
No class action for unhappy Uber drivers: U.S. appeals court - rectang
https://www.reuters.com/article/us-uber-lawsuits/uber-can-force-drivers-into-arbitration-u-s-appeals-court-idUSKCN1M526F?il=0
======
ethagnawl
Have any small business owners, contractors, freelancers, etc. had success
pushing back against arbitration clauses during contract negotiations?

I've spent money on lawyers' fees in order to make changes to offered
contracts in the past, only to have them rejected outright. (It makes a
certain amount of sense, as $CORP isn't going to have their legal team spend
hours negotiating/revising a contract with a vendor that's only worth $NNk.)
Unsurprisingly, this is not an area I and, I would imagine, others like me
have a lot of room to experiment in: 1) lawyers are expensive and 2) missing
out on that contract might mean missing out on $BILL payment. However, _most_
contracts I'm given these days contain an arbitration clause. Having had to
sue someone in small claims court (I was successful!), I _loathe_ the idea of
being forced into a kangaroo court.

Anyways, I'm not looking for free legal advice, I'm just curious to know how
others are navigating this issue.

~~~
slededit
Arbitration clauses are usually in everyone's favor because it dramatically
reduces the cost of dispute resolution. The only downside is they prevent
class action suites. In a b2b contract that usually isn't a consideration and
so arbitration is a benefit - it would be foolish to try and remove it.

~~~
lovich
Arbitration clauses are explicitly not in everyone's favor and that is the
sort of incorrect information companies like to spread around. Frequently the
company is the one picking the arbitrator, which I hope has obvious problems
with them being unbiased.

Even in cases where the arbitrator is a "neutral" party that both sides have
to agree to, the companies are the ones bringing in the lion's share of work
to the arbitrators and they are not going to agree to an arbitrator who rules
against them in any significant quantities

~~~
hcurtiss
This presumes the company is frequently in arbitration. That is not frequently
the case. With few exceptions, most companies want to (and do) avoid these
kinds of disputes. My critique of arbitration is that, under AAA rules, it's
not actually much cheaper than just going to court. The only real advantage is
that it cuts off appeals, but that cuts both ways. These days I find clients
are relatively ambivalent about whether to include arbitration in B2B
contracts.

~~~
lovich
The company is going to be frequently in arbitration compared to the employees
because they have an agreement with every employee and the employees only have
an agreement with the company.

Even in your statement here, there's evidence that the arbitration agreements
are only in place because the companies can force it. B2B contracts usually
have _actual_ negotiation involved instead of a take it or leave type of deal.
Now that they can't force the agreements they are ambivalent about whether
they are included.

If the arbitration agreements don't survive in contacts when both parties are
on roughly equal footing and only show up when one party is much weaker,
doesn't that imply that they are abusive?

------
duxup
I wonder at what point arbitration is not really an "option". I looked around,
the only ISPs in my area all include arbitration clauses. Is it really a
choice when the choice is no home internet, or arbitration that eliminates my
access to the courts?

~~~
JBlue42
Same for the last two normal jobs I've taken. I was surprised to also be
presented with an arbitration agreement when visiting a new doctor for the
first time. I think it's become quite standard since no one is really able to
stand up against them.

------
rectang
Is there a practical distinction between agreeing to arbitration and agreeing
in advance to lose? Compared to court cases, how many arbitration cases are
actually decided in favor of the petitioner?

~~~
ergothus
[https://www.epi.org/publication/the-arbitration-
epidemic/](https://www.epi.org/publication/the-arbitration-epidemic/)

Cant say the quality of this study, but it came up in recent discussions about
the topic when the US supreme court ruled on a related matter, and claims
"employees win 21 percent of arbitration cases, compared to 57 percent of
cases in state court. " and "Workers also get less money when they're
successful: $109,000 in arbitration compared to $575,000 in state court"
(quotes pulled from a digg summary)

~~~
chimeracoder
> "Workers also get less money when they're successful: $109,000 in
> arbitration compared to $575,000 in state court" (quotes pulled from a digg
> summary)

There is definitely a difference, but that has to be adjusted for the
difference in expenses as well. For an employee who is successful, arbitration
is also a lot cheaper than a court case.

~~~
staticautomatic
No its not because the kinds of employment cases that can net $575k in court
are typically taken on contingency by the plaintiff's lawyers.

~~~
chimeracoder
> No its not because the kinds of employment cases that can net $575k in court
> are typically taken on contingency by the plaintiff's lawyers.

"Contingency" doesn't mean it's free. If the case is won (which is the
situation we're talking about), the lawyer gets paid out of the net recovery.

