More on Mass Individual Arbitration As an Alternative to Class Arbitration

By Echo K.X. Wang

A plaintiffs-side law firm is embracing a recently developed path to pursuing employment disputes against companies that mandate class-action waivers.

Last month in California’s Northern District federal court, Uber and Lyft were separately faced with individual JAMS Inc./American Arbitration Association claims and petitions to compel arbitration from thousands of Uber and Lyft drivers working for each company.

The Uber lawsuit, Abadilla v. Uber Technologies Inc., is scheduled for a hearing on a motion to compel arbitration on March 28 with U.S. District Court Judge Edward M. Chen. (The Abadilla case page is available at http://bit.ly/2By5Zpf.)

The Lyft lawsuit, Abarca v. Lyft Inc., is scheduled for an initial case management conference on Mar. 14, 2019 with U.S. District Court Judge William Haskell Alsup. (The Abarca case page can be found at http://bit.ly/2Svtny8.)

The drivers claimed that the ride-share companies have misclassified them as independent contractors and violated the Fair Labor Standards Act.

The basis for these arbitration claims arose in light of last year’s California Supreme Court case, Dynamex v. Superior Court of Los Angeles County, 4 Cal. 5th 903 (Cal. April 30, 2018) (available at http://bit.ly/2ByKGnH), where the state’s top Court limited companies’ ability to label their workers as independent contractors. Unlike workers classified as employees, independent contractors, including Lyft and Uber drivers, are not entitled to minimum wage and other benefits promised under state and federal law.

The U.S. Supreme Court last year ruled in favor of employers in limiting employee’s ability to bring class suits, backing waivers in favor of mandatory individual arbitration, in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018) (available at https://bit.ly/2rWzAE8); see also Noah Hanft, “What’s Next for Employers, Post Epic Systems?” Corporate Counsel (July 24, 2018) (available on the CPR Institute’s website at http://bit.ly/2E6ZUlB).

Another earlier Supreme Court case, Stolt-Nielsen v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010) (available at http://bit.ly/2SP4ugk), held that a party may not be compelled to submit to class arbitration under the Federal Arbitration Act unless otherwise provided for within the contract.

These decisions impose restrictions on employees’ ability to resolve workplace disputes, requiring them to arbitrate claims individually.

Yet 2019 has started off with a shift toward a more expansive view of workers’ rights which will affect—in ways yet to be determined—resolving conflicts with their employers. Last month, the Supreme Court in New Prime v. Oliveira, No. 17–340 (2019) (available at https://bit.ly/2CyEpbd) resolved a circuit split about whether the FAA Section 1 exemption applies to independent contractor agreements.

Plaintiff Oliveira brought a class action wage-and-hours claims against New Prime, an interstate trucking company. When New Prime sought to enforce its mandatory arbitration agreement under the FAA, Oliveira contended that he qualifies for the FAA Section 1 exemption, and the FAA shouldn’t apply to his case, thereby striking the mandatory arbitration clause in his independent contractor agreement.

The exemption clause states that “nothing herein” the FAA “shall apply to contracts of employment of . . . any [] class of workers engaged in foreign or interstate commerce.” While both parties agreed that Oliveira is considered a class of worker “engaged in interstate commerce,” the parties disagreed on whether the FAA’s “contracts of employment” included independent contractor agreements, or only to employer-employee agreements.

In the unanimous 8-0 decision by Justice Neil M. Gorsuch—new Justice Brett Kavanaugh wasn’t seated when the case was argued and didn’t participate—the Court held that “contract of employment” includes a broad reading of employee-employer relationships, including independent contractor agreements. Therefore, under FAA Sec.1, transportation workers like Oliveira may not be compelled to arbitrate.

Looking to the historical usage of the word “employment,” Gorsuch explained that when the FAA was enacted in 1925, “employment” was understood broadly to be “more or less as a synonym for ‘work.’” He also noted that both federal and state courts in the early 20th century have used the term “contract of employment” to describe work agreements involving independent contractors.

In summary, he wrote, “a contract of employment did not necessarily imply the existence of an employer-employee . . . . relationship.” (Emphasis is in the opinion.)

* * *

The New Prime decision could have a significant impact on the interstate transportation industry, including the outcomes of the pending Uber and Lyft disputes. Chicago-based law firm Keller Lenkner  initially filed and is orchestrating both the 12,501 arbitrations claims against Uber (Abadilla v. Uber Technologies Inc.)and the 3,420 Lyft drivers arbitration claims against Lyft (Abarca v. Lyft Inc.).

