Cunningham v. Lyft, Inc.

450 F.Supp.3d 37

Melody CUNNINGHAM and Frunwi Mancho, individually and on behalf of all others similarly situated, Plaintiffs,

v.LYFT, INC., Logan Green, and John Zimmer, Defendants.

Civil Action No. 1:19-cv-11974-IT

United States District Court, D. Massachusetts.

Signed March 27, 2020

Karla E. Zarbo, Office of the Attorney General, Adelaide H. Pagano, Anastasia Doherty, Anne R. Kramer, Shannon E. Liss-Riordan, Lichten & Liss-Riordan, P.C., Boston, MA, for Plaintiffs

James D. Smeallie, Andrew E. Silvia, Holland & Knight (B), David J. Santeusanio, Michael T. Maroney, Holland & Knight, LLP, Boston, MA, Adele M. El-Khouri, Pro Hac Vice, Munger, Tolles & Olson LLP, Washington, DC, Benjamin G. Barokh, Pro Hac Vice, Jeffrey Y. Wu, Pro Hac Vice, Munger Tolles & Olson LLP, Los Angeles, CA, Justin P. Raphael, Pro Hac Vice, Munger, Rohit K. Singla, Pro Hac Vice, Tolles & Olson LLP, San Francisco, CA, for Defendants

MEMORANDUM AND ORDER

TALWANI, D.J.

Plaintiffs Melody Cunningham and Frunwi Mancho bring claims, on their own behalf and on behalf of drivers who have worked in Massachusetts for Defendant Lyft, Inc. (Lyft), based on Lyfts' alleged misclassification of drivers as independent contractors.¹ Defendants have filed a Motion to Compel Arbitration and Stay Proceedings Pending Arbitration [#16], pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1 - 4, seeking an order compelling Plaintiffs submit any claims they are asserting here to individual, non-class arbitration and staying all further proceedings pending arbitration. Defs' Mot. to Compel Arbitration [#16]. For the following reasons, Defendants' Motion to Compel Arbitration and Stay Proceedings Pending Arbitration [#16] is DENIED.

I. Background

Lyft is a ridesharing company that uses a smartphone application ("Lyft App" or "App") to allow customers to hail drivers. Ayanbule Decl. ¶ 2 [#18]. To become a Lyft driver, an individual must register, download the App, and agree to Lyft's Terms of Service ("Terms"). Id. ¶ 3.

Lyft updated its Terms on February 6, 2018. Id. ¶ 7. All drivers who opened the App on that day or subsequent days were presented with the following screen:

Id. Drivers could not continue to drive for Lyft until they clicked the "I accept" button. Id. ¶ 8.

In Lyft's Terms, the agreement states, in relevant part:

PLEASE BE ADVISED: THIS AGREEMENT CONTAINS PROVISIONS THAT GOVERN HOW CLAIMS YOU AND LYFT HAVE AGAINST EACH OTHER CAN BE BROUGHT ... 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 ... AS A DRIVER

OR DRIVER APPLICANT, YOU HAVE AN OPPORTUNITY TO OPT OUT OF ARBITRATION WITH RESPECT TO CERTAIN CLAIMS ...

Ex. A at 1 (Ayanbule Decl.) [#18-1].

The agreement also contained a hyperlink in a different color allowing drivers to drop directly to Section 17, the section in the Terms containing the arbitration provision. Id. Section 17 states, in relevant part:

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 ... ANY ARBITRATION UNDER THIS AGREEMENT WILL TAKE PLACE ON AN INDIVIDUAL BASIS; CLASS ARBITRATIONS AND CLASS ACTIONS ARE NOT PERMITTED. Except as expressly provided below, this Arbitration Agreement applies to all Claims (defined below) between you and Lyft, including our affiliates, subsidiaries, parents, successors, and assigns, and each of our respective officers, directors, employees, agents, or shareholders ...

Except as expressly provided below, ALL DISPUTES AND CLAIMS BETWEEN US ... SHALL BE EXCLUSIVELY RESOLVED BY BINDING ARBITRATION SOLELY BETWEEN YOU AND LYFT. These 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: this Agreement and prior versions thereof ... the Lyft Platform, the Services, any other goods or services made available through the Lyft Platform, your relationship with Lyft ... state or federal wage-hour law ..."

Ex. A at § 17(a) (Ayanbule Decl.) [#18-1].²

The agreement also includes a "Prohibition of Class Actions and Non-Individualized Relief," which reads as follows:

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 ("CLASS ACTION WAIVER"). YOU UNDERSTAND AND AGREE THAT YOU AND LYFT BOTH ARE WAIVING THE RIGHT TO PURSUE OR HAVE A DISPUTE RESOLVED AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS, COLLECTIVE OR REPRESENTATIVE PROCEEDING ...

The arbitrator shall have no authority to consider or resolve any Claim or issue any relief on any basis other than an individual basis. The arbitrator shall have no authority to consider or resolve any Claim or issue any relief on a class, collective, or representative basis. The arbitrator may award declaratory or injunctive relief only in favor of the individual party seeking relief and only to the extent necessary to provide relief warranted by that party's individual claims.

