Adams v. Postmates Inc.

Background

The petitioners were 5,257 people who worked as couriers for Postmates. Their agreements classified them as independent contractors and required disputes to be resolved through individual, final, and binding arbitration. The agreements also included waivers barring class and representative actions.

In March and April 2019, the petitioners submitted a total of 5,274 individual arbitration demands alleging misclassification in violation of the Fair Labor Standards Act. The demands triggered Postmates’ obligation to pay its share of arbitration filing fees, which the opinion describes as approximately $10 million. Postmates refused to pay, arguing that the demands were insufficiently specific and had not properly begun the arbitrations.

The petitioners then asked the court to compel arbitration. The parties agreed that the arbitration provision was valid and binding, but disagreed about additional conditions. Postmates sought an order requiring the petitioners to submit more detailed individual demands. The court granted the parties’ motions to compel arbitration but denied their requests for additional conditions, ruling that the arbitrator—not the court—must decide whether the demands complied with the agreement.

Postmates appealed that ruling and asked the court to stay, or pause, the order compelling arbitration while the appeal proceeded. Postmates also asked for a temporary 60-day stay while it sought a stay from the United States Court of Appeals for the Ninth Circuit.

Legal standard

A stay pending appeal is discretionary, not automatic. The party seeking one must address four factors: likely success on appeal, irreparable harm without a stay, harm to other interested parties, and the public interest. The first two factors are the most important.

Court’s reasoning

Likelihood of success

Postmates argued that the court should decide whether the petitioners’ allegedly generic demands violated the class-action waiver by attempting to create a classwide arbitration. The court rejected that argument. It explained that the central question was whether each demand included the information required by the arbitration agreement, and that the agreement delegated disputes about compliance and arbitrability to the arbitrator.

The court also rejected Postmates’ interpretation of the agreement’s exception to the delegation clause. The court read that exception as allowing a judge to decide only claims that the class-action waiver was unenforceable, unconscionable, void, or voidable. Because the petitioners were not making such a claim, the exception did not apply.

The court further explained that it had not compelled class arbitration. It had compelled the individual arbitration that the parties agreed to, leaving the arbitrator to determine whether the individual demands complied with the agreement. The court concluded that Postmates had not shown likely success on appeal or a substantial case for relief.

Irreparable harm

Postmates argued that it would suffer irreparable harm from potentially having to pay more than $10 million in nonrefundable arbitration fees. The court rejected that argument, stating that substantial litigation expense generally is not irreparable injury and that being required to arbitrate disputes that might later be found non-arbitrable is not, by itself, irreparable harm.

The court also reasoned that Postmates agreed that the petitioners’ misclassification claims were subject to arbitration. Even if Postmates prevailed on appeal, the petitioners could submit revised demands. The court stated that the fees resulted from the individual-arbitration arrangement in Postmates’ own agreement, which required couriers to bring claims individually rather than in a class action.

Because Postmates failed to establish either likely success or irreparable harm, the court did not need to fully address the remaining stay factors. It nevertheless observed that further delay would harm the petitioners and conflict with the public interest in prompt arbitration.

Disposition

The court denied Postmates’ motion for a stay pending appeal. The court also denied Postmates’ alternative request for a temporary 60-day stay while it sought relief from the Ninth Circuit.