When the two companies failed to fully pay the initial arbitration filing fees as promised within the companies’ arbitration agreements, Keller Lenkner enlisted Los Angeles firm Larson O’Brien LLP to help with the Uber Abadilla cases, and filed a motion to compel arbitration against both companies in the N. D. California District Court.

It is not a surprise that Uber and Lyft are delaying the fee payments. As it turns out, the large numbers of individual arbitrations are expensive and time consuming for companies. In the Uber arbitrations under JAMS, the initial filing fees for arbitration is $1,500 per dispute.

Similarly, Lyft’s American Arbitration Association arbitrations are $1,900 per dispute. A detailed list of AAA’s employment dispute arbitration fees is available at https://bit.ly/2X4VD9Q.

At the same time, Uber counters in the joint case management statement filed by both parties on Feb. 7 that the plaintiffs haven’t paid their arbitration fees either. The joint statement is available at http://bit.ly/2X10Tew.

Uber even proposed to resolve the arbitrations through four representative arbitrations. Alison Frankel, “Forced into arbitration, 12,500 drivers claim Uber won’t pay fees to launch case,” Reuters (Dec. 6, 2018) (available at https://reut.rs/2tha1xS). While Keller Lenkner rejected this offer on behalf of its clients, it is interesting and unusual that Uber proposed the equivalent of class arbitration, after fighting so hard—and successfully—against class action arbitrations at the Ninth U.S. Circuit Court of Appeals. O’Connor, et al.  v. Uber Technologies Inc., No. 14-16078 (Sept. 25, 2018) (available at http://bit.ly/2Gnhggl).

In combatting these individual arbitration claims, the ride-share companies adopted several tactics including: 1) delay the arbitrations by not paying the arbitration initial filing fees, 2) challenging their opposing counsels’ qualifications, and 3) offering incentives for employees to drop their arbitration claims.

The tactic to delay arbitration fee payments, as both Uber and Lyft seem to be doing, is not new. See Howard E. Levin, Stiffing the Arbitrators and the Respondents, ABA GPSolo eReport (Aug. 22, 2017) (available at http://bit.ly/2WZQD6c). Neither is the plaintiffs’ push for mass individual arbitrations. See Jessica Goodheart, “Why 24 Hour Fitness Is Going to the Mat against Its Own Employees,” Fast Company (March 13) (available at http://bit.ly/2pkDPIm) (A class of health club employees decertified by a California federal court filed hundreds of individual arbitrations, which the employer settled as a group); Ben Penn, “Buffalo Wild Wings Case Tests Future of Class Action Waivers,” Bloomberg Law (July 12, 2018), https://bit.ly/2Sx9qXY (Workers at Buffalo Wild Wings filed nearly 400 individual arbitrations for wage-and-hour disputes, which also resolved in a group settlement).

Uber and Lyft did not respond to a request for comment.

Since arbitrations can only proceed after the initial filing fees are paid, there is perverse incentive for companies to delay or even refuse to pay the arbitration fees, in hopes that employees would either pay for the filing fees themselves, or simply give up and abandon the claims altogether.

As noted, the companies advanced arguments to attack the qualifications of their opposing firms and attorneys. In a separate but similar wage-and-hour arbitration dispute at the California Northern District federal court, Uber succeeded in its motion to disqualify Keller Lenkner and its partner Warren Postman from representing Diva Limousine against Uber in Diva Limousine Ltd. v. Uber Technologies Inc. (case page available at http://bit.ly/2Ia1wz2).

In Diva, Uber argued that in his previous job at the U.S. Chamber of Commerce, Postman frequently “exchanged confidential and privileged communications [with Uber] on the driver classification issue,” and should therefore be disqualified for conflicts of interest. (A detailed account of Uber’s argument can be found at Alison Frankel, “Law firm for Uber drivers in mass arbitration is bounced from federal court case,” Reuters (Jan. 10) (available at https://reut.rs/2GntPYS).

On Jan. 11, Judge Edward M. Chen from the California Northern District federal court in San Francisco granted Uber’s motion to disqualify Postman & Keller Lenkner. On Feb. 11, 2019, the plaintiff appealed this decision to the Ninth Circuit, filing a writ of mandamus.

