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Comment by tyingq | Hacker News Reader

"The retail giant made the change after plaintiffs’ lawyers flooded Amazon with more than 75,000 individual arbitration demands on behalf of Echo users. That move triggered a bill for tens of millions of dollars in filing fees, according to lawyers involved, payable by Amazon under its own policies."

https://www.wsj.com/articles/amazon-faced-75-000-arbitration...

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Nice quote from Hacker News's favorite judge:

> “No doubt, DoorDash never expected that so many would actually seek arbitration,” U.S. District Judge William Alsup wrote in an order last February. “Instead, in irony upon irony, DoorDash now wishes to resort to a class-wide lawsuit, the very device it denied to the workers, to avoid its duty to arbitrate. This hypocrisy will not be blessed.”

"This hypocrisy will not be blessed"

Actual poetic justice.

Judicial poetry.

The phrase “hoisted upon their own petard” was almost made for moments like these.

The New York Times also covered this trend:

>‘Scared to Death’ by Arbitration: Companies Drowning in Their Own System

https://www.nytimes.com/2020/04/06/business/arbitration-over...

or https://web.archive.org/web/https://www.nytimes.com/2020/04/...

I believe their podcast “The Daily” also had an episode on it, even got the original lawyer that discovered the trick. It’s a pretty good podcast for those who may not know about it

Not pretending to be in the same league as The Daily, but we have a more tech-focused interview with Teel Lidow (the guy I think you're talking about - he's the lawyer who founded FairShake, the company in that NYT article) for the Anvil podcast, along with their tech lead.

Fun fact - the entire thing was prototyped by the lawyers using no-code systems, then only rewritten with an actual Web framework when they had proven out the idea:

https://anvil.works/blog/podcast-fairshake

It definitely predated Teel by nearly a decade.

Do you know which episode?

I wasn’t close.

https://www.wsj.com/podcasts/the-journal/why-suing-amazon-ju...

Different podcast but that’s the episode. The Daily is still good.. the one linked above is good as well

It was a very clever move. Well done!

I participated in the arbitration swarm against IndieGoGo for tortious interference after they shut down and refunded a campaign after it had completed successfully. The details of the matter aren't public but the mechanics are.

In order to participate, consumers pay a one-time fee capped at $250 and they pick up the rest. "The rest" includes the balance of the arbitration fees ($1500). Companies used to ignore this and leave people in arbitration limbo but California changed their laws a couple years back and if the company fails to pay, it automatically goes into arbitration and they have to pay after.

More importantly, $1500 each isn't the big cost. The more expensive part is they have to individually respond and work them through the process. If you have 100 or 1000, the billable hours - or even just corp legal team's hours - start racking up quickly and it ties up and slows down all other matters.

And none of this considers the consequences of the arbitrations. Win or lose the first few, people can iterate and shift the outcome over time.

So yes, it becomes a legal DDOS.. and Amazon dealing with 75k of them is a staggering number and still only a fraction of what they could have faced.

Is there any more information available on which campaign was shut down or why they did it? Perhaps pre-settlement discussions on organizing the swarm? I'm really curious as to the backstory.

In Germany banks have to reimburse some fees after a court decision. But each customer has to write their own letter, the banks offer no forms or real help because it's not in their best interest. Still Deutsche Bank put aside 350 million Euro, only 100 of those is for fees, the rest I assume is the extra administrative hassle.

Just pulling some numbers out of a hat, if they are paying $250/hr for legal counsel, and each of these disputes is generating one 8-hour day's worth of billable time, then Amazon is looking at $1.5 billion in legal fees to individually arbitrate each of these disputes.

I hardly think they are paying $250/hr for external counsel on each and every of those 75 000 arbitration cases. Amazon can easily justify hiring in-house counsel, and regular employees of legal department don't make $500k/year. More likely, they are going to hire a bunch of paralegals at $40/hour, and have each spend 1 hour tops on arguing each case.

Wow. A legal DoS attack. Interesting.

Hmm, that's not a first. Our legal systems (its AFAIK world-wide phenomenon) are flooded as it is, as its slooowwwww. In US, politicians use their time with amendments (?) to slow down the adoption of a law. Not sure how that exactly works as I'm not from US.

Our legal systems may be slow, but if you try to spam the court, you will not have a good time.

You can't outright spam the court. But you can fill the court with lots and lots of legitimate cases, and lots of people all filing suit against the same company for essentially the same thing is a real thing that does legitimately happen. The US courts have developed some mechanisms - class action, but also a thing called multidistrict litigation (https://en.wikipedia.org/wiki/Multidistrict_litigation) to help with these things.

I've never been personally involved in arbitration, but I wouldn't be at all surprised if the arbitration firms have not developed any real equivalents. Heck, being for-profit organizations, I would think that they have every incentive to not develop anything like that.

In the US, arbitration HAS developed the equivalent of class action cases. However, most companies that require their customers to agree to mandatory arbitration also require them to agree not to utilize class action options.

