Happy December!  I hope that everyone has had a restful and well-earned holiday weekend break.

There’s a lot of new and exciting stuff happening in the world of arbitration, and I have some catching up to do.  I want to start, though, in an unorthodox place.

We rarely write about early litigation actions on this blog, but there’s something very interesting happening in California.  A law firm there has taken action to protect its effort to engage in mass individual arbitrations on behalf of a large group of clients.  In two different actions – one in the California Superior Court (Boyd v. DoorDash, Inc., Case No. CPF-19-516930) and one in the federal court for the Northern District of California (Abernathy v. DoorDash, Inc., CASE NO. 3:19-cv-07545-WHA) – several thousand DoorDash couriers are seeking TROs to prevent DoorDash from changing the terms of its arbitration agreement with each of them.

Substantively, the courier’s claims look familiar.  They echo a torrent of similar claims asserted by gig-economy workers recently.  The couriers argue that they have been misclassified as independent contractors when, in fact, they are employees.  Whatever one makes of the merits, DoorDash makes its “Dashers” agree to a broadly worded arbitration agreement that covers such claims and excludes class proceedings.  The original version of this arbitration agreement required arbitration pursuant to the AAA’s Commercial Arbitration Rules.

The Dashers’ law firm decided to embrace the arbitration agreement and initiate, cookie-cutter style, thousands of individual arbitrations against DoorDash.  In the federal case, pursuant to the applicable AAA fee schedule, DoorDash was accordingly billed approximately $11 million for initial up-front administrative fees.

Viewing this situation as a “shakedown” (this is what it called the situation in its brief opposing the TRO in federal court), DoorDash refused to pay.  It argued that the filings were deficient, although the AAA determined that the claimants had satisfied the minimum filing requirements.  Ultimately, because the fees were not paid, the AAA administratively dismissed the Dashers’ claims on November 8, 2019.

On November 9, DoorDash revised its arbitration agreement, changing providers from the AAA to the CPR. (The CPR has much lower administrative filing fees and has instigated a new process for dealing with these sorts of “mass” individual arbitrations.  See https://www.cpradr.org/dispute-resolution-services/employment-related-mass-claims-documents/emp-mass-claims-protocol.)  Any Dashers logging into their app to accept deliveries after November 9 consented to the new agreement, including any of the Dashers who had attempted to initiate arbitration before the AAA but who had their claims administratively dismissed.

The hearings on the TROs have taken place, though the courts have not yet ruled.

This situation raises at least three important issues.  First, how viable is the Dashers’ clever end-run around class action waivers?  DoorDash, not surprisingly, dislikes the tactic.  It asserts that these sorts of “mass” individual arbitrations have “wreaked havoc on the arbitration system.”  But that’s far from clear to me.  Each arbitration remains individual, even if it’s essentially a clone.  In the first ArbitrationNation Bookworm entry, I recommended an article by Andrea Cann Chandrasekher and David Horton,  Arbitration Nation: Data from Four Providers.  In that article, the authors specifically suggest that this sort of mass individual arbitration approach could be ameliorating some of the perceived shortcomings of arbitration in the consumer, employee, and patient contexts.

Second, when a party agrees to arbitrate with a particular institution, can that party effectively avoid arbitration by failing to pay the required administrative fees?  I know, I know.  This is something of an over-simplification, as DoorDash tries to thread a more precise needle here.  It says that the filing requirements weren’t satisfied so the arbitrations weren’t technically initiated.  But that seems like a tough argument to stomach, given that the AAA concluded the minimal filing requirements were satisfied.  Moreover, that seems like the sort of substantive argument that should be heard by the arbitrator.  (I wrote about a similar issue in an Eleventh Circuit decision —   Freeman v. SmartPay Leasing, LLC, 771 Fed.Appx. 926 (11th Cir. 2019) – a few months ago.)

Finally, can a corporate party change the terms of its arbitration agreement after arbitrations have been initiated under the old agreement?  The answer seems pretty clear-cut – no – but this DoorDash situation makes things complicated.  The initial arbitrations were administratively dismissed.  Even if DoorDash was wrong not to pay the filing fee, what’s the right remedy at this stage?  Does DoorDash have to remain bound to its original arbitration agreement?

I’ll keep a close eye on these cases and provide an update as soon as there’s a decision.