Uber is now trying to use the Diva opinion as the basis to disqualify Keller Lenkner and Larson O’Brien in the Abadilla case. In Uber’s opposition to the plaintiffs’ motion to compel arbitration (see motion available at http://bit.ly/2TNcnjx), the company argued that while the counsel of record for the 12,501 drivers is the Larson O’Brien firm, the arbitration demands were initially submitted to JAMS by Keller Lenkner.

Uber expressed doubts on Larson O’Brien’s involvement in the case, alleging that Keller Lenkner, with Larson O’Brien by association, should not be able to represent the drivers given the Diva disqualification judgment.

Keller Lenkner might face the same conflict problem against Lyft as well.  In November, soon after Keller Lenkner requested arbitration, Lyft filed a tort lawsuit against Postman, seeking both money damages and an injunction against Postman from representing the Lyft drivers in arbitrations. (Lyft Inc. v. Postman, case court docket available at https://bit.ly/2SRO4DY). There, Lyft alleged that Postman worked closely with Lyft when he was at the Chamber of Commerce, and like Uber, alleged that he was exposed to confidential information about Lyft’s driver classification issues (see motion available at https://bit.ly/2tiNMYu).

On Jan. 16, the Court grant an extension for Postman to respond to the complaint, but Postman has yet to respond as of Feb. 14. It is unclear if the Diva opinion, now on appeal, would affect Keller Lenkner’s eligibility to represent the drivers in the Lyft arbitrations.

* * *

In addition to stalling the arbitration and imposing other defenses against the arbitrations, Uber and Lyft might also consider other ways to settle these claims. Uber already did this in the past, in offering to pay 11 cents per mile in exchange for drivers to opt out of another arbitration. After all, Uber and Lyft are both hoping to go public in the next few months, and it would be to their advantage to resolve these matters before then.

It is unknown if mass individual arbitrations—the plaintiffs’ “death by a thousand cuts” strategy—will turn out to be a key path for gig-economy workers. While mass individual arbitrations may impose pressure for companies to change their policies or to settle, would it be possible to arbitrate so many disputes?

Although it appears that Uber is stalling for time by attacking Postman’s qualifications, it is questionable whether Keller Lenkner, a 10-attorney firm, is equipped to handle more than 16,000 individual arbitrations–though, according to Keller Lenkner, they have been referring affected clients to other firms as a way to address this problem.

The plaintiffs’ mass arbitration strategy also has been questioned by experts, who wonder whether it risks corrupting the processes.  They charge that attorneys employing this strategy may be trying to gain negotiation leverage, rather than intending to arbitrate each claim, which, they say, is detrimental to ADR. See Andrew Wallender, “Corporate Arbitration Tactic Backfires as Claims Flood In,” Bloomberg Law (Feb. 11) (available at https://bit.ly/2BwruqF).

Moreover, in light of New Prime, significant changes loom in how transportation workers bring their claims. For drivers in the ride-share industry who “engage[] in … interstate commerce,” New Prime stands for the proposition that they have a choice to bring future wage and hour claims directly to the state and federal courts, rather than through arbitrations.

Another question is whether Uber and Lyft drivers will fit under the FAA Sec. 1 umbrella of transportation workers “engaged in … interstate commerce.” Even if they are, how will the New Prime sit with individual state laws and regulations?

 

The author is a Spring 2019 CPR Institute intern, and a student at Brooklyn Law School.

Arbitration Practice After Epic Systems

By Russ Bleemer

Today’s U.S. Supreme Court decision backs the use of employer-imposed bars on class-action processes. See Epic Systems Corp. v. Lewis, No. 16-285 (opinion in the consolidated cases is available at https://bit.ly/2rWzAE8).  The case is summarized on this CPR Speaks blog here: https://bit.ly/2KEuXFN,   with Justice Clarence Thomas’s concurrence summarized the blog at https://bit.ly/2wYEKEB, and Justice Ruth Bader Ginsburg’s dissent examined on CPR Speaks here: https://bit.ly/2rXQFgT.

So what’s next?

Mandatory individual employment arbitration, with a waiver of class/collective processes, means simply that business can require employees to go it alone in addressing problems about the workplace.

