Osvatics v. Lyft, Inc.

Decision Date22 April 2021
Docket NumberNo. 20-cv-1426 (KBJ),20-cv-1426 (KBJ)
Citation535 F.Supp.3d 1
Parties Cassandra OSVATICS, on behalf of herself and all others similarly situated, Plaintiff, v. LYFT, INC., Defendant.
CourtU.S. District Court — District of Columbia

Christopher McNerney, Pro Hac Vice, Outten & Golden LLP, New York, NY, Mikael A. Rojas, Pooja Shethji, Outten & Golden LLP, Sally Jasmine Abrahamson, Werman Salas, Washington, DC, for Plaintiff.

Rohit K. Singla, Pro Hac Vice, Justin P. Raphael, Pro Hac Vice, Munger, Tolles & Olson LLP, San Francisco, CA, Elaine J. Goldenberg, Rachel G. Miller-Ziegler, Munger, Tolles & Olson LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION

KETANJI BROWN JACKSON, United States District Judge

Plaintiff Cassandra Osvatics worked as a driver for the ride-sharing company Lyft, Inc. in the Washington, D.C. metropolitan area from November of 2015 to June of 2018. (See Compl., ECF No. 2, ¶¶ 7–10.) In May of 2020, Osvatics filed a putative class-action lawsuit against Lyft, alleging that Lyft was engaged in a continuous violation of District of Columbia law by failing to provide paid sick leave to its drivers in the District. (See id. ¶¶ 79, 90–99.) According to Lyft, however, Osvatics had agreed to the company's Terms of Service for its drivers, which require any disputes between Lyft and its drivers to be resolved by arbitration on an individual basis rather than through the filing of a lawsuit. (See Decl. of Neil Shah in Supp. of Def.’s Mot. ("Shah Decl."), ECF No. 6-2, ¶¶ 8, 13.)

Before this Court at present is Lyft's motion to compel individual arbitration of Osvatics's claim and to stay the instant proceedings pending any arbitration between the parties. (See Def.’s Mot. to Compel Individual Arbitration and Stay Proceedings Pending Arbitration, ECF No. 6; Def.’s Mem. in Supp. of Mot. to Compel Individual Arbitration and Stay Proceedings Pending Arbitration ("Def.’s Mot."), ECF No. 6-1.) Lyft contends that the arbitration agreement and the associated class waiver in its Terms of Service are valid, and thus the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq. , requires this Court to enforce the arbitration agreement by compelling Osvatics to submit this dispute to individual arbitration. (See Def.’s Mot. at 9–10.)1 Osvatics responds, in part, that the FAA does not apply to her agreement with Lyft given section 1 of the statute, which provides that the "contracts of employment" of any "class of workers engaged in ... interstate commerce" are categorically exempt from the FAA's coverage. (See Pl.’s Opp'n to Def.’s Mot. to Compel Individual Arbitration and Stay Proceedings Pending Arbitration ("Pl.’s Opp'n"), ECF No. 20, at 19 (quoting 9 U.S.C. § 1 ).)

On March 31, 2021, this Court issued an Order that GRANTED Lyft's motion to compel arbitration. (See Order, ECF No. 47.) This Memorandum Opinion explains the reasons for that Order. In short, and as explained fully below, this Court has concluded that Osvatics is bound by Lyft's arbitration agreement and that the section 1 exemption does not apply to rideshare drivers such as Osvatics. Therefore, the FAA requires this Court to compel arbitration of the instant dispute.

I. BACKGROUND
A. Lyft's Terms Of Service

Lyft operates a ride-sharing mobile application that enables customers who seek rides to specified destinations to hail drivers willing to drive them to those destinations. (See Compl. ¶¶ 17–18; see also Shah Decl. ¶ 3.) To become a Lyft driver, an individual must download the Lyft application, register as a driver, and agree to Lyft's Terms of Service. (See Shah Decl. ¶¶ 4–5.) Prospective drivers presented with the Terms of Service can scroll through the text of the agreement, and they must ultimately click the "I Agree" button at the bottom of the screen before they can begin offering rides through the Lyft application. (See id. ¶¶ 7–9.) Lyft periodically updates these Terms of Service, and drivers are required to consent to the updated terms in order to continue offering rides through Lyft's application. (Id. ¶ 6.)

The most recent version of Lyft's Terms of Service to which Osvatics allegedly agreed is dated November 27, 2019. (See Ex. A to Suppl. Decl. of Neil Shah ("2019 Terms of Service"), ECF No. 28-3, at 2.) The second and third paragraphs of the agreement read as follows:

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.
By entering into this Agreement, and/or by using or accessing the Lyft Platform you expressly acknowledge that you understand this Agreement (including the dispute resolution and arbitration provisions in Section 17) and accept all of its terms. IF YOU DO NOT AGREE TO BE BOUND BY THE TERMS AND CONDITIONS OF THIS AGREEMENT, YOU MAY NOT USE OR ACCESS THE LYFT PLATFORM OR ANY OF THE SERVICES PROVIDED THROUGH THE LYFT PLATFORM. If you use the Lyft Platform in another country, you agree to be subject to Lyft's terms of service for that country.

