Binding arbitration agreements were formalized in 1925, allowing two corporate entities of roughly equal size to resolve their disputes outside of a court, saving both parties a lot of money, but since then, the primary use of arbitration is to force employees, customers, patients and other comparatively weak parties to surrender their right to sue (or join class actions) as a condition of going to work, seeking care, or simply shopping.
Instead, people who have been crammed into binding arbitration "agreements" are forced to argue their cases one at a time in a privatized courtroom, where the "judge" is often a contractor for the corporation whose conduct gave rise to the complaint.
A notorious example of this is the gig economy, where employees are turned into "contractors" through a legal fiction and then deprived of their right to join class action suits over unfair treatment thanks to the arbitration clauses in the farcically long license agreement they click through when they sign up (Uber drivers can technically opt out within 30 days, but they'd have to read thousands of words of impenetrable legalese to discover this).
As is so often the case, Uber is the granddaddy of the worst practices of the gig economy. When the company went to the court to argue that its employees weren't employees, it defended its binding arbitration, saying that the company would of course pay for the arbitration fees in the states that required it.
12,501 Uber drivers took the company at its word and filed arbitration claims in California. Under the terms of the contract that Uber crammed down these drivers' throats, it must now pay $1,500 per driver to JAMS, the arbitration service it uses — a total of $18.7m.
But Uber has only paid the filing fees for 296 of these drivers; and of those, only 47 have had arbitrators appointed to them. Uber has paid the retainers for only six of those arbitrators.
As Larson O'Brien, a lawyer for the drivers, wrote in a motion, "At this point, it is fair to ask whether Uber's previous statements to the 9th Circuit about its desire to facilitate arbitration with its drivers were nothing more than empty promises to avoid litigating a class action. Uber's actions make clear it does not actually support arbitration; rather, it supports avoiding any method of dispute resolution, no matter the venue."
On the one hand, fuck Uber, which is in the midst of an IPO that will make the people who designed this system unfathomably rich. On the other hand, these drivers are amazing and inspiring: having been stripped of their right to work as a group to seek justice from Uber and having been corralled into a narrow chute with no options, they rushed the chute and filled it, overflowed it, and forced Uber to reckon with them anyway: as human beings with legal rights, not as squishy, inconvenient stopgaps that the company grudgingly pays for while it races to perfect self-driving cars.
The drivers' lawyers said in their filings that they proposed an alternative to arbitrating thousands of individual cases at a cost of no less than $1,500 apiece. After filing an initial batch of 400 arbitration demands in August, the drivers' lawyers suggested a bellwether process in which the two sides would select nine cases to be arbitrated, with mediation to follow. According to the drivers, Uber rejected that proposal and instead suggested four representative arbitrations and no mediation. Larson O'Brien said that plan was unworkable and proceeded to file more than 12,000 additional arbitration demands at JAMS.
"At bottom, our clients are entitled to a resolution of their disputes," said drivers' lawyer Stephen Larson in an email. "By robbing its drivers of a forum to resolve their disputes, I believe Uber is charting a dangerous course, and if its strategy is successful, it would have significant repercussions for all workers in the gig economy." In addition to an order compelling Uber to pay the arbitration fees, the drivers are seeking a sanction against the company under the court's equitable powers.
Uber declined to comment on the drivers' filings, which are before U.S. Magistrate Judge Kandis Westmore of Oakland. (The drivers have asked for the case to be deemed related to previous litigation before U.S. District Judge Edward Chen of San Francisco.)
Forced into arbitration, 12,500 drivers claim Uber won't pay fees to launch cases [Alison Frankel/Reuters]
Uber's Arbitration Policy Comes Back to Bite It in the Ass [Bryan Menegus/Gizmodo]
(Image: Albert V Bryan Federal District Courthouse – Alexandria Va, Tim Evanson, CC-BY-SA)