Adams v. Postmates Inc.

District Court, N.D. California·Decided March 5, 2020·No. 4:19-cv-03042·Unknown

Opinion

JAMAL ADAMS, et al. Case No: 19-3042 SBA

Petitioners, ORDER DENYING POSTMATES’ MOTION TO STAY PENDING vs. APPEAL

POSTMATES, INC., Dkt. 261

Respondent.

This matter is presently before the Court on Respondent Postmates, Inc.’s (“Postmates”) Motion to Stay Order Granting in Part and Denying in Part Cross-Motions Pending Appeal (“Motion to Stay”). Dkt. 261. Having read and considered the papers filed in connection with this matter and being fully informed, the Court hereby DENIES the Motion to Stay for the reasons set forth below.1 Petitioners are 5,257 individuals who work as “couriers” (i.e., delivery drivers) for Postmates, an entity that operates a food delivery platform and mobile app. To work for Postmates, all couriers must sign Postmates’ Fleet Agreement, which classifies them as 1 The Court, in its discretion, finds this matter suitable for resolution without oral independent contractors, not employees. The agreement contains a Mutual Arbitration Provision, which requires that all disputes between couriers and Postmates be resolved “through final and binding arbitration instead of filing a lawsuit in court.” Fleet Agt. § 10A.2 To initiate an arbitration, either party to the Fleet Agreement must notify the other party by certified mail or by hand delivery of the arbitration demand. The demand must include: “(1) the name and address of the Party seeking arbitration, (2) a statement of the legal and factual basis of the claim, and (3) a description of the remedy sought.” Id. § 10B.i. Within the Mutual Arbitration Provision are a Class Action Waiver and Representative Action Waiver. See id. § 10B.ii (Class Action Waiver); id. § 10B.iii (Representative Action Waiver). The Class Action Waiver bars couriers from bringing “any dispute or claim … as a class and/or collective action” or “participat[ing] in any class and/or collective action….” Id. § 10B.ii. The Representative Action Waiver similarly bars couriers from bringing “any dispute or claim … as a representative action, … including but not limited to, claims brought under any state’s Private Attorneys General Act (PAGA)….” Id. § 10B.iii.3 The net effect of these waivers is that any courier with a legal claim against Postmates is limited to filing an individual arbitration demand with the designated arbitrator, the American Arbitration Association (“AAA”). In March and April 2019, Petitioners tendered a total of 5,274 individual arbitration demands to the AAA, alleging that they have been misclassified as independent contractors, in violation of the Fair Labor Standards Act, 29 U.S.C. §§ 206, 207. Petitioners’ submission of these demands triggered Postmates’ obligation to tender its share of arbitration filing fees, approximately in the sum of $10 million. Postmates refused to pay

2 Both the 2018 and 2019 versions of the Fleet Agreement are relevant to this action and contain the same Mutual Arbitration Provision and Class Action Waiver, albeit in different sections. For simplicity, citations in this Order are to the 2018 Agreement. See Keller Decl. Ex. C, Dkt. 5-3. 3 Unless otherwise indicated, further reference to the “Class Action Waiver” shall any fees, claiming that the arbitration demands were insufficient under the terms of the Mutual Arbitration Provision and therefore the arbitrations had not been properly commenced. The AAA disagreed and continued to demand payment of the fees. On June 3, 2019, Petitioners filed a Petition to Compel Arbitration in this Court pursuant to the Federal Arbitration Act, 9 U.S.C. § 3, 4. Dkt. 1. Thereafter, the parties filed cross-motions to compel arbitration. Dkt. 4, 228. Petitioners and Postmates both agreed that the Mutual Arbitration Provision is valid and binding and moved for an order compelling arbitration. Each side also requested that the order include specific, additional conditions. Petitioners requested that the Court direct Postmates to tender its share of the arbitration fees to the arbitrator so that the arbitrations may proceed. Postmates countered that it is not yet obligated to tender its share of the filing fees on the ground that the arbitration demands are “generic” and lack the specific information articulated in the Mutual Arbitration Provision. Thus, Postmates asserted that the Court should compel arbitration and “enter an order: (1) requiring each Petitioner to refile his or her demand as an individual arbitration demand that sets forth the facts and legal theories of relief applicable to the particular Petitioner; and (2) requiring each Petitioner, after refiling, to proceed to arbitration on an individual basis….” Dkt. 228 at 20. In its cross-motion, Postmates argued that by submitting allegedly “generic” arbitration demands with the arbitrator, Petitioners are attempting to proceed with a de facto classwide arbitration, in contravention to the Class Action Waiver. Dkt. 228 at 10, 11, 15. To that end, Postmates argued that this Court, as opposed to the arbitrator, must “determine the threshold issue of whether the parties have agreed to arbitrate on a de facto classwide basis.” Id. at 15. The Court rejected Postmates’ contention, finding that the Mutual Arbitration Provision contained a delegation clause that vests the arbitrator with the exclusive authority to decide “gateway” questions of arbitrability. Fleet Agt. § 10A.ii. The delegation clause states, in relevant part: ii. Only an arbitrator, and not any federal, state, or local court or agency, shall have the exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability, or formation of this Mutual Arbitration Provision, including without limitation any dispute concerning arbitrability. However, as stated in Section 10B.iv below, the preceding clause shall not apply to any dispute relating to or arising out of the Class Action Waiver and Representative Action Waiver, which must proceed in a court of competent jurisdiction and cannot be heard or arbitrated by an arbitrator. Fleet Agt. § 10A.ii (emphasis added). Relying on the second sentence of the delegation clause quoted above, Postmates argued that any issues pertaining to the Class Action Waiver, including whether Petitioners were attempting to arbitrate on a classwide basis, are excluded from the scope of the delegation clause—meaning that the Court must decide the issue. To support its position, Postmates argued that Sections 10A.ii and 10B.iv in tandem create two independent exceptions to the delegation clause applicable to: (1) any claim “relating to or arising out of” the Class Action Waiver; and (2) any claim that the Class Action Waiver is “unenforceable, unconscionable, void or voidable.” Dkt. 253 at 9. The Court rejected Postmates’ interpretation of the Fleet Agreement. Applying well settled rules of contract interpretation, the Court concluded that Section 10A.ii expressly incorporates Section 10B.iv, which only excludes claims that the Class Action Waiver is unenforceable, unconscionable, void or voidable from the scope of the delegation clause. Id. at 10. Since there is no claim by Petitioners that the Class Action Waiver is unenforceable, unconscionable, void or voidable, the Court concluded that the carve out was inapplicable. Alternatively, the Court found that even if Postmates’ construction of the Fleet Agreement were correct, the outcome of the cross-motions would be the same. Id. at 11. As noted, Postmates’ position is that no arbitration filing fees are due because Petitioners’ individual arbitration demands fail to provide the requisite information specified by the Mutual Arbitration Provision. Id. In Postmates’ view, Petitioners’ omission of such information demonstrates that they are attempting to arbitrate their claims on a de facto

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