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12,000 Uber Drivers Claim Uber Is Now Failing To Pay Arbitration Fees (reuters.com)

Posted by EditorDavid on from the seeing-you-in-court dept.

Uber's terms of service prohibit its drivers from joining class action lawsuits, Gizmodo writes, adding that over 12,000 drivers have now "found a way to weaponize the ridesharing platform's restrictive contract in what's possibly the funniest labor strategy of the year."

An anonymous reader summarizes their report: Uber's contract requires that all driver lawsuits be arbitrated (instead of argued in open court), but "While arbitrating parties are responsible for paying for their own attorneys, the terms state that 'in all cases where required by law, [Uber] will pay the Arbitrator's and arbitration fees'... A group of 12,501 drivers opted to take Uber at its word, individually bringing their cases up for arbitration, overwhelming the infrastructure...." (Gizmodo calls it Uber's arbitration policy "coming back to bite it in the ass.") A petition in California's Northern District Court points out that Uber now is apparently overwhelmed. "Of those 12,501 demands, in only 296 has Uber paid the initiating filing fees necessary for an arbitration to commence [...] only 47 have appointed arbitrators, and [...] in only six instances has Uber paid the retainer fee of the arbitrator to allow the arbitration to move forward."

The drivers' lawyers are now complaining that Uber's delinquincies "make clear it does not actually support arbitration; rather, it supports avoiding any method of dispute resolution, no matter the venue... 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."

43 of 83 comments (clear)

  1. play stupid games, win stupid prizes by nimbius · · Score: 4, Interesting

    empty promises to avoid litigating a class action.

    Exactly this, cutting off your nose to spite your face. Uber is responsible for several instances of major litigation, protest, documented evasion of law enforcement, sexual harassment, and offshore tax havens. Uber is also the most over-valued turd in this gig-economy race to the bottom, and at fifteen billion dollars in assets expects to release an IPO in 2019. Now its actively refusing to pay for the arbitration clauses it insisted upon?

    If the IPO drops in 2019 its going to be hard to really justify why anyone bought the stock. Uber is basically a ponzi scheme with an advanced misery clause.

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    1. Re:play stupid games, win stupid prizes by fibonacci8 · · Score: 1

      Yes, I'd much rather Uber relocated to Venezuela. Excellent suggestion!

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    2. Re: play stupid games, win stupid prizes by Z00L00K · · Score: 2

      Make it illegal to avoid class action suits in contracts.

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    3. Re: play stupid games, win stupid prizes by Mashiki · · Score: 2

      Make it illegal to avoid class action suits in contracts.

      Outside of the US it's already illegal. The real question you should be asking is why various states allow the waiving of rights and options in a contract.

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  2. Question by quonset · · Score: 1

    Have other taxi companies done this and if so, what was the final outcome? Did their drivers get paid or was the clause removed to allow for class action lawsuits?

    1. Re:Question by hey! · · Score: 2

      I wouldn't be surprised if some taxi companies have arbitration clauses, but they may not need them because of other dodges common in the industry.

      Have you ever wondered what your insurance coverage is as a taxi passenger? Chances are, very little. Owners of large fleets divide those fleets up among many different paper companies, to take advantage of insurance requirement breaks intended for small operators. This also divides up their assets among different corporate persons to protect them in the case of a lawsuit. Given that kind of structure, it's not hard to shift profits away from the corporation that owns the taxi you're riding in, so that there are no assets to cover any kind of compensatory award against them.

      Could a lawyer cut through that and ferret out assets to pay damages? Probably, but if you need to drive other people around you can't afford that kind of effort. You might be able to afford one to find a loophole in the contract you signed with a ridesharing company.

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    2. Re:Question by sphealey · · Score: 1

      - - - - - - Probably, but if you need to drive other people around you can't afford that kind of effort - - - - -

      Definitely not true in NYC, Chicago, and other large wealthy cities.

