By: Patrick Brogan, ALR Senior Editor, 2021

In April 2021, Postmates Inc., dropped appeals in the Ninth and Seventh Circuit Courts of Appeals that attempted to fight off thousands of arbitration demands filed by the company’s contracted couriers.

Postmates, founded in 2011, offers its customers on-demand delivery of food, groceries, and other goods from restaurants and retailers.^[1] Orders are placed online or via mobile application and delivered directly to consumers by Postmates couriers.

Postmates’ couriers have accused Postmates of improperly classifying them as independent contractors, rather than employees, to deny the couriers of employment benefits. Upon working for Postmates, couriers agree to resolve all job-related disputes with Postmates in arbitration. Accordingly, over 10,000 couriers filed arbitration demands against Postmates in a strategic mass arbitration campaign. Under the California state law known as SB 707, the company is responsible to pay the fees and costs of arbitration.[2]

In an attempt to avoid the payment of these arbitration expenses, Postmates filed a motion in district court to strike down SB 707. Judge Philip Gutierrez denied Postmates’ motion and ruled that the California state law is not preempted by the Federal Arbitration Act and does not violate either the federal or state constitutions.[3] In denying Postmates’ motion, Judge Guitierrez ordered Postmates to pay the fees and costs of arbitration to the American Arbitration Association (AAA).

In its next attempt to avoid payment of arbitration expenses, Postmates pointed to the class action waiver in its contracts with couriers. In an appeal of a motion to compel arbitration of the first wave of courier demands, Postmates argued that the mass arbitration campaign violated the class action waiver. The Ninth Circuit Court of Appeals held that the issue of breach of contract was for an arbitrator, not the court, to decide.[4]

While many may have expected Postmates to appeal the Ninth Circuit’s decision, Postmates business filed motions for voluntary dismissal in the Ninth and Seventh Circuits. This decision may open the door for the arbitration cases to move forward, though it may also signal that the sides have or will agree to a settlement.

The case is an interesting one to follow as the debate over categorization of gig-economy workers continues. Undoubtedly, companies in Silicon Valley will keep a close eye on the progress of arbitration claims brought en masse by independent contractors. One of those companies particularly interested in this case is Uber. In December 2020, Uber Technologies completed its acquisition of Postmates for $2.65 billion to strengthen its delivery of food, groceries, and other goods to customers.^[5]

[1] See About Us (Apr. 9, 2021) https://postmates.com/about.

[2] See 2019 California Senate Bill No. 707.

[3] Postmates Inc. v 10,356 Individuals, CV202783PSGJEMX, 2020 WL 1908302 (CD Cal Apr. 15, 2020).

[4] Adams v Postmates, Inc., 823 Fed Appx 535, 536 (9th Cir 2020).

[5] See Uber Completes Acquisition of Postmates (Dec. 1, 2020) https://investor.uber.com/news-events/news/press-release-details/2020/Uber-Completes-Acquisition-of-Postmates/default.aspx#:~:text=SAN%20FRANCISCO%2D%2D(BUSINESS%20WIRE,process%20of%20integrating%20U.S.%20operations.