~~~
treis
Typically a third and would obviously still come out way ahead if you do the
basic math.

~~~
chimeracoder
> Typically a third and would obviously still come out way ahead if you do the
> basic math.

Yes, typically 33-45%. As I said in the original comment:

> There is definitely a difference, but that has to be adjusted for the
> difference in expenses as well

~~~
GW150914
So it’s somewhere between double and triple the award considering costs.
That’s _huge_ and if your point isn't purely pedantic then I’m missing it.

------
DanielBMarkham
Related personal story.

I had dealings with a national technology-based company over the past several
years that involved fraud. Not on my part. It was obvious to me after some
investigation that they had stolen several hundred dollars from me by causing
charges on another account without asking my permission or clearly indicating
that charges were being made. (I had to investigate to figure it out)

I was willing to let it slide and move on. Lesson learned. Then I saw a
commercial for the company and realized: _they were doing the same thing to
tens, maybe hundreds of thousands of other customers_.

It was really kind of mind-boggling when I thought about it. Who knows how
much money was involved.

So I looked up a lawyer in a nearby large town who had experience and
knowledge about class action suits in the technology arena.

We had a nice chat. I had accumulated a ton of paperwork to show what was
going on.

He agreed. They were hurting a lot of people. On purpose. But he couldn't take
the case.

Was it lack of proof? Broken laws? What?

It was arbitration. If I understood him correctly, arbitration clauses are
destroying class action lawsuits. So you can legally screw over tons of
people, then insist arbitration with the few that care if you get caught. And
you get screwed over? You'd better not say anything about it because then
you'd be slandering the company. After all, they haven't been found guilty of
anything, right?

So how about regulatory agencies, I asked? Surely this violates some
regulation that they operate under.

His view, if I understood him correctly, was that regulation was entirely
political. It had nothing to do with them breaking any rules. It certain
political contexts certain companies got the hammer. In certain other
political contexts, they did not. In this particular case, he knew from the
lay of the land that it was not worth pursuing.

I'm still taken back by our conversation. I had no idea that arbitration had
effectively destroyed class action. I don't remember this ever being reported
anywhere.

~~~
gamblor956
If this story was true, the attorney should have told you that you could
report it to your state's attorney general, which would have resulted in civil
and criminal lawsuits filed against the company by the state (which is not a
party to the contract and not bound by the arbitration clause). And the
settlements for these kinds of cases always involves refunding the customers.

Again, if the story was true, there were ways to hold the company to the
rules, get your money back, and avoid any legal costs of your own.

~~~
DanielBMarkham
IANAL. If you are, why don't we set up a call. I'll explain it to you and you
can tell me where I'm wrong. Then I won't tell a misleading story like this
again.

I can only relate to you what I heard. I viewed what happened as criminal. The
company would have viewed it as covered under our contract. Nothing to see
here, folks! I'm guessing the AG wouldn't take up a complex legal criminal
case involving tech if it looked like there was a good chance it could end up
a civil matter. And so we're still in civil court.

I tried proposing several different remedies during our talk. What if I sued
by myself? It might work. I might get part of the monies back. Or not. In
either case it'd take a while.

What if I went to the press? If there's no proof of anything, and I don't have
a lawyer, I could be getting into risky legal territory. It went on like this
for a few minutes. Admittedly, not being an attorney, I probably forgot to
mention a lot of things.

I can assure you this happened. And I'm happy to explain it to anybody that
would like to hear it off-the-record. It's a fucked-up situation and I would
love more than anything else for there to be some remedy like you're
describing.

It's just not worth my time, or the time of the attorney I consulted, to chase
down a remedy that's only going to be a few thousand bucks. Situations like
this are why you have class action suits in the first place. Hell, I'll give
you the name of the attorney and you can call and ask him.

~~~
gamblor956
I am a lawyer but I charge $600/hour for my services. I do not offer free
consults or legal advice. (What I've offered so far, including this post,
doesn't constitute legal advice, which is the application of law to the
specific facts of a particular case. Speaking in generalities doesn't result
in a professional relationship. )

CA provides an online form for your type of complaint:
[https://oag.ca.gov/contact/consumer-complaint-against-
busine...](https://oag.ca.gov/contact/consumer-complaint-against-business-or-
company)

If you would prefer to call them directly it's best to call your local CA
office (numbers available on their website) and they'll connect you to the
appropriate person. (I recommend this as they respond to you immediately; the
form can take several weeks.)

 _I 'm guessing the AG wouldn't take up a complex legal criminal case
involving tech if it looked like there was a good chance it could end up a
civil matter. And so we're still in civil court._

I'm not sure why you think this. What you described sounds like fraud, which
is pretty simple from a legal perspective to investigate and prosecute at the
scale you described. And the State AG would never turn down a criminal case
just because they could also go after them civilly, as the criminal case
strengthens their hand in the civil case.