A recent study found that mandatory arbitration use already had been soaring on its own over the long-term—see Alexander J.S. Colvin, “The growing use of mandatory arbitration,” Economic Policy Institute (April 6, 2018)(available at https://bit.ly/2HxgQUL–even as earlier studies found that employers prefer more conciliatory processes (see the Alternatives article cited below).

Employers surely will continue to restrict class processes.  For many, the ADR process was a sideshow to the ability to limit class actions. New employment arbitration programs will be faced with the same legitimacy questions that adopters over the past 20 years have had to address, and now, with the higher-profile, perhaps more worker skepticism.

Plaintiffs’ lawyers will be forced to assess new approaches for dealing with clients’ work problems without the prospects of bigger matters.

The bottom line, of course, is that leading lawyers on both sides have been ready for today’s decision in the consolidated cases. Both already have begun maneuvering while now facing the decision they are still analyzing.

* * *

The cases involve arbitration provisions that kick in due to class waivers which prohibit employees from joining class processes—litigation or arbitration—in favor of mandatory, predispute, individualized arbitration to resolve disputes with their employers.

The decision is actually on three cases—NLRB v. Murphy Oil (No. 16-307), from the Fifth U.S. Circuit Court of Appeals; Ernst & Young v. Morris (No. 16-300), from the Ninth Circuit, and the Seventh Circuit’s Epic Systems—that had been consolidated into the Court’s 2017-2018 term’s kickoff argument on Oct. 2, with four attorneys arguing the case on behalf of the parties in all three cases.

The long-contested issue began with the release in 2012 of an opinion by the National Labor Relations Board. The administrative decision, which found that class waivers illegally violated the National Labor Relations Act’s Sec. 7 allowing employees to take concerted action to confront their employer, was overturned repeatedly by the Fifth U.S. Circuit Court of Appeals in numerous cases.  See below.

The NLRB ruled that the class waivers eliminated by the FAA’s Sec. 2 savings clause, which enforces arbitration agreements “save upon such grounds as exist at law or in equity for the revocation of any contract.” The Fifth Circuit rejected that view on the ground it infringed on arbitration under the Federal Arbitration Act, a position strongly echoed today by the U.S. Supreme Court in the majority opinion written by Justice Neil Gorsuch.

The class waivers in question require workers, from collectively bargained rank-and file to executive suites, to address disputes with their employers in individual arbitration. While unions can agree to mandatory predispute arbitration on behalf of their members, the cases involved white-collar employees and nonunion workers with little bargaining power.

The Court had definitively permitted mandatory arbitration contract clauses accompanied by class waivers for products and services contracts where consumers have little or no bargaining power. See AT&T Mobility LLC v. Concepcion, 563 U. S. 333 (2011)(available at https://bit.ly/2KJc8RE).

The Federal Arbitration Act-focused decision today now settles how arbitration is used in workplace matters.

Cases challenging the class waivers that provided for mandatory arbitration flooded the federal courts, starting in the Fifth Circuit, which reversed the NLRB’s 2012 decision, In re D.R. Horton, 357 NLRB No. 184, 2012 WL 36274 (Jan. 3, 2012)(PDF download link at http://1.usa.gov/1IMkHn8), enforcement denied in relevant part, 737 F.3d 344 (5th Cir. 2013)(Graves, J., dissenting)(PDF download link at http://bit.ly/1XRvjrM), reh’g denied, No. 12-60031 (Apr. 16, 2014).

The Fifth Circuit became the venue of choice for employers seeking to reverse the NLRB’s finding that they had violated labor law by requiring class waivers and arbitration as a condition of employment. The New Orleans-based federal appeals court issued dozens of opinions countering in their reasoning, and then officially reversing in their holdings, the many NLRB decisions in which the board, an independent Washington agency, followed its D.R. Horton decision.  The reversal, however, only applied to law in the circuit in which the decision was made.

A circuit split emerged, from the Seventh and Ninth Circuits–first the Seventh Circuit’s Epic Systems Corp. v. Lewis (No. 16-285), which became today’s lead Supreme Court case won by the employer, then with the case of Ernst & Young v. Morris (No. 16-300), from the Ninth Circuit.

The Court accepted the cases, along with NLRB v. Murphy Oil (No. 16-307), one of those Fifth Circuit decisions reversing the NLRB–which itself is a party in the case–and then consolidated the three cases with Epic Systems as the lead more than a year ago.  The argument in the cases kicked off the Court’s current term on Oct. 2.