    3. Re:Question by Mashiki · · Score: 1

      I wouldn't be surprised if some taxi companies have arbitration clauses, but they may not need them because of other dodges common in the industry.

      This is a US-centric thing of course, and not all of the US.

      Have you ever wondered what your insurance coverage is as a taxi passenger? Chances are, very little

      Varies by state, province, etc. In North America most require a minimum of 500k in liability per-passenger carried in the vehicle, there's a few states where it's as low as $100k.

      Given that kind of structure, it's not hard to shift profits away from the corporation that owns the taxi you're riding in, so that there are no assets to cover any kind of compensatory award against them.

      This is called evasion of liability, and doesn't really happen anymore - mainly because it's illegal in nearly every US state. Funny enough this started out in the trucking industry with big fleets, it was the taxi companies that followed it. You're actually more likely to be monumentally fucked if you head to a convention, and have half the building fall on you. Now there's a spot where the laws haven't caught up yet.

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  3. I was wondering how this was going to go by rsilvergun · · Score: 5, Interesting

    this is basically a mass protest against Uber's arbitration process. 12,000 Uber employees (I refuse to call them contractors, they're not) all triggered the arbitration clause at once. Uber wanted control of the arbitration process so they could cheat, so they offered to pay all costs. The employees are actually pretty well organized on various forums. The reason they don't have any power is that workers lack solidarity, so they don't have a teamsters Union to give them money for food/rent while they strike, giving most of the actual power to Uber. But they noticed this clever little problem with Uber's contract.

    I say more power to them. This is a win/win for the employees either way. Uber probably doesn't want to lose 12,000 drivers at once (though I suspect they could get by). So a mass firing probably isn't in the cards just yet. If they don't pay the fees the arbitration clause becomes null & void, leading to class action. But if they do pay they're probably out at least $12 million, which won't look good on the old balance sheet. Plus if this works they'll do it again.

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    1. Re:I was wondering how this was going to go by larryjoe · · Score: 2

      Uber wanted control of the arbitration process so they could cheat, so they offered to pay all costs.

      "While arbitrating parties are responsible for paying for their own attorneys, the terms state that 'in all cases where required by law, [Uber] will pay the Arbitrator's and arbitration fees'." So, Uber didn't so much offer to pay arbitration costs as they simply acknowledged limitations imposed upon them by state law. In California, employers are required to pay arbitration fees, which at $1500/case comes out to over $18 million.

      It's also interesting to note that lawyer fees are separate from arbitration fees, so the Uber employees still need to pay for their own lawyers. I wonder how much Larson O’Brien, the Uber employees' lawyer, is getting from this, or even where the money is coming from.

  4. Arbitration is fraught with issues by Anonymous Coward · · Score: 5, Interesting

    This is an interesting, but Uber will just rewrite their contract and force it on their drivers to put a stop to it.

    The scary part about arbitration, is the qualifications of the arbitrators used. The arbitrator could technically render any decision they please, even if it is contrary to law and court precedent. They then drive over to a real court of law and record the judgement against the losing party (Which is predominately the employee). There is no way to appeal.

    I'm hoping California comes down like a ton of bricks on workplace arbitration, but it it going to be challenging given recent court decisions. One idea I have is to surtax companies which require employees to arbitrate, and use the funds to create an oversight agency which licences arbitrators.

    1. Re:Arbitration is fraught with issues by Anonymous Coward · · Score: 5, Interesting

      An arbitration result can be appealed on a matter of law and this lands in real court.

    2. Re:Arbitration is fraught with issues by organgtool · · Score: 1

      One idea I have is to surtax companies which require employees to arbitrate, and use the funds to create an oversight agency which licences arbitrators.

      This is one reason why America has such a huge GDP: rather than fix the crux of the problem and just make arbitration clauses illegal, we create a whole new industry to support nonsense like this.

