Patrick Ouellette

Senior Editor, 2020-2021

The “gig economy” refers to workers making money completing tasks for companies as independent contractors, rather than being employees working on projects. [1] The rise of companies like Uber and Doordash have led to the explosion of independent contractors. These contractors can either be looking to supplement main sources of income by picking up extra money on the side, or work as an independent contractor to pay for life expenses.

Independent contractors are not subject to the same employment laws as full-time employees. In an effort to keep litigation costs down, companies have frequently required their workers to sign agreements to arbitrate any claims. Arbitration is frequently considered a cheaper alternative to litigating in court. Companies use their bargaining power to ensure that arbitration agreements are controlling in disputes prior to hiring a worker. While this practice has frequently worked in the favor of the bigger party – the company that is hiring the worker – a recent case, Boyd v. Doordash, Inc., threatens to turn a company’s best defense against costly legal fees into a company’s biggest weakness. [2]

In Boyd v. Doordash, Inc., the plaintiffs are a group of workers for Doordash that claim the company incorrectly classified the group as independent contractors, as opposed to employees. [3] Instead of attempting to file a class action, a legal maneuver that would be rejected under the arbitration agreement’s class action waiver, 5,010 of the workers moved to arbitrate the decision. [4] Doordash, saddled with the agreement to arbitrate, balked at the idea. [5] As per the arbitration agreement, the larger party to the contract would be responsible for the larger portion of the filing and administrative costs. [6] Doordash would be required to pay about $1900 per worker that brought the claim. [7] As a result, prior to the costs of even arbitrating the claims, Doordash would be required to pay between $12 and 20 million dollars in filing and administrative costs. [8]

Doordash attempted to circumvent the arbitration requirement, requesting that the plaintiffs instead litigate as a class. [9] A California judge struck down the request, noting the irony that Doordash forced its employees into the arbitration agreement, but then asked for reprieve following the workers attempting to exercise that right. [10] Doordash will likely appeal, but the decision leaves open the uncertainty of the arbitration clause in the gig economy.

Gig economies accounts for an increased number of workers in America’s economy, with more workers opting for the increased flexibility that gig jobs allow. [11] With an increasing number of courts ruling that gig workers are actually employees, it is not surprising that litigation over employment classification is becoming a hotly contested issue. Doordash’s loss in court could be the first of large companies relying on their currently classified independent contractors experiencing the pains of mass arbitration. With companies like AirBnB, one of the larger workers in the gig economy, attempting to IPO this year, the threat of looming legal costs associated with mass arbitration could be a major detriment to stock price on the open market. [12]

Ultimately, the judge’s decision to force arbitration upholds the spirit of the arbitration agreement, much to the detriment of the company responsible for including the provision. While the FAA has traditionally been used to hold the smaller party to an agreement, this case may represent a turning point in arbitration proceedings in general. When arbitration becomes less cost effective for the party writing the contract, it would be unsurprising for the bigger party to move away from including arbitration agreements.

[1] Jim Chappelow, www.investopedia.com, Gig Economy https://www.investopedia.com/terms/g/gig-economy.asp (last visited, Sept. 4 2020)

[2] Boyd v. Doordash, Inc. No. C 19-07545 WHA (N.D. CA 2020)

[3] Id.

[4] Id.

[5] Id.

[6] Michael Hiltzik, www. latimes.com DoorDash Thought It Was Smart to force workers to arbitrate but now faces millions in fees, https://www.latimes.com/business/story/2020-02-11/doordash-arbitration-blunder, (last visited Sept. 4 2020)

[7] Id.

[8] Id.

[9] Boyd v. Doordash, Inc. No. C 19-07545 WHA (N.D. CA 2020)

[10] Id.

