$91M in AAA Filing Fees? Another Lesson in Being Intentional in Drafting Class Action Waivers in Arbitration Agreements

We have blogged in the past about the importance of companies being intentional in drafting their arbitration agreements. It is important to think through such issues as: Should we include a class action waiver? Should we include a collective action waiver? Who decides the scope of arbitration and interprets the scope of such waiver provisions: a court or an arbitrator? How susceptible are we to massive numbers of repeat claims?

I personally have been involved in a horror story of litigation in which a homebuilder company failed to include a class action waiver in its arbitration agreement, and a runaway arbitrator decided to conduct a class arbitration and certify a class of homebuying customers even though the claimants were anything but similarly situated.

Now here is the converse horror story. On April 14, in Uber Technologies Inc. v. American Arbitration Association Inc., a New York appeals court ruled that Uber was required to pay the American Arbitration Association the filing fees for 31,500 individual demands for arbitration for claims that Uber Eats’ 2020 waiver of delivery fees for Black-owned restaurants constituted “unlawful reverse race discrimination” against customers ordering from other businesses who had to pay a delivery fee. The AAA filing fees alone are expected to exceed $91 million.

The court put it starkly in affirming the denial of Uber’s motion to preliminary enjoin the filing fees:

The balance of the equities weighs in favor of AAA. While Uber is trying to avoid paying the arbitration fees associated with 31,000 nearly identical cases, it made the business decision to preclude class, collective, or representative claims in its arbitration agreement with its consumers, and AAA’s fees are directly attributable to that decision.

So we say it again: Be intentional about how your draft arbitration agreements. There are both costs and benefits to including class action waivers. For some companies, the benefits will outweigh the costs, but for some companies, specifically, those more susceptible to large numbers of repeat claims that plaintiffs’ lawyers actually will file in arbitration, maybe not so much. Go in with your eyes wide open. Uber wishes it had done so.