A federal judge ordered San Francisco food-delivery company DoorDash to arbitrate over 5,000 actions brought by its delivery drivers in a move that could cost the company millions of dollars.
U.S. District Judge William Alsup ordered DoorDash to comply with the arbitration agreements it made workers accept with a tap on their smartphones. Like many gig-economy companies, DoorDash requires that its couriers, which it calls “dashers,” resolve disputes out of court.
“For decades, the employer-side bar and their employer clients have forced arbitration clauses upon workers, thus taking away their right to go to court,” Alsup wrote in the order filed Monday night. “The irony, in this case, is that the workers wish to enforce the very provisions forced on them by seeking, even if by the thousands, individual arbitrations, the remnant of procedural rights left to them,” Alsup added.
Arbitration allows companies to settle disputes with workers outside the court system and is in theory intended to be faster, cheaper and more private than litigation.
What started as a dispute over whether the meal couriers are contractors turned into a dispute over filing fees after thousands of workers filed for arbitration with the American Arbitration Association.
The private arbitration provider requires each worker to pay a filing fee of $300, with the responding company paying $1,900. In October, DoorDash refused to pay the nearly $12 million in administrative fees, alleging problems with the couriers’ claims.
“Companies impose these arbitration clauses because for many harms like this they were betting most individuals would not bring claims,” said attorney Travis Lenkner, who represents the 5,010 petitioners.
Lenkner said cases like this are normally handled through class actions but the arbitration agreement couriers agreed to prohibited them from going that route.
DoorDash and its attorneys did not immediately respond to emailed requests for comment on the order.
Attorneys for DoorDash previously asked Alsup to stay proceedings in federal court while a separate class-action case against it in San Francisco Superior Court proceeded, potentially allowing the dashers in the federal case to join a settlement in that case.
Alsup, who is known for his fiery decisions against companies like PG&E and Uber, declined to issue a stay.
“No doubt, DoorDash never expected that so many would actually seek 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,” he wrote. “This hypocrisy will not be blessed, at least by this order.”
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