Ex-Employees Move to Compel Twitter to Pay Arbitration Fees Under JAMS Rules

Seven petitioners moved the U.S. District Court for Southern New York in Manhattan for an order compelling X, formerly Twitter, to pay arbitral fees in accordance with the rules of JAMS in the absence of governing New York law mandating any other division of fees, said their notice of petition Thursday (docket 1:24-cv-02135) to compel Twitter and X to arbitrate with them in accordance with the terms of Twitter’s dispute resolution agreement (DRA).

Terms require the respondents to pay the fees for such arbitrations, said petitioners Burgious Frazier, Yosub Kim, Wayne Krug, Ben Perez, Vanessa Szajnberg, Nicholas Tapalansky and Shelly Yip in a separate memorandum of law in support of their petition to compel Twitter and X to arbitrate in accordance with the terms of Twitter’s DRA.

When Elon Musk acquired Twitter, he “promptly laid off nearly 75% of the workforce, offering them a paltry severance far less than the amount Twitter had previously promised,” said the memorandum. That prompted “thousands" of former Twitter employees to file arbitration demands, it said.

The petitioners were required to sign Twitter’s DRA as a condition of accepting employment and didn't opt out of the DRA’s arbitration provisions, said the memorandum: The former employees acknowledge that fact, it said. “They are ready, willing, able and prepared to arbitrate” and have filed arbitrations, it said. And Twitter has argued in other proceedings that its employees are required to arbitrate “and has sought to compel them to arbitrate,” it said.

Though Twitter contends that employees are required to arbitrate, it also maintains it doesn’t have to pay the fee required under Rule 31(c) of the JAMS employment rules and minimum standards, said the memorandum. It refuses to do so even though it selected the JAMS employment rules to govern those arbitrations, the memorandum said. In Twitter’s view, the DRA’s provision relating to payment of forum fees conflicted with Rule 31(c) and the minimum standards that only an arbitrator could rule on that position and require them to pay the fees. If the arbitrator won’t make a ruling to that effect without the fees having first been paid, “well that’s the employee’s problem, not Twitter’s,” the memorandum said.

In the months after the ex-Twitter employees filed their arbitration demands, JAMS invoiced the respondents for their share of the initiation fees and indicated JAMS concluded that the minimum standards would apply to arbitration, it said. The respondents didn’t object to the statements and filed answers and affirmative defenses, paid their share of case initiation fees and “participated in the selection of arbitrators,” it said.

After proceeding in arbitration for several months, the respondents began “objecting to the application of the JAMS rules requiring them to bear the fees," arguing that the DRA “superseded those rules,” said the notice. On June 21, JAMS rejected respondents’ objection; on June 28, respondents wrote JAMS indicating they would refuse to proceed under the minimum standards, asserting that only an arbitrator could answer questions regarding the interpretation of the DRA.

The effect of Twitter and X’s position, and refusal to pay arbitration fees, “was to halt the progress of hundreds of arbitrations involving former Twitter employees who contended that they had been denied severance benefits which had been promised to them,” said the memorandum.

In another case, the petitioners’ counsel advanced the fees for that petitioner to allow retired Magistrate Judge Frank Maas to rule on the disputed contractual interpretation Twitter relied on as the justification for refusing to arbitrate under the terms of its DRA, said the memorandum. In that case, petitioner Zhang Yunfeng signed, as a condition of employment with Twitter, a DRA “substantively identical” to the relevant parts of the current case, it said. Twitter and X insisted in that case that the DRA “relieved them of their obligation to make JAMS-ordered payments of arbitration and arbitrator fees,” the memorandum said.

Zhang moved for an award declaring that the DRA required Twitter to pay all the arbitration costs, and Twitter and X opposed. Maas held that the DRA’s provision regarding payment of arbitral fees didn't conflict with Rule 31(c) and the minimum standards, and that Twitter’s agreement in the DRA to abide by the JAMS rules encompassed an agreement to abide by and pay the fees required by Rule 31(c) and the minimum standards, it said. Maas issued a final award ordering that Twitter pay the JAMS and arbitrator fees, other than the initial case management fee, in connection with the proceeding, but despite that ruling, Twitter maintains the same objection in “hundreds of other matters,” including petitioners’, the memorandum said.

The petitioners thus seek an order compelling the respondents to arbitrate “in accordance with the terms [of the DRA],” including paying the forum fees required by the rules Twitter “selected to govern those arbitrations, and contractually agreed to abide by,” the memorandum said. The court should grant the petition, it said.