
A new weapon in arbitration: sheer volume - jseliger
https://www.nytimes.com/2020/04/06/business/arbitration-overload.html
======
Animats
Oh, it's even worse than that for companies. The 9th and 10th circuits have
both agreed that if the defense refuses to pay for arbitration, plaintiff can
go to court. They're no longer barred from suing at that point.

Incidentally, the AAA rules have some useful provisions in consumer disputes.
Either party can request to transfer the case to small claims court. At least
in California, that's not only cheaper, small claims courts tend to be pro-
plaintiff. You get to be heard in person in your own county by a real judge.

[1]
[https://www.adr.org/sites/default/files/Consumer_Rules_Web_0...](https://www.adr.org/sites/default/files/Consumer_Rules_Web_0.pdf)

~~~
caseysoftware
Either way, they end up having to fight on a thousand little battlefields all
over the place and likely do not have the interest or ability to fight each
and every one. This is the sort of thing that can tie up legal teams for years
and drain reserves in no time.

I was involved in a mass-arbitration last year. The NDA bars any details from
being released for 2 years but in the meantime, we can say we reached "a
resolution, not a settlement" in the dispute.

~~~
anamexis
Generally speaking, what does "a resolution, not a settlement" mean? Or is
that not a general legal term?

~~~
simcop2387
No idea if there's a legal distinction but a settlement usually makes it sound
like one side admitted fault even if that isn't the case

~~~
bdowling
Settlement is one type of resolution. A settlement is just an agreement for
one party to drop claims against the other in exchange for something of value
(usually money). Usually there is no admission of anything by any of the
parties and the exact terms are confidential.

------
surround
Stack overflow’s TOS has a binding arbitration clause, [1] despite
overwhelming user feedback to the contrary. [2]

Y Combinator’s TOS has an arbitration clause. [3] If you’ve created an account
on HN, you’ve agreed to arbitration.

[1] [https://stackoverflow.com/legal/terms-of-
service/public](https://stackoverflow.com/legal/terms-of-service/public)

[2]
[https://meta.stackexchange.com/a/309756](https://meta.stackexchange.com/a/309756)

[3] [https://www.ycombinator.com/legal/](https://www.ycombinator.com/legal/)

~~~
nabla9
The US stands alone in consumer arbitration.

In most countries consumer arbitration is either heavily regulated, or non
binding. In EU pre-dispute binding consumer arbitration clauses are considered
unfair terms.

American Exceptionalism in Consumer Arbitration
[https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2265556](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2265556)

~~~
marcus_holmes
Thanks for this. I'm curious: I live in Germany. Is YC/HN's arbitration clause
enforceable against me? Can I take them to court in Germany?

~~~
tjpnz
Not a lawyer but I suspect it would depend on the country.

As an example there are clauses written into ToS which don't allow refunds on
digital purchases. These work fine in the US but are illegal in countries with
stronger consumer protections like Australia. US companies do still have to
obey local laws - at least when it comes to the sale of faulty goods.

------
crazygringo
This seems like fantastic news -- if class action suits aren't allowed, then
technology now makes it easier to file "cookie cutter" arbitration suits at
such low cost that it effectively acts like a small class-action suit anyways.

But I'm worried companies will be able to respond in a way that neutralizes it
-- tweaking arbitration terms somehow. I hope not, though. It is absolutely
necessary that we hold companies accountable for mass bad behavior, no matter
if it's with their customers or employees.

~~~
manfredo
It seems like an easy tweak to nullify this strategy is to invalidate
automated arbitration claims.

Even without this tweak, if a company saw a huge increase in "cookie cutter"
arbitration suits they could probably just not respond to these suits and hope
that the majority of complainants aren't willing to go to court. A cookie
cutter suit likely indicates a low-effort action, not likely to be followed up
with a lawsuit. How many of the 6,000 DoorDash claims would have gone to court
if DD just didn't respond? At $1,500 per claim even if dozens or a couple
hundred went to court DoorDash may have still have saved money.

~~~
Ericson2314
In court they can do a class action, so little reason not to.

~~~
mycall
In fact, the class action filing management could also be automated using the
vendor's same system.

------
function_seven
The article mentions 6,000 arbitration cases against DoorDash amounted to $9
million in fees from the American Arbitration Association. That's $1,500 a
pop!

If you have a dispute with a company, and are bound by an arbitration clause,
it seems like you have a $1,500 hammer to hit them with? (Assuming your
agreement states that the company will front the fees).

What happens if the arbitrator decides the case against you? Do you owe that
fee? Does this vary from one contract to another?

~~~
jerzyt
Does that mean that someone is getting $1500 because their pizza arrived cold?
I hope not.

