Uber Demonstrates A Problem With Arbitration Agreements

Arbitration clauses are put in place in many circumstances to discourage the less economically powerful party from litigating in the first place and to force decisions to be made case by cases rather than globally, because when the odds are in your favor you have a mathematical incentive to resolve issues as many times as possible for the lowest stakes possible. But, arbitration can backfire when there is a global problem as a record number of arbitration requests filed against Uber demonstrate.

When the company went to the court to argue that its employees weren't employees, it defended its binding arbitration, saying that the company would of course pay for the arbitration fees in the states that required it.

12,501 Uber drivers took the company at its word and filed arbitration claims in California. Under the terms of the contract that Uber crammed down these drivers' throats, it must now pay $1,500 per driver to JAMS, the arbitration service it uses -- a total of $18.7m. 

But Uber has only paid the filing fees for 296 of these drivers; and of those, only 47 have had arbitrators appointed to them. Uber has paid the retainers for only six of those arbitrators.

As Larson O’Brien, a lawyer for the drivers, wrote in a motion, "At this point, it is fair to ask whether Uber’s previous statements to the 9th Circuit about its desire to facilitate arbitration with its drivers were nothing more than empty promises to avoid litigating a class action. Uber’s actions make clear it does not actually support arbitration; rather, it supports avoiding any method of dispute resolution, no matter the venue."

Via Boing Boing.

Uber's conduct clearly violates its arbitration agreement. Now the question is, what remedies do the Uber drivers have for its breach of this agreement.