Islam v. Lyft, Inc.

MD ISLAM, on behalf of himself and those similarly situated, Plaintiff, v. LYFT, INC., Defendant.

No. 20-CV-3004 (RA)

United States District Court, S.D. New York

June 28, 2021

MEMORANDUM OPINION AND ORDER

RONNIE ABRAMS, United States District Judge:

On March 9, 2021, the Court granted Defendant Lyft, Inc.'s motion to compel arbitration. See Dkt. 43; Islam v. Lyft Inc., --- F.Supp.3d ---, 2021 WL 871417 (S.D.N.Y. Mar. 9 2021). The Court agreed with Plaintiff that as a Lyft driver he belonged to a nationwide “class of workers engaged in . . . interstate commerce, ” 9 U.S.C. § 1, such that the Federal Arbitration Act could not be the basis to mandate his compliance with his contract's arbitration provision. But the Court found that New York law furnished an alternative basis to enforce the provision, and accordingly granted Lyft's motion. See Dkt. 43 at 26-31. Plaintiff now moves for reconsideration of the Court's decision to compel arbitration or, in the alternative, for an order permitting him to take an interlocutory appeal to the United States Court of Appeals for the Second Circuit. See Dkt. 45. Plaintiff argues that the Court committed clear error by compelling arbitration under state law after finding the FAA to be inapplicable, given the parties' “express choice of law” for the FAA to apply to the arbitration provision. Plaintiff further asks the Court to either (a) lift the stay and dismiss the action, such that he may properly take an appeal now; or (b) certify an interlocutory appeal pursuant to 28 U.S.C. § 1292(b). Lyft opposed the motion on April 20, 2021. See Dkt. 48. For the following reasons, the motion for reconsideration is denied. The Court will, however, certify its March 9, 2021 order, Dkt. 43, for interlocutory appeal.

DISCUSSION

The Court assumes familiarity with the background of this case as documented in the Court's prior opinion. Dkt. 43; Islam, 2021 WL 871417, at *1-*6.

I. Legal Standard

Motions for reconsideration are governed by Local Civil Rule 6.3 and Federal Rule of Civil Procedure 60(b). To prevail, the movant must identify “an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice.” Virgin Atl. Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992). A district court commits clear error when a reviewing court would be “left with the definite and firm conviction that a mistake has been committed.” Anderson v. City of Bessemer City, N.C. , 470 U.S. 564, 573 (1985) (citation omitted). The standard on a motion for reconsideration “is strict, and reconsideration will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked - matters, in other words, that might reasonably be expected to alter the conclusion reached by the court.” Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995). Ultimately, whether to grant or deny a motion for reconsideration is “committed to the sound discretion of the district court.” Abu Dhabi Commercial Bank v. Morgan Stanley & Co., 888 F.Supp.2d 478, 483 (S.D.N.Y. 2012).

Section 1292(b) of Title 28 governs the certification by a district court of an interlocutory appeal, and presents a limited exception to the “basic tenet of federal law” that appellate review should be delayed until final judgment is entered. Koehler v. Bank of Bermuda Ltd., 101 F.3d 863, 865 (2d Cir.1996). Under this statutory provision, a district court may certify for appeal an otherwise non-appealable order when the court concludes that the order “[1] involves a controlling question of law [2] as to which there is substantial ground for difference of opinion and [3] that an immediate appeal from the order may materially advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b).

II. Plaintiff's Motion for Reconsideration is Denied

Plaintiff first argues that the Court clearly erred in relying on New York law as an alternative basis for compelling arbitration after finding that the FAA did not apply, where the contract expressly provided that the arbitration agreement was “governed by” the FAA. Plaintiff reemphasizes his argument, which was fully briefed and discussed at oral argument, that the parties' agreement that the arbitration provision would be “governed by” the FAA meant that any motion to compel arbitration “rises or falls with the application of the FAA.” Dkt. 45 at 3.

The Court considered this to be a close question, but ultimately found Lyft to have the stronger position. See Islam, 2021 WL 871417, at *14 (“The fact that the arbitration clause is ‘governed by the FAA' does not [render the clause unenforceable where the FAA does not apply], because it does not plausibly suggest that the parties intended for the clause to be discarded in the event that the FAA was found inapplicable.”). The Court was guided by the decisions of Judge Chin in Valdes v. Swift Trans. Corp., 292 F.Supp.2d 524 (S.D.N.Y. 2003), Judge Wexler in Diaz v. Michigan Logistics Co., 167 F.Supp.3d 375 (E.D.N.Y. 2016), and Judge Amon in Burgos v. Ne. Logistics, Inc., No. 15-CV-6840 (CBA), 2017 WL 10187756 (E.D.N.Y. Mar. 30, 2017), each of which compelled arbitration under state law on the assumption that the Section One transportation worker exemption precluded the application of the FAA. In Diaz and Burgos, in particular, the courts reached these conclusions notwithstanding that the arbitration agreement in question, like the one here, was “governed by” the FAA. Diaz, 167 F.Supp.3d at 378-379; Burgos, 2017 WL 10187756, at *1.