~~~
DanielBMarkham
Maybe I'm not being clear enough.

I have dropped this issue as it is not worth my time. I'm simply relaying what
another $600/hour professional told me as best as I can.

I apologize if I misrepresented any part of what that guy said. Since both you
and the attorney I contacted seem to enjoy this legal stuff, if you have any
confusion over what I've related, you two are welcome to chat. I'm happy to
hook you up. Coming online and casting doubt on whether my story is true or
not doesn't seem to be a very good use of either of our time either, and this
is the reason I replied to you in the first place, not for some free legal
consultation, online or otherwise. I'm happy to adjust my story if there's any
part any HN commenter found that was in error. I've done the best I can to
relate it.

As far as what I would think and why, I was just guessing. What I think is
fraud or a civil matter or the prosecutorial leanings of my state AG? That and
ten bucks will get you a nice cup of coffee. This kind of thing was the entire
reason I spent an entire morning talking to the other bozo.

I'm not a California resident.

I appreciate your taking the time to reply here. I'm not sure either of us
educated any of the other readers. My entire point was to offer to correct any
errors in my story. I apologize to the rest of the forum that this line of
discussion ended up rather pointless. My offer still stands. I have no desire
to relate stories that are untrue, online or otherwise. If anybody has any
questions, I am happy to do what I can to clear them up.

------
gwright
Another title might be: "U.S. appeals court: Contracts with an arbitration
clause are enforceable."

Uber isn't "forcing" anybody to do anything. The court is saying the contract
is valid and the parties must work within the context of that contract.

~~~
ergothus
When my (now ex-) wife was going to law school, one of the biggest surprises I
had was learning how often contracts aren't entirely binding (as long as you
have the money to actually go to court with real representation).

It's easy to think "You agreed, it's clear that you agreed, end of story" but
that's not the way contract law actually works. If the parties aren't both
getting a roughly equal deal and operating with roughly equal levels of good
faith, everything changes.

And overall, that's a good thing. "If you don't like it, do something else"
isn't much of an option when there's no other "real" option. "Go found your
own company that works differently" is a farce for the vast majority of the
population.

~~~
rectang
> _(as long as you have the money to actually go to court with real
> representation)_

The theoretical ability to contest contract provisions is close to meaningless
because the cost of litigation makes it inaccessible for the vast majority of
the American people. Arbitration puts justice even further out of reach.

~~~
ergothus
No argument here (though I have no real solution to that problem. Denying
everyone lawyers doesn't help, it just slightly shifts who suffers).

My point was that on this and related topics the "It's a contract, suck it up"
type responses are based on a flawed basis, not that the result is actually
just or fair.

------
lsiebert
The biggest negative of arbitration isn't that individuals lose, though they
do. It's that class action lawsuits are undermined. It used to be that a legal
firm could find a group of people harmed by a company, create a class action
lawsuit, and make money if they won/settled that one case. Often class action
settlements had requirements that bound the company.

But each arbitration is it's own case with it's own particulars. If a company
screws over thousands of people, taking each of those to arbitration means
that's thousands of hours more work then a single class action. Further,
settlements are generally restricted to the specific issues a particular party
has issue with, and there is generally no way to guarantee changes for the
benefit of similar parties.

There are only two ways to counter unequal power in deciding contract terms
that mandate arbitration, regulation or concerted action. But not a class
action.

[https://scholarship.law.marquette.edu/cgi/viewcontent.cgi?re...](https://scholarship.law.marquette.edu/cgi/viewcontent.cgi?referer=https://www.google.com/&httpsredir=1&article=1631&context=sportslaw)

------
syntaxing
This is why Unions are so important. I understand how it might not make much
sense for high wage jobs like engineering to Unionize but I really can't see
the negative side to Unions for low wage jobs for everyone besides the
employer (I do not buy the increase consumer price or laissez-faire
arguments). One of the best benefits from a Union is a sponsored lawyer to
represent you when you don't have the money to fight the big guys.

~~~
mdasen
I think a lot of labor situations are different (not just low vs high wage).
With Uber, one of the defining characteristics is that there are (basically)
only two employers (Uber and Lyft). If there were hundreds of equivalent
employers, the employer doesn't have the same control over the wage. When
labor has few or one option, unions can certainly provide a counter-balance to
the power that employers have.

However, Uber also provides an easy way to view consumer price increases due
to wage increases. I know that Uber has moved to more of a fixed-price model
now, but let's pretend that Uber still had a per-mile/minute model. Uber
charges $X per mile and $Y per minute and Uber takes 20% giving 80% to the
driver. At that point, the absolute most that a union could increase driver
wages without increasing consumer prices is 25%. If Uber was charging $1 and
drivers were getting $0.80, if the union wanted a 50% raise Uber couldn't
still charge $1 because drivers would be taking $1.20.

