524 F.Supp.3d 338
S.D.N.Y.2021Background
- Plaintiff MD Islam, a New York City Lyft driver, brought a putative class action challenging Lyft’s policy of logging drivers off for performing too few rides; his driver agreement contains an individual-arbitration clause governed by the FAA.
- Plaintiff contends Section 1 of the FAA exempts him because rideshare drivers are a “class of workers engaged in . . . interstate commerce” (transporting passengers across state lines and to/from interstate travel hubs). Lyft moved to compel arbitration and oppose discovery on interstate-activity issues.
- Lyft’s records show ~2% of rides nationally cross state lines; plaintiff estimates ~4–5% of his NYC rides are interstate and that trips to airports/train stations are a substantial portion of revenue.
- The court framed the relevant class at the national level (nationwide rideshare drivers for platforms like Lyft/Uber) and evaluated whether that class is engaged in interstate commerce under FAA §1.
- Court held: nationwide rideshare drivers are a class engaged in interstate commerce (so the FAA does not apply), but New York law supplies an alternate basis to enforce the arbitration agreement; arbitration compelled and litigation stayed; discovery request denied as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FAA §1 residual exemption covers rideshare drivers | Rideshare drivers (esp. NYC) are transportation workers engaged in interstate commerce because they regularly cross state lines and ferry passengers to/from airports and stations | Drivers predominantly provide intrastate/local rides; only a small % of trips cross state lines; Section 1 is narrow | The court held the nationwide class of rideshare drivers is engaged in interstate commerce; FAA §1 exemption applies (FAA inapplicable) |
| Whether Section 1 covers passenger transport (not just goods) | §1 includes workers who transport passengers or facilitate interstate movement | §1 historically concerned goods carriers; rideshare drivers differ from classic interstate transport workers | Court adopted view that §1 can cover passenger transport when work is part of interstate commerce flow; exemption not limited to goods |
| Proper scope of the relevant "class of workers" | Class should be NYC Lyft drivers (plaintiff’s putative class) | Class should be nationwide rideshare drivers for platforms like Lyft/Uber | Court defined the class nationally (nationwide rideshare drivers) and applied §1 at that level |
| If FAA inapplicable, can arbitration still be enforced under state law? | Because the contract states arbitration is “governed by the FAA,” the clause should be unenforceable if FAA doesn’t apply | Inapplicability of the FAA does not void arbitration; choice-of-law defaults to the state with greatest interest (New York), which enforces the clause | Court applied choice-of-law rules, held New York law governs and enforces the arbitration clause; compelled arbitration and stayed case |
Key Cases Cited
- Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) (interpreting §1 residual clause as limited to transportation workers and construing "engaged in" narrowly)
- Waithaka v. Amazon.com, Inc., 966 F.3d 10 (1st Cir. 2020) (local delivery drivers who move packages that are in the stream of interstate commerce fall within §1)
- Rittman v. Amazon, Inc., 971 F.3d 904 (9th Cir. 2020) (similar to Waithaka; AmFlex drivers engaged in interstate commerce)
- Wallace v. Grubhub Holdings, Inc., 970 F.3d 798 (7th Cir. 2020) (Section 1 applies where interstate movement is central to the job description)
- Singh v. Uber Techs., Inc., 939 F.3d 210 (3d Cir. 2019) (§1 can cover passenger transport; remanded for factfinding on whether drivers are engaged in interstate commerce)
- New Prime Inc. v. Oliveira, 139 S. Ct. 532 (2019) (Section 1 exemption applies to agreements to perform work, including independent contractors)
- United States v. Yellow Cab Co., 332 U.S. 218 (1947) (local taxi drops to train stations insufficiently related to interstate commerce for antitrust purposes)
- Rogers v. Lyft, Inc., 452 F. Supp. 3d 904 (N.D. Cal. 2020) (district court decision finding Lyft drivers not a class engaged in interstate commerce)