Rogers v. Lyft, Inc.

• Decision Date: 07 April 2020
• Docket Number: Case No. 20-cv-01938-VC
• Citation: 452 F.Supp.3d 904
• Court: U.S. District Court — Northern District of California
• Parties: John ROGERS, et al., Plaintiffs, v. LYFT, INC., Defendant.

452 F.Supp.3d 904

John ROGERS, et al., Plaintiffs,

v.LYFT, INC., Defendant.

Case No. 20-cv-01938-VC

United States District Court, N.D. California.

Signed April 7, 2020

Anne R. Kramer, Shannon Liss-Riordan, Lichten and Liss-Riordan, P.C., Boston, MA, for Plaintiffs.

Amir Ebadat, pro se.

Hany Farag, pro se.

R. James Slaughter, Brook Dooley, Eugene Morris Paige, Ian Asher Kanig, Jason S. George, Rachael Elizabeth Meny, Keker, Van Nest & Peters LLP, San Francisco, CA, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO COMPEL ARBITRATION; REMANDING REQUEST FOR PUBLIC INJUNCTION

Re: Dkt. Nos. 8, 19

VINCE CHHABRIA, United States District Judge

In this case, three Lyft drivers have filed an emergency motion to require Lyft to reclassify all of its drivers in California from "independent contractor" to "employee" status, as required by California's new law governing worker classification. The plaintiffs' frustration with Lyft's steadfast refusal to comply with the new law is understandable. While the status of Lyft drivers was previously uncertain, it is now clear that drivers for companies like Lyft must be classified as employees.

But this lawsuit—which was filed hurriedly in an attempt to capitalize on the coronavirus pandemic—is riddled with defects. The fact that Lyft is ignoring an obvious legal obligation does not permit this Court to brush those defects aside. Nor, for that matter, does the current health crisis. The plaintiffs' motion for an emergency injunction reclassifying Lyft drivers is denied; Lyft's motion to compel the individual claims to arbitration is granted; Lyft's motion to strike the class allegations is granted; and the remaining claim for public injunctive relief is remanded to state court because this Court lacks jurisdiction to entertain it.

I

Although the plaintiffs' motion for emergency relief is dominated by technical legal questions, it's worth taking a moment to put the matter in context. The coronavirus pandemic has caused millions of people to lose their jobs entirely. Millions more have seen their income streams decimated. And many of these people were already living hand to mouth. Their only recourse during the crisis will be to rely on emergency aid from the federal and state governments—aid like cash payments, unemployment benefits, emergency refundable tax credits, and sick pay.

In the midst of all this, a few Lyft drivers have rushed to court with a class action lawsuit seeking an emergency ruling that requires the company to reclassify its drivers from "independent contractor" to "employee" status. They are represented by a lawyer who has been filing similar suits against Lyft and other "gig economy" companies for years. What makes this an emergency, in their view, is that if Lyft is finally forced to reclassify its drivers, those drivers will potentially qualify for sick pay under California law.

At first glance, this case might seem to present the kind of situation that would justify an emergency motion. Sick leave policies, the plaintiffs correctly note, generally decrease the chances that people will go to work sick. And especially during this health crisis, the public interest favors more access to paid sick leave so that people will avoid going to work sick—especially when "going to work" means occupying close quarters in a car with other people. But the question whether Lyft drivers to qualify for California sick pay is less of an emergency than the plaintiffs suggest, for at least three reasons.

First, even if drivers were reclassified, the amount of sick pay involved would be small. See Cal. Labor Code § 246. Although a handful of drivers might qualify for three days' worth of sick pay per year (the amount at which employers can cap usage under California law), most Lyft drivers would not qualify for anything close to that. The record suggests that roughly 41 percent of the drivers haven't accrued enough hours of work to qualify for sick pay at all. And even for those who do qualify, a significant percentage would get four hours (that is, a half day) or less.

