452 F.Supp.3d 904
N.D. Cal.2020Background
- Three Lyft drivers filed an emergency motion (in state court, later removed under CAFA) seeking an order reclassifying all California Lyft drivers from independent contractors to employees under California Assembly Bill 5 (A.B. 5) and related state law, to obtain paid sick leave.
- Plaintiffs sought a mandatory preliminary injunction requiring immediate reclassification; Lyft moved to compel individual claims to arbitration under its Terms of Service (which includes a delegation clause and a class-/public-injunction waiver).
- Lyft’s Terms of Service: broad delegation of arbitrability to an arbitrator, but a separate clause waiving class/representative relief and stating disputes about that waiver (and public-injunctive relief) are for courts; it provides severance of unenforceable waiver provisions.
- Plaintiffs argued (1) the court should decide the injunction before arbitration, (2) FAA §1’s transportation-worker exemption applies, and (3) public-injunction claims are not arbitrable; Lyft argued the FAA governs and arbitration should proceed.
- The court found A.B. 5 makes driver classification as employees clear but denied emergency reclassification relief, compelled individualized claims to arbitration, struck class allegations as waived, and remanded the remaining public-injunction claim to state court for lack of federal standing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court should decide the preliminary injunction before ruling on arbitration | Injunction is urgent and should be decided now | Arbitration agreement must be resolved first; injunction would displace arbitration | Court: do not decide injunction first; preliminary injunction would displace agreed arbitration and is not ancillary to preserve arbitration |
| Whether FAA §1 transportation-worker exemption applies | Drivers are "transportation workers" engaged in interstate commerce, so FAA doesn't apply | Drivers are not a class "engaged in foreign or interstate commerce"; FAA applies | Court: exemption does not apply—class of Lyft drivers is not engaged in interstate commerce; FAA governs |
| Scope/enforceability of Lyft arbitration Terms (delegation clause; class/public-injunction waiver) | Waiver of class/public injunctive relief unenforceable for public injunctions; arbitration cannot cover public-injunction claim | Broad delegation sends arbitrability questions to arbitrator; class waiver enforceable for individualized relief | Court: delegation clause valid—arbitrator decides arbitrability for individual claims; class allegations struck; waiver of public-injunction relief invalid under California law, so public-injunction claim reserved for court |
| Standing / federal jurisdiction to seek only a California public injunction after arbitration and class-waiver effects | Plaintiffs can pursue public injunctive relief in federal court | If plaintiffs lack individualized or representative claims in federal court, they lack Article III standing for only a public injunction | Court: plaintiffs lack Article III standing to pursue solely a public injunction in federal court; remand the public-injunction claim to state court |
Key Cases Cited
- New Prime Inc. v. Oliveira, 139 S. Ct. 532 (2019) (courts decide §1 transportation-worker exclusion; independent contractors can fall within §1)
- Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018) (FAA/SCOTUS endorses pro‑arbitration policy and enforces class waivers)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) (clear delegation clauses send arbitrability disputes to arbitrators)
- Blair v. Rent‑A‑Center, Inc., 928 F.3d 819 (9th Cir. 2019) (FAA preemption analysis and interaction with California public‑injunction rule)
- Dynamex Operations West, Inc. v. Superior Court, 4 Cal. 5th 903 (2018) (California test for employee vs. independent contractor)
- McGill v. Citibank, N.A., 2 Cal. 5th 945 (2017) (California rule on public injunctive relief and limits on arbitration waivers)
- Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) (interpreting §1 residual clause narrowly re: transportation workers)
- United States v. Yellow Cab Co., 332 U.S. 218 (1947) (local taxi services are typically only casually related to interstate commerce)
- Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186 (1974) (definition of "in commerce" as persons/activities within the flow of interstate commerce)
- Summers v. Earth Island Institute, 555 U.S. 488 (2009) (limits on seeking broad injunctive relief absent concrete threatened injury)