Scientology used this method to good effect (good for them, at least) to gain tax exempt status in the US: https://en.wikipedia.org/wiki/Tax_status_of_Scientology_in_t...

The court is already overburdened as we speak.

My opinion on the matter is that plea bargain is a hack to work around a slow legal system. If it weren't for the slowness of the legal system, we would not need plea bargain.

Also, since there's no verdict by a judge, I find it not rather undemocratic.

Lower courts and court cost are also ways to put less stress on the legal system, but they can be balanced.

Honestly, you’ll have less of a bad time than you deserve. Judges are way too slow to sanction bad actors.

Do you know why companies' policies say the fees are payable by them? Is there a law requiring this?

Not a specific law, to my knowledge, but a few court cases that have established over the years that arbitration agreements must make every effort to be reasonable and accessible for the consumer. Unreasonable or unconscionable agreements can and have been successfully challenged in the courts. The company footing the bill is a _de facto_ requirement.

For context, if the plaintiff needs to personally cover $150 of the arbitration fee, that puts their cost in line with what it would typically cost them to pursue a case in small claims court.

It's a condition of the arbitration firm. Uber tried to switch to an arbitration firm with cheaper fees after a flood of driver disputes, but the drivers won their right to use the original firm.

Interesting. I guess then in that case the question would be why do the firms have such conditions to begin with? Isn't it better for all the companies to just make people pay the costs too?

I did some googling and found this:

http://www.vsb.org/docs/valawyermagazine/apr02kirsner.pdf

A cursory read suggests that having arbitration fees paid by the customer opens the door for them to ask the courts to throw out the arbitration clause; so it's safer to assume responsibility for the costs to ensure the clause remains enforceable.

Whoever pays the cost becomes the customer, with all the incentives that entails. The point of arbitration is keeping the decision makers incentivized towards the companies in a way that judges and juries would never be.

Why works it matter who's actually making the payment? I would've thought what matters is who is bringing them business & causing them to earn money, not who is actually paying them? It's not like customers can take their businesses to another arbitrator.

Because other potential customers will see that the arbitrator usually sides with the business and choose to use their arbitration service.

Sorry I still don't get it. Couldn't the same thing happen even if consumers were paying? It's still the business that's bringing them the fees (even if consumers are paying them), so it seems like they would still be incentivized to side with the businesses rather than with the consumers. The consumers have no choice here, so I don't see what incentive they have to rule in favor of consumers even if they're the ones making the payments.

>The consumers have no choice here

For the choices that matter to the arbitration firm, they absolutely do. Without a customer who is willing to initiate arbitration proceedings, there are no fees to be collected.

If there is a huge upfront financial burden to the customers, the customers are much more likely to just drop the whole matter. And while the businesses would absolutely consider consumers not pursuing grievances to be a win, the arbitration firm does have an incentive to actually have there be some arbitration.

D'oh, I feel dumb for missing this. Thanks!

Don’t. My train of thought went in the same direction, and I was enlightened by this explanation as well.

Thanks! Glad you found it helpful.

This is a surprising insight. Can anyone dispute it?

As far as I can tell, the actual point of arbitration is more to dodge the extensive discovery and subpoena powers of actual courts. If you're suing Amazon in small claims court, if you can convince the judge that Jeff Bezos' testimony meets the legal bar, you can compel him to testify in court. Or you can compel Amazon to turn over broad swathes of potentially damaging information. You can even force third parties to come in and testify, if it should be relevant.

In arbitration, you do not have a judge, so there isn't subpoena power, and discovery is extremely curtailed.

That would make sense if it's the case, but in that case, is it really worth it for Amazon to give up that protection for the tens of millions of dollars at stake here? I would've thought they'd still prefer to pay that.

The way to dispute it would be to look at actual statistics to figure out if the arbitrators appear to be more biased than regular courts. I think some studies have actually done that and found that there is no inherent bias towards the corporate defendant in arbitration, but I don't have a ready cite in front of me.

On the contrary, every study I know of shows substantial bias towards the corporate side in these sorts of disputes. That's why they're attractive to the corporation in the first place. This link explains how even a "fair" system (arbitrator chosen from a random list) is gamed:

https://www.gsb.stanford.edu/insights/why-binding-arbitratio...

It's simple. The optimum situation from Amazon's point of view is a system that gives almost enough justice to avoid public outcry, and no more. The most outrageous cases should get paid a modest amount, average cases should get paid a tiny amount, and no stretch cases should get paid. Amazon anticipated that by paying for the arbitration process, they'd end up with a set of pro-Amazon arbitrators and that, in itself, would keep the number of cases filed to a minimum. What they didn't anticipate was enough people angry enough to file cases even in a biased system just to mess with the company.

The arbitration firm would have a harder time collecting their fees from the users than the companies. Fees can be around $10k per case.

If you were going to court would you rather be the one paying the judge or the other side? Even if the arbitration board is supposed to be neutral they know on which side the bread is buttered.

You can A/B test. Company A awards your firm wins in 50% of your arbitration cases. Company B awards you wins in 65% of your arbitration cases. Which contract should you renew next year?

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