Postmates Resists Multi-Million-Dollar Arbitration Fees in Dispute with Drivers

Jamal Adams and 5,256 other individuals in California and Illinois working as delivery drivers, filed a Petitioners’ Motion against Postmates, Inc. to compel arbitration in the Northern District of California (Adams et al v. Postmates Inc. 4:19-cv-03042). Postmates filed a cross-motion to compel arbitration and stay proceedings.

Postmates operates online and via mobile app as a food delivery service. The petition explained that the delivery drivers signed Postmates’ Fleet Agreement, which contained a mandatory arbitration clause and a class action waiver. The delivery drivers are seeking arbitration of the matter that, under the Fair Labor Standards Act, they should not have been classified as independent contractors. Postmates refused to pay for their share of the arbitrator, arguing that the delivery drivers had effectively created a class action.

Both the delivery drivers and Postmates wish to enter into arbitration but under different rules. Attempts by the parties to set up mediation to resolve the conflict failed. The delivery drivers hold they are individuals because they and their counsel filed 5,274 separate arbitration demands to both Postmates and the American Commercial Arbitration Association (“AAA”). According to the initial petition, Postmates was compelled by the AAA to pay their portion of the arbitration but refused, in violation of the agreement they signed. The initial petition asked for Postmates to be made to pay the necessary fees for the arbitrations demands and that they pay all future costs that AAA demands of them within 14 days.

An Order, signed by Judge Saundra Brown Armstrong, last month, granted the aspects of the motions to compel arbitration and denied all other parts of the motions. The order summarizes facts in the case, including that counsel for the petitioners estimated that the individual complaints filing fees could total over $20 million for Postmates.  After being informed of what the arbitration would cost Postmates drafted a new Fleet Agreement which drivers would be forced to sign in order to log in to their accounts and make deliveries. The new agreement required the delivery drivers to share in the cost of filing for arbitration, where the previous agreement stated that Postmates must pay all the filing fees. Many of the individuals who filed for arbitration qualified for a fee waiver. In total, the 5,274 delivery drivers paid $99,600 to file for arbitration. AAA told Postmates that they owed $1,900 for each arbitration demand, but the company refused to pay.

Postmates filed for an appeal to Judge Armstrong’s ruling on November 22 (Jamal Adams, et al v. Postmates, Inc. 19-17362). Counsel for Jamal Adams and the other delivery drivers is Keller Lenkner. Counsel for Postmates is Gibson, Dunn & Crutcher.