Court Compels Postmates Arbitration, Defers Fee Dispute

The Northern District of Illinois issued an opinion on Monday regarding cross-motions to compel arbitration and stay litigation filed by 200 Illinois Postmates couriers and respondent Postmates. The court granted the motions as they relate to compelling arbitration and denied the other requested relief. The court stated that the parties must arbitrate the misclassification claims and the disagreements about compliance with the Fleet Agreement. 

The petitioners, Illinois Postmates couriers who claimed they were misclassified as independent contractors, each agreed to the Fleet Agreement which contains a Mutual Arbitration Provision stating that disputes are resolved over arbitration and class action petitions are waived for individual arbitration.

In April 2019, the petitioners’ counsel “filed an arbitration demand with AAA on behalf of 4,925 California Postmates couriers” and a month later, “filed a demand on behalf of additional claimants, including the 200 Illinois Petitioners here.” AAA contacted Postmates about the $11,022,400 administrative filing fee and demands, to which Postmates responded that “in its view no arbitration proceedings had begun because the couriers’ arbitration demands were improper under the Fleet Agreement.” Postmates argued against the mass arbitration instead of individual arbitration as required in the agreement.

After these claims were re-filed for individual arbitration, Postmates still raised an issue with the demands finding them deficient because they ‘continued to assert generic claims that were copied and pasted thousands of times’ and did not recite the amount in controversy asserted by each courier.” Consequently, Postmates refused to pay the AAA filing fee by the specified date. AAA closed the cases and notified the couriers that their demands were sufficient, but it would not arbitrate since the fees remained unpaid. In September 2019, the Illinois couriers filed a petition to compel arbitration according to the Fleet Agreement.

The parties agreed that the mandatory arbitration provision is valid and that the misclassification claims would be arbitrated. The petitioners asserted that the court should compel Postmates to pay the necessary filing fees for arbitration through AAA, and all future arbitration fees as per the Fleet Agreement. Postmates counter-argued that no fees are due because of the petitioners’ inadequate demands under the Fleet Agreement, which requires individual arbitration. However, Postmates stated that the petitioners “are attempting to proceed with arbitration on a de facto class-wide basis in violation of the Class Action and Representation Action Waivers.” Postmates has sought to compel the petitioners to refile and proceed with individual arbitration.

The court concluded that the Fleet Agreement gives the arbitrator the sole authority to resolve Postmates’ allegations that the petitioners violated the waivers through their alleged “de facto class arbitration.” Consequently, the court will not consider the merits of each parties’ arguments, stating that this is for the arbitrator to solve and Postmates’ request for the petitioners to refile their demands was denied.

The court also denied the petitioners’ request for the court to order Postmates to pay all arbitration fees necessary to proceed with arbitration. The court stated that in agreement with the California court, the Fleet Agreement “incorporates the AAA’s Rules,” as a result, “ordering the payment of all fees up front would be premature, as Postmates challenges this as a collective arbitration tactic.” The court added that the arbitrator must have “a chance to determine whether conditioning the start of any one arbitration on the payment of fees for all related arbitration demands contravenes the Fleet Agreement.”

The court has denied the other requested relief. This action is now pending arbitration. The petitioners are represented by Keller Lenkner LLC. Postmates is represented by Gibson, Dunn & Crutcher with Littler Mendelson P.C.