For details on the arguments, see the blog by Alternatives’ publisher, the CPR Institute, CPR Speaks, at Mark Kantor, “Supreme Court Oral Argument on NLRB Class Actions vs. Arbitration Policy,” CPR Speaks (Oct. 2)(available at http://bit.ly/2fLwU9C), and Russ Bleemer, “The Class Waiver-Arbitration Argument: The Supreme Court Transcript,” CPR Speaks (Oct. 3) (available at http://bit.ly/2yWjWuf).

Kantor noted that the NLRB’s ruling that mandatory arbitration teamed with class waivers were illegal might have disappeared on its own with Trump administration appointees now installed as commissioners ready to reverse the Obama-era D. R. Horton administrative decision.

Regardless, Kantor noted, “This dispute is a reminder that many aspects of arbitration in the U.S. are now a partisan political issue, with regulatory measures addressing arbitration shifting back and forth as political party control shifts back and forth.”

In his majority opinion, Gorsuch used almost the same language.  See the end of CPR Speaks post on the dissent and the majority reaction here: https://bit.ly/2rXQFgT

* * *

For now, today’s Supreme Court has cleared up history’s questions by resolving the overarching issue, with the details to be worked out in employment policies, ADR sessions and, eventually, courtrooms nationwide.

Still, how that plays out in practice is far more in question than it was even a few months ago.

Arbitration has been under attack recently for its frequent use of confidentiality provisions by the #MeToo movement.  The ADR process has been a target in high-profile matters such as Gretchen Carlson’s settlement with her former employer, Fox News.

Microsoft CEO Brad Smith announced that the company would stop using mandatory employment arbitration with respect to sexual harassment claims (which was shortly followed by Uber and Lyft) and legislation barring the process has been proposed. Elena Gurevich, “Predispute Arbitration Would be Barred for Sex Harassment Claims under Legislative Proposal,” CPR Speaks blog (Jan. 25)(available at http://bit.ly/2FUyv4V).

And yet, the license to use arbitration has produced unintended consequences for employers.  A class of employees decertified by a California federal court bombarded national health club 24-Hour Fitness with hundreds of individual arbitrations earlier in the decade, forcing the company to settle all at once.  The decertification–over the claims’ content and unrelated to the class waiver issue—pushed the company to be more aggressive about defending its arbitration clauses, though the Supreme Court didn’t accept its case as part of the consolidated cases decided today. Jessica Goodheart, “Why 24 Hour Fitness Is Going to the Mat against Its Own Employees,” Fast Company (March 13)(available at http://bit.ly/2pkDPIm)

That hardline stance may be an anachronism, despite apparent backing from the Supreme Court today. Employers five years ago were exhibiting a much stronger preference for “mediation and other interest-based processes over mandatory arbitration and other rights-based processes.” David B. Lipsky, J. Ryan Lamare and Michael D. Maffie, “Mandatory Employment Arbitration:  Dispelling the Myths,” 32 Alternatives 133 (October 2014)(available at https://bit.ly/2s11Aqd).

That article also questioned whether employees were increasingly being subject to mandatory arbitration.  And new data from the same source, the Cornell University ILR School—see Colvin article linked above–indicates that the number has soared, more than tripling since the 1990s.  According to Colvin, more than half of employers now have mandatory arbitration, both with and without class waivers, with more than half the nation’s nonunion workers covered by the agreements.  That’s up from only two percent in 1992. Alexander J.S. Colvin, “The growing use of mandatory arbitration,” Economic Policy Institute (April 6, 2018)(available at https://bit.ly/2HxgQUL).

Whether more workplace conflict is diverted to resolution methods via human-resource departments’ open-door policies or mediation remains to be seen.  But the growing presence of mandatory arbitration at least guarantees more court cases that will drill down into finer points involving arbitration use—the limits and parameters will be under scrutiny more than the extent of the practice.

Next up for the Supreme Court’s arbitration scrutiny is Oliveira v. New Prime Inc., No. 17-340, which will investigate whether courts or arbitrators decide the arbitrability of a case where Federal Arbitration Act Sec. 1 exemption removing a case from arbitration applies. The case, which will be heard in the fall, could authorize further expansion of the reach of class waivers and mandatory arbitration to independent contractors from today’s employees’ decision. Early speculation is that Epic Systems makes Oliveira an easy call for the employers.