Plaintiff urges the Court to reconsider. Although he does not point to any controlling, on point case law that mandates a different conclusion, he asserts that in light of the parties' selection of the FAA as governing the arbitration agreement, applying state law where the FAA does not apply would amount to “rewriting [the parties'] contract and . . . impos[ing] additional terms.” Dkt. 45 at 3 (quoting Salvano v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 85 N.Y.2d 173, 182 (1995)). He maintains that “[w]here the clear language of an express choice-of-law clause is found inapplicable, it is not the case that a choice of law was not made, or that such clause is severed.” Id. at 4. And “[w]here parties have expressed their intent to apply a certain law, ”-in this case, the FAA-“the Court may not override the parties' intent and impose a choice-of-law analysis against the clear language of the contract.” Id. at 5 (citing Motorola Credit Corp. v. Uzan, 388 F.3d 39, 51 (2d Cir. 2004) (choice-of-law clauses governing arbitration agreements must be honored)). Because the arbitration provision cannot be enforced pursuant to the FAA, and the provision is “governed by” the FAA, he argues that it simply cannot be enforced.

Plaintiff's arguments are well-taken, but the Court will adhere to its prior ruling, finding that the balance of authority continues to weigh in favor of its decision to compel arbitration under New York law. The implication of the Court's finding that Plaintiff belonged to a class of workers engaged in interstate commerce, and thus that the Section One exemption applies, was only that the FAA's “enforcement mechanisms [were not] available, not that the whole dispute [could not] be arbitrated by enforcing the contract through another vehicle (like state law).” Atwoodv. Rent-A-Ctr. E., Inc., No. 15-CV-1023 (MJR), 2016 WL 2766656, at *3 (S.D. Ill. May 13, 2016). For that reason, a number of courts have compelled arbitration under state law where the FAA was found or assumed not to apply, even where the arbitration clause in question was expressly governed by the FAA. See Diaz, supra; Burgos, supra; Espinosa v. SNAP Logistics Corp., No. 17 CIV. 6383 (AT), 2018 WL 9563311, at *5, n.3 (S.D.N.Y. Apr. 3, 2018) (“The fact that the Agreement states that the parties will arbitrate disputes ‘in accordance with the FAA,' does not, as Plaintiff argues, make the Agreement unenforceable under state law” if the FAA transportation worker exemption applies.); Atwood, 2016 WL 2766656, at *3 (“[E]ven when the contract says that the Federal Arbitration Act applies and mentions no other law[, ] if the federal act doesn't apply, the agreement to arbitrate remains viable, and the only question becomes what state's law applies to the contract to arbitrate.”); Michel v. Parts Auth., Inc., No. 15-CV-5730 (ARR), 2016 WL 5372797, at *3-4 (E.D.N.Y. Sept. 26, 2016) (“Nor do I find that, as plaintiff would have it, the FAA is the only statute that governs the parties' agreement simply because the parties cited to it in that agreement.”); see also Byars v. Dart Transit Co., 414 F.Supp.3d 1082, 1088 (M.D. Tenn. 2019) (M.D. Tenn. Nov. 5, 2019) (rejecting plaintiff's argument that, where the arbitration provision was “governed by” the FAA, it “cannot be enforced under state law because the parties intended that the FAA was the only law that applied to those agreements”). Plaintiff argues that Diaz, as well as other cases that relied on Judge Chin's decision Valdes, misapplied Valdes, since the contract in Valdes did not include an express choice-of-FAA provision. Dkt. 45 at 8; Dkt. 49 at 8. This is a valid criticism of the post-Valdes decisions.

Nonetheless although the Court accepts that the issue as to how to enforce a contractual provision that elects to be governed by the FAA when the FAA is found to be inapplicable is subject to reasonable debate, it agrees with Lyft that “in the absence of any contrary controlling authority, Islam's attempt to argue that this Court, Judge Wexler (Diaz), Judge Torres (Espinosa), Judge Amon (Burgos), Judge Ross (Michel), and Judge Ramos (Zambrano) all committed clear error is hard to swallow.” ...