Postmates Risks Judicial Rebuke by Filing Suit Against 10,000 of Its Drivers to Try to Escape Individual Arbitrations
Be careful what you ask for.
We have used that expression frequently when writing about recent federal court orders requiring DoorDash and Postmates to conduct thousands of individual arbitrations in California pursuant to the terms of their arbitration agreements with their drivers.
Thousands of individual arbitrations for which DoorDash and Postmates would have to pay many millions of dollars in arbitration fees alone.
The risk of dozens, hundreds or even thousands of individual arbitrations attends any time an employer seeks the benefits of an arbitration agreement with a class and collective action waiver. It is the reason why many employers have chosen to forgo arbitration agreements with class and collective action waivers – and the reason why many have settled cases on a classwide basis even when they have such agreements in place.
Now, one of the companies ordered to conduct thousands of individual arbitrations in California has taken an aggressive strategic step – one that seems likely to put it right back in front of the judge who ordered it to conduct thousands of individual arbitrations in the first place.
Unhappy with the order by a federal judge in Oakland requiring it to conduct more than 5,000 individual arbitrations, Postmates has now filed a separate federal lawsuit in Los Angeles against more than 10,000 of its drivers, seeking an injunction to prevent individual arbitrations from going forward. In the new lawsuit, Postmates argues that thousands of individual arbitrations is a “de facto class action.” And it accuses the employees’ attorneys of “abusive litigation tactics” by filing thousands of individual arbitration demands.
It does not appear that the 10,000 arbitrations Postmates seeks to enjoin include the 5,000 individual arbitrations it was already ordered to conduct by a federal judge in Oakland – but there seems to be little question that the injunction Postmates seeks would be useful in trying to enjoin those arbitrations from proceeding, too.
But, of course, that is only if Postmates succeeds in obtaining such an injunction.
It is not difficult to imagine the first sentence of whatever the drivers might file in response to Postmates’request: “Postmates is arguing on the one hand that drivers cannot bring their claims together, and argues on the other hand that the drivers cannot bring their claims individually.”
It will be fascinating to see how Postmates responds to that.
Just as fascinating will be seeing which court ultimately addresses Postmates’ new complaint and its request to enjoin individual arbitrations.
By filing the suit in Los Angeles, Postmates likely believes that it will find a more favorable audience for its arguments in Los Angeles than in Oakland.
It may never find out.
Without delving into all of the procedural nuances, Postmates’ new lawsuit in Los Angeles seems likely to be considered to be related to the case in Oakland. That suggests that the new lawsuit may well be transferred to Oakland, where it would be assigned to the very same judge whose order Postmates is trying to undo through the new complaint.
The very judge who accused Postmates of hypocrisy for trying to escape its own arbitration agreements.
The very judge who had this to say about Postmates in ordering it to conduct more than 5,000 individual arbitrations: “Postmates’ obligation to tender $10 million in filing fees as a result of those arbitration demands is a direct result of [its own] agreement — which Postmates drafted and which Postmates required each courier to sign as a condition of working for Postmates. It strains credulity for Postmates to argue that the amount of filing fees due constitute irreparable harm when that ‘harm’ is entirely of its own making.”
Think that judge might be displeased that Postmates was trying to get another judge to essentially undo her order?
No need to answer that question. It was rhetorical.