Bekele v. Lyft, Inc.

Decision Date09 August 2016
Docket NumberCivil Action No. 15-11650-FDS
Parties Yilkal BEKELE, on behalf of himself and all others similarly situated, Plaintiff, v. LYFT, INC., Defendant.
CourtU.S. District Court — District of Massachusetts

Adelaide H. Pagano, Shannon E. Liss-Riordan, Lichten & Liss-Riordan, P.C., Boston, MA, for Plaintiff.

David J. Santeusanio, James D. Smeallie, Michael T. Maroney, Nathaniel F. Hulme, Robert M. Shaw, Holland & Knight, LLP, Boston, MA, for Defendant.


SAYLOR, District Judge

This is a putative class action arising out of a ride-sharing company's alleged misclassification of its drivers as independent contractors. Jurisdiction is based on diversity of citizenship. Plaintiff Yilkal Bekele has brought suit individually and on behalf of other individuals working as drivers in Massachusetts for defendant Lyft, Inc. The complaint alleges that Lyft has wrongfully classified its drivers as independent contractors, rather than employees, in violation of the Massachusetts Wage Act, Mass. Gen. Laws ch. 149, § 148B. Bekele seeks a declaratory judgment that Lyft drivers are employees under Massachusetts law, as well as damages for unpaid wages and other forms of restitution.

Lyft has moved to compel arbitration and dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6) and the Federal Arbitration Act, 9 U.S.C. § 1 et seq. Lyft contends that when Bekele agreed to Lyft's "clickwrap" Terms of Service Agreement, he agreed to a valid arbitration provision requiring him to submit "any legal disputes or claims arising out of or related to [Lyft's Terms of Service Agreement]" to binding individual arbitration. Bekele contends that the agreement is invalid because he did not receive adequate notice of the arbitration provision, and did not assent to it. He also contends that the agreement is unenforceable under the FAA because it is unconscionable under Massachusetts law and illegal under the National Labor Relations Act.

During oral argument, the parties agreed that Lyft's motion to compel arbitration and dismiss the complaint should be converted into a motion for partial summary judgment concerning arbitrability. For the reasons set forth below, Lyft's motion to compel arbitration will be granted and the action will be dismissed.

I. Background
A. Factual Background

Unless otherwise noted, the following facts concerning arbitrability are undisputed.

1. The Parties

Defendant Lyft, Inc. is a California-based company that facilitates peer-to-peer ride-sharing through a mobile-phone application ("the App"). (Still Decl. ¶ 4). After downloading the App, passengers can request a ride through it and Lyft drivers can elect to pick them up. (Id. ). Plaintiff Yilkal Bekele is a Massachusetts resident who has worked as a Lyft driver since August 2014. (Compl. ¶ 5).

The complaint alleges that Lyft has misclassified its drivers as independent contractors in violation of the Massachusetts Wage Act, Mass. Gen. Laws ch. 149, § 148B.1 It alleges that as a result of that misclassification, drivers must pay for expenses that their employer Lyft should pay for, including costs of vehicle ownership and maintenance, gas, and insurance. (Id. ¶ 2).

2. Lyft's Registration Process

In order to use Lyft as a passenger or a driver, a user must complete Lyft's registration process. (Still Decl. ¶ 7). To begin the registration process, both prospective passengers and prospective drivers are required to download the App. (Id. ). Once a user downloads and opens the App, he or she is prompted to enter either a mobile-phone number or Facebook-profile credentials and to follow further registration steps. (Id. ¶¶ 7-9). After those registration steps, a user must agree to Lyft's Terms of Service Agreement ("TOS") to complete the registration process. (Id. ¶ 10). The text of the TOS appears on the user's screen; the user can scroll through the entire agreement on the screen. (Id. ¶ 12). At the bottom of the TOS, the App presents the following requirement: "Please agree to the Terms of Service to continue." (Id. ).

All users must click the "I accept" button to accept the TOS and begin using the App. (Id. ). A user, regardless of whether he or she is a passenger or driver, cannot complete the registration process or use the App without accepting the TOS. (Id. ). After the user's acceptance of the TOS, he or she can request a ride as a passenger or begin the application process to become a Lyft driver. (Id. ).

