How a Corporation Suddenly Faced 'Flood' of Lawsuits From Thousands of Gig Workers

guest · Apr 12, 2020

‘Scared to Death’ by Arbitration: Companies Drowning in Their Own System
Lawyers and a Silicon Valley start-up have found ways to flood the system with claims
April 6, 2020
https://www.nytimes.com/2020/04/06/business/arbitration-overload.html

Over the past few years, the nation’s largest telecom companies, like Comcast and AT&T, have had a combined 330 million customers. Yet annually an average of just 30 people took the companies to arbitration, the forum where millions of Americans are forced to hash out legal disputes with corporations.

But what would happen, the lawyers wondered, if those workers started filing tens of thousands of arbitration claims all at once? Many companies, it turns out, can’t handle the caseload.
Hit with about 2,250 claims in one day last summer, for example, the delivery company DoorDash was “scared to death” by the onslaught, according to internal documents unsealed in February in federal court in California.

And as companies face a flood of claims, they are employing new strategies to thwart the very process that they have upheld as the optimal way to resolve disputes.
“The companies are trying to weasel their way out of the system that they created.”
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Mr. Lidow runs FairShake, a start-up that uses an automated system to get the arbitration process started. If the claim results in a payout, the start-up takes a cut.
The companies were caught off guard. It took six months for many of the claims to move through arbitration.

“From our perspective, the companies weren’t prepared to administratively handle that volume,” Mr. Lidow said. “The whole system wasn’t prepared.”

It began last summer when Keller Lenkner filed more than 6,000 arbitration claims on behalf of couriers for DoorDash, known as “dashers.”
The company also told the dashers that it would pay any fees that the association required to start the legal process.

Then DoorDash got the bill for the 6,000 claims — more than $9 million.
DoorDash balked [...]
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In a statement, a spokeswoman for DoorDash said the company “believes that arbitration is an efficient and fair way to resolve disputes.”

But in a hearing, Judge Alsup questioned whether the company and its lawyers really believed that.

“Your law firm and all the defense law firms have tried for 30 years to keep plaintiffs out of court,” the judge told lawyers for Gibson Dunn late last year. “And so finally someone says, ‘OK, we’ll take you to arbitration,’ and suddenly it’s not in your interest anymore. Now you’re wiggling around, trying to find some way to squirm out of your agreement.”
“There is a lot of poetic justice here,” the judge added.
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DoorDash is learning just how binding arbitration is (February 12, 2020)

In a decision on Feb. 10, US district judge William Alsup wrote that for decades employers have forced arbitration clauses and class-action waivers, taking away their right to go to court and to sue collectively. “The irony, in this case, is that the workers wish to enforce the very provisions forced on them…,” he noted.

Similar to other gig-economy platforms, DoorDash includes an arbitration agreement in its contracts with couriers, or “Dashers,” who deliver customers’ food orders. But after facing a flood of claims, DoorDash balked at the costs of going into arbitration.

“Instead, in irony upon irony, DoorDash now wishes to resort to a class-wide lawsuit, the very device it denied to the workers, to avoid its duty to arbitrate. This hypocrisy will not be blessed, at least by this order,” he wrote.
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How a Corporation Suddenly Faced 'Flood' of Lawsuits From Thousands of Gig Workers

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