Welcome back for another week of What's Next, where we report on the intersection of law and technology. We're kicking off the new year with a review on the evolution of arbitration law in 2019 and the challenges that could shape it going forward. Plus, Lyft and Postmates take on California's contractor law. And we forecast 2020's biggest tech IPOs. Let's chat: Email me at [email protected] and follow me on Twitter at @a_lancaster.

Judge Kimberly Mueller, United States District Court for the Eastern District of California

Arbitration Prognostication

Arbitration had a bit of a coming of age tale in 2019. For decades, legal experts have tested the boundaries of the alternative dispute resolution practice, and now arbitration law is grappling with the consequences. Here's a look at the past year's biggest decisions shaping arbitration going into 2020.

Forced Arbitration:
On Monday, a federal judge blocked a California law that would bar employers from forcing workers to sign arbitration agreements as a condition of their employment.

Just two days before California's Assembly Bill 51 was set to take effect, business groups including the U.S. Chamber of Commerce and the National Retail Federation convinced U.S. District Judge Kimberly Mueller of the Eastern District of California to grant a temporary restraining order against the law.

In a December complaint, the groups' lawyers from Mayer Brown and Littler Mendelson argued that the Federal Arbitration Act preempts California law and could create uncertainty around employment contracts. Mueller said the stakes were especially high since violators could get slapped with a misdemeanor.

"The court finds that plaintiffs have no other adequate legal remedy to preserve the status quo for a short period of time until the court can consider their motion for a preliminary injunction on a more well-developed record, with full opposition briefing as well," she wrote.

The business groups will also get a shot at getting Mueller's approval for a preliminary injunction at a Jan. 10 hearing.

"We are pleased that the court placed AB 51 on hold until it can determine whether the law is constitutional, so that in the meantime employers will not be exposed to criminal liability for including an arbitration agreement among the routine terms and conditions of employment," Mayer Brown's Donald Falk said in an email.

Mass Arbitration:
This year, the growing trend of arbitrating mass claims individually also heated up. In the U.S. District Court for the Northern District of California, plaintiffs' firm Keller Lenkner is asking Judge William Alsup to compel arbitration for thousands of claims filed by couriers against third-party delivery company DoorDash.

Keller Lenkner argues that DoorDash's Gibson, Dunn & Crutcher attorneys helped draft the guidelines of an arbitration venue the company shifted to in the midst of couriers' arbitration attempts. DoorDash's new venue, the International Institute for Conflict Prevention & Resolution (CPR), has a new rule that calls for 10 bellwether arbitrations when more than 30 individuals file a similar claim against an employer.

In a letter brief, Gibson Dunn's Joshua Lipshutz denied the claims, and said that although the firm consulted with the CPR over the rules, nothing "nefarious" occurred.

On Dec. 20, Alsup ordered CPR to comply with Keller Lenkner's discovery request for documents involved with the rulemaking process between Gibson Dunn and DoorDash. CPR president and CEO Allen Waxman will also have to sit for a deposition.

Neutral Disclosures:
In October, the U.S. Court of Appeals for the Ninth Circuit ordered that neutrals must disclose if they are an owner in their alternative dispute resolution organizations. The ruling against Monster Energy Co. and City Beverages LLC came out of an alleged appearance of neutral partisanship for repeat customers.

"We conclude, given the Arbitrator's failure to disclose his ownership interest in JAMS, coupled with the fact that JAMS has administered 97 arbitrations for Monster over the past five years, that vacatur of the Award is necessary on the ground of evident partiality," wrote Ninth Circuit Judge Milan Smith.

In a dissent, Judge Michelle Friedland said the decision "could spur years of quibbling over the extent of disclosures required by arbitrators."

Growth in the Garden State:
California wasn't the only state hammering out arbitration law. Review the state's role in arbitration developments in 2019 from New Jersey Law Journal's Charles Toutant here.

Uber and Postmates Push Back

Gibson Dunn is also representing Uber, Postmates and two gig economy workers in a suit arguing that California's Assembly Bill 5 violates the Equal Protection and Due Process Clauses of the Fourteenth Amendment, as well as the Ninth Amendment.