And three weeks ago, the Court took a second arbitration case for next year, Lamps Plus Inc. v. Varela, No. 17-988, which will examine the issue of whether the Federal Arbitration Act “forecloses a state-law interpretation of an arbitration agreement that would authorize class arbitration based solely on general language commonly used in arbitration agreements.”

Today’s Epic Systems decision will overshadow whatever happens in those cases for human resources executives and in employment lawyers’ offices for longer.  The battleground may move to legislatures.

* * *

Meantime, players on both sides have begun to assess it. They are elated—or searching for words, depending on their side of the employment fence.

Referring to the FAA, Cliff Palefsky, of San Francisco’s McGuinn Hillsman & Palefsky, who has represented employees in the 24- Hour Fitness litigation above, says that the Court “took a statute that Congress expressly said doesn’t apply to employment and used it to preempt the nation’s most significant labor and civil rights laws.”

Palefsky, who worked on an amicus brief filed in the consolidated cases on behalf of 10 labor unions and the National Employment Lawyers Association, and who is has been active on the employees’ side in the cases for years, says he’s still reviewing the decision, but adds, “It was an intellectually and legally indefensible political assault on worker’s rights.”

On the other side, Evan M. Tager, a Washington, D.C., Mayer Brown partner who has argued many arbitration cases on employers’ behalf, says, “The Court reaffirmed in the strongest possible terms that conditioning the enforcement of arbitration provisions on the availability of class-like procedures frustrates the purposes of arbitration and is not permissible absent a clear congressional command.”

Tager worked on Mayer Brown’s amicus brief on behalf of the U.S. Chamber of Commerce in the consolidated cases.  He also represented the petitioner in AT&T Mobility, and says he was glad that the Court decision today reasserted that case’s view that FAA Sec. 2 doesn’t save the NLRB’s view that class waivers violated public policy, which he notes was “indistinguishable” from the rule invalidated 2011 case.

Christopher Murray, an Indianapolis shareholder in Ogletree Deakins–the firm that brought D.R. Horton to the Fifth U.S. Circuit Court of Appeals where it was overturned, leading to today’s decision (the firm also submitted an amicus brief on behalf of trade associations in the consolidated cases)—says, “Today’s decision affirms what almost everyone already knew before the NLRB’s 2012 D.R  Horton decision: The NLRA has nothing to do with class-action procedures used by other decision makers to adjudicate claims under other statutes. Rather, the FAA gives parties the right to determine the procedures they’ll use in arbitration, including the right to arbitrate individually.”

Murray–who authored this month’s Alternatives cover story, “No Longer Silent: How Accurate Are Recent Criticisms of Employment Arbitration?” 38 Alternatives 65 (May 2018)(available at https://bit.ly/2rYmned), and who co-chairs his firm’s Arbitration and ADR Practice Group—adds, “This is a good decision for parties interested in any form of alternative dispute resolution because it confirms those parties are best situated to agree on the procedures to be used to resolve their disputes quickly, effectively, and fairly, and courts are generally not permitted under the FAA to second-guess those procedures.”

.

 

Russ Bleemer is the editor of CPR’s award-winning publication, Alternatives.

Uber Eliminates Mandatory Arbitration of, and NDAs for, Sexual Assault and Harassment Claims

AnnaBy Anna M. Hershenberg, Esq.

Uber Technologies Inc. announced that it will no longer require its customers, drivers or employees to arbitrate sexual assault or harassment claims, and that it would allow victims to decide whether to enter into non-disclosure agreements or confidentiality provisions as a part of any settlement with the company.

Uber is the second tech company to announce it has changed its dispute resolution policies in response to the #MeToo movement, following Microsoft’s December move.  Brad Smith, “Microsoft endorses Senate bill to address sexual harassment,” Microsoft blog (Dec. 19, 2017)(available at http://bit.ly/2mR65jR).

In a blog post yesterday, “Turning the lights on,” Uber’s Chief Legal Officer Tony West announced the details of three major changes to Uber’s policies. Tony West, “Turning the lights on,” Uber blog (May 15, 2018) (available at https://ubr.to/2KrVhD1).

First, Uber states it “will no longer require mandatory arbitration for individual claims of sexual assault or sexual harassment claims by Uber riders, drivers or employees.” The company instead will allow victims to choose whether to mediate, arbitrate or litigate their individual claims.