    3. Re:Arbitration is fraught with issues by renegade600 · · Score: 1

      lets not forget that the Arbitrator will be bias. If they lose too many cases for Uber, they will get fired and another Arbitrator will be brought in. IMO, they will lose just enough to keep their job. I always felt arbitrating was a scam in itself.

    4. Re:Arbitration is fraught with issues by dgatwood · · Score: 3, Informative

      Well, yes, and it benefits a broken, hopelessly overloaded court system by preventing it from becoming more so. And it prevents disputes from dragging on needlessly for decades when they could be solved by arbitration in a couple of weeks.

      Arbitration — even binding arbitration — is great when applied to contracts between two groups of approximately equal power, e.g. when two individuals or small companies negotiate a contract with each other in good faith.

      The problem with arbitration is when it gets applied to a contract of adhesion (any contract created by one party and given to the other in a take-it-or-leave-it way). In those situations, non-binding arbitration would be fine, and it would even be fine if the larger party agreed to let arbitration be binding upon them. But when it is binding upon the lesser party, it becomes highly problematic, in large part because arbiters have an inherent conflict of interest.

      You see, a random person going after a big company will almost certainly never give an arbiter repeat business. However, a corporation might. Therefore, it is in the arbiter's best interest financially to find for the corporation more often than not. Further, in many cases, the corporation pays the bills, which makes it even more in the arbiter's interest to find for the corporation. That is why binding arbitration in contracts of adhesion qualifies as unmitigated evil.

      To be fair, conflicts of interest can also at least ostensibly occur in a court of law. The difference is that the existence of multiple levels of judicial review makes it dramatically less likely that the larger party can get a favorable verdict through such a conflict of interest unless the lesser party runs out of money (which, of course, can usually be avoided by lawyers agreeing to work on retainer or by getting help from a rights group, such as the ACLU, assuming the case actually has merit).

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    5. Re:Arbitration is fraught with issues by Cyberax · · Score: 1

      There are lots of horror stories about arbitration. Like an arbitrator being a relative of the employer's lawyer.

      Murder is a criminal offense and can't be arbitrated (for now).

    6. Re:Arbitration is fraught with issues by sjames · · Score: 1

      Then 12,000 employees sue the arbitrator. The law is still the law. The employees "agreed" to arbitration, they did not agree to nullify the law.

  5. Part of my work in the "gig" economy... by Anonymous Coward · · Score: 5, Interesting

    I work for one of those strip mall tax services during the tax season as a preparer. (Gotta pay for that BS CS!)

    Every Uber and Lyft driver loses money when I'm done with the Schedule C. They pat me on the back and think I'm a genius for "creating" a loss for them to offset their other income, but I protest and say, "No, you are really losing money."
    WHOOOSHHH! They think I'm BS'ing because of a "loop-hole" or something.

    You guessed it, those are the ones who have only been doing for a year or so or less.
    When the bills for the oil changes, tires, timing belts, etc .... come due, it sinks in that it isn't worth it.

    OH! If the insurance company finds out that you're an Uber driver, guess what happens if you're in an accident and you don't have the additional coverage!

    The other money losers are the owner operator truck drivers. BAD DEAL.

    1. Re: Part of my work in the "gig" economy... by c6gunner · · Score: 1

      The other money losers are the owner operator truck drivers. BAD DEAL.

      The rest of your comment sounded like nonsense just based on quick back of he envelope math, but I wasn't ready to call bullshit until I got to this point. You have absolutely no clue what you're talking about. I had a couple trucker buddies who saved every penny they could to buy their own truck; they made an absolute killing afterwards. The smart one then saved all the money he made driving his own truck and bought several more trucks for others to drive for him. Today the cars sitting in his garage are worth more than my entire house.

    2. Re:Part of my work in the "gig" economy... by bobbied · · Score: 2

      Well, I'm not disagreeing that Uber is not a money making idea for the drivers in general, it DOES provide cash flow. Sometimes cash flow is a good thing, if you are not losing too much in the process. Driving for Uber is stupid, at least it would be for me as they don't pay enough to cover expenses much less actually pay me.

