Hinson v. Lyft, Inc.

• Decision Date: 26 February 2021
• Docket Number: CIVIL ACTION FILE NO. 1:20-CV-2209-MHC
• Citation: 522 F.Supp.3d 1254
• Parties: Fitzgerald HINSON, Plaintiff, v. LYFT, INC., Defendant.
• Court: U.S. District Court — Northern District of Georgia

522 F.Supp.3d 1254

Fitzgerald HINSON, Plaintiff,

v.LYFT, INC., Defendant.

CIVIL ACTION FILE NO. 1:20-CV-2209-MHC

United States District Court, N.D. Georgia, Atlanta Division.

Signed February 26, 2021

Frederick Cobb Dawkins, Frederick C. Dawkins, Esq. P.C., Atlanta, GA, for Plaintiff.

Archis Ashok Parasharami, Pro Hac Vice, Daniel E. Jones, Pro Hac Vice, Mayer Brown LLP, Washington, DC, Andrew Michael McKinley, Louisa J. Johnson, Seyfarth Shaw, Atlanta, GA, for Defendant.

ORDER

MARK H. COHEN, United States District Judge

This case comes before the Court on Defendant Lyft, Inc. ("Lyft")’s Motion to Compel Arbitration and to Stay Litigation ("Mot. to Compel") [Doc. 16] pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1 - 16.

I. BACKGROUND

Lyft owns and operates a ridesharing service that has employed hundreds of drivers in the state of Georgia. Compl. [Doc. 1] ¶ 8; see also Decl. of Neil Shah in Supp. of Lyft's Mot. to Compel (Sept. 17, 2020) ("Shah Decl.") [Doc. 16-2] ¶ 3 (stating that Lyft is a "mobile-based ridesharing marketplace platform" that connects riders seeking a destination with drivers willing to drive them to those destinations). To access Lyft's services, both riders and drivers (known as "users") must create a registered profile, which requires that the user "consent to the Terms of Service Agreement, and supply information such as the individual's first and last name, email address, and phone number." Shah Decl. ¶ 4. Drivers also must agree to an additional "driver addendum." Id. ¶ 5. Lyft periodically updates its Terms of Service Agreement, and in doing so requires all users to re-consent to the updated document in order to continue using Lyft's services. Id. ¶ 6. For example, after a new update, a driver with a registered profile cannot offer a ride unless he accepts the newly updated Terms of Services Agreement. Id. ¶ 9. Two such updates occurred on August 26, 2019, and November 27, 2019. Id. ¶¶ 7, 10.

Plaintiff Fitzgerald Hinson ("Hinson") alleges that he has been a driver for Lyft since 2019. Compl. ¶¶ 7, 20. According to Lyft's business records, Hinson first agreed to Lyft's Terms of Service on July 23, 2016, and he accepted them again on August 26, 2019, on October 19, 2019, and finally on November 24, 2019. Shah Decl. ¶ 16. Hinson accepted the November 27, 2019, updated Terms of Service on June 9, 2020. Id. ¶ 17. He accepted the Terms of Service several more times throughout 2020, most recently on August 7, 2020. Id.

A. The Lyft Terms of Service Agreement

Lyft's November 27, 2019, Terms of Service Agreement includes a disclaimer on the first page that states:

PLEASE BE ADVISED: THIS AGREEMENT CONTAINS PROVISIONS THAT GOVERN HOW CLAIMS BETWEEN YOU AND LYFT CAN BE BROUGHT (SEE SECTION 17 BELOW). THESE PROVISIONS WILL, WITH LIMITED EXCEPTION, REQUIRE YOU TO SUBMIT CLAIMS YOU HAVE AGAINST LYFT TO BINDING AND FINAL ARBITRATION ON AN INDIVIDUAL BASIS, NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY CLASS, GROUP OR REPRESENTATIVE ACTION OR PROCEEDING. AS A DRIVER OR DRIVER APPLICANT, YOU HAVE AN OPPORTUNITY TO OPT OUT OF ARBITRATION WITH RESPECT TO CERTAIN CLAIMS AS PROVIDED IN SECTION 17.

Lyft Terms of Service (Nov. 27, 2019) ("Nov. Terms of Service") [Doc. 16-2 at 11-53] at 1. Section 17, titled "Dispute Resolution and Arbitration Agreement" (the "Arbitration Agreement") provides that the user and Lyft "mutually agree" "to resolve any dispute by arbitration," and that the agreement to arbitrate is governed by the FAA. Id. § 17(a). The Arbitration Agreement applies to "all Claims," which is defined to include "any dispute, claim or controversy ... arising out of or relating to," in relevant part, (1) "any city, county, state or federal wage-hour law ...," (2) "compensation, break and rest periods, [and] expense reimbursement ...", and (3) "any claims arising under the ... Fair Labor Standards Act." Id. Moreover, the Arbitration Agreement provides that "[a]ll disputes concerning the arbitrability of a Claim (including disputes about the scope, applicability, enforceability, revocability or validity of the Arbitration Agreement) shall be decided by the arbitrator, as expressly provided below."¹ Id.