[11] Greg Iacurci, www.cnbc.com, The Gig Economy Has Ballooned by 6 Million People Since 2010. Financial worries may follow, https://www.cnbc.com/2020/02/04/gig-economy-grows-15percent-over-past-decade-adp-report.html (last visited Sept. 4 2020)

[12] Shalini Nagarajan, www.businessinsider.com, Bill Ackman says Airbnb’s first choice is to choose the IPO route after the home-rental platform declined a $5 billion cash injection from his ‘blank-check’ company, https://markets.businessinsider.com/news/stocks/investor-bill-ackman-airbnb-prefers-choose-the-ipo-route-2020-9-1029563085#

Kyle Yager

Senior Editor, 2020-2021

On June 1, 2020, the U.S. Supreme Court issued its unanimous decision in GE Energy Power Conversion France, SAS, Corp., v. Outokumpu Stainless USA, LLC. [1] The Court granted cert to determine whether the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”) conflicted with domestic contract law regarding nonsignatory enforcement of agreements. [2] The Court concluded that the Convention does not conflict with equitable estoppel doctrines that permit enforcement of arbitration agreements by nonsignatories. [3]

In 2007, ThyssenKrupp Stainless USA, LLC, contracted with F.L. Industries, Inc., for the construction of cold rolling mills for the ThyssenKrupp steel manufacturing plant in Alabama. [4]  They executed three contracts, and each contained an identical arbitration clause stipulating all disputes between the parties in connection with the contract be submitted to arbitration for settlement. [5] F.L Industries then subcontracted with GE Energy to provide motors for the mills. [6] GE Energy ultimately supplied nine motors to the Alabama plant between 2011 and 2012. Shortly after, Outokumpu Stainless, USA, LLC, acquired ThyssenKrupp. [7]

Outokumpu claimed that that the motors failed by the summer of 2015 and caused substantial damage. [8] Outokumpu sued GE Energy in Alabama state court. [9] GE Energy subsequently removed the case to federal court and moved to dismiss and compel arbitration. [10] The United States District Court for the Southern District of Alabama granted the motion, finding that both Outokumpu and GE Energy were parties to the original contracts. [11] On appeal, the United States Court of Appeals for the Eleventh Circuit reversed, holding that the Convention is a multilateral treaty which allows enforcement of an arbitration agreement only by parties that actually signed the agreement. [12] Considering GE Energy was a nonsignatory, it could not enforce arbitration. [13] The court also held that permitting GE Energy to rely on state-law equitable estoppel doctrines to enforce the arbitration agreement would conflict with that signatory requirement. [14]

The Supreme Court unanimously disagreed, and reversed. [15] The Court concluded that the Convention does not conflict with domestic equitable estoppel doctrines that allow nonsignatories to enforce arbitration agreements. [16] The Court reasoned that, “[f]ar from displacing domestic law,” the Convention actually contemplates usage of “domestic doctrines to fill gaps in the Convention.” [17] Further, the Court considered the drafting history of the Convention, reasoning that during drafting, “the delegates to the Convention voiced frequent concern that courts of signatory countries . . . should not be permitted to decline enforcement of such agreements on the basis of parochial views of their desirability or in a manner that would diminish the mutually binding nature of the agreements.” [18]

This decision demonstrates a cogent response in support of the social equity and assurance of arbitration. [19] This support ensures certainty and predictability through international commercial transactions. [20] “[A]llowing nonsignatories to compel arbitration would assure companies that conduct international trade that they can resolve potential disputes through arbitration.” [21] However, some critics believe that forcing business parties to “arbitrate commercial disputes without their consent” will disadvantage them and hamper commercial transactions. [22]

Regardless, “[t]he Court’s decision will” impact how companies “draft the scope of their arbitration agreements” and calculate their arbitration liabilities. [23] Businesses will surely be encouraged to show more care and clarity when drafting contracts containing arbitration clauses. [24]

[1]. GE Energy Power Conversion France, SAS, Corp. v. Outokumpu Stainless USA, LLC, 140 S. Ct. 1637, 1648 (2020).

[2]. Id. at 1640.

[3]. Id. at 1648.

[4]. Id. at 1642.