~~~
Nextgrid
If the service’s promise is to deliver warm pizza and they fail without
compensating the customer (as these delivery services often do, essentially
saying “tough luck” with fake, canned apologies and hoping you don’t bother
doing a chargeback) then I don’t see why the customer _shouldn’t_ be getting
$1500.

~~~
arbitraryacct
The $1500 doesn't go to the customers, it goes to the courts. It's effectively
a fine that a customer can arbitrarily impose on a company.

~~~
Nextgrid
But the customer has to pay it back if the lose the lawsuit, correct? If so
then it’s absolutely fair.

------
Paul-ish
> The International Institute for Conflict Prevention & Resolution, or C.P.R.,
> was willing to allow DoorDash to arbitrate “test cases” and avoid having to
> pay the fees all at once. C.P.R. also took feedback from Gibson Dunn on the
> proposed new rules, though it did not consult with the dashers’ lawyers.

DoorDash gets to try a few cases with this company to see if they like the
results. That couldn't possibly create a conflict of interest.

------
mehrdadn
> DoorDash got the bill for the 6,000 claims — more than $9 million.

> DoorDash balked, arguing in court that it couldn’t be sure that all of the
> claimants were legitimate dashers. The American Arbitration Association said
> the company had to pay anyway. It refused, and the claims were essentially
> dead.

How is that legal for binding arbitration? Didn't both sides agree that
disputes will be resolved by arbitration?

~~~
itake
Many companies require you sign a contracting to use their service (or in this
case to be employed by them) that says you agree to binding arbitration

~~~
sfifs
No longer binding if the company breachs the arbitration clause. They're going
to be sued if the issue is real.

~~~
anonymousab
It seems simple enough for a binding arbitration clause to simply require the
plaintiff to pay, and to tack on additional clauses to indemnify the corporate
party.

~~~
Nextgrid
I would assume that these scum companies would’ve already done so long ago if
this was possible.

------
vsskanth
I wonder why the issue of being able to waive away your rights - forced
arbitration, non-competes, severance packages etc. never come up at the
presidential campaign stage.

Seems like this is pervasive enough to affect pretty much everyone. Or am I
misunderstanding something here ?

~~~
function_seven
I think because the issue seems too theoretical to most people. I'm betting
that most people have never felt a negative impact from forced arbitration
clauses, or non-compete agreements. Anecdotally, I've never once felt the need
to take a company to court, only to be stymied by an arbitration clause. Nor
have I been prevented from getting hired due to a non-compete. And I don't
think I know anyone who has.

I'm not saying these aren't valid and serious issues. Just that they're not
day-to-day matters in the same way that healthcare, taxes, gas prices, or
housing costs are. They're the type of issues that nobody thinks about until
it bites them one day.

~~~
vsskanth
speaking from my personal experience, I've seen non-competes being pretty
pervasive outside tech and some states like CA or MA, I've had competitors
flat out refuse to proceed with an interview because I had a non-compete.
whether it is enforceable is a different question but it does reduce
opportunities.

Like you said, it's probably not what the majority of people are experiencing.

~~~
laughinghan
CA or MA? Noncompetes have historically been completely unenforceable in CA,
whereas until recently MA had a pretty oppressive noncompete regime. That
contrast is actually commonly credited with why Silicon Valley overtook Route
128 in technological innovation:
[https://www.vox.com/2016/4/12/11349248/noncompetes-
silicon-v...](https://www.vox.com/2016/4/12/11349248/noncompetes-silicon-
valley-route-128)

~~~
vsskanth
thanks for the info, wasn't aware of the historical context.

------
DannyB2
> But a federal judge in San Francisco wasn’t willing to go along with it. The
> judge, William Alsup, ordered DoorDash in February to proceed with the
> American Arbitration Association cases and pay the fees.

Ah! Gotta love judge Alsup. Back in SCO vs Novell, and in Oracle vs Google.

> ... in a hearing, Judge Alsup questioned whether the company and its lawyers
> really believed that.

> "Your law firm and all the defense law firms have tried for 30 years to keep
> plaintiffs out of court,” the judge told lawyers for Gibson Dunn late last
> year. “And so finally someone says, ‘OK, we’ll take you to arbitration,’ and
> suddenly it’s not in your interest anymore. Now you’re wiggling around,
> trying to find some way to squirm out of your agreement."

> "There is a lot of poetic justice here," the judge added.

~~~
dllthomas
What was his involvement in SCO vs Novell? He doesn't seem to be mentioned in
[https://en.wikipedia.org/wiki/SCO_Group,_Inc._v._Novell,_Inc](https://en.wikipedia.org/wiki/SCO_Group,_Inc._v._Novell,_Inc).