In an interview with the New York Times, West confirmed that the “waiving of arbitration only applied to those claims and not for other legal claims, like discrimination.” Daisuke Wakabayashi, “Uber Eliminates Forced Arbitration for Sexual Misconduct Claims,” New York Times (May 15, 2018)(available at https://nyti.ms/2GjbBTW).

West also noted that the new policy applies “to people currently in arbitration with Uber over sexual assault or harassment claims.” Id. 

The Uber blog post specifically states that the company waives application of mandatory arbitration to “individual” claims, still barring class actions. Notably, as of the writing of this blog post, Uber’s driver agreement still contains a mandatory arbitration clause.  Uber US Terms of Use (Dec. 13, 2017)(available at https://ubr.to/2jrKPBW).

Second, Uber will no longer require people who settle sexual harassment or abuse claims with the company to sign confidentiality provisions or NDAs that forbid them from speaking about their experience in order to “help end the culture of silence that surrounds sexual violence.” Tony West, “Turning the lights on,” Uber blog (May 15, 2018)(available at https://ubr.to/2KrVhD1).

This does not appear to prohibit victims from agreeing to keep the terms of the settlement confidential. “Whether to find closure, seek treatment, or become advocates for change themselves, survivors will be in control of whether to share their stories,” the blog post states.

Third, Uber has committed to publishing “a safety transparency report that will include data on sexual assaults and other incidents that occur on the Uber platform.” Id.

Soon after Uber announced these changes, competitor Lyft announced the same changes, and said on Twitter it would join Uber in producing a safety report.  Johana Bhuiyan, “Following Uber’s lead, Lyft is also allowing alleged victims of sexual assault to pursue cases in open court.” Recode (May 15, 2018)(available at https://bit.ly/2ILLXfO).

Some news sources have linked Uber’s policy change to its hopes for an initial public offering in 2019, and mounting public pressure following a CNN investigation, which found that 103 U.S. Uber drivers had been accused of sexual assault or abuse in the past four years.  Daisuke Wakabayashi, “Uber Eliminates Forced Arbitration for Sexual Misconduct Claims,” New York Times (May 15, 2018)(available at https://nyti.ms/2GjbBTW); Stephanie Forshee, “Uber CLO Explains Decision to Scrap Mandatory Arbitration Clauses and NDAs Around Sexual Harassment, Assault,” Corporate Counsel (May 15, 2018)(available at https://cnnmon.ie/2I35QyI); see also Sara Ashley O’Brien, Nelli Black, Curt Devine and Drew Griffin, “CNN investigation: 103 Uber drivers accused of sexual assault or abuse,” CNN Money (April 30, 2018) (available at https://cnnmon.ie/2I35QyI).

Uber’s Tony West, however, insists that the new policies are aimed at winning back the “public’s trust,” “respect of customers [Uber] lost through [its] past actions and behavior,” and, in the words of the company’s new “cultural norm,” to “do the right thing, period.”  Tony West, “Turning the lights on”, Uber blog (May 15, 2018) (available at https://ubr.to/2KrVhD1); see also Dara Khosrowshahi, Uber’s new cultural norms, Linked In (Nov. 7, 2017)(available at https://bit.ly/2jaoiL7)(the author is the company’s chief executive officer).

The legal profession’s use of mandatory employment arbitration also has recalibrated, at least at some firms, in the wake of the #MeToo movement. In March, major law firms, including New York-based Skadden, Arps, Slate, Meagher & Flom, San Francisco’s Orrick, Herrington & Sutcliffe and Los Angeles’ Munger, Tolles & Olson announced they would no longer require employees to sign onto mandatory employment arbitration agreements. The moves followed a Twitter attack invoking #MeToo directed primarily at Munger.

And on Monday, Yale Law School sent a letter on behalf of top law schools asking law firms that recruit on their campuses to “disclose whether they require summer associates to sign mandatory arbitration agreements and nondisclosure agreements related to workplace misconduct, including but not limited to sexual harassment.” Staci Zaretsky, “Elite Law Schools Demand That Biglaw Firms Disclose Whether Students Will Be Forced to Sign Arbitration Agreements,” Above the Law (May 14, 2018)(available at https://bit.ly/2ILJMZU).

 

Ms. Hershenberg is Vice President of Programs and Public Policy at CPR. She can be reached at ahershenberg@cpradr.org.