3. Lyft's Terms of Service Agreement

When a user electronically accepts Lyft's TOS by clicking "I accept," the company is notified of the date and time of his acceptance. (Id. ¶ 13). Lyft stores and maintains the registration records of its users. (Id. ). According to Lyft's records, Bekele successfully registered for Lyft by electronically agreeing to the TOS on three occasions: May 19, 2014; September 24, 2014; and October 11, 2014. (Id. ¶ 14; Def. Exs. 1-3).2

The TOS in effect on May 19 was dated May 8, and the TOS in effect on September 24 and October 11 was dated July 28. (Gallagher Decl. ¶¶ 5-6; id. Exs. 2, 3). Although the two versions of the TOS accepted by Bekele have slight differences, they contain identical arbitration provisions. (Id. ¶ 7; Compare id. Ex. 2 at 13, with Ex. 3 at 21-22). For the purposes of this motion, the parties agree that the last version of the TOS agreed to by Bekele—the July 28 TOS accepted by Bekele on October 11—is the controlling agreement.

In print format, the TOS agreed to by Bekele on October 11, 2014, is 33 pages long and contains headings that separate sections. On page 2 of the TOS, the agreement provides as follows:

IF YOU DO NOT AGREE TO BE BOUND BY THE TERMS AND CONDITIONS OF THIS AGREEMENT, PLEASE DO NOT USE OR ACCESS LYFT OR REGISTER FOR THE SERVICES PROVIDED ON LYFT. We may amend this Agreement at any time by posting the amended terms on the Lyft Platform. If We post amended terms on the Lyft platform, You may not use the Services without accepting them. Except as stated below, all amended terms shall automatically be effective after they are posted on the Lyft Platform. This Agreement may not be otherwise amended except in writing signed by You and Lyft.

(Id. Ex. 3 at 2).

Most critical to this dispute, the agreement contains the following arbitration provision, beginning on page 21:


You and We agree that any legal disputes or claims arising out of or related to the Agreement (including but not limited to the use of the Lyft Platform and/or the Services, or the interpretation, enforceability, revocability, or validity of the Agreement, or the arbitrability of any dispute), that cannot be resolved informally shall be submitted to binding arbitration in the state in which the Agreement was performed. The arbitration shall be conducted by the American Arbitration Association under its Commercial Arbitration Rules (a copy of which can be obtained here[hyperlink] ), or as otherwise mutually agreed by you and we [sic]. Any judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Claims shall be brought within the time required by applicable law. You and we agree that any claim, action or proceeding arising out of or related to the Agreement must be brought in your individual capacity, and not as a plaintiff or class member in any purported class, collective, or representative proceeding. The arbitrator may not consolidate more than one person's claims, and may not otherwise preside over any form of a representative, collective, or class proceeding. YOU ACKNOWLEDGE AND AGREE THAT YOU AND LYFT ARE EACH WAIVING THE RIGHT TO A TRIAL BY JURY OR TO PARTICIPATE AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS ACTION OR REPRESENTATIVE PROCEEDING.

(Id. at 21-22). Beginning on page 24, the agreement provides as follows:


This Agreement shall be governed by the laws of the State of California without regard to choice of law principles. If any provision of this Agreement is held to be invalid or unenforceable, such provision shall be struck and the remaining provisions shall be enforced.... This Agreement sets forth the entire understanding and Agreement between the User and Lyft with respect to the subject matter hereof.

(Id. at 24-25).

The image below shows how the Lyft TOS appears on a mobile-device screen, although not to scale:

(Brannstrom Decl. ¶ 7). "The user has the opportunity to scroll all the way through the text" of the TOS, and the "I accept" button remains at the bottom of the screen while scrolling. (Id. ).

Bekele states that he "used [his] iPhone to get signed up on Lyft's system." (Bekele Aff. ¶ 3). He does not dispute that he accepted Lyft's TOS by clicking the "I accept" button. He states, however, that he does not recall seeing the arbitration provision on any of the three dates that he accepted the TOS. (Id. ¶¶ 3, 7). He further contends that even if the arbitration provision was displayed, he doubts that he would have been able to read it easily on his phone's small screen. (Id. ¶ 4).

B. Procedural Background

Bekele, proceeding on behalf of himself and all other Lyft drivers in Massachusetts, filed the class action complaint on March 17, 2015, in the Massachusetts Superior Court. On April 21, 2015, Lyft removed the proceeding to this Court. The complaint alleges that Lyft has misclassified its drivers in Massachusetts as independent contractors, in violation of the Massachusetts Wage Act, Mass. Gen. Laws ch. 149, § 148B.

On April 28, 2015, Lyft moved to compel arbitration and dismiss the complaint. On four separate occasions from June to December, the parties moved to continue the hearing on Lyft's motion. In December 2015, the parties requested a stay pending the outcome of a related lawsuit against Lyft in California. In May 2016, the parties finally moved to lift the stay and filed supplemental briefs.

Both parties have...

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