~~~
maxlybbert
SCO vs. Novell was in Utah, under Judge Kimball. But Alsup was impressive in
Oracle vs. Google, noting that he had some familiarity with programming and
calling out Math.max() as the kind of function where scènes à faire and merger
probably apply.

~~~
tobinfricke
> as the kind of function where scènes à faire and merger probably apply.

I had to look this up -

»Scène à faire (French for "scene to be made" or "scene that must be done";
plural: scènes à faire) is a scene in a book or film which is almost
obligatory for a genre of its type. In the U.S. it also refers to a principle
in copyright law in which certain elements of a creative work are held to be
not protected when they are mandated by or customary to the genre.«

[https://en.wikipedia.org/wiki/Sc%C3%A8nes_%C3%A0_faire](https://en.wikipedia.org/wiki/Sc%C3%A8nes_%C3%A0_faire)

~~~
late2part
This was a holding argument in the CISCO v. ARISTA lawsuits. You can't
trademark "show interface" for example.

------
petilon
This is excellent. Forced arbitration clauses are fundamentally unfair to
consumers. See this older article to understand why:
[https://www.nytimes.com/2015/11/02/business/dealbook/in-
arbi...](https://www.nytimes.com/2015/11/02/business/dealbook/in-arbitration-
a-privatization-of-the-justice-system.html)

~~~
de_watcher
Like what the hell is even happening in the US? I understand that for the
international stuff it's sometimes hard to use national courts, but what's
wrong when dealing with the internal? Courts aren't good enough? So maybe fix
them, no? Of course, easier to make your own court where you'll have an
advantage...

------
manfredo
This strategy does result in increased upfront costs for companies. But this
sort pile-on strategy seems like it could be countered with arbitration
agreements that aren't subject to any sort of timeline, or arbitration
agreements that preclude use of automated complaint filing systems.

Fundamentally, this strategy of inundating the company with claims only works
because it's more expensive for the company to respond to an arbitration
dispute than it is for an employee or customer to file one. If that asymmetry
goes away, this strategy no longer works. I could see a company witness a
spike in complaints, especially if the complaints are filed from an automated
system, and conclude that these complaints would likely not result in lawsuits
if arbitration was rejected. Now the onus is back on the complainant to
actually go forth with the lawsuit.

~~~
hn_throwaway_99
I think it remains to be seen if the courts will allow arbitration agreements
that are completely one-sided. I mean, a big part of the original Supreme
Court rulings was that the arbitration proceedings would be impartial. Having
an arbitration agreement with no timeline seems like it would be more likely
to be overturned.

~~~
anonymousab
>I think it remains to be seen if the courts will allow arbitration agreements
that are completely one-sided.

One-sided bad faith terms of service have been enforced to great effect in
recent years, so I can't see a one sided arbitration agreement getting any
scorn or backlash from the current judicial makeup.

------
xibalba
DoorDash seems to have looked at Uber's many PR problems over the last many
years and said, "Hold my beer".

------
fernly
Is this current news? In trying to find non-pay-walled coverage (FU,NYT), I
quickly found previous stories on this from February and in November.

The November 25 article[1] mentions the "squirming out" remark by the judge.

A WaPo article from February 16 [2] mentions that each of the 5000 Dashers who
filed for arbitration had to put up $300.

[1] [https://www.courthousenews.com/judge-accuses-doordash-of-
try...](https://www.courthousenews.com/judge-accuses-doordash-of-trying-to-
squirm-out-of-arbitration/)

[2]
[https://www.washingtonpost.com/opinions/2020/02/16/doordashs...](https://www.washingtonpost.com/opinions/2020/02/16/doordashs-
multimillion-dollar-arbitration-mistake/)

~~~
russellbeattie
Posted here a few months ago as well [1] when the judge's decision was given.
This NYT article doesn't add anything new, and I suspect it's a result of the
defense lawyers calling in favors order to put pressure on DoorDash which
filed for it's IPO in February.

DoorDash is most likely going to use the surge in traffic because of the
coronavirus to help push their IPO through sooner than later, taking advantage
of the fact they're one of the few types of businesses benefitting from the
lock down. If the defense can threaten that IPO, DoorDash might be more
pliable to a deal...

[https://news.ycombinator.com/item?id=22315348](https://news.ycombinator.com/item?id=22315348)

------
neonate
[https://archive.md/tXRs6](https://archive.md/tXRs6)

------
huffmsa
Good on Judge Alsup. This is the bed they asked for. They can sleep in it.

Not much gets me going more than someone making tons of demands and then
backing out when they actually have to deal with the consequences associated
with those demands.

Fuck 'em.

