Uber opposes $10M in arbitration fees in reverse racism claims

Uber Technologies Inc. is fighting against claims it refuses to pay over $10 million in fees to arbitrate more than 31,000 claims by people who allege their civil rights were violated when Uber allegedly committed reverse racism.

The claimants said they were charged delivery fees for ordering food from restaurants not owned by Black people while Uber chose to waive delivery fees for Black-owned restaurants following George Floyd's death in Minnesota.

A hearing on Uber's motion to dismiss the claims was heard Thursday by U.S. District Judge Richard Seeborg in San Francisco, who took the arguments under submission.

"Petitioners ask this court to enjoin a pending New York state court appeal, which is on an expedited track following the entry of interim relief to Uber, in order to force Uber to pay over $10 million that Uber does not owe, while providing zero individualized evidence that they are entitled to any relief," the company stated in court documents.

Uber is represented by Adam G. Unikowsky and Laurie Edelstein of Jenner & Block LLP. They did not respond to requests for comment.

The petitioners seek to compel arbitration because Uber's alleged refusal to pay the fees would result in the individuals' claims being unable to proceed and stuck in limbo. They are represented by Bryan K. Weir of Consovoy McCarthy PLLC and Bradley A. Benbrook of Benbrook Law Group PC. Neither responded to requests for comment by press time. Chavez et al v. Uber Technologies Inc. et al., 3:21-cv-09577, (N.D. Cal., filed Dec. 10, 2021).

The 20,000 people who believed they were wronged by Uber each filed an individual demand with the American Arbitration Association and advanced only their own claims.

The petitioners state in court filings Uber objected to proceeding with the arbitrations on an individual basis and sought to go through with collective action procedures to reduce the case management and arbitrator fees.

But Uber contends in its response that it "fully intends to arbitrate every single one of petitioners' claims."

As part of the arbitration process, the American Arbitration Association invoiced Uber for all the cases, dividing claims into five batches: a little under 500 cases in the first batch and the remaining four batches evenly separated into almost 8,000 cases each. At $1,400 per case, the fees added up to around $668,000 for the first batch and around $10.9 million for each of the remaining batches.

The petitioners allege Uber paid for the first batch of cases but refused to pay for the second batch. They point to text in the American Arbitration Association's invoice that states payment must be received within 60 days, which is now well past.

Uber argued the association was breaching its contractual obligations by refusing to discount fees for tens of thousands of cookie-cutter cases. The company claimed the association initially reduced its filing fees by around 70%, and Uber paid the fees at that rate. But Uber says the arbitration group later reverted to the original filing fees following pressure from the claimants' attorneys and billed Uber for the remainder of the undiscounted fees. As a result, the company said, Uber would possibly be billed more than $91 million in fees.

Uber brought an action against the association in a New York trial court, winning a preliminary injunction to temporarily delay payment while litigation is pending. Uber emphasized its goal was "not to avoid arbitration, but to ensure that the arbitrations would occur without AAA illegally obtaining a massive windfall."

Weir and Benbrook accuse Uber of using the New York court to flee arbitration and the suit is a way to "renege on its promise to pay AAA's long-posted fees." They note that the preliminary injunction would "prohibit AAA from requiring the payment of its invoice to proceed with the arbitrations." Thus, the attorneys are seeking to compel Uber to pay the invoice and have the New York case enjoined.

In response, Uber contends, "The petition should be dismissed because Section 4 of the [Federal Arbitration Act] requires petitioners to show that Uber is resisting arbitration, and Uber is not." Furthermore, petitioners cannot enjoin because they have no interest in the New York case, Uber contends, saying it is strictly between Uber and the American Arbitration Association. According to Uber's court papers, some petitioners sought to intervene in the New York suit but the state court denied them, concluding Uber would arbitrate their claims no matter what and the proposed interveners had no interest in how much Uber pays the association.

"Basic principles of federalism require this court to allow the New York court to complete its work rather than overriding a pending case between Uber and a third party," Uber said.

Additionally, Uber argued that "at a minimum, the court should deny relief to petitioners until they provide evidence" and there should not be a court order forcing Uber to pay over $10 million until petitioners can prove they are entitled to it. Uber said petitioners claimed they paid Uber Eats delivery fees during Uber's "initiative to support Black-owned restaurants'' but the company "has strong reasons to believe that numerous petitioners did not pay delivery fees during the initiative, and in some cases, did not even have UberEats accounts at all."