Second, if the Court ordered Lyft to reclassify its drivers immediately, it's possible that the drivers would lose the opportunity to obtain emergency assistance totaling thousands of dollars from the federal government. Take, for example, sick leave. The Families First Coronavirus Response Act offers substantial sick pay to independent contractors sidelined by coronavirus. Pub. L. No. 116-127, § 7002, 134 Stat. 178, 212 (2020). The Act makes independent contractors eligible for up to ten days of paid sick leave in the form of refundable tax credits worth up to the lesser of $511 per day or their average daily income last year. § 7002(c)(1)(B), 134 Stat. at 212. But if Lyft drivers were employees, they might not qualify for these benefits. The Act funds sick pay for employees too, but it excludes people who work for companies with 500 or more employees. §§ 5102, 5110(2)(B)(i)(I)(aa), 134 Stat. at 195–96, 199. Lyft has well more than 500 drivers in California, so Lyft drivers (once classified as employees) might not be entitled to any type of sick pay under the new federal legislation. In addition, independent contractors can apply for a forgivable small business loan through the Paycheck Protection Program to cover up to 250 percent of their monthly income as a measure of "payroll costs." Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Pub. L. No. 116-136, § 1102(a)(2), 134 Stat. 281, 286–93 (2020). If Lyft drivers are immediately switched from independent contractor to employee status, they could lose their entitlement to this relief as well. Nor have the plaintiffs identified any additional benefits that employees of large employers receive under the emergency federal legislation that would offset these potential losses.

Third, even if the drivers wouldn't lose federal relief upon reclassification, it is indisputable that the small amounts of paid sick leave that would be available to some Lyft drivers under California Labor Code § 246 pale in comparison to the assistance workers will be able to get from the emergency legislation. See, e.g. , CARES Act § 2102(a)(3), (c), 134 Stat. at 313–15 (authorizing up to 39 weeks of unemployment assistance to independent contractors who cannot work or lost their job due to coronavirus but would not otherwise qualify for unemployment benefits); § 2104(b)(1)(B), (e)(2), 134 Stat. at 318–19 (augmenting unemployment benefits with $600 weekly payment through end of July); § 2201(a), 134 Stat. at 335 (establishing recovery rebate that, for example, pays out $1,200 to individual filers with adjusted gross income under $75,000).

Against this backdrop, the plaintiffs insist that if they don't get their zero to three days of paid sick leave immediately, they are willing to put their passengers at risk. One of the plaintiffs, for example, insists that (unless he is reclassified) he will continue to give rides even if he develops coronavirus symptoms and would expose his passengers to the disease. At the same time, however, this driver says that business has fallen off sharply—to the point that he's been unable to get a fare for ten days. The upshot of his position, then, is as follows: He currently has little chance of making more than a few dollars a week by giving a ride or two, but if he has an opportunity to make those few dollars, he will not allow coronavirus symptoms to prevent him from doing so, even at risk of killing his passengers, even though that money will be a drop in the bucket compared to the assistance he could get from the emergency legislation, and even though obtaining that drop could shrink the overall size of the bucket.

While there's no justification for the tone-deafness of the position advanced by the plaintiffs and their lawyer as this crisis unfolds, perhaps there's an explanation for how they got there. As previously noted, the effort to require gig companies like Lyft to reclassify their workers has been underway for years. That effort has thus far been unsuccessful in the courts, a string of defeats and stalemates explained both by the widespread use of forced arbitration by these companies and by the previous lack of clarity in the law. See Cotter v. Lyft, Inc. , 60 F. Supp. 3d 1067, 1078–81 (N.D. Cal. 2015). But California's new A.B. 5, which was passed in September 2019 and became operative January 1, 2020, makes clear that a company's workers must be classified as employees if the work they perform is not outside the usual course of the company's business. See Cal. Labor Code § 2750.3(a)(1) ; see also Dynamex Operations West, Inc. v. Superior Court , 4 Cal. 5th 903, 959–61, 232 Cal.Rptr.3d 1, 416 P.3d 1 (2018). That test is obviously met here: Lyft drivers provide services that are squarely within the usual course of the company's business, and Lyft's argument to the contrary is frivolous. See Cotter , 60 F. Supp. 3d at 1078 ; see also Namisak v. Uber Technologies, Inc. , No. 17-cv-6124-RS, 444 F.Supp.3d 1136, 1142–43, (N.D. Cal. Mar. 13, 2020) ; O'Connor v. Uber Technologies, Inc. , 82 F. Supp. 3d 1133, 1144 (N.D. Cal. 2015) ; Yellow Cab Cooperative, Inc. v. Workers' Compensation Appeals Board , 226 Cal. App. 3d 1288, 1293–94, 277 Cal.Rptr. 434 (1991) ; cf. People v. Maplebear, Inc. , No. 2019-48731-CU-MC-CTL (Cal. Super. Ct. Feb. 18, 2020). But rather than comply with a clear legal obligation, companies like Lyft are thumbing their noses at the California Legislature, not to mention the public officials who have primary responsibility for enforcing A.B. 5.¹

In short, there are no heroes in the story of this case. But there are several complicated legal questions, to which this ruling now turns. The first question is whether the plaintiffs' individual claims must be compelled to arbitration. The second is whether the plaintiffs have waived their right to pursue claims on behalf of a class of Lyft drivers in California. The...