Bekele v. Lyft, Inc., 199 F. Supp. 3d 284

Background

Plaintiff Bekele, a Massachusetts Lyft driver, sued Lyft in state court alleging misclassification as an independent contractor in violation of the Massachusetts Wage Act; Lyft removed and moved to compel arbitration and dismiss.
Bekele registered with Lyft via a mobile app and clicked an on-screen “I accept” button to agree to Lyft’s 33-page Terms of Service (TOS) on three occasions; the TOS as displayed included a bold, titled arbitration clause with a class-action waiver.
Lyft produced timestamps and records showing Bekele’s electronic acceptance; Bekele conceded he clicked “I accept” but asserted he did not see the arbitration clause and that it was unreadable on his phone.
The parties converted the motion into a partial summary-judgment-type determination on arbitrability; the Court applied Massachusetts contract law to formation questions and the FAA to enforcement.
The Court held the TOS was a clickwrap agreement that gave reasonable notice, that clicking “I accept” manifested assent, and that Bekele’s Wage Act claim falls within the broad arbitration clause.
Bekele’s defenses (unconscionability under Massachusetts law and illegality under the NLRA based on the class-waiver) were rejected; the action was dismissed and arbitration compelled.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Validity of arbitration agreement	Bekele: lacked actual notice of, and did not assent to, the arbitration clause on the mobile TOS	Lyft: clickwrap TOS displayed in full; Bekele clicked “I accept” — objective assent and reasonable notice	Valid agreement: clickwrap provided reasonable notice and Bekele manifested assent by clicking “I accept”
Procedural unconscionability	Bekele: clause buried in lengthy TOS on a small phone screen; acceptance was a condition to work	Lyft: clause was prominent (bold header), TOS viewable/scrollable, affirmative click required, and Bekele had time to review	No procedural unconscionability: no unfair surprise or oppressive formation found
Substantive unconscionability (cost-splitting / class waiver)	Bekele: terms (including cost and class waiver) are one-sided and oppressive	Lyft: clause is standard, severable, and subject to FAA presumption of enforceability	Not reached on substantive merits because plaintiff failed to show procedural unconscionability (both required under Massachusetts law)
Legality of class-action waiver under NLRA	Bekele: waiver violates Sections 7/8 of the NLRA because class/collective litigation is protected "concerted activity" and thus non-waivable	Lyft: class-waiver is enforceable under FAA; collective-litigation procedures are procedural (not substantive) and not protected as a non-waivable NLRA right	Waiver valid: court rejected Lewis’s reasoning, finding Section 7’s “other concerted activities” limited by ejusdem generis and not a substantive right to class litigation; NLRA does not render the waiver illegal

Key Cases Cited

Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (Sup. Ct.) (federal policy favors arbitration and doubts about scope go to arbitration)
AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (Sup. Ct.) (FAA preemption and enforceability of arbitration agreements; limits on unconscionability-based invalidation)
American Express Co. v. Italian Colors Restaurant, 133 S. Ct. 2304 (Sup. Ct.) (arbitration can preclude class procedures even when individual arbitration may be impracticable)
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (Sup. Ct.) (statutory claims may be arbitrated if the arbitral forum permits effective vindication)
Ajemian v. Yahoo!, Inc., 83 Mass. App. Ct. 565 (Mass. App. Ct.) (clickwrap agreements are enforceable when terms are displayed and user must click to accept)
D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir.) (class-waiver does not violate NLRA; FAA enforces arbitration agreements)
Lewis v. Epic Systems Corp., 823 F.3d 1147 (7th Cir.) (holding class-waivers violate NLRA — discussed and rejected by this court)