(Id. ) The underlined phrase contains a hyperlink to Section 17 of the Terms of Service. (See Shah Decl. ¶ 7.)

Section 17 is titled "Dispute Resolution and Arbitration Agreement[.]" (2019 Terms of Service at 14.) It provides that, with exceptions not relevant here, "ALL DISPUTES AND CLAIMS BETWEEN US ... SHALL BE EXCLUSIVELY RESOLVED BY BINDING ARBITRATION SOLELY BETWEEN YOU AND LYFT." (Id. ) It continues: "[t]hese Claims include, but are not limited to, any dispute, claim or controversy, whether based on past, present, or future events, arising out of or relating to" many categories of disputes, including "any city, county, state or federal wage-hour law[.]" (Id. ) Section 17 also contains a delegation clause, which 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," with certain exceptions not relevant here. (Id. ) And it contains the following language waiving the driver's right to institute a class action: "YOU UNDERSTAND AND AGREE THAT YOU AND LYFT MAY EACH BRING CLAIMS IN ARBITRATION AGAINST THE OTHER ONLY IN AN INDIVIDUAL CAPACITY AND NOT ON A CLASS, COLLECTIVE ACTION, OR REPRESENTATIVE BASIS[.]" (Id. at 15.)

Importantly for present purposes, Section 17 of the Terms of Service also contains a subsection titled "Opting Out of Arbitration for Driver Claims That Are Not In a Pending Settlement Action." (Id. at 18.) That subsection provides that drivers "may opt out of arbitration with respect to ... Driver Claims, other than those in a Pending Settlement Action, by notifying Lyft in writing of your desire to opt out of arbitration for such Driver Claims ... within 30 days of the date this Agreement is executed by you[,]" so long as "you have not previously agreed to an arbitration provision in Lyft's Terms of Service where you had the opportunity to opt out of the requirement to arbitrate." (Id. ) Finally, the Terms of Service further specifies that "[t]his agreement to arbitrate ... is governed by the Federal Arbitration Act" (id. at 14); however, the remainder of the Terms of Service "shall be governed by the laws of the State of California without regard to choice of law principles" (id. at 21).

B. Procedural History

Osvatics filed the instant lawsuit against Lyft on May 29, 2020. (See Compl. ¶ 6.) The complaint asserts one legal claim: that Lyft drivers are "employees" of Lyft within the meaning of the District of Columbia's Accrued Safe and Sick Leave Act, D.C. Code § 32-531.01 et seq. , and that Lyft thus violated that statute by failing to provide paid sick leave to Lyft drivers in the District. (See id. ¶¶ 90–99.) Moreover, the complaint seeks to assert similar claims on behalf of a class consisting of "all drivers who work or worked for Lyft in the District of Columbia for at least 90 days between when Lyft began operating in the District of Columbia and the date of final judgment in this matter[.]" (Id. ¶ 79.) For relief, the complaint requests monetary damages, a declaration that Lyft's practices regarding sick leave violate District of Columbia law, and an order enjoining Lyft from continuing its allegedly unlawful practices. (See id. , Prayer for Relief.)

On June 16, 2020, Lyft moved to compel individual arbitration of Osvatics's claim and to stay the instant lawsuit pending any arbitration of Osvatics's claim on an individual basis. (See Def.’s Mot. at 9–10; see also Def.’s Reply in Supp. of Mot. to Compel Individual Arbitration and Stay Proceedings Pending Arbitration ("Def.’s Reply"), ECF No. 28, at 8.) As cause, Lyft maintains that, according to its business records, Osvatics accepted Lyft's Terms of Service for drivers on four separate occasions—on October 4, 2015; October 30, 2016; May 4, 2018; and May 4, 2020 (Def.’s Mot. at 11 (citing Shah Decl. ¶ 13))—and, pursuant to the embedded arbitration provision, Osvatics's legal claim must be resolved through arbitration on an individual basis rather than class-action litigation, per the FAA. (See id. at 18–20.) Lyft also contends that section 1 of the FAA, which exempts the employment contracts of certain transportation workers from the FAA's coverage, does not apply to the arbitration agreement between Osvatics and Lyft, both because that exemption covers only workers who transport goods rather than passengers (see id. at 34–36), and because Lyft drivers as a class are not "engaged in ... interstate commerce" within the meaning of the statute (see id. at 22–34). Further, even if the FAA...

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