Adams v. Postmates: Arbitrator to Decide If Mass Arb Violates Class Action Waiver, Says 9th Cir.

In Adams v. Postmates, Inc., 9th Cir. Sept. 29, 2020 (slip op. available here), the Ninth Circuit recently affirmed an order granting the petition of over 5,200 delivery drivers to compel Postmates to arbitrate their misclassification claims pursuant to an arbitration provision in their fleet agreement. Adams v. Postmates, Inc., 414 F.Supp.3d 1246 (2019). The drivers filed individual arbitration demands with the American Arbitration Association and paid their portion of the arbitration filing fees. Id. at 1251. The petition was filed after Postmates refused to pay its share, which is estimated to be $9.36 million. Id. Postmates contended that the petitioners were improperly pursuing a “de facto class action” in violation the class action and representative action waivers in the fleet agreement.

The Ninth Circuit held that the delegation provision in the fleet agreement clearly delegated that issue to the arbitrator. The agreement granted the arbitrator exclusive authority to resolve disputes over the interpretation of the agreement, except that any claim that the class action waiver is “unenforceable, unconscionable, void, or voidable” was to be resolved by a court. Postmates’ argument that the delivery drivers violated the class action waiver was not an attack on the validity the class action waiver itself.

Postmates’ arbitration agreement does exactly what it was designed to do. It protects Postmates from class actions by drivers by compelling their claims to arbitration. Then, it precludes drivers from arguing to an arbitrator that the class action waiver is unenforceable by reserving that issue for a court. It did not anticipate drivers petitioning to compel arbitration en masse which, if allowed, will likely negate the very advantages to employers that class action waivers were meant to preserve.

It remains to be seen whether the drivers’ tactic of filing over 5,200 arbitration demands violated the class action waiver, or whether Postmates will be required to pay millions of dollars in arbitration filing fees. Those issues will now be for the arbitrator to decide.

Authored by:
Robert Friedl, Senior Counsel
CAPSTONE LAW APC