Big Companies Balk When Citizens Fight Back Against Unfair Arbitration Practices

04/14/2020 | Class Actions/Mass Torts

Consumers and employees are attempting to level the playing field between big businesses and the people. One startup company called FairShake has been finding consumers and employees who want to file arbitration claims against cable and internet companies, and using an automated system to file massive amounts of claims against these companies. The companies, faced with large numbers of claims, are now attempting to weasel out of the arbitration processes they have been touting and demanding from employees and consumers for years.

Arbitration is “a method of dispute resolution involving one or more neutral third parties who are usually agreed to by the disputing parties and whose decision is binding.” Arbitration Definition, Black’s Law Dictionary 44 (4th Pocket Edition 2011).

Over the past ten years, many businesses have inserted easily missed “arbitration clauses” into consumer and employment contracts, forcing consumers and employees to settle disputes through arbitration, and giving up their right to access the civil legal system. A major downside to this alternative dispute resolution system is that people cannot join together in class-action lawsuits, often the only realistic way that citizens have to fight improper business practices. It is simply too costly, complex, and time consuming for most citizens to fight these companies on a case by case basis through the arbitration process. Any payout the individual receives doesn’t justify the costs of pursuing one of these claims through the arbitration process, and companies know this.

For example, large telecom companies, such as Comcast and AT&T “have had a combined 330 million customers. Yet annually an average of just 30 people took the companies to arbitration.” Jessica Siler-Greenberg and Michael Corkery, ‘Scared to Death’ by Arbitration: Companies Drowning in Their Own System,N.Y. Times, April 6, 2020, https://www.nytimes.com/2020/04/06/business/arbitration-overload.html  (last accessed April 14, 2020).

Now, faced with the onslaught of claims, some companies are trying to thwart the process that they have long demanded from customers and workers. According to a San Francisco employment lawyer interviewed in the New York Times article, “there is no way that the system can handle mass arbitrations. The companies are trying to weasel their way out of the system that they created.”

Last summer, attorneys from the firm Keller Lenkner filed more than 6,000 claims on behalf of delivery drivers for the app DoorDash. The employees allege the compensation system is inconsistent, but as independent contractors required to sign arbitration clauses, they had no other way to fight the payment system.

When confronted with the large amounts of claims, DoorDash has argued it can’t be sure the claimants were real employees, and tried to change to a different  arbitration provider that would be more lenient towards the company. However, a judge in San Francisco ruled the cases must proceed with the original arbitrator, and that Doordash had to pay the arbitration fees.

The judge told Doordash’s lawyers, “your law firm and all the defense law firms have tried for 30 years to keep plaintiffs out of court. 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.” Jessica Siler-Greenberg and Michael Corkery, ‘Scared to Death’ by Arbitration: Companies Drowning in Their Own System, N.Y. Times, April 6, 2020, https://www.nytimes.com/2020/04/06/business/arbitration-overload.html (last accessed April 14, 2020).

At the Poppe Law Firm, we do the due diligence for our clients to determine if there is a way to get cases heard in Court, rather than through the arbitration process. We have the resources and skills to bring class actions and mass tort cases on behalf of those wrongfully injured by unlawful business practices.