's saying to that law firm, "Put up or shut up." But that's hardly an appropriate exercise of judicial temperament. The whole adversary process is already crafted, in a carefully derived and ritualized process, to define whether, and the extent to which, the lawyers are obliged to "Put up or shut up."

[David Nieporent]

The court’s order has nothing to do with the merits. DoorDash is saying that KL has filed arbitration claims (and thus forced DoorDash to incur fees) for people for whom KL doesn’t even represent, or who don’t have a right to arbitration. DoorDash doesn’t get a refund from AAA if that turns out to be the case in any particular claim. So if KL acted in bad faith, KL should/will be on the hook for those costs.

[Bored Lawyer]

One thing that I think may have been an issue is that arbitrators and arbitration companies are supposed to not be biased. Usually that is dealt with after the arbitration, but there are cases that say that where the set up of the arbitration is biased, you can refuse to arbtirate under the FAA.

Here DoorDash, through its counsel, negotiated with CPR to set up special rules for its arbitration, and even wrote back supposedly confidential comments on what the rules should be like. Hard to see how that is not biased. Most arbitration companies have set rules for everyone (with variations for different classes of cases, like commercial, employment, smaller cases, etc.) Where one side negotiated to create specially tailored rules for it, that certainly appears biased.

[ReaderY]

Exactly. The totality of the context indicates that DoorDash declined the arbitration it had contracted for. The minute it discovered that the AAA would actually enforce the rules and wouldn’t simply do whatever it was told, it went looking for someone else willing to be its lap dog.

Why doesn’t this course of conduct free the plaintiffs to go to court and do a class action? They could always ask to compel arbitration if they lose.

[Lee Moore]

One thing that I think may have been an issue is that arbitrators and arbitration companies are supposed to not be biased.

As indeed they should not be. But I think the same principle probably applies to district courts, and this Judge obviously missed "At Least Pretending To Be Impartial 101" :

For decades, the employer-side bar and their employer clients have forced arbitration clauses upon workers, thus taking away their right to go to court, and forced class-action waivers upon them too, thus taking away their ability to join collectively to vindicate common rights. The employer-side bar has succeeded in the United States Supreme Court to sustain such provisions.

Gee, I wonder where his sympathies lie 🙂