{"id":807,"date":"2021-09-24T12:57:05","date_gmt":"2021-09-24T12:57:05","guid":{"rendered":"https:\/\/blog.nicarb.org\/?p=807"},"modified":"2021-09-24T12:57:05","modified_gmt":"2021-09-24T12:57:05","slug":"uber-sues-aaa-to-block-100-million-fees-in-politically-motivated-arbitration","status":"publish","type":"post","link":"https:\/\/blog.nicarb.org\/index.php\/2021\/09\/24\/uber-sues-aaa-to-block-100-million-fees-in-politically-motivated-arbitration\/","title":{"rendered":"Uber Sues AAA to Block $100 million Fees in \u2018Politically-Motivated\u2019 Arbitration"},"content":{"rendered":"\n

Author: <\/strong>Alison Franklen<\/p>\n\n\n\n

In 2018, Uber Technologies Inc was one of the first companies targeted\u00a0in a mass arbitration campaign. In 2019, Uber was one of the first companies to capitulate, agreeing to pay more than $146 million to settle wage-and-hour claims by more than 60,000 drivers.<\/p>\n\n\n\n

Now Uber wants to be the first company to force the American Arbitration Association Inc to back down from a fee demand that, according to the company, gives unwarranted leverage to the other side.<\/p>\n\n\n\n

On Monday, Uber\u2019s lawyers at Kaplan Hecker & Fink filed a declaratory judgment complaint\u00a0and a motion\u00a0for a preliminary injunction against AAA in New York State Supreme Court in Manhattan, seeking to bar the nonprofit from charging Uber nearly $100 million in administrative and arbitrator fees in about 31,000 cases alleging that Uber\u2019s 2020 policy of waiving delivery fees for Black-owned restaurants was discriminatory.<\/p>\n\n\n\n

Unlike other companies that have protested AAA fees \u2013 unsuccessfully \u2013 in the face of mass arbitration demands, Uber has already paid the requisite fees, about $5 million, to initiate the cases. Uber has also paid about $670,000 to administrate the first batch of about 480 cases that will be heard by AAA arbitrators. Uber\u2019s senior litigation director, Randall Haimovici, told me in an interview that the company is downright eager to defend its delivery-fee waiver for Black-owned restaurants, which Uber adopted in June 2020 in the wake of George Floyd\u2019s death.<\/p>\n\n\n\n

But the company said it is unreasonable and a breach of AAA\u2019s contractual commitment to a fair, cost-effective process for AAA to refuse to discount subsequent administrative and arbitrator fees for tens of thousands of cookie-cutter cases. By insisting on full-freight fees that will total nearly $100 million, Uber contends, AAA is effectively granting a huge advantage to the claimants\u2019 lawyers from Consovoy McCarthy, a firm with a long history\u00a0of challenging affirmative action policies.<\/p>\n\n\n\n

\u201cThe AAA, a nonprofit arbitration service provider, casts this astronomical sum as purported administrative fees and costs,\u201d Uber\u2019s complaint said. \u201cIn fact, it is a ransom orchestrated by politically-motivated lawyers, who are manipulating the arbitral process to prop up baseless claims of \u2018reverse discrimination.\u2019\u201d<\/p>\n\n\n\n

An AAA spokesman did not immediately respond to a request for comment on Uber\u2019s filings, nor did Consovoy name partners William Consovoy and Thomas McCarthy.<\/p>\n\n\n\n

AAA did reduce Uber\u2019s initial fees after Consovoy McCarthy began filing demands by the thousands in the latter half of 2020. AAA adopted a new, reduced-fee schedule for \u201cmultiple consumer case filings,\u201d or mass arbitration of consumer claims, last year. Because AAA determined that the Consovoy-filed demands against Uber met its mass arbitration criteria, it charged Uber an arbitration initiation fee of only about $140 per claim, not the $500 that the company would have had to pay for an individual consumer demand for arbitration.<\/p>\n\n\n\n

That fee reduction, Uber argued in Monday\u2019s filings, showed that the AAA is willing to exercise its discretion over mass arbitration fees. AAA has also recognized that the Consovoy filings are a mass campaign, the Uber filings suggested, in early proposals to streamline the cases via a bellwether process to resolve legal and factual issues that cut across all of the arbitration. But when Consovoy McCarthy insisted that cases be litigated individually, the complaint said, AAA acquiesced, informing Uber that without Consovoy\u2019s consent to change the process, the usual arbitration rules would apply.<\/p>\n\n\n\n

Under those rules, AAA told Uber, the company is on the hook for advance payments of fees to administer each case and to pay individual arbitrators \u2013 even though, according to Uber, there is no way that the cases will actually be litigated individually. (Consovoy McCarthy lists 13 lawyers on its website, a small crew for 31,000 cases. And AAA, according to Uber, has only 750 neutral arbitrators in all of California.) Uber\u2019s filings said that AAA also informed the company that if Uber paid the fees \u201cunder protest\u201d to preserve a challenge to the amount, AAA would close the arbitrations and potentially send the cases to court.<\/p>\n\n\n\n

Uber said that it had no choice but to seek an injunction when it received an invoice last week for $10.8 million. As you know, California passed a law\u00a0in 2019 to penalize companies for refusing to pay requisite arbitration fees in mass arbitration cases. Uber said that law exposes the company to harsh sanctions, including a possible default on the merits, if it does not submit the money to AAA. But if it pays up, Uber said in its preliminary injunction motion, AAA will undoubtedly assert that Uber has waived its right to challenge the fee and will claim arbitral immunity.<\/p>\n\n\n\n

\u201cWe felt like we were backed into a corner,\u201d said Haimovici. \u201cIt\u2019s not as if we won\u2019t pay. We just want it to be fair and reasonable.\u201d Haimovici said that as a show of its good faith, Uber intends to put $10.8 million \u2013 the fees in the disputed September invoice from AAA \u2013 in escrow.<\/p>\n","protected":false},"excerpt":{"rendered":"

Author: Alison Franklen In 2018, Uber Technologies Inc was one of the first companies targeted\u00a0in a mass arbitration campaign. In 2019, Uber was one of the first companies to capitulate, agreeing to pay more than $146 million to settle wage-and-hour claims by more than 60,000 drivers. Now Uber wants to […]<\/p>\n","protected":false},"author":1,"featured_media":808,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[84],"tags":[318,13,319,12,6,317],"class_list":["post-807","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-nicarb-adr-developments","tag-aaa","tag-adr","tag-american-arbitration-association","tag-arbitration","tag-nicarb","tag-uber","col-lg-4 col-md-6"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/blog.nicarb.org\/wp-content\/uploads\/2021\/09\/Uber.jpg?fit=290%2C174&ssl=1","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pcb80P-d1","jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/posts\/807","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/comments?post=807"}],"version-history":[{"count":1,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/posts\/807\/revisions"}],"predecessor-version":[{"id":809,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/posts\/807\/revisions\/809"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/media\/808"}],"wp:attachment":[{"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/media?parent=807"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/categories?post=807"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.nicarb.org\/index.php\/wp-json\/wp\/v2\/tags?post=807"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}