Olson v. Lyft, Inc.

• Decision Date: 29 October 2020
• Docket Number: A156322
• Citation: 270 Cal.Rptr.3d 739,56 Cal.App.5th 862
• Court: California Court of Appeals Court of Appeals
• Parties: Brandon OLSON, Plaintiff and Respondent, v. LYFT, INC., Defendant and Appellant.

56 Cal.App.5th 862

270 Cal.Rptr.3d 739

Brandon OLSON, Plaintiff and Respondent,

v.LYFT, INC., Defendant and Appellant.

A156322

Court of Appeal, First District, Division 2, California.

Filed October 29, 2020

Attorney for Plaintiff and Respondent Brandon Olson: Olivier Schreiber & Chao LLP, Monique Olivier, San Francisco, Christian Schreiber, Emeryville; Outten & Golden LLP, Jahan Sagafi, Adam Koshkin, Rachel Bien, San Francisco

Attorney for Defendant and Appellant Lyft, Inc.: Horvitz & Levy LLP, Andrea Russi, Peder Batalden, Felix Shafir, Burbank; Keker, Van Nest & Peters LLP, R. James Slaughter, Erin E. Meyer, Chessie Thacher, Ian Kanig, San Francisco.

Richman, Acting P.J. Brandon Olson is a driver for Lyft, Inc. (Lyft), whose terms of service include an agreement he could not bring a Private Attorney General Act (PAGA) claim in court and that disputes with Lyft must be resolved by individual arbitration. Olson sued Lyft alleging six PAGA claims, which Lyft petitioned to compel to arbitration. The petition acknowledged that Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 173 Cal.Rptr.3d 289, 327 P.3d 129 ( Iskanian ) precluded enforcement of PAGA waivers, but asserted that Iskanian was wrongly decided and in any event was no longer good law in light of the 2018 opinion of the United States Supreme Court in Epic Systems Corp. v. Lewis (2018) ––– U.S. ––––, 138 S.Ct. 1612, 200 L.Ed.2d 889 ( Epic Systems ). The trial court denied the petition in a comprehensive order rejecting Lyft's arguments.

Lyft appeals and, represented by two prominent law firms, provides us with 96 pages of briefing, beginning with an argument as to what we "must follow" from United States Supreme Court opinions, going on to reassert its unsuccessful arguments below. Lyft's opening brief cites 12 United States Supreme Court cases, two cases from the Fifth Circuit Court of Appeals, and, indeed, a 2013 case from an Ohio District Court. Olson, represented by a well-known appellate boutique, provides 54 pages of his own, included within which is a scholarly exposition of California jurisprudence dealing with arbitration.

We need not engage in any similar discussion, as we reject Lyft's position based on Correia v. NB Baker Electric, Inc. (2019) 32 Cal.App.5th 602, 244 Cal.Rptr.3d 177 ( Correia ), an opinion that thoughtfully analyzed—and rejected—the identical argument Lyft makes here. Other post- Epic Systems cases have agreed, including the only two other published Court of Appeal decisions and numerous California federal cases. Accordingly, we affirm the order denying arbitration.

BACKGROUND

Olson worked as a driver for Lyft, and as such had to agree to its Terms of Service (TOS) which, as pertinent here, begin with this:

"THIS AGREEMENT CONTAINS PROVISIONS THAT GOVERN HOW CLAIMS YOU AND LYFT HAVE AGAINST EACH OTHER 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."

The referenced section 17 then provides in pertinent part as follows:

"17. DISPUTE RESOLUTION AND ARBITRATION AGREEMENT

"(a) Agreement to Binding Arbitration Between You and Lyft.

"YOU AND LYFT MUTUALLY AGREE TO WAIVE OUR RESPECTIVE RIGHTS TO RESOLUTION OF DISPUTES IN A COURT OF LAW BY A JUDGE OR JURY AND AGREE TO RESOLVE ANY DISPUTE BY ARBITRATION, as set forth below. This agreement to arbitrate (‘Arbitration Agreement’) is governed by the Federal Arbitration Act and survives after the Agreement terminates or your relationship with Lyft ends.... Except as expressly provided ... [¶] ... ALL DISPUTES AND CLAIMS BETWEEN US ... SHALL BE EXCLUSIVELY RESOLVED BY BINDING ARBITRATION SOLELY BETWEEN YOU AND LYFT. [¶] ... [¶]

"BY AGREEING TO ARBITRATION, YOU UNDERSTAND THAT YOU AND LYFT ARE WAIVING THE RIGHT TO SUE IN COURT OR HAVE A JURY TRIAL FOR ALL CLAIMS, EXCEPT AS EXPRESSLY OTHERWISE PROVIDED IN THIS ARBITRATION AGREEMENT. This Arbitration Agreement is intended to require arbitration of every claim or dispute that can lawfully be arbitrated, except for those claims and disputes which by the terms of this Arbitration Agreement are expressly excluded from the requirement to arbitrate. [¶] ... [¶]

"(c) Representative PAGA Waiver.

