Most consumers have, at one time in their life, agreed to contractual terms through the TOS agreements. Every time a consumer visits a website to read the news, use the social media account, or even by a pair of jeans, they are entering into an online contract.

My prior post of Enforceability of Website Terms and Conditions, from Sep. 24, 2019, focused mainly on the consumer side. The influx of lawsuits against the tech giants like DoorDash, Uber Technologies Inc., Postmates, and Chipotle Mexican Grill Inc. show that the sellers also need to pay heed to their on contractual terms.

In a recent decision in Abernathy et al. v DoorDash, Inc., Case 3:19-cv-07545-WHA, a mutual arbitration clause came back to bite DoorDash. The case involved about 6,000 couriers that worked for DoorDash challenged the company’s classification as independent contractors rather than employees. They all individually filed demands for arbitration since the contract they each clicked through to work for DoorDash contained a mutual arbitration provision through the American Arbitration Association (AAA). The agreement also provided that the parties waived their right to have any dispute or claim brought or arbitrated as a class or collective action or representative action.

Further, AAA’s Commercial Arbitration Rules require each individual to pay a filing fee of $300 and the responding company to pay a filing fee of $1,900. Consequently, DoorDash would have to pay nearly $12 million in administrative costs for the arbitrations.

The petitioners moved to compel DoorDash to arbitration, which the US District Court granted on Feb. 10, 2020. In its Conclusion, the Court stated:

DoorDash faced with having to actually honor its side of the bargain, now blanches at the cost of the filing fees it agreed to pay in the arbitration clause. No doubt, DoorDash never expected that so many would actually seek arbitration. Instead, in irony upon irony, DoorDash now wishes to resort to a class-wide lawsuit, the very device it denied to the workers, to avoid its duty to arbitrate. This hypocrisy will not be blessed, at least by this order.[1]

Most nonunion and private-sector employers have mandatory arbitration agreements.[2] Perhaps it is time to have your TOS agreements reviewed by an attorney with knowledge. Yoars Law has experience in helping clients understand if their terms and condition agreements are legally binding and litigating breaches of terms when necessary. At Yoars Law, we focus on being proactive business and legal advisors for our clients, guiding them through the complex legal issues as they arise and being zealot advocates when needed. We also provide transparent and predictable legal fees so our clients can consistently manage their budgets.

[1] Abernathy et al. v. DoorDash, Inc., Case 3:19-cv-07545-WHA (N.D. Cal., Feb. 2, 2020), pp 7-8.

[2] See Economic Policy Institute study, Apr. 6, 2018, reported on here.

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