      Another thing.. No offense to the service you provide your customers, but if somebody is paying to get their taxes done by some guy in s a strip mall they obviously don't understand business or the implications of tax law on how you run one and are likely not keeping the right records to start with. My guess is that you are not seeing a representative sample of Uber drivers and owner operator truckers. The folks that know what they are doing won't be hiring you, but either doing their own taxes or working with their CPA to get them filed, because they will be big enough and efficient enough to both make a profit and not be forced to darken your door.

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    3. Re: Part of my work in the "gig" economy... by Anonymous Coward · · Score: 2, Funny

      Today the cars sitting in his garage are worth more than my entire house.

      Yeah but you rent a cot at the Salvation Army.

    4. Re: Part of my work in the "gig" economy... by Registered+Coward+v2 · · Score: 2

      The other money losers are the owner operator truck drivers. BAD DEAL.

      The rest of your comment sounded like nonsense just based on quick back of he envelope math, but I wasn't ready to call bullshit until I got to this point. You have absolutely no clue what you're talking about. I had a couple trucker buddies who saved every penny they could to buy their own truck; they made an absolute killing afterwards. The smart one then saved all the money he made driving his own truck and bought several more trucks for others to drive for him. Today the cars sitting in his garage are worth more than my entire house.

      I think he was overgeneralizing. If someone has a new truck and a relatively small note do to saving as you point out, the can make a good living; and if they expand then they're doing what everyone else does in business, i.e. use capital to expand and hire people who bring in more revenue and ideally profit. OTOH, if they are an OO with a used truck from a leasing or trucking company and paying a full note on it, they can easily be in a tough situation. I did some work for a company that financed trucks and in the case of an older truck, the OO faces significant maintenance costs as companies general dump the trucks for new ones once they are on the upswing in maintenance costs. The finance company was happy if they got enough to cover the depreciation rather than repossess a truck that would be tough to sell. At worse, if the driver made some payments that was better than getting a truck that needed repairs before they sold it, if they could sell it.

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    5. Re:Part of my work in the "gig" economy... by fred911 · · Score: 1

      "When the bills for the oil changes, tires, timing belts, etc"... which is a drop in the bucket once you explain to them what depreciation is, and how much the money to finance this loss really costs.

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    6. Re:Part of my work in the "gig" economy... by Actually,+I+do+RTFA · · Score: 1

      I'm not sure what the depreciation and other costs on a truck are, but I remember seeing billboards advertising $1-$2 per mile more for owner operators. I mean, that cursorily sounds like a good premium.

      Although it was really funny, since the ads were in rapid succession. I saw one ad, it offered X, and a mile down the road I saw another ad offering like 60% of X.

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    7. Re: Part of my work in the "gig" economy... by c6gunner · · Score: 1

      I did provide the "incompetent" alternative.

    8. Re:Part of my work in the "gig" economy... by sjames · · Score: 2

      To be fair, your characterization of most of his clients easily describes most Uber drivers.

    9. Re:Part of my work in the "gig" economy... by bobbied · · Score: 1

      To be fair, your characterization of most of his clients easily describes most Uber drivers.

      Perhaps. But I wouldn't know. I neither use or drive for Uber or any other "ride share" company.

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  6. Re:Well by bobbied · · Score: 2

    I'm so glad I am not an Uber driver. No arbitration for me!

    You sure about that? I mean, have you read any of the ELUA's you've agreed to lately?

    Arbitration is now so common as to be conspicuous if it's absent in most terms of service, licenses and user agreements.

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  7. Rode to Hell... by ElitistWhiner · · Score: 1

    hop into an Uber and you put your life into the hands of a legal system that is unassailable, unlawful and unresponsive.

    Worst case...passenger hospitalized in Hawaii riding in back of Uber when rear ended. Driver not at fault. Uber told passenger to go fuck herself. She got nothing more than her money refunded on the incomplete fare. She has not only the physical ramifications from the accident but the psychological as well. She thought Uber was a company. Its a software developer.