"Notwithstanding any other provision of this Agreement or the Arbitration Agreement, to the fullest extent permitted by law: (1) you and Lyft agree not to bring a representative action on behalf of others under the Private Attorneys General Act of 2004 (PAGA), California Labor Code § 2698 et seq., in any court or in arbitration, and (2) for any claim brought on a private attorney general basis, including under the California PAGA, both you and Lyft agree that any such dispute shall be resolved in arbitration on an individual basis only (i.e., to resolve whether you have personally been aggrieved or subject to any violations of law), and that such an action may not be used to resolve the claims or rights of other individuals in a single or collective proceeding (i.e., to resolve whether other individuals have been aggrieved or subject to any violations of law) (collectively ‘representative PAGA Waiver’). [¶] ... [¶]

"(g) Exceptions to Arbitration.

"This Arbitration Agreement shall not require arbitration of the following types of claims: (1) small claims actions brought on an individual basis that are within the scope of such small claims court's jurisdiction; (2) a representative action brought on behalf of others under PAGA or other private attorneys general acts, to the extent the representative PAGA Waiver in Section 17(c) of such action is deemed unenforceable by a court of competent jurisdiction under applicable law not preempted by the FAA; (3) claims for workers’ compensation, state disability insurance and unemployment insurance benefits; and (4) claims that may not be subject to arbitration as a matter of generally applicable law not preempted by the FAA."

The TOS are updated periodically, and drivers had to agree to the updated terms in order to continue offering rides through the Lyft app. In May 2018, Olson agreed to the updated terms and that same month filed a class action lawsuit alleging that Lyft misclassified him as an independent contractor rather than an employee. The complaint asserted violations of the Labor Code and the Unfair Competition Law ( Bus. & Prof. Code, § 17200 et seq. ).

In August, Olson filed a first amended complaint in which he was replaced as class representative by a new plaintiff, which amended complaint also added representative claims under PAGA. And in October, Olson filed a second amended complaint, the operative complaint here. The second amended complaint added a new class representative who alleged six non-PAGA claims, and also alleged six PAGA claims on behalf of Olson.

Lyft petitioned to compel arbitration of Olson's PAGA claims. The petition argued that although Olson asserted PAGA claims as a representative for "aggrieved employees," the arbitration provision to which he agreed contained a PAGA representative-action waiver, and was thus governed by the Federal Arbitration Act (FAA), which, Lyft argued, required that Olson arbitrate on an individual basis. Lyft's petition acknowledged that Iskanian precluded the enforcement of PAGA representative-action waivers, but argued that Iskanian was wrongly decided under prior FAA precedent and in any event was no longer good law because of Epic Systems .¹ Finally, Lyft argued that even if Iskanian survived Epic Systems , Olson should be compelled to arbitrate the request for victim-specific relief alleged in the PAGA claims because this request did not seek representative relief.

Olson opposed the petition based on Iskanian , asserting that Epic Systems had no bearing on the issue.

Following Lyft's reply, the petition (along with other matters) came on for hearing before a most experienced superior court judge, the Honorable Curtis Karnow. Following a lengthy hearing, Judge Karnow issued a 14-page order, which, as pertinent here, rejected Lyft's arguments, holding as follows:

"Under Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 173 Cal.Rptr.3d 289, 327 P.3d 129 the PAGA waiver is unenforceable; see e.g., Tanguilig v. Bloomingdale's Inc. (2016) 5 Cal.App.5th 665, 670, 673–680.

"Lyft contends that Iskanian is no longer good law as a result of Epic Systems Corp. v. Lewis (2018) ––– U.S. ––––, 138 S. Ct. 1612, 200 L.Ed.2d 889. Lyft argues that Iskanian held that the Federal Arbitration Act (FAA) is inapplicable to statutory claims. Not true. Iskanian knew ‘the high court has found the FAA applicable to statutory claims between parties to an arbitration agreement.’ " Iskanian , 59 Cal.4th at 384, 173 Cal.Rptr.3d 289, 327 P.3d 129 (emphasis supplied).

"And Lyft is wrong to compare the statutory claims it says were at issue in Epic Systems (i.e., the Fair Labor Standards Act (FLSA) claims) with PAGA. First, the argument was not even made in the U.S. Supreme Court that the FLSA ‘overcomes’ the FAA to permit collective actions in court. Epic Sys. , 138 S. Ct. at 1626. Second, Iskanian did not hold that representative PAGA actions are beyond the scope of the FAA because a PAGA action is a statutory procedure; rather, Iskanian held that a PAGA action is a dispute between the state on the one hand, and the employer on the other. Iskanian 59 Cal.4th at 385–387, 173 Cal.Rptr.3d 289, 327 P.3d 129. And since the state was not a party to the arbitration agreement, the agreement does not control. This is a decision which rests on state (i) contract law and (ii) statutory interpretation, both committed to the state supreme court in the final instance; these were not grounds expressly...