I think the network effects of Uber and Lyft make it hard for labor to have
power in those situations. However, given that Uber's gross margin is a
percentage of receipts, it's easy to see how it would push prices higher. I'm
not saying it's not a worthwhile trade-off, but it's hard to argue that Uber
drivers getting paid 25% more wouldn't cause fares to increase.

~~~
bobthepanda
As a society, we chose to push children out of the labor market even though
that made things more expensive. We pushed for weekends, time off, the 40-hour
workweek and overtime, even though it made things more expensive. At the end
of the day, racing to the bottom in the pursuit of lower prices is not an
unmitigated good.

(To be clear, I'm not saying you disagree with any of these points, these are
just my $.02.)

------
mhneu
Link to full opinion is here:
[http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/25/14...](http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/25/14-16078.pdf)

Three-judge panel, 9th Circuit.

\- Richard R. Clifton, authored opinion (app. GW Bush, Repub.)

\- Richard C. Tallman (app. Bill Clinton, Repub- see wikipedia)

\- Sandra S. Ikuta (app. GW Bush, Repub, Fed Soc member)

------
balozi
I should invest in an arbitration-as-a-service startup.

~~~
monocasa

       fn arbitration() {
          return rulingFor(billing.client);
       }
    

Bam, can I get my cut?

------
s73v3r_
But, if they're not employees, then how can Uber do this?

~~~
kevin_b_er
A contract is a contract is a contract. You may, without a meeting of the
minds, sign away your basic rights according to the courts.

~~~
EpicEng
>You may, without a meeting of the minds, sign away your basic rights
according to the courts.

You actually cannot sign away your basic rights as contract cannot supersede
state or federal law. You may argue that one's right to litgation _should_ be
considered a basic right, but currently it's not.

~~~
kevin_b_er
We may weep for the 7th amendment, which guaranteed the right to a trial by
jury in disputes, as long having been bypassed and a currently dead amendment.

Alexender Hamilton: "The civil jury is a valuable safeguard to liberty."

Thomas Jefferson: "Another apprehension is that a majority cannot be induced
to adopt the trial by jury; and I consider that as the only anchor, ever yet
imagined by man, by which a government can be held to the principles of it’s
constitution."

They tried, but greed is too strong. You've lost the right to a trial by jury.
What little bit is left is dead under mandatory binding arbitration.

~~~
EpicEng
Ok, but the supreme court disagrees:
[https://corpgov.law.harvard.edu/2018/06/08/the-
enforceabilit...](https://corpgov.law.harvard.edu/2018/06/08/the-
enforceability-of-employment-arbitration-agreements/)

~~~
rectang
Another 5-4 decision. The Roberts court is transforming the US into something
unrecognizable.

~~~
EpicEng
Yeah... the more I think on this the more I have to admit that I'm on your
side of things.

------
dang
Unless Reuters changed their own title, the submitter broke the site
guidelines by editorializing (submitted title was "Uber can force drivers into
arbitration: U.S. appeals court".) Please don't do that. Accounts that do it
eventually lose submission privileges on HN. From the guidelines: _Please use
the original title, unless it is misleading or linkbait; don 't editorialize_
([https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)).

One reason we have this rule is that when people break it—especially when they
break it to editorialize—the comments tend to fill up with distracting
arguments about the title.

~~~
rectang
Reuters changed the title.

I copied and pasted the original title, as I always do -- I'm familiar with
the guidelines (and have in fact brought similar issues to the mod's attention
before).

Thank you for addressing the issue.

~~~
dang
Ah. That makes me glad I put that bit in at the beginning! Thanks for being
conscientious about the guidelines and thanks for replying so nicely.

I will mark this subthread offtopic and collapse it, and delete my other
comment about the title.

~~~
rectang
Thanks as always for your good work. :)

------
qrbLPHiKpiux
Bought.

------
steveeq1
Forgive my ignorance, but what are the negatives to arbitration? Isn't that
basically a private court system used because the government court system is
so slow and inefficient? Isn't that a good thing?

~~~
tnorthcutt
The company chooses the arbitrator. The arbitrator is therefore incentivized
to find in the company's favor. If they find in favor of the "plaintiff" (I
would imagine that's not what they're called in arbitration) too often, then
the company can simply find a more friendly arbitrator.

~~~
bigpicture
As an example, look at the Comcast arbitration agreement [1]. They do not want
to choose. They want it to be either the AAA or a judge making the choice. You
might also notice that they are totally fine with you suing them in your local
small claims court.

[1]
[https://www.xfinity.com/Corporate/Customers/Policies/Subscri...](https://www.xfinity.com/Corporate/Customers/Policies/SubscriberAgreement)

