Cunningham v. Lyft, Inc.Cunningham v. Lyft, Inc.
The parties joined issue in a flurry of motions leading to rulings concerning plaintiffs’ requests for preliminary injunctive relief and Lyft‘s request to compel arbitration. Lyft now presses an interlocutory appeal from the denial of its motion to compel arbitration, while plaintiffs press interlocutory cross-appeals from the denial of requests for preliminary injunctive relief, including a so-called “public injunction.”1 For the following reasons, we reverse the order denying Lyft‘s motion to compel arbitration, and affirm the denials of preliminary injunctive relief.
I.
Lyft, Inc., a ridesharing company, uses a smartphone application to allow customers to hail drivers. Cunningham v. Lyft, 450 F. Supp. 3d 37, 39 (D. Mass. 2020). In order to work
Lyft considers its drivers “independent contractors” and does not provide them with sick leave benefits. Id. Although drivers may drive as much or as little as they want, and may also reject ride requests, Lyft retains the right to deactivate drivers who violate the Terms of Service or fall below Lyft‘s “star rating or cancellation threshold.” Id.
In 2018, Lyft updated its Terms of Service. Drivers could not continue using Lyft to pick up riders until they signaled their acceptance of the updated Terms of Service by clicking the “I accept” button. Cunningham, 450 F. Supp. 3d at 39. Those revised terms stated, in relevant part, that “[t]hese 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.” Id. at 39–40 (capitalization altered). Drivers could also follow a hyperlink directly to the
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 . . . .
Id. at 40 (alterations in original). The agreement also includes a “Prohibition of Class Actions and Non-Individualized Relief.” Id.2 Finally, the agreement provides that “disputes regarding the
Plaintiff Melody Cunningham has been driving for Lyft since June 2013. Plaintiff Frunwi Mancho has been driving for Lyft since January 2016. Both clicked the “I accept” button on the updated Terms of Service in 2018 and neither opted out of the arbitration agreement. Id. at 41. Both Mancho and Cunningham used the Lyft platform to pick up passengers, some of whom were traveling to or from Logan Airport in Boston, Massachusetts. Id. at 41. Mancho also occasionally drove passengers across state lines, including from Haverhill, Massachusetts to Salem, New Hampshire, and from Logan Airport to Portsmouth, New Hampshire. Cunningham did not drive any passengers across state lines. Id.
Lyft contends that nation-wide, “approximately 98% of rides provided by drivers using Lyft and similar ridesharing platforms take place entirely within the boundaries of a single state.” From September 17, 2016 to April 7, 2020, “fewer than 2% of all [rides given by drivers for Lyft] in the United States crossed state lines. And during that same period, fewer than 0.5% of rides on the Lyft platform that began in Massachusetts crossed state lines. Instead, those rides were short and localized.” In 2018, for example, “on average, drivers using rideshare platforms in Massachusetts gave rides that lasted under 16 minutes and traveled fewer than 5 miles.” Interstate travel by drivers who use the competing Uber platform is similarly rare, as “only 2.5% of all trips fulfilled using the Uber Rides marketplace in the United States between 2015 and 2019 . . . started and ended in different states.” Capriole v. Uber Techs., Inc., 7 F.4th 854, 864 (9th Cir. 2021)(internal quotation marks omitted).
Plaintiffs do not quibble with Lyft‘s numbers. Instead, they train their focus primarily on a different set of numbers, based on trips to and from Logan Airport. Plaintiffs assert that Lyft and Uber “represent about 40% of the traffic at Logan Airport
II.
We first address the issue of compulsory arbitration. The parties agree that the Federal Arbitration Act (FAA) applies unless plaintiffs fit within an exemption for “a class of workers engaged in foreign or interstate commerce.” Our review of this issue is de novo. Barbosa v. Midland Credit Mgmt., Inc., 981 F.3d 82, 86 (1st Cir. 2020).
A.
The FAA was enacted in 1925 “in response to a perception that courts were unduly hostile to arbitration.” Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1621 (2018). The FAA establishes “a liberal federal policy favoring arbitration” and reflects “the fundamental principle that arbitration is a matter of contract.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (internal quotation marks and citations omitted). It also requires courts to “place arbitration agreements on an equal footing with other contracts” and “enforce them according to their terms.” Id.
