from the flooding-the-system dept
Back in college, I took an arbitration class, and it was one of my favorite classes. The professor (James Gross, who just retired last year after teaching for an astounding 56 years) was amazing, and I became a little obsessed with the entire idea and process of arbitration as an alternative to the costly and much more time intensive court process. However, lots of big businesses became obsessed with the concept as well, and, as we’ve covered over the years, that’s resulted in them spending much of the early 2000s turning the system to their advantage.
First, they built in arbitration clauses to agreements that effectively blocked certain types of lawsuits with “binding” arbitration, which the Supreme Court said was fine. Then they said that unalterable “click-wrap” agreements with binding arbitration clauses could take away your rights to go to court. And the people studying arbitration results quickly learned that the businesses quite frequently win any arbitration claim, in part because the company is the one hiring the arbitrator, and if they side against the company too often, guess who isn’t getting hired again later?
So, forced arbitration agreements, for a while, turned into a method for big companies to screw over customers, users, employees and more.
But… over the last few years, we’ve been highlighting how people have started to fight back against the companies who forced arbitration on them by flooding them with arbitration claims. Don’t want to deal with class action lawsuits? Fine, how about a few hundred arbitration claims, each one you have to deal with separately? Amusingly, over the last few years, the same folks who spent decades twisting the arbitration system to their own advantage have been flipping out, now that arbitration claims have become a form of distributed denial of service attack in protest to the company’s bad behavior.
Now, as you well know, in the last few months, Elon Musk has laid off a huge percentage of Twitter’s former employees. When he took over the company it had around 7,500 employees. Within a month that number was closer to 2,500. The most recent report I’ve seen is that the company is down to around 1,000 employees. So, approximately 6,500 employees are gone.
Another important point: part of the purchase agreement that Musk signed (but apparently did not read very carefully, given his hilariously inept attempt to get out of it) was that employees under Musk’s ownership would get “substantially comparable benefits” to what they had under the old company, including severance payments:
Parent shall, or shall cause the Surviving Corporation or any of their Affiliates to, provide for each Continuing Employee (i) at least the same base salary and wage rate, (ii) short- and long-term target incentive compensation opportunities that are no less favorable in the aggregate than those provided to each such Continuing Employee immediately prior to the Effective Time (provided that Parent shall not be obligated to provide such incentives in the form of equity or equity-based awards) and (iii) employee benefits (excluding equity and equity-based awards) which are substantially comparable in the aggregate (including with respect to the proportion of employee cost) to those provided to such Continuing Employee immediately prior to the Effective Time. Without limiting the generality of the foregoing, during the Continuation Period, Parent shall provide, or shall cause the Surviving Corporation or any of their Affiliates to provide severance payments and benefits to each Continuing Employee whose employment is terminated during such period that are no less favorable than those applicable to the Continuing Employee immediately prior to the Effective Time under the Company Benefit Plans.
Of course, for a while, Musk, who verbally promised three months severance (which was below what the company had previously offered, and really only one month, since the first two months were required by the WARN Act, and were actually just continuing salary, since he had to give 60 days of notice for a layoff) refused to provide employees with any severance documentation. Then, when the documentation finally came, it was way less than they expected. They also included gag orders and giving up legal rights.
Many employees chose to fight this, including suing the company. But, those old pesky arbitration clauses meant that some of the lawsuits were dismissed, with the judge telling employees they had to go to arbitration, instead.
It turns out that many of them did.
1,986 former Twitter employees have filed arbitration claims.
And Twitter’s lawyers at the big law firm of Morgan Lewis are flipping out about it. They’re asking the arbitrators if they can combine the discovery process so they don’t have to go through 1,986 separate discovery efforts.
Given the identical and/or overlapping legal claims and factual allegations in these thousands of pending matters, a coordinated, universal discovery plan is imperative to litigate these matters efficiently, effectively, and fairly. Thoughtful coordination on the front-end across all pending matters will result in speedier resolutions, while also preventing prejudice, undue burden and waste of resources and expense for the parties and JAMS. Indeed, a coordinated, universal plan is the only practical way to resolve such an enormous number of similar arbitration matters.
Twitter’s lawyers note that there are four law firms handling the majority of the cases, with the largest (by far) being Lichten & Liss-Riordan (Shannon Liss-Riordan made herself known to Twitter employees basically as soon as Musk took over, so it’s not surprising that the majority of ex-employees went to her firm). Apparently 1,848 of the 1,986 arbitration cases have all come from this firm.
And while Morgan Lewis tried to get the firm to agree to a combined discovery plan, the firm has apparently rejected it (another high profile firm, run by another high profile lawyer, Lisa Bloom, apparently was willing to agree for the 49 cases that firm represented):
The Lichten & Liss-Riordan firm has rejected the concept of a universal discovery plan. Instead, they are seeking to schedule cases on a case-by-case basis with hearing dates as soon as September 2023. In one of their matters, the arbitrator has scheduled a hearing for January 10- 12, 2024. That decision and its implications for the rest of these related matters warrants JAMS’ immediate consideration of Twitter’s request.
The Bloom/Dixon firms, on the other hand, have negotiated and now executed an agreed upon UDP with Twitter.
Apparently Twitter’s lawyers hasn’t met with the other law firms that have brought arbitration claims yet. But, it seems they’re freaked out by the prospect of having to handle 1,848 separate discovery efforts.
The firm also notes that they wouldn’t be surprised if Liss-Riordan seeks to depose Elon Musk for each of the nearly 2,000 claims, because why not?
Twitter will seek coordination across the matters and various law firms because for most, if not all, witnesses, the testimony would be equally applicable across all arbitrations (or a large subset of them). These disputes will have to be briefed and resolved by potentially several hundred (or more) arbitrators. An obvious example is Elon Musk. Without conceding that Mr. Musk should be subject to deposition in the first place, whatever testimony Mr. Musk has to offer will be equally applicable to all other matters, in whole or in part, and it would be wholly unreasonable to permit repeated depositions of him or other individuals across the numerous arbitrations
The law firm is even arguing that if there need to be depositions, they should be universal across all for firms that are representing claims, or otherwise even having people give four separate depositions for each firm would be too much.
Well, yeah, maybe Twitter should have thought of that before laying off everyone without providing them the proper severance? Just saying.
Either way, Twitter’s lawyers basically beg JAMS (basically the biggest arbitration firm, which will be handling most of the claims) to let it effectively force the law firms to accept the company’s proposed universal discovery protocol:
We have arrived at an inflection point for these mass arbitrations. In the absence of an agreed-upon universal discovery protocol, adjudicating these approximately 2,000 arbitrations will be wholly impractical, there will be countless duplicative and unnecessary disputes, as well as the potential for inconsistent and even conflicting rulings, and the parties will waste enormous amounts of time, resources (including JAMS’) and effort across the arbitrations. Accordingly, Twitter respectfully asks that JAMS exercise its authority and discretion under Rule 6, and direct and assist the parties to agree on and implement a universal discovery protocol.
And, it seems like there’s a decent change that JAMS will agree. I mean, as fun as it would be to have to watch Twitter have to deal with 2,000 independent discovery requests, the company’s lawyers are not wrong to say much of it would be duplicative. The real question, though is how this can be done that recognizes that many of the 2,000 employees may actually have somewhat different claims that require somewhat different discovery demands.
Either way, it’s noteworthy that so many ex-employees are claiming a breach of contract.