The law codifies the California Supreme Court's Dynamex Operations West v. Superior Court decision, which instituted a test to determine worker classification. The law seeks to address claims that companies such as Uber and Postmates misclassify their workforce as contractors.

The complaint filed in the U.S. District Court for the Central District of California claims the law, which took effect New Year's Day, would stifle the gig economy workers' valued flexibility and could cripple Uber and Postmates' business model.

"For some companies, the burdens of restructuring their businesses and the potential penalties from the threatened enforcement of AB 5 could force them to stop doing business in California," wrote the Gibson Dunn team lead by Theane Evangelis.

The companies argue legislators' "targeting of app-based workers and platforms" violates the Equal Protection Clauses and California Constitution, according to the complaint, and there's "simply no rational basis for subjecting exempt occupations and non-exempt occupations to different rules and burdens."

The case has been assigned to District Judge Dolly Gee and Magistrate Judge Rozella Oliver. A 2018 profile from The New York Times described Gee as "an advocate for the underdog," a reputation which could come into play as the law has been framed as a protection for working class folks in need of solid jobs. "It's our duty to look out for working men and women, not Wall Street and their get-rich-quick IPOs," bill author Assemblywoman Lorena Gonzalez said in a press release.

IPOs Down the Road

Combined, the initial public offerings of Uber, Lyft, Pinterest, Peloton and Slack generated nearly $14 million in fees for their outside counsel in 2019. However, more major IPOs are planned for 2020, reports business of law reporter Xiumei Dong.

>> Airbnb Airbnb announced in September that it will push off an IPO sometime in 2020. The company was valued at $31 billion in its latest round of private financing about three years ago.

>> Robinhood As of right now, financial services company Robinhood's IPO date is TBD. But last year, CEO Baiju Bhatt said the company was indeed pursuing an IPO. In its latest financing round in July, supported by counsel from Gunderson Dettmer, Robinhood reported raising $323 million in Series E funding at a company valuation of $7.6 billion.

>> Postmates Postmates kicked its IPO down the road in October, pointing to a poor market conditions. The delivery platform reported a $2.4 billion valuation in September.

>> Instacart In 2019, Instacart CEO Apoorva Mehta said that "an IPO is definitely on the horizon" for the grocery delivery service company. The company was valued at around $8 billion in 2017.

>> 2020: An E-Discovery Odyssey Legal tech experts expect major developments in e-discovery over the next year. Some say trends that have been captivating the legal and tech industries, such as deepfakes and data from the internet of things, will make their way into the e-discovery world. Others predict 2020 will be the year long overdue diversity takes hold in the space. Read more from Zach Warren here.

>> HP's Bid to SCOTUS Ahead of the Supreme Court's certiorari votes scheduled for Jan. 10 on six Section 101 patent cases, HP Inc. is telling the justices why HP v. Berkheimer should also be thrown in the mix. The case, which centers on technology for computer file storage, asks whether patent eligibility is a question of law for the court or a question of fact for the jury. HP argues that the solicitor general has landed on the former. "The government offers no defense of the decision below and concedes that the 'substantial uncertainty' the decision caused has had 'considerable practical consequences,'" HP wrote in a supplemental brief. Read more from Scott Graham here.

>> The Holographic Judge In 2017, China launched the country's first court powered by artificial intelligence. Since then, the Hangzhou court has heard more than 3 million cases. Beijing followed suit the next year with an Internet Court, and Estonia has an AI judge in the works. As judges take the form of AIs and holograms, a lingering question remains: Are these developments utopian or dystopian? Read more from Cravath, Swaine & Moore's Katherine B. Forrest here.

>> Ransomware Retribution A Georgia-based manufacturer of electrical cables is suing an alleged hacker after its confidential business information was posted online following a ransomware attack. Southwire Company claims an unknown hacker demanded millions of dollars in exchange for not leaking its private information. The company alleges the hacker violated the federal Computer Fraud and Abuse Act and is asking the U.S. District Court for the Northern District of Georgia for a preliminary injunction requiring the bad actors to abandon their ransom demands and plans to publish the information online. Read more from R. Robin McDonald here.

Thanks for reading. We will be back next week with more What's Next. Wishing you all the very best in 2020.