HMM: Uber gambled on driver arbitration and might have come up the loser.
As the ride-hailing titan prepares to go public this week, in a listing that could value Uber at almost $84 billion, the number of U.S. drivers who have filed arbitration demands against Uber has swelled to more than 60,000, according to the company’s prospectus. The figure surprised legal experts, who said resolving that many cases would take decades and cost Uber at least $600 million — with no end in sight.
Uber’s pending listing this week, on the heels of a planned strike by drivers, has brought the legal tactic into sharper focus. From Uber’s perspective, arbitration prevents drivers from banding together in class actions in open court, and from possibly winning a ruling with the power to threaten a linchpin of the company’s business model: treating drivers as independent contractors, avoiding the costs of full-time employees.
Arbitration decisions, whether for or against the company, don’t set any legal precedent, and the results are confidential. “Uber kind of picked its poison in that regard,” said Nancy Cremins, general counsel at Globalization Partners in Boston.
But while the choice might have initially deterred lawsuits, 60,000 arbitrations are “a death by a thousand cuts,” Cremins said. “The volume is impossible to deal with from an administrative and legal perspective.”
We live in a remarkable age, when the union option might be the easier and cheaper one.