------
mandelken
As a European, reading these articles on arbitration, no-compete, required
licenses, 'right-to-work', tipping, "gig work", firing over zoom, and so much
more, it seems U.S. workers could really use some collective bargaining? Here
unions are the obvious century-old solution to improve working conditions, why
don't workers organize there? Are we just lucky here, like with universal
health care?

~~~
gumby
Unions have suffered from a bad reputation in the United States over the past
few decades.

Some of it is deserved BTW; some big unions were/are corrupted and some were
connected with organized crime. Even more innocently, unions have been quite
conservative; as jobs and technology changed some were very resistant and
fought modernization (requiring people who were not needed to be around). But
a lot of it also stems from corporate resistance to unionization and the high
regard in which ordinary people hold the opinions of corporate managers in the
USA.

All that being said, unions have been very good for labor, and when I've
worked in union shops (not in a unionized role) they've been really great in
terms of qualified people and high quality work. I built my house using union
labor and I'm glad I did.

Europe is not immune to these diseases by the way. Certain French unions
certainly negotiate against the greater interests of society. And in Germany
my non-unionized brother in law (a mechanical engineer) was not allowed to
work late at VW -- he was trying to finish a project one evening and a union
guy came by and cut his PC's power cable while he was designing a part.

~~~
wegs
Most of the bad reputation is deserved. Most US unions are horrible
organizations. There are still some good unions, just not many.

That doesn't make the concept of a union bad. They worked much better 50 years
ago, even. It's a great concept, but the implementation got corrupted over the
years.

I don't think we'll fix unions' reputations without first fixing unions. And
we really need more unions and more credible unions.

As a footnote, in my local school district, under coronavirus school closures,
the teacher's union negotiated that the teachers get paid, but they don't need
to remotely teach students. Some teachers continue teaching for some amount of
time, but essentially on a volunteer basis. Many teachers are just sitting at
home, doing nothing except for collecting a pay check.

~~~
tssva
Are you sure it was the union which forced the district not to remote teach? I
live in an area where teachers are not unionized and the teachers are still
getting paid and not teaching. The school district has signed contracts with
the teachers which doesn't have any terms which stop payment because the
schools close during the year and the district is not requiring remote
learning because of equal access issues.

~~~
Reelin
> doesn't have any terms which stop payment because the schools close during
> the year

And so they shouldn't! In many (most?) US states, the public schools are
unconditionally funded by the state based on student enrollment figures.
Cutting teacher pay during a closure under such a system would be a purely
greedy move.

~~~
tssva
If my comment seemed to imply I thought they shouldn't I didn't mean to. I
agree that they should get paid.

I don't know how it works in the majority of states but I know the model of
mostly state funding based upon student enrollment is not universal. In my
state the majority of funding is from local tax revenues. For example the
budget for my local school district is approximately $1.3 billion. $370
million comes from the state and $30 million comes from the federal
government. Another $40 million comes from "misc other sources" and $860
million comes from local tax revenue.

~~~
Reelin
I hadn't considered the local tax aspect. I understand that many areas are
projecting large shortfalls in the near future, so I suppose there could be
some issues. I guess it would probably depend on how the education taxes were
levied in a given jurisdiction (property, sales, or something else).

------
jaakl
Does any juristiction require all these unilateral (in any sense) TOS to be
pre-reviewed and approved as “fair and clear” by a public autority? It feels
so elementary to me that I’m really surprised why not everyone is demanding it
as basic human right.

------
joshuaheard
The "reform" is to clog the system with a huge number of cases? I don't see
the benefit here. A better solution would be for the American Arbitration
Association to have a special system for class actions like government courts
do.

~~~
battery_cowboy
The best solution would be for corporations to not get special treatment like
fucking babies.

~~~
cityzen
couldn't agree with this more!

------
LatteLazy
While I like the general idea, I still think we need a wider answer to the
question of companies like doordash. Employees (or whatever they are) won't
get what they want this way any more than they would previously...

------
ch33zer
How come it seems like every time I hear Alsup's name in the news it's because
he's telling a major corporation to stop being an asshole. It's refreshing to
hear from a judge.

------
tester89
I'm just wondering, could the plaintiffs in court now receive a higher
settlement than they would have had their been no arbitration?

My thinking is basically they could argue that they agreed to the companies
terms of arbitration and now the company refused to honour them requiring them
to waste their time and money going to court?

------
jerzyt
Basically, the strategy is "death by a thousand paper cuts." There may be
legit cases for it, but in the end, it's a wrong solution. It could easily
explode to be abused for minor complaints where a real class action lawsuit
would be more proper. There should be a cost to a frivolous lawsuit. This
seems to eliminate it.

------
marcuswebb
Would be poetic justice except: this is really just companies weaseling out of
even THIS low level of social responsibility.

------
srib
Just a distributed denial of service attack.

It is amazing how so few systems are inherently robust to DDOS.

~~~
dredmorbius
Globalised JIT economic systems and pandemics!

------
emiliosic
I think it's an excellent idea what FairShake.com is doing

------
fmakunbound
”You can't stop the bum-rush!” — Ice-T

