In response to the increased use and enforcement of class and collective action waivers, plaintiffs’ attorneys are now relying on a new strategy to gain leverage over businesses.  More specifically, they have started to commence mass arbitrations by simultaneously filing hundreds—and in some cases, thousands—of individual arbitration demands in an effort to trigger a business’ obligation to pay its share of filing fees for the arbitrations.

Depending on the number of arbitration demands at issue, the filing fees alone can add up to tens of millions of dollars.

Postmates has been the target of such an approach in California.  And as we wrote about here, Judge Saundra Brown Armstrong of the United States District Court in Oakland previously ordered Postmates to conduct more than 5,000 individual arbitrations.  Postmates later appealed that order to the Ninth Circuit.

Among other things, Postmates has argued that because the claimants’ arbitration demands were generic, and lacked specific information required by the parties’ arbitration agreement, the demands amounted to de facto classwide arbitration proceedings, in contravention of the parties’ class action waiver.  Postmates has further argued that in light of a provision that carves out disputes relating to the class action waiver from the arbitration provision’s delegation clause, the court (as opposed to an arbitrator) must decide the threshold issue of whether the parties agreed to a de facto classwide arbitration.

On September 29, 2020, the Ninth Circuit affirmed Judge Armstrong’s decision, concluding that “the district court correctly held that an arbitrator [as opposed to the court] must decide whether [the claimants] have violated the [c]lass [a]ction [w]aiver.”  The Ninth Circuit reasoned that Postmates’ challenge to the claimants’ mass arbitration tactics fell outside the scope of the only exception to the delegation clause, which the Ninth Circuit determined is limited to claims that the class action waiver is “unenforceable, unconscionable, void, or voidable.”

As a result, the Ninth Circuit did not address Postmates’ argument that the thousands of generic arbitration demands amounted to de facto classwide proceedings.  Per the Ninth Circuit’s order, that issue must be decided in arbitration.

While it remains to be seen how this issue will unfold in arbitration, the Ninth Circuit’s decision serves as another reminder for businesses to carefully evaluate the pros and cons of class and collection action waivers before implementing an arbitration program.

Back to Wage and Hour Defense Blog Blog

Search This Blog

Blog Editors

Related Services

Topics

Archives

Jump to Page

Subscribe

Sign up to receive an email notification when new Wage and Hour Defense Blog posts are published:

Privacy Preference Center

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer.

Strictly Necessary Cookies

These cookies are necessary for the website to function and cannot be switched off in our systems. They are usually only set in response to actions made by you which amount to a request for services, such as setting your privacy preferences, logging in or filling in forms. You can set your browser to block or alert you about these cookies, but some parts of the site will not then work. These cookies do not store any personally identifiable information.

Performance Cookies

These cookies allow us to count visits and traffic sources so we can measure and improve the performance of our site. They help us to know which pages are the most and least popular and see how visitors move around the site. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.