Uber Drivers--12,500 of Them--Demand Individual Arbitrations, Each Paid for by Uber

Uber's arbitration agreements with its drivers precludes class actions and thus requires individual arbitration. "Amazingly," Allison Frankel writes, "thousands of Uber drivers did just that. Between August and November of this year, about 12,500 drivers, many of whom had been class members in cases in which Uber successfully moved to compel arbitration, served individual arbitration demands on Uber ... These thousands of drivers filed their arbitration demands at JAMS, as mandated in Uber’s contracts."

The drivers argue Uber is required to pay for their arbitration because the terms of service say "In all cases where required by law, the Company will pay the Arbitrator's and arbitration fees."

The drivers allege “As of November 13, 2018, 12,501 demands have been filed with JAMS,” the arbitration organization. : “Of those 12,501 demands, in only 296 has Uber paid the initiating filing fees necessary for an arbitration to commence [...] only 47 have appointed arbitrators, and [...] in only six instances has Uber paid the retainer fee of the arbitrator to allow the arbitration to move forward.”

Broadly Interpreting Arbitration Agreements, Effectively Vindicating Statutory Rights

The 10th Circuit broadly interpreted an arbitration clause in a non-compete agreement  to require arbitration of claims under the Fair Labor Standards Act because federal law requires all ambiguities about the scope of the agreement to be resolved in favor of arbitration.  Sanchez v. Nitro-Lift Technologies, LLC, __ F.3d__, 2014 WL 3882543 (10th Cir. Aug. 8, 2014).  The court remanded to the district court to determine whether the fees of arbitration precluded the plaintiffs from effectively vindicating their federal statutory rights.  Liz Kramer's summary.

American Arbitration Association Consumer Arbitration

More good work by my University of Kansas School of Law faculty colleague, Christopher R. Drahozal.  Professor Drahozal is serving as a Special Advisor to the Consumer Financial Protection Bureau on its study of arbitration clauses in consumer financial services contracts.

His abstract:

This chapter has provided an overview of consumer arbitrations administered by the American Arbitration Association, the largest administrator of consumer arbitrations. It does not, of course, purport to resolve the ongoing debate over arbitration and access to justice. A consumer’s incentive to bring a claim (and an attorneys’ incentive to take a case) depend on the costs of the process and the expected outcome in the forum. With the recent amendments to its consumer arbitration rules, the AAA reduced the cost to consumers of bringing claims in arbitration, both by lowering the upfront fees and by largely precluding reallocation of fees to consumers in the award. The expected outcome in arbitration (in particular, relative to the expected outcome in court) presents a much more difficult question because limits to available data preclude comparison of similarly-situated complainants. More research remains to be done.

Part of what I like about this chapter’s review of empirical studies is that it points out when selection effects make it hard to draw conclusions from the data.

Allegation that Companies Breach Promises to Pay Consumers' Arbitration Fees

Arbitration Fees: Do Companies Breach Duty to Pay Them?

Via Art Hinshaw at ADR Prof, and Jean Sternlight of UNLV writes that Public Justice's Paul Bland (here) argues that although many companies promise to pay arbitration fees incurred by their customers and employees, "quite a few fail to pay those fees on the rare occasion when someone actually brings a claim against them in arbitration.  The post further discusses how the AAA has begun to send letters to such companies demanding that they stop using the AAA name in company documents. Bland identifies car dealers as a common culprit,"

Dropbox Adds Arbitration Clause

California Mediation and Arbitration reports the clause has what are now pretty typical provisions for consumer agreements:

Arbitration will be administered by the AAA under the Commercial Arbitration Rules and the Supplementary Procedures for Consumer Related Disputes. 

Arbitration will be held in the US in the county where you live or work, San Francisco (where Dropbox is headquartered) or any other location the parties agree to.

Dropbox will pay arbitration fees for claims less than $75,000.  If you receive a more favorable award than what Dropbox offers to pay, you get a bonus of $1,000, in addition to the award.  Dropbox won’t seek fees and costs in arbitration – unless the arbitrator determines your claim is frivolous.

Exceptions to the arbitration requirement include small claims, or injunctive relief for certain claims.

There is a class action waiver:  “You may only resolve disputes with us on an individual basis, and may not bring a claim as a plaintiff or a class member in a class, consolidated, or representative action.”

Pace University Law Professor Jill Gross writes at the consistently-strong ADR Prof Blog "I wonder whether Dropbox adopted the few consumer-friendly features of the clause simply to please its users, to forestall any finding of unconscionability based on the class action waiver, or to try to retain users who might object."

Is Adjudication a Public Good?: 'Overcrowded Courts' and the Private-Sector Alternative of Arbitration

This article was published in  Cardozo Journal of Conflict Resolution, Vol. 14, 2013
 It asks which disputing parties deserve subsidized adjudication which should have to pay market rates for it? Our society’s failure to confront this important question allows all disputing parties to pursue the subsidy for themselves. The result is that parties who do not deserve the subsidy — parties who should be paying market rates for adjudication — are consuming public resources that would be better spent on parties who do deserve the subsidy.

One way to end the public subsidy for cases that do not deserve it is for courts to charge the parties to such a case a fee high enough to reimburse the court for its costs of adjudicating the case. Such “user fees” have been proposed by several thoughtful commentators. This article assesses those proposals and suggests that user fees would make litigation look more like arbitration. This article concludes by considering the possibility that the public-sector court system and private arbitration organizations could compete in the market for unsubsidized adjudication and in the market for subsidized adjudication. In short, this article places discussions of overcrowded courts and court user fees in the context of a society — our society — with a strong private-sector alternative to our courts.

The Case for Enforcing Adhesive Arbitration Agreements

Arbitration clauses appear in a wide variety of the form contracts through which consumers obtain goods, services and credit, as well as in employment agreements, and other contracts of ordinary individuals. These adhesive agreements to arbitrate are generally enforced by courts, but this enforcement is quite controversial. Countless law review articles criticize it, while the few that defend it are usually limited in important ways. This paper defends the general enforcement of adhesive arbitration agreements.

Section I shows that this general enforcement is socially desirable and that it benefits most consumers, employees and other adhering parties. Section II introduces the doctrines on which courts most commonly rely in refusing to enforce particular adhesive arbitration agreements, the unconscionability and effectively vindicate doctrines, and applies them to typical adhesive arbitration agreements. Sections III and IV apply these doctrines to two issues that are now hotly contested in the courts: an arbitration agreement's prohibition of class actions (discussed in Section III) and the costs of pursuing a claim in arbitration (discussed in Section IV).

This paper concludes in Section V that many courts have been too reluctant to enforce adhesive arbitration agreements that prohibit class actions or require plaintiffs to pay forum fees not required in litigation. This reluctance is largely caused by courts narrowly considering only how the arbitration agreement affects the particular adhering party before the court, and considering those effects given the existence of the particular dispute that gave rise to litigation. This paper calls on courts to take the broader approach of considering all the adhering parties who adhered to the same form contract and considering the agreement's effects on those parties as of the time they entered into the agreement. This ex ante perspective would lead courts to consider the adhering parties who benefit from, as well as those who are harmed by, adhesive arbitration agreements.

Consumer Arbitration

Paying the Price of Process: Judicial Regulation of Consumer Arbitration Agreements

Arbitration clauses now appear in many of the form contracts through which consumers obtain goods, services and credit. This article in the Journal of Dispute Resolution considers the effect on prices of two sorts of judicial decisions: (1) decisions making consumer arbitration clauses generally enforceable, and (2) decisions refusing to enforce arbitration clauses that lack certain pro-consumer features.