Applebaum v. Lyft, Inc.

263 F.Supp.3d 454

APPLEBAUM, on Behalf of Himself and All Other Persons Similarly Situated, Plaintiff,

v.LYFT, INC., Defendant.

16–cv–07062 (JGK)

United States District Court, S.D. New York.

Signed June 26, 2017

Lee A. Weiss, Berns Weiss, LLP, Garden City, NY, Nealraj Bhushan, The Jacob D. Fuchsberg Law Firm, New York, NY, for Plaintiff.

Amanda L. Groves, Winston & Strawn, LLP, Charlotte, NC, Jeffrey J. Amato, Winston & Strawn LLP, New York, NY, Sean D. Meenan, Winston & Strawn LLP, Los Angeles, CA, for Defendant.

OPINION AND ORDER

JOHN G. KOELTL, District Judge:

The defendant, Lyft, Inc. ("Lyft"), is a transportation company that connects consumers to drivers through its mobile application (the "Lyft App"). The plaintiff, Josh Applebaum, on behalf of a purported class alleges that Lyft overcharges its New York City metropolitan area consumers by charging them the non-discounted cash price for tolls, as opposed to the discounted rate that Lyft's drivers may receive by using "E–Z Pass." The plaintiff has asserted claims for violation of N.Y. Gen. Bus. L. § 349 and unjust enrichment. Lyft has moved to dismiss or, in the alternative, stay the action, and to compel arbitration pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq.

The plaintiff alleges diversity of citizenship jurisdiction pursuant to 28 U.S.C. § 1332(d)(2). Am. Compl. ¶ 9.

I.

The following facts are taken from the parties' submissions.

Lyft is a Delaware company with its principal place of business in California. Am. Compl. ¶¶ 1, 8. Lyft "facilitates peer-to-peer ridesharing by connecting passengers who need a ride with available Lyft drivers" through the Lyft App, which is available for download on smartphones. Am. Compl. ¶¶ 2, 13. Lyft charges consumers for rides "using Lyft's rates plus additional rates, if applicable, such as surcharges and tolls." Am. Compl. ¶ 17.

The plaintiff is a citizen of New York. Am. Compl. ¶ 7. The plaintiff alleges that bridges and tunnels in the New York City metropolitan area charge tolls at two rates, a non-discounted cash rate and a discounted rate for drivers that use the "E–Z Pass electronic toll collection system," which automatically charges drivers each time they drive through a tunnel or bridge. Am. Compl. ¶¶ 19–20.

The plaintiff alleges that, on May 30, 2016, he used the Lyft App to arrange a ride from New York City to New Jersey. Am. Compl. ¶ 24. The plaintiff alleges that Lyft overcharged him by $2.50 because he was charged the non-discounted cash rate of $15.00 for the "Holland Tunnel toll," instead of the discounted "E–Z Pass rate" of $12.50 that his driver actually paid. Am. Compl. ¶ 25. The plaintiff claims that Lyft misled consumers—including the plaintiff himself—into believing that they would be charged the discounted rate. Am. Compl. ¶ 32.

To connect to a driver through Lyft, the plaintiff had to first download the Lyft App and register with Lyft, including by creating a registered profile. Lauzier Decl. ¶¶ 2, 4. The Lyft App is free to download; a consumer will not be charged until after the consumer creates a registered profile and connects to a driver through the Lyft App.

On or around April 6, 2016—before the alleged overcharge—the plaintiff created his registered profile. Ajmani Decl. ¶ 4. At the time, the registration process required the plaintiff to input certain information into a series of screens presented on his smartphone. Applebaum Decl. ¶ 3. The plaintiff was asked to provide Lyft with certain information, such as his name and e-mail address. Lauzier Decl. ¶ 4. The plaintiff was also asked to supply payment information (for example, a credit card number); however, the plaintiff had the option of temporarily bypassing this step until he first requested a ride. Lauzier Decl. ¶ 4. Eventually, the plaintiff was presented with the following screen¹ :

Lauzier Decl. ¶ 6. The plaintiff could not click the pink "Next" bar (which was necessary to create a registered profile) until he entered his phone number into the "Phone" field and clicked the box (the "Box") adjacent to the phrase "I agree to Lyft's Terms of Services." Lauzier Decl. ¶¶ 4, 6. The plaintiff entered his phone number and clicked the Box as part of the registration process. Ajmani Decl. ¶ 4.