B. Procedural History

On May 22, 2020, Hinson filed his Complaint on behalf of himself and other current or former drivers for Lyft, based on Lyff's alleged violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq. See Compl. ¶ 1. Hinson alleges that Lyft has been classifying its drivers improperly as "independent contractors" instead of "employees," and thereby avoiding its obligations to pay drivers expense reimbursements, minimum wages, overtime pay, and other benefits. Id. ¶¶ 1-5. Hinson alleges that the drivers are not independent contractors because, among other reasons, they lack the discretion and autonomy that independent contractors have. Id. ¶ 2, 20-115. In the single count of the Complaint, Hinson alleges that Lyft has engaged in a pattern and practice of violating the FLSA with respect to him and all similarly situated Lyft drivers who have performed services for Lyft from May 22, 2017, until the present, by failing to pay overtime wages and failing to record all of the time said drivers have worked for Lyft. Id. ¶ 116-31.

On September 25, 2020, Lyft filed its Motion to Compel asking the Court to compel Hinson to arbitrate his claim against Lyft on an individual basis in accordance with the Arbitration Agreement. Mot. to Compel. Anticipating that Hinson would attempt to invoke the exemption for "transportation workers" in § 1 of the FAA, 9 U.S.C. § 1, Lyft contends that the exemption does not apply to Lyft rideshare drivers because they predominantly provide local services, transport passengers rather than goods, and are not engaged in interstate commerce. Lyft's Mem. of Law in Supp. of Mot. to Compel ("Lyft's Mem.") [Doc. 16-1] at 1-4, 8-22. Hinson responds by asserting that § 1 of the FAA does apply because he is a transportation worker engaged in interstate commerce even if most of his rides are intrastate in nature. Pl.’s Resp. to Def.’s Mot. to Compel ("Pl.’s Opp'n") [Doc. 24] at 2-5. Hinson also contends that the § 1 exemption applies to the transportation of passengers as well as goods. Id. at 5-6. Finally, Hinson argues that if the FAA does not apply to him, then the Arbitration Agreement is unenforceable. Id. at 6-9.

II. LEGAL STANDARD

The FAA "reflects the fundamental principle that arbitration is a matter of contract." Id. Section 2 of the FAA provides:

A written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

9 U.S.C. § 2. "The FAA thereby places arbitration agreements on an equal footing with other contracts, and requires courts to enforce them according to their terms." Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 67, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010) (citations omitted).

There is an "emphatic federal policy in favor of arbitral dispute resolution," and courts are to construe "any doubts concerning the scope of arbitrable issues ... in favor of arbitration." Cordoba v. DIRECTV, LLC, 801 F. App'x 723, 725 (11th Cir. 2020) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 631, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) ); see also Bazemore v. Jefferson Capital Sys., LLC, 827 F.3d 1325, 1329 (11th Cir. 2016) (same). The FAA "provisions manifest a liberal federal policy favoring arbitration agreements." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) (quotation omitted); see also Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 226 (1987) (holding that the FAA's "federal policy favoring arbitration" requires that courts "rigorously enforce agreements to arbitrate."). Therefore, "questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration" and "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983).

However, the FAA exempts from its coverage "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. The Supreme Court has held that § 1 ’s residual clause—"any other class of workers engaged in foreign or interstate commerce"—applies only to "contracts of employment of transportation workers." See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 118-19, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001) (resolving a circuit split over whether § 1 applied to all employment contracts engaged in interstate commerce or only to contracts involving transportation workers engaged in interstate commerce). The Supreme Court also has stated that "a court should decide for itself whether § 1 ’s ‘contracts of employment’ exclusion applies before ordering arbitration." New Prime Inc. v. Oliveira, ––– U.S. ––––, 139 S. Ct. 532, 537, 202 L.Ed.2d 536 (2019).

"A plaintiff challenging the enforcement of an arbitration agreement bears the burden to establish, by substantial evidence, any defense to the enforcement of the agreement." Inetianbor v. CashCall, Inc., 923 F. Supp. 2d 1358, 1362 (S.D. Fla. 2013) (citing Bess v. Check Express, 294 F.3d 1298, 1306-07 (11th Cir. 2002) ).

III. DISCUSSION²

There is no dispute that the Arbitration Agreement requires a Lyft rideshare driver to arbitrate all FLSA claims, including the one brought by Hinson in this case. The principle question for the Court to decide is whether Hinson and the class of Lyft drivers he seeks to represent are members of a "class of workers engaged in ... interstate commerce" such that they would be classified as transportation...