Postmates and its couriers to argue arbitration in misclassification lawsuit

A federal judge will hear arguments over a motion to compel arbitration next month in a case pitting Postmates Inc. couriers against the San Francisco-based on-demand delivery platform. The putative class of couriers alleges the company unlawfully classified them as independent contractors, among other California Labor Code violations.

The couriers claim Postmates, valued at over $1 billion, failed to reimburse business expenses and pay couriers minimum wage and for time spent waiting for goods to be ready for delivery. Lee v. Postmates Inc., 18-CV03421 (N.D. Cal., filed Jun 8, 2018).

Theane Evangelis, a partner at Gibson, Dunn & Crutcher LLP who is representing Postmates, filed a motion to dismiss the case and compel arbitration. Evangelis noted in the filing that couriers signed Postmates' "Fleet Agreement" to access the platform and perform deliveries as an independent contractor in the filing.

Evangelis also highlighted a first-page all-caps ask in the agreement to review a mutual arbitration provision.

"We are committed to providing those who perform deliveries using Postmates with flexible terms of service and an opportunity for fair and reasonable dispute resolution," said Vikrum Aiyer, Postmates' vice president of public policy, in a statement.

Attorneys representing the couriers' opposed Postmates' motion to compel arbitration in court documents filed Monday.

"Postmates has argued that, within the agreement, the language highlights the arbitration clause, but what we are arguing is that Postmates has not shown that the typical courier would have even looked at the agreement," Shannon Liss-Riordan, co-founder of Lichten & Liss-Riordan, P.C., who is representing the couriers, said in an emailed statement.

Liss-Riordan argued in the Nov. 19 filing that under the Federal Arbitration Act's transportation worker exemption, the couriers are not bound to arbitration. "This exception applies to transportation workers who transport goods that are in the flow of interstate commerce," she wrote.

U.S. Chief Magistrate Judge Joseph C. Spero disagreed, however. In an October order, Spero wrote the plaintiffs presented no evidence the job "involved handling goods in the course of interstate shipments" or in the "business of transporting goods between states."

"We are urging the court to consider this issue again, including additional evidence and argument we have submitted," wrote Liss-Riordan in her emailed statement. "We are arguing, for example, that Postmates couriers affect interstate commerce in a way that pizza delivery drivers don't, who have been held to engage in only local deliveries."

The attorney also argued the couriers should be classified as employees rather than independent contractors based on the California Supreme Court's Dynamex Operations West, Inc. v. Superior Court decision in April, which set an employment classification standard based on an "ABC test."

Kevin F. Ruf, a partner at Glancy Prongay & Murray LLP who argued on behalf of the Dynamex drivers before the state Supreme Court, outlined the three-prong test in an interview Thursday, noting the worker must be free from control of the hirer, the worker must perform work outside their regular business, and the worker must have an established business independent of the hirer in the same industry.

"The ABC test will make for a streamlined process to achieve class certification and will apply to the drivers' claims for overtime, meal breaks, and other related claims," Ruf said of the Postmates matter. "At the end of the day, these gig economy companies will recognize they need to classify their workers as employees under the law."

Spero will hear arguments on the motion to compel arbitration Dec. 14 in San Francisco federal court.