The light blue-texted "Terms of Services" hyperlinked to a separate scrollable page containing Lyft's "February 8, 2016 Terms of Services." Ajmani Decl. ¶ 4; Ajmani Decl., Ex. 2 (The February 8, 2016 Terms of Services); Lauzier Decl. ¶ 6. Clicking the hyperlink was not required to create the registered profile; indeed, the plaintiff swears that he did not read the February 8, 2016 Terms of Services, and that he did not at the time knowingly agree to any arbitration agreement. Applebaum Decl. ¶¶ 5–6.

The February 8, 2016 Terms of Services provided that: "THIS FOLLOWING USER AGREEMENT DESCRIBES THE TERMS AND CONDITIONS ON WHICH LYFT, INC. OFFERS YOU ACCESS TO THE LYFT PLATFORM." Ajmani Decl., Ex. 2 at 1. The contract defined the "Lyft Platform" as the "Lyft application, website, and technology platform." Ajmani Decl., Ex. 2 at 1.

Paragraph 17 of the contract entitled "Agreement to Arbitrate All Disputes and Legal Claims " provided:

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), or as otherwise mutually agreed by you and we. 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.

Ajmani Decl. ¶ 8. The pink-texted "here" hyperlinked to the American Arbitration Association's Commercial Arbitration Rules. Ajmani Decl., Ex. 2 ¶ 17.

The screen that the plaintiff saw on April 6, 2016 with the header "Add phone number " and the hyperlink to the February 8, 2016 Terms of Service represented a marked departure from the previous ways in which Lyft presented its contracts to consumers. For example, a consumer registering with Lyft in 2014 would have been presented at some point during that registration process with the following screen containing Lyft's July 28, 2014 Terms of Service:

Weiss Decl. ¶ 2; Weiss Decl., Ex. A at 4 (noting the date of the applicable Terms of Service). This screen contained the entire July 28, 2014 Terms of Service and was scrollable, meaning that a consumer could read the entire contract without clicking any hyperlinks. Weiss Decl. ¶ 2. A consumer could not register with Lyft without clicking the teal "I accept" bar. Weiss Decl. ¶ 2.

The plaintiff initiated this action on September 9, 2016. Weiss Decl. ¶ 2.

Lyft updated its Terms of Service on September 30, 2016. Ajmani Decl., Ex. 3 (The September 30, 2016 Terms of Service). Any existing Lyft customer (such as the plaintiff) that accessed the Lyft App after the update was automatically presented with the following screen containing Lyft's September 30, 2016 Terms of Service:

Laufer–Edel Reply Decl. ¶ 2. Lyft's method of presenting the September 30, 2016 Terms of Service to its existing customers who had already registered with Lyft resembles Lyft's 2014 method for presenting its contracts to new customers during the initial 2014 registration process. The screen contained the entire September 30, 2016 Terms of Service and was scrollable. Laufer–Edel Reply Decl. ¶ 3. An existing Lyft customer could not book a ride after September 30, 2016 unless the customer clicked the pink "I accept" bar. Laufer–Edel Reply Decl. ¶ 3.

As reflected in the above image, the screen that a customer saw after the update (in other words, without any scrolling) stated in its header: "Before you can proceed you must read & accept the latest Terms of Service." The screen also stated the following regarding arbitration:

PLEASE BE ADVISED: 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, YOU HAVE AN OPPORTUNITY TO OPT OUT OF ARBITRATION WITH RESPECT TO CERTAIN CLAIMS AS PROVIDED IN SECTION 17.

A customer could click the light blue-texted "SEE SECTION 17 BELOW" to jump to paragraph 17 of the September 30, 2016 Terms of Service entitled "DISPUTE RESOLUTION AND ARBITRATION AGREEMENT " (alternatively, the customer could scroll through the contract to read that paragraph). Ajmani Decl., Ex. 3 at 1.

Paragraph 17 set forth extensive information related to the arbitrability of any claims involving Lyft. Paragraph 17(a), which was sub-titled "Agreement to Binding Arbitration Between You and Lyft ," provided:

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

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