[5]. Id.

[6]. GE Energy, 140 S. Ct. at 1642

[7]. Id.

[8]. Id.

[9]. Id.

[10]. Id.

[11]. GE Energy, 140 S. Ct. 1642–43.

[12]. Id. at 1643.

[13]. Id.

[14]. Id.

[15]. Id. at 1648.

[16]. GE Energy, 140 S. Ct. at 1648.

[17]. Id. at 1645.

[18]. Id. at 1646.

[19]. See Connor Grant-Knight & Angela Shin Wei Ting, GE Energy Power Conversion France SAS v. Outokumpu Stainless USA LLC, Cornell Law School, https://www.law.cornell.edu/supct/cert/18-1048 (last visited Sept. 6, 2020).

[20]. See id.

[21]. Id.

[22]. Id.

[23]. Id.

[24]. See Grant-Knight, supra note 18.

Patrick Brogan

Senior Editor, 2020-2021

The Novel Coronavirus (“COVID-19”) and subsequent government-mandated restrictions on in-person gatherings significantly impacted nearly every facet of our lives. Schools, hospitals, restaurants, and businesses were forced to either close or scale-back and operate in a manner unlike ever before. The world hit pause on social gatherings to slow the spread of COVID-19, which, in part, meant resorting to virtual meetings to conduct business, connect with friends and family, learn, and even resolve conflicts.

The virus also caused a number of new disputes to arise between parties due to its disruption on daily operations. Some broad categories of these disputes include business interruption insurance claims, force majeure disputes, residential and commercial lease disputes, and disputes over supply chain disruptions. ¹ Unfortunately, courts were not immune to COVID-19 and were subject to the same government-mandated restrictions, which resulted in the postponement of in-person hearings, a growing backlog of cases, and the implementation of virtual proceedings. With trial dates being pushed-out months and moratoriums placed on certain proceedings such as evictions, alternate dispute resolution (ADR) may be in a position to help decrease the courts backlog and aid in parties finding resolution through some of its already established virtual methods for resolving disputes.

Online dispute resolution (ODR), which is simply the conducting of ADR through the use technologies such as video conferencing, gives parties-in-conflict the opportunity to resolve disputes, often through mediation or arbitration, on an entirely virtual platform. ODR, relative to US courts in their current state, will likely save participants time and money, while also mitigating the risk of spreading COVID-19.

ADR organizations such as Judicial Arbitration and Mediation Services, Inc (“JAMS”) and American Arbitration Association (“AAA”) began promoting their online services years prior to COVID-19 and have since ramped up both their offering of online dispute resolution and the training of neutrals on conducting online hearings. ² Private companies, such as Tyler Technologies, offer ODR platforms in which parties can submit claims and negotiate settlements entirely online.

In response to COVID-19, the American Bar Association hosted an online program entitled: ODR in the Era of COVID-19: Experts Answer Your Questions. ³ During this program, a group of ODR experts, made up of two law professors and a Vice President of ODR at a technology company, discussed both the current state of ODR and the wide scope of disputes that can be resolved using an online platform. The group discussed the use of video conference websites such as Zoom to conduct hearings.

The panel praised Zoom’s features that can make conducting meetings extremely effective, such as breakout rooms, text chat, and screen share. However, the experts warned listeners to be aware of the potential drawbacks of online meetings. For example, mediators may lose their ability to pick up on nonverbal ques from participants, which they typically look for in order to guide the conversation. Further, security of the proceeding must be considered. Neutrals should take every measure possible to assure participants that the meeting will only be accessed by those with authorization. Participants will likely need to consent to conducting the hearing online via video conference and accept any risk to privacy that may arise.

COVID-19 forced people to adapt to a world with minimal social gathering. This meant conducting business, seeing loved ones, and resolving conflicts, online. The ADR industry adapted quickly to COVID-19 with the use of online technologies. Moving forward, it remains to be seen whether online dispute resolution becomes the “new normal” in ADR.