Ex. A at § 17(b) (Ayanbule Decl.) [#18-1].

Finally, the agreement also includes two provisions regarding the resolution of disputes over the class action waiver and severability:

Notwithstanding any other provision of this Agreement, the Arbitration Agreement or the AAA Rules, disputes regarding the scope, applicability enforceability, revocability or validity of the Class Action Waiver may be resolved only by a civil court of competent jurisdiction and not by an arbitrator. In any case in which: (1) the dispute is filed as a class, collective, or representative action and (2) there is a final judicial determination that the Class Action Waiver is unenforceable as to any Claims, then those Claims shall be severed from any remaining claims and may be brought in a civil court of competent jurisdiction, but the Class Action Waiver shall be enforced in arbitration on an individual basis as to all other Claims to the fullest extent possible.

...

[I]n the event that any portion of this Arbitration Agreement is deemed illegal or unenforceable under applicable law not preempted by the FAA, such provision shall be severed and the remainder of the Arbitration Agreement shall be given full force and effect.

Ex. A at § 17(b), (h) (Ayanbule Decl.) [#18-1].

Plaintiff Melody Cunningham has been driving for Lyft since June 2013. Cunningham Decl. ¶ 4 [#37-7]. On May 15, 2018, after Lyft updated its terms, Cunningham opened the App and clicked the "I accept" button. Ayanbule Decl. ¶¶ 10-11 [#18]; Ex. B (Ayanbule Decl.) [#18-2]. Cunningham did not opt out of the arbitration agreement. Lieu Decl. ¶ 7 [#19].

Plaintiff Frunwi Mancho has been driving for Lyft since January 2016. Mancho Decl. ¶ 3 [#37-8]. Although the record does not state the date that Mancho opened the App after February 6, 2018, there appears to be no dispute that Mancho also clicked the "I accept" button and did not opt out of the arbitration agreement.

As part of their work, both Mancho and Cunningham picked up customers traveling to or from Logan Airport in Boston. Cunningham Decl. ¶ 6 [#37-7]; Mancho Decl. ¶ 4 [#37-8]. Mancho drove passengers across state lines, including from Haverhill, Massachusetts, to Salem, New Hampshire, and from Logan Airport to Portsmouth, New Hampshire, Mancho Decl. ¶ 4 [#37-8], but Cunningham did not drive passengers across state lines. Lieu Decl. ¶¶ 8-9 [#19].

II. Procedural History Relevant to the Motion to Compel

Plaintiff Melody Cunningham filed this putative class action, on her own behalf and on behalf of similarly situated Lyft drivers in Massachusetts, under the Massachusetts Wage Act, M.G.L. c. 149, §§ 148, 148B, and M.G.L. c. 151, §§ 1, 1A, and the Uniform Declaratory Judgment Act, 28 U.S.C. §§ 2201 et seq., alleging misclassification and non-payment of minimum wage and overtime.

Defendants responded with a Motion to Compel Arbitration and Stay Proceedings [#16], and Cunningham subsequently amended her complaint to add Frunwi Mancho as a named plaintiff. Am. Compl. [#61]. The parties agreed that Defendants' Motion [#16] applied to Plaintiff Mancho's claims and did not need to be refiled. Stipulation [#64].³

III. Analysis

Defendants seek to compel arbitration of Plaintiffs' claims under the Federal Arbitration Act ("FAA"). Defs' Mem. in Support of Mot. to Compel Arbitration ("Defs' Mem.") 6-7 [#17]. They argue further that if the FAA does not apply, arbitration must still be compelled under Massachusetts law. Defs' Reply in Support of Mot. to Compel Arbitration ("Defs' Reply") 8-9 [#52].

Plaintiffs oppose arbitration on the ground that Plaintiffs and the class they seek to represent fall under the transportation worker exemption to the FAA. Pls' Opp'n to Mot. to Compel Arbitration ("Pls' Opp'n") 7-14 [#37]. Plaintiffs argue further that Massachusetts prohibits enforcement of arbitration agreements containing class action waivers. Id. at 17-18.⁴

The court notes at the outset that this is not the first challenge to Lyft's arbitration agreement with its drivers. As Defendants state, this court "has twice enforced arbitration agreements between Lyft and drivers ..., granting motions to compel arbitration of misclassification claims brought by a putative class of Massachusetts drivers." Defs' Mem. 1 [#17] (citing Wickberg v. Lyft, Inc., 356 F.Supp. 3d 179 (D. Mass. 2018), and Bekele v. Lyft, Inc., 199 F.Supp. 3d 284 (D. Mass. 2016), aff'd 918 F.3d 181 (1st Cir. 2019) ). But while Defendants contend that "[t]here is no sound basis for this Court to depart from those rulings," id., those rulings did not address the arguments Plaintiffs raise here. Moreover, as no class has been certified, Plaintiffs are not barred by the fact...