    Woke yet? Uber doesn't own taxi's, doesn't hire drivers and doesn't have users. Driver partners on the Uber software platform do.

    1. Re:Rode to Hell... by fred911 · · Score: 1

      "riding in back of Uber when rear ended".

      That's because unless the driver was uninsured, the driver isn't the responsible party, neither is Uber. The responsible party is the one that ultimately created the accident by failing to operate their vehicle in a controlled manner (even if the Uber driver slammed on brakes due to a hallucination).

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    2. Re:Rode to Hell... by Actually,+I+do+RTFA · · Score: 1

      Or, the way that would makes sense, Uber pays the passenger's bills and then tries to get money from the person who hit the car.

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  8. The best description I've ever had for Uber by rsilvergun · · Score: 3, Insightful

    is that it's a payday loan where the interest and fees are the miles on your car. The folks I've talked to who drive Uber are doing it to make rent. With one exception they've all been people who were either recently laid off or took a massive paycut after a buyout. Uber is all about taking advantage of desperate, formally middle class Americans who still have the car from when they were gainfully employed.

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  9. He's not talking about real owners by rsilvergun · · Score: 2

    He's talking about these guys.

    TL;DR; California put a bunch of new pollution guidelines in place to force trucking Co's to upgrade their fleets. The regulations went in effect right when the economy tanked. Instead of buying a new fleet they forced the drivers (now desperate for any kind of work because the economy was in free fall) into phony "leases" where they were essentially working for free by earning less money than it cost to maintain the truck.

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  10. vote with your feet by bkmoore · · Score: 3, Insightful

    Uber's business model only works when people drive for Uber and nobody's being forced to drive for Uber. If every Uber driver took a vacation week off at once, it would probably change Uber's behavior. If Uber's terms are unacceptable, don't drive for Uber. Drive for Lyft, or find another part-time job. Modern crony capitalism has two sides, and the only real power workers have is to leave.

  11. Re: Well by Z00L00K · · Score: 1

    Suddenly just a ride with Uber will cause you to be drafted as a driver.

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  12. Well... by galabar · · Score: 1

    Checkmate.

  13. Re:I'm one of the rare ones. by fluffernutter · · Score: 1

    This seems to be the real way that Uber should be used. However, other people seem to say that you can't pick a fare by pickup and drop off point. If this is true, how do you manage to ensure you won't end up 30 minutes out of your way?

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  14. Re: Seriously? by Paxtez · · Score: 1

    You don't have to pick up anyone? When getting a ride to the airport I will normally have to call for 3 or 4 Ubers before one will want to pick me up since I am like 20 miles away from the airport.

  15. bubble by Uberbah · · Score: 1

    Because people have a hive mind, and everyone can afford to pass up money for a few weeks to show some megacorp who's boss.

    1. Re:bubble by Uberbah · · Score: 1

      Retentive distinction without a difference, pedant.

    2. Re:bubble by sjames · · Score: 1

      One week or a few weeks makes no difference to the point.

  16. No it CAN NOT by Cyberax · · Score: 2

    Nope. Arbitration is FINAL. There are NO appeals unless the arbitration procedure was not followed.

    It's entirely LEGAL for the arbitrator to be bribed, have conflicts of interest or decide a case by tossing a coin. There is NO legal recourse against it.

    Yes, it's seriously that bad.

  17. Re:I'm one of the rare ones. by Savantissimo · · Score: 1

    You can set "destination mode" where (in theory) the rides are only going your way. This can only be done for two destinations in a day, each of which only count if you actually get a ride. They tried allowing 6 per day, but drivers used it to get some control over where they would be heading.

    Also, for several months now trips over 45 minutes are marked before the driver accepts the trip. Nevertheless, drivers still have no idea at all what the destination will be before actually starting the ride after reaching the pickup location.

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