Daily Labor Report®

DoorDash Must Arbitrate Misclassification Suit, Couriers Say (1)

Nov. 18, 2019, 4:21 PMUpdated: Nov. 18, 2019, 8:44 PM

More than 2,200 DoorDash Inc. couriers want the on-demand delivery company to abide by the arbitration agreements it uses to thwart would-be litigants and also are suing to stop the company from issuing new agreements to the drivers.

The DoorDash couriers attempted to file individual arbitration claims that they’re misclassified as independent contractors, as opposed to employees entitled to overtime minimum wage and other benefits, under the agreement they signed before they could start making deliveries. They argue in the U.S. District Court for the Northern District of California that DoorDash refused to pay the filing fees required to start the arbitration process, and thus breached the agreement.

The company is the latest to see mass arbitration filings, following similar disputes including against Uber Technologies, Lyft Inc., and Chipotle. The companies, under their arbitration agreements, typically are required to pay fees to begin the process. It could cost as much as $2,000 per claim, not including any potential settlement. Employers, by and large, prefer arbitration for its potential to resolve disputes quickly.

Separately, attorneys for the DoorDash drivers filed a temporary restraining order accusing the company of drafting a new arbitration agreement that changes the terms of condition for employment. The original agreements, which are the source of the individual arbitration demands, fall under the American Arbitration Association’s requirements. The new pact allegedly doesn’t conform to the association’s standards.

Even though the drivers already were in the process of individual arbitration, the company attempted to change the rules of the agreement, said Travis Lenkner, managing partner at Keller Lenkner, one of the firms representing the drivers. He said the new agreement was less favorable.

“Faced with more than a handful of demands at once, DoorDash refused to honor its own contract,” Lenkner said. “The day after AAA administratively closed the arbitrations because DoorDash flatly refused to pay the filing fees it owed, the company started pushing out a new arbitration agreement with the new rules administered by the new arbitral body.”

DoorDash’s attorneys didn’t respond to a request for comment, nor did a company spokesperson.

Arbitration Fees

For the claims against DoorDash, each courier paid $300 or submitted a hardship-based fee waiver, at which point the AAA billed DoorDash for its share of filing fees under the arbitration agreement, which is $1,900 per claim. Once an arbitrator is empaneled, DoorDash is required to pay an arbitrator retainer and for the arbitrator’s fees going forward, as well as a $750 AAA administrative fee, Lenkner said.

The U.S. Supreme Court has bolstered arbitration agreements in recent disputes, including a 2018 ruling that found agreements can include class action waivers. In the wake of that decision, attorneys for the drivers filed thousands of individual arbitration claims and companies faced large bills.

There have been efforts to target companies that don’t comply with their own agreements. A group of 12 state attorneys general announced investigations into companies that refuse to pay arbitration fees. The California Legislature also recently passed a bill that targets companies that don’t pay arbitration fees and codified a state law that says it represents a material breach of the arbitration agreement. Recently, Postmates drivers were granted a motion to compel arbitration for a spate of individual claims.

The DoorDash couriers filed the AAA demands in August 2019. They claim that DoorDash misclassified them as independent contractors, resulting in minimum wage, overtime, and other violations of the Fair Labor Standards Act and California law. DoorDash appears willing to comply with the agreement only when fewer people seek to enforce it, the couriers say, noting that DoorDash paid the requisite filing fees to arbitrate 250 similar claims in July.

The couriers filed the same demand forms with the AAA to enforce the same agreement, yet DoorDash now claims the demands are deficient and refuses to proceed, the couriers say. An arbitrator should decide this newly raised demand issue because the agreement delegates disputes over its application to the arbitrator, they say.

Custis Law P.C. and Keller Lenkner represent the couriers. Gibson, Dunn & Crutcher represents DoorDash.

The case is Abernathy v. Doordash, Inc., N.D. Cal., 19-cv-07545, motion to compel arbitration 11/15/19.

(Updated with additional reporting throughout.)

To contact the reporters on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com; Kathleen Dailey at kdailey@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Steven Patrick at spatrick@bloomberglaw.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com

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