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Postmates Drops Appeals in Two Mass Arbitration Disputes (1)

April 8, 2021, 7:53 PM; Updated: April 8, 2021, 9:30 PM

Postmates Inc. agreed to drop parallel appeals that had fought back against thousands of its couriers filing individual arbitration disputes—a tactic meant to force the company to rack up costly legal fees to defend its workforce model.

Attorneys for the on-demand food-and-drink delivery business filed motions for voluntary dismissal Wednesday in the U.S. Court of Appeals for the Ninth Circuit in San Francisco and in the Seventh Circuit in Chicago.

The couriers accused the company of improperly classifying them as independent contractors and, therefore, denying them benefits due to employees. Abandoning the appeal would allow the individual claims to move forward in the arbitration process, though it wasn’t immediately clear whether the company had reached a settlement.

Attorneys for the company and its media office didn’t immediately respond to requests for comment. Warren Postman, a partner with Keller Lenkner who represents plaintiffs in both appeals, declined to comment.

Postmates requires its workers to sign agreements pledging to take job-related disputes to arbitration, as opposed to going to court. In response, thousands of couriers responded by filing arbitration claims en masse.

Plaintiffs’ firms have increasingly used this strategy in recent years, as more gig companies utilized arbitration to avoid class actions or a ruling on the merits of their business models. This creates costly fees for Postmates, as an individual arbitration can cost as much as $1,900 per claim just to begin the process.

A pair of federal courts previously upheld the couriers’ tactic, prompting the company to appeal in both the Ninth and the Seventh Circuits.

In the latter jurisdiction, Postmates lawyers on March 31 argued to overturn one of the rulings, in a case involving more than 200 individually filed arbitration claims. In the Ninth Circuit, the company had also been challenging a 10,000-case outcome.

In the Seventh Circuit, U.S. Circuit Judge Frank Easterbrook repeatedly asked Postmates’ attorney, Theane Evangelis, whether the dispute should be allowed to be appealed. The judge appeared frustrated when Evangelis cited only precedent that allowed such a scenario to occur.

The appeal to the Ninth Circuit came after the U.S. District Court for the Central District of California in January ordered Postmates into arbitration with more than 10,000 couriers, who had filed arbitration demands nearly a year earlier; they allege worker misclassification and violations of California wage and hour laws.

District Judge Philip S. Gutierrez had denied the company’s request for a declaration that it can’t be compelled to arbitrate on a “de facto class basis,” and for injunctive relief to block the arbitration. Gutierrez also ordered Postmates to pay attorneys’ fees and costs.

Postmates is represented by Gibson, Dunn & Crutcher in both cases. Keller Lenkner represents couriers in the Seventh Circuit. In the Ninth Circuit, Keller Lenkner, Zigler Law Group and Ahdoot & Wolfson represent the couriers.

The cases are McClenon v. Postmates, 7th Cir., No. 20-02577, voluntary dismissal 4/7/21 and Postmates v. 10,356 Individuals, 9th Cir., No. 21-55052, 4/7/21.

(Updated with additional reporting throughout.)

To contact the reporters on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com; Maeve Allsup in San Francisco at mallsup@bloomberglaw.com

To contact the editors responsible for this story: Andrew Harris at aharris@bloomberglaw.com; John Lauinger at jlauinger@bloomberglaw.com

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