Employment Law Daily DoorDash driver bound by arbitration agreement; court won’t make company correct for Dynamex diss
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Thursday, October 25, 2018

DoorDash driver bound by arbitration agreement; court won’t make company correct for Dynamex diss

By Ronald Miller, J.D.

A delivery driver for DoorDash was compelled to arbitrate, on an individual basis, his claim that the food delivery service misclassified him and other delivery drivers as independent contractors. A federal district court in California rejected the driver’s argument that drivers who agreed to binding arbitration may be “deemed” to have opted out of arbitration so long as a single driver opted out of arbitration, and that driver is a named plaintiff in a putative class action. Nor was the driver an exempt transportation worker under Section 1 of the FAA. Further, because the plaintiff could seek public injunctive relief in arbitration, the agreement was enforceable. However, the court denied the driver’s motion for a protective order to prevent DoorDash from communicating with its California drivers about a legislative proposal that could affect their rights and provide notice of this lawsuit (Magana v. DoorDash, Inc., October 22, 2018, Hamilton, P.).

Arbitration agreement. Magana, a delivery driver for DoorDash, filed a class action alleging that the food delivery service misclassified him and other delivery drivers as independent contractors rather than employees. He asserted state-law claims for failure to reimburse business expenses, minimum wages, and willful misclassification, among other claims.

He signed an arbitration agreement with DoorDash in 2014, when he first created an account with the delivery service. The first page of the agreement advised drivers of the arbitration provisions, as well as the right to opt out of those provisions. The agreement also contained a class-action waiver providing that an arbitrator would not have any authority to hear or arbitrate any class, collective, or representative action. Further, the arbitration agreement provided that it was governed by the Federal Arbitration Act (FAA) and that it applied to any and all claims arising out of the agreement and to the driver’s classification as an independent contractor.

However, the arbitration provision was not mandatory. Each driver had a right to opt out of the provision within 30 days by sending an email to DoorDash. Although Magana had the right to opt out, he did not do so. There was evidence that another driver, Roussel, had opted out of the arbitration agreement after he began working for DoorDash in May 2018.

Opting out. In July 2018, DoorDash filed a motion to compel arbitration, asserting that Magana must bring his claims in individual arbitration. Seeking to avoid arbitration, Magana sought to add Roussel as a named plaintiff. He argued that drivers who agreed to binding arbitration may be “deemed” to have opted out of arbitration so long as a single driver opted out of arbitration, and so long as that driver is a named plaintiff in a putative class action.

In support of his assertion, Magana relied on a case from the Georgia Supreme Court, Bickerstaff v. Suntrust Bank. Here, the court observed that the Ninth Circuit in O’Connor v. Uber Technologies, Inc., rejected a nearly identical argument similarly based on Bickerstaff. Further, Bickerstaff held only that filing the class complaint tolled the required time period for giving notice of putative class members’ decisions to opt out of the class “until a class certification decision is made.” Because the decision tolled the right to opt out starting the day the complaint was filed, it could not allow putative class members to opt out whose opportunity to do so had already expired by the time the complaint was filed. Magana did not file his complaint within the 30-day period during which he was permitted to opt out of arbitration. Nor did he argue that Roussel filed a complaint during his opt-out period. Accordingly, because Magana was unable to opt out when the complaint was filed, he would not benefit from the tolling period that the logic of Bickerstaff would support.

Transportation worker exemption. Magana also argued that DoorDash’s arbitration agreement is exempt from the FAA’s coverage under the transportation worker exemption. A district court must first assess whether a Section 1 exemption applies before ordering arbitration. To qualify for the transportation worker exemption in the Ninth Circuit, an individual must (1) be a “transportation worker” engaged in interstate commerce and (2) work for a business pursuant to an “employment contract.” In this district, courts have declined to find that a delivery driver is engaged in interstate commerce where he did not allege that he made interstate deliveries. Here, although Magana alleged that he “has worked as a delivery driver for DoorDash” in “San Jose, California,” he did not allege that he ever crossed state lines as part of his work. Consequently, the agreement was not exempt from the FAA.

Public injunctive relief. Next, he argued that a generally applicable California contract defense prohibits enforcement of the arbitration clause because the arbitration agreement prohibits the plaintiff from seeking public injunctive relief in any forum. This line of attack required the court to consider two issues: (1) whether the complaint seeks public injunctive relief under California law; and (2) whether the agreement prevents plaintiff from adjudicating a claim for such relief in any forum. Public injunctive relief is relief that has “the primary purpose and effect of” prohibiting unlawful acts that threaten future injury to the general public. Relief that has the primary purpose or effect of redressing or preventing an injury to an individual plaintiff or to a group of individuals similarly situated to the plaintiff does not constitute public injunctive relief.

Here, the operative complaint seeks injunctive relief only for California Labor Code claims. Those claims have the primary purpose and effect of redressing and preventing harm to DoorDash’s employees. Any benefit to the public would be ancillary to the benefit to DoorDash’s employees. Therefore, Magana did not assert a claim for public injunctive relief under state law. Further, because Magana could seek public injunctive relief in arbitration under the terms of the agreement, the agreement was enforceable. Accordingly, his action must be compelled to arbitration.

Email communications. On August 2, 2018, DoorDash set an email communication to its drivers in California with the subject line “Speak Up for Your Independence.” The communication discussed a petition and message to the California legislature concerning a recent California Supreme Court case, Dynamex Operations West, Inc. v. Superior Court .The email stated that “DoorDash supports a legislative solution” to “a recent court decision” that affected “who can qualify as an independent contractor.” The email further encouraged drivers to sign a letter to state legislators and directed them to a webpage. The email did not include information about this action.

Protective order. The day after the email went out, Magana filed a motion for a protective order asking the court to enjoin DoorDash from communicating with its drivers about “issues that could affect their rights in this case,” and to order that a corrective notice be issued informing DoorDash drivers in California about this case, and how the Dynamex decision may help them.

However, DoorDash had not requested that anyone opt out of this case or take any action at all specifically with respect to this litigation. Any effect on this case from a driver reviewing and taking action based on the email was too remote and speculative to implicate any interest in the case, the court reasoned. Moreover, the political activity of the email was too remote from the subject of this litigation to make the omission of this action misleading or confusing. Accordingly, the court declined to require DoorDash to disclose to every putative class action in every email it sends to drivers expressing political support for the so-called gig economy.

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