New Lawsuit Seeks to Transform Large Business Tool Arbitrations Against Leading Customer Service Provider – ProPublica
Arise Virtual Solutions is violating the rights of customer service agents across the country, claims a lawsuit filed in federal court last week. The company, according to the complaint, is getting away with “gross violations of the law” by keeping “its workers in the dark about their rights.”
The lawsuit tries to turn one of Arise’s biggest legal advantages – that its workers agree to individual arbitration, which prevents them from taking coordinated legal action – against the company. Shannon Liss-Riordan, the plaintiffs lawyer who brought the action, asked the court to order Arise to provide her with the names and contact details of the company’s customer service agents. (Its CEO said last year that Arise has around 70,000 agents.) That could allow Liss-Riordan, who quarreled with Arise for years in courts and private arbitrations, to brief those workers of their possible legal claims. If she hires enough agents as clients, she could spark a wave of arbitration demands against Arise in what could turn into a war of attrition.
ProPublica investigated Arise last year, and that report is cited throughout the trial. (ProPublica also partnered with NPR’s Planet Money on a podcast episode that featured Liss-Riordan’s attempts to hold Arise to account.) Drawing on transcripts from arbitration hearings, the internal financial slides , corporate contracts and other documents, our reports have shown how Arise has helped shape an underground industry network that enables large companies to reduce their labor costs by outsourcing customer service to a large network agents who work from home. Outsourcing is discreet: agents are even prohibited from publicly revealing the branded companies from which they take customer calls.
Arise, a privately held company headquartered in Florida, sells the services of its customer service representatives to well-known brands like Disney and Airbnb. Arise says his agents are independent contractors; officers sign forms that say the same. But Liss-Riordan says they’re actually Arise employees who are deprived by the company of overtime, minimum wages and other protections under federal law.
His lawsuit alleges that Arise violates the Fair Labor Standards Act of the United States by falsely classifying agents as freelancers while exercising such extensive control over them through training guidelines, mandatory capital expenditures and ‘other job requirements that they are actually employees and should be paid accordingly. Liss-Riordan has made this argument before and won it – before at least two arbitrators and before an administrative law judge on the National Labor Relations Board. (ProPublica reported this year that a Department of Labor investigator came to the same conclusion and estimated that Arise owed workers $ 14.2 million; Arise’s lawyers, however, did not “politely agreed ”and the Ministry of Labor dropped the case.)
Arise has yet to file a response to the new lawsuit and declined to comment for this story. In previous lawsuits, the company has said its practices are legal and transparent. In a statement provided to ProPublica last year, Arise said its business model is based on “freedom of choice” and that “the opportunities it offers have shown overwhelmingly positive results” for agents who sign up. .
Liss-Riordan has been blocked in her efforts to mount a class action lawsuit on behalf of Arise’s agents. This is because Arise, like many other companies, requires workers to file complaints through individual arbitration. At least three times before, Arise has had out-of-court class actions dismissed on the basis of these binding arbitration agreements. Arise may well demand the same result in this latest trial. Arise, argues the recent lawsuit, has succeeded “in using his binding arbitration agreements to protect himself from the law” and he “still engages in the same illegal behavior” even after the arbitrators have ruled against the company and its business model.
This time, Liss-Riordan is preparing a possible workaround, or at least a new way to leverage Arise: his petition asking the U.S. District Court to order Arise to turn over a list of all names. of its agents over the past three years, as well as their contact details. Armed with that list, Liss-Riordan could reach out to those agents to let them know they could have legal action against the company – in court or, where appropriate, in arbitration.
This could open up the possibility of forcing Arise to defend hundreds or thousands of individual arbitration claims, a legal strategy that has prevailed in recent years with plaintiffs’ attorneys against companies such as DoorDash, Comcast and AT&T. Last year, a California federal judge ordered DoorDash to pay arbitration filing fees for every claim filed by delivery drivers. Each charge was $ 1,900. There were 5,010 drivers. For DoorDash, that meant a tab, just for the application fee, of $ 9.5 million. “The only thing they have left is the right to arbitrate,” the judge said of the drivers, according to a transcript of the hearing. Referring to the millions in filing fees, the judge told DoorDash legal counsel: “This is what you negotiated, and you are going to do it.
Without a court-ordered list, finding and contacting Arise’s network of customer service agents would present significant challenges. Agents work from home. They are isolated from each other. There is no water cooler to congregate around, no bulletin board in the break room to help spread the word. Allowing Arise to keep her agent list confidential “would allow Arise not only to avoid being held accountable in court, but also in arbitration,” Liss-Riordan wrote in her petition.
For lawyers representing a class of workers, taking claims one by one to arbitration is not effective. The process takes a long time in exchange for payments which may be minimal. Companies have long relied on this inefficiency to deter litigation. But if the lawyers representing the workers jump in, this inefficiency can backfire on the company, which could be forced to pay a plethora of arbitration and attorney fees in a long succession of cases.
In 2014, Liss-Riordan represented a Houston woman in an arbitration case against Arise. The arbitration hearing lasted two days. Arise was represented by three lawyers. An executive from Arise who lived in Florida traveled to Texas to testify. Liss-Riordan’s client won, with the arbitrator ruling that the agent had operated as an employee, regardless of Arise’s insistence that she was an independent contractor. The arbitrator ordered Arise to pay the woman $ 5,841.82 for unpaid minimum wage, training time, and equipment expenses. Then the arbitrator doubled the damages, finding that Arise had no solid legal basis to believe she was right. Arise therefore paid $ 11,683.64 in damages, in addition to all that he spent in fees, attorney fees and other miscellaneous expenses.
A case with such costs could be negligible for a company like Arise. But now imagine thousands of such cases – a bitter war that could undermine the company’s attention and finances. For Liss-Riordan, that’s what getting Arise’s list of representatives could mean. “We are ready to file hundreds or thousands of arbitration requests if we need them,” she told ProPublica.
Boston-based Liss-Riordan has a long history of attacking big business. She took on Uber, FedEx, Amazon and others, accusing them of deceiving employees by falsely classifying them as independent contractors. She recently made an offer for the US Senate but dropped out last year before the Massachusetts Democratic primary.
In the lawsuit filed last week, Liss-Riordan attached statements from four women who previously worked as agents in the Arise network. Their accounts detailed the types of costs that agents typically absorb as independent contractors. In addition to paying $ 10 to $ 40 per month for landlines, the four women described purchasing all kinds of office equipment, including computers, monitors, headsets, Ethernet cords, keyboards, webcams, printers and improved Wi-Fi. A former agent estimated his equipment costs at $ 3,800.
Liss-Riordan filed a lawsuit in Missouri, one of seven states that come under the U.S. Court of Appeals for the 8th Circuit. It was on purpose. Two federal courts of appeals, in the 5th and 7th Circuits, have denied the kind of demand she makes, for a list of potential plaintiffs in a class-action lawsuit where the case may well be referred to arbitration.
But within the 8th Circuit, a number of US district courts have gone the other way and ordered companies to produce such lists. “So we tried to choose a circuit where we could get a better result,” said Liss-Riordan. A recent example occurred in Iowa, where in April a federal judge ordered a strip club to provide a list of exotic dancers it had classified as independent contractors rather than employees.