Labor & Employment Law Daily Are drivers giving Uber an ‘Aha!’ moment?
Wednesday, December 12, 2018

Are drivers giving Uber an ‘Aha!’ moment?

By Pamela Wolf, J.D.

In what could turn out to be one of those “Aha!” moments for Uber (and other employers), 12,501 drivers have filed a motion in federal district court in California to compel the ride-share giant to arbitrate their claims that it misclassified them as independent contractors. The drivers are intent upon making Uber live up to its own mandatory arbitration agreement. It seems like class arbitration, although not favored by most employers, would have worked neatly here.

The drivers raised minimum wage and overtime pay claims under the FLSA, California law, Illinois law, Massachusetts law, New Jersey law, and New York law, as well as failure to pay sick time under California law, and other wage and hour violations.

Be careful what you ask for. In defending its arbitration provisions and promoting arbitration as a viable alternative to the courts, Uber told the Ninth Circuit that it “has offered to pay the arbitration fees” to plaintiffs who had asserted employment-based claims—an offer that is memorialized in the arbitration agreements at issue, according to the petition.

As of November 13, 2018, 12,501 demands have been filed with JAMS (formerly known as Judicial Arbitration and Mediation Services), according to the petitioners. However, Uber has paid the initial filing fees necessary for an arbitration to commence in only 296 of those demands. Only 47 of those matters have been appointed arbitrators, and in just six of those has Uber paid the retainer fee of the arbitrator so that the arbitration can go forward.

The petitioners are asking the court to enforce the arbitration provision contained in Uber’s services agreement that all drivers are required to sign. “It has been more than three-and-a-half months since the first Petitioners served their individual arbitration demands, yet Uber has refused to pay the necessary fees to commence and administer arbitration in all but a handful of cases,” the petition states. “For the vast majority of demands, Uber’s refusal to pay any fees means the arbitrations cannot even commence, let alone proceed to a preliminary hearing.”

Going to take a while. At the rate Uber is paying the initial arbitration fees, it would take about 10 years before the last petitioner’s arbitration has even commenced, the petitioners contend.

The demands just keep coming. Uber has likely been overwhelmed by the mounting demands for arbitration. Here is the breakdown given in the petition: August 13, 2018, 400 individual demands; September 5, 2018, 1,046 individual demands; September 18, 2018, 2,194 individual demands; September 28, 2018, 1,285 individual demands; October 8, 2018, 1,834 individual demands; October 15, 2018, 1,215 individual demands; October 22, 2018, 998 individual demands; October 30, 2018, 1,191 individual demands; November 6, 2018, 1,030 individual demands; and November 13, 2018, 1,346 individual demands.

There must be a better way. Four days after the first petitioners served their demands, their counsel allegedly tried to reach an agreement with Uber on an alternative process that could be used to administer the arbitration—a bellwether process, under which Uber and the petitioners’ counsel would select nine bellwether arbitrations, with mediation to follow. But two-and-a-half weeks later, Uber purportedly declined that invitation, proposing instead four individual arbitrations and no mediation. That proposal was unworkable for petitioners, who then elected to pursue their arbitrations through the JAMS procedure set forth in the arbitration provision, according to the petition.

“Uber knows that its failure to pay the filing fees has prevented the arbitrations from commencing,” the petition states. “Throughout this process, JAMS has repeatedly advised Uber that JAMS is ‘missing the NON-REFUNDABLE filing fee of $1,500 for each demand, made payable to JAMS.’ JAMS has also informed Uber that ‘[u]ntil the Filing Fee is received we will be unable to proceed with the administration of these matters.’”

It looks like those individual arbitration fees can add up fast—$18,751,500 in filing fees alone for the current 12,501 demands.

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