Central to this appeal is section 1 of the FAA. Section 1 “exempts employment contracts of certain categories of workers from the Act‘s coverage.” Waithaka v. Amazon.com, Inc., 966 F.3d 10, 16 (1st Cir. 2020), cert. denied, 141 S. Ct. 2794 (2021), reh‘g denied, 141 S. Ct. 2886 (2021). Specifically, section 1 provides that “nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”
In Circuit City, the Court rejected the contention that the residual phrase covered all employees arguably involved in commerce. Instead, it read the residual phrase as covering only “transportation” workers. Id. at 119 (“Section 1 exempts from the FAA only contracts of employment of transportation workers.“)
No party to this case contends that the contracts at issue here are not “contracts of employment of transportation workers.”3 Pointing to the fact that the Supreme Court in Circuit City referred to the movement of goods, Lyft does contend that because Lyft drivers generally transport persons, not goods, the residual phrase does not encompass them. But see Waithaka, 966 F.3d at 13 (workers “who transport goods or people“); see also Saxon v. Sw. Airlines Co., 993 F.3d 492, 497 (7th Cir. 2021)(accepting that “the movement of goods accompanying people, just as much as the movement of goods alone,” constituted interstate commerce for § 1, where the defendant had abandoned the contrary argument on appeal); Singh v. Uber Techs Inc., 939 F.3d 210, 226 (3d Cir. 2019) (holding that § 1 exempts employment contracts for “all classes of transportation workers” engaged in interstate commerce). As it turns out, we need not address this contention. Rather, we turn our attention to Lyft‘s principal contention that these transportation workers are not among a class of transportation workers who are “engaged in . . . interstate commerce” within the meaning of section 1. Plaintiffs do not challenge the premise that they must be among such a class of transportation workers in order to claim the benefit of the exemption. Instead, they claim that members of the class of transportation workers to which they belong are engaged in interstate commerce for two reasons: (1) Because they take passengers to and from Logan Airport for trips to and from other states and countries; and (2) Because some Lyft drivers sometimes take fares across state lines. We address each argument in turn.
1.
Plaintiffs’ argument based on their transportation of some passengers to and from Logan Airport runs headlong into the
The first scenario involved the transfer of passengers and their luggage between rail stations in Chicago. Id. at 228. At the time, most passengers traveling interstate by rail through Chicago were required to disembark from a train at one station and travel up to two miles to board another train at another station to continue their interstate journey. Id. The railroads often agreed with their passengers to provide transit between the two stations. Id. The railroads then contracted with cab companies to supply the vehicles and drivers for this connecting transit. Id. at 229.
The second scenario involved taxi cabs in the course of their normal local taxi service throughout Chicago arranging with passengers to drive them to or from various locations, including the rail stations at the beginning or end of their rail journeys. Id. at 230.
The Supreme Court held that the transfer by motor vehicles in the first scenario sufficiently implicated interstate commerce as to make the Sherman Act applicable. Id. at 229. This
As to the second scenario, however, the Court held that “when local taxicabs merely convey interstate train passengers between their homes and the railroad station in the normal course of their independent local service, that service is not an integral part of interstate transportation.” Yellow Cab, 966 F.3d at 233. Rather, the interstate journey begins when the passenger “boards the train at the station and ends when he disembarks at the station in the city of destination.” Id. at 231. “To the taxicab driver, it is just another local fare.” Id. at 232.
The trips by Lyft drivers to and from Logan fit well the second Yellow Cab scenario. The Lyft driver contracts with the passenger as part of the driver‘s normal local service to take the passenger to the start (or from the finish) of the passenger‘s interstate journey. See Capriole, 7 F.4th at 863–64 (finding that rideshare drivers who take fares to an airport “are less like the exclusive provider of ‘between-station transportation’ described
Conversely, the trips by Lyft drivers to and from Logan fit poorly the first Yellow Cab scenario. The airlines do not agree to provide the relevant ground transit, and based on the record before us, neither Lyft nor Lyft drivers contract with the airlines to help the airlines perform such an undertaking.
We are confident that a scenario not affecting “interstate commerce” under the Sherman Act would also not qualify as a scenario in which taxicabs would be “engaged in . . . interstate commerce” under section 1 of the FAA. The Sherman Act bars “unreasonable restraints on interstate commerce, regardless of the amount of commerce affected.” Yellow Cab, 332 U.S. at 225. The Act is broadly construed, see id. at 226, whereas the FAA exception at issue here is narrowly construed, Circuit City, 532 U.S. at 118. Hence, conduct that does not affect interstate commerce under the Sherman Act (e.g., local cab rides to the station) would seem a fortiori not to be conduct “engaged in interstate commerce” under the FAA‘s section 1 exception.
Plaintiffs seek to distinguish Yellow Cab by pointing out that the dropping off and picking up of passengers at Logan is regulated by the Massachusetts Port Authority, rather than a purely local entity. But nothing in Yellow Cab even hints that the
Drawing a line between the interstate transportation provided by the airlines and the local intrastate transportation provided by Lyft drivers makes sense when defining the nature of activity in which plaintiffs are engaged. One would not reasonably say that plaintiffs are engaged in interstate trucking merely because they sometimes give truck drivers rides to and from their garages. Similarly, we do not think that plaintiffs are engaged in interstate travel merely because they bring passengers to and from an airport.
Our decision in Waithaka is not to the contrary. There Amazon (like the railroads in Yellow Cab) agreed with Amazon customers to transport goods interstate from their point of origin to the customer‘s home. See 966 F.3d at 13–14. The local delivery drivers (like the taxi companies in the first scenario of Yellow Cab) then agreed with Amazon to carry the goods for a portion of that single interstate journey (“the so-called ‘last mile‘“). Id. Here, by contrast, there is no evidence of any such agreements between Lyft and the airlines.
Plaintiffs’ only other argument for distinguishing the local taxicab scenario in Yellow Cab from the Logan trips taken by Lyft drivers rests on an assertion that “Lyft has formed partnerships with airlines in which airlines promote its service
2.
We turn next to plaintiffs’ alternative argument that they fit within the section 1 exemption because some of them occasionally transport passengers across state lines. We need not decide how to treat a lawsuit arising out of one of these rare interstate trips. Nor need we decide whether any particular Lyft driver engages in interstate commerce. Rather, our task under the FAA is to decide whether relatively rare (but nevertheless
Lyft contends that plaintiffs are not a class of workers engaged in interstate commerce under section 1 because not all of them ever cross state lines and those who do only do so relatively infrequently. One of the four named plaintiffs in this very case, who are all said to be typical of the putative class members, never took a fare across state lines in five years of driving for Lyft, and fewer than 2% of Lyft rides nationwide cross state lines. So the question posed is this: Does a class of workers qualify under section 1 if many but not all of the workers cross states lines on a very small percentage of their trips?
The two circuits who have considered this question reached opposite results. In International Brotherhood Of Teamsters Local Union No. 50 v. Kienstra Precast, Inc., 702 F.3d 954, 958 (7th Cir. 2012), the Seventh Circuit held that cement truck drivers whose local trips took them across state lines on roughly two percent of their delivery trips were within the ambit of the section 1 exemption. Reasoned the court, “there is no basis in the text of § 1 for drawing a line between workers who do a lot of interstate transportation work and those who cross state lines
As an abstract matter, one might argue that a person whose job primarily involves intrastate transportation but also, albeit infrequently, requires interstate transportation might be engaged in both types of transportation. Nonetheless, for several reasons we conclude that Lyft drivers are not a class of workers engaged in interstate commerce.
First, not all Lyft drivers engage in any interstate transportation. The lead plaintiff, Ms. Cunningham, has in five years of working as a Lyft driver never taken a passenger across state lines. So the “class of workers” as a whole is not engaged in interstate commerce at all. That being said, we also expect that some workers on passenger railroads may handle only within-state trips. So we do not rely on this fact alone.
More significantly, Circuit City instructs that the “§ 1 exclusion provision [must] be afforded a narrow construction,” 532 U.S. at 118, and that we must construe the general language of the residual phrase “to embrace only objects similar in nature to those objects enumerated by the preceding specific words,” id. at 115. In section 1, those enumerated objects are “seamen” and “railroad employees,” two classes of transportation workers primarily devoted to the movement of goods and people beyond state boundaries. The same cannot even arguably be said of Lyft drivers.
Third, in Waithaka, we noted that “[t]he nature of the business for which a class of workers perform their activities must inform [our] assessment” of “whether a class of workers is ‘engaged in . . . interstate commerce.‘” Waithaka, 966 F.3d at 22 (quoting
For all of these reasons, collectively, we conclude that Lyft drivers are not among a class of transportation workers engaged in interstate commerce within the meaning of section 1 as narrowly construed. They are among a class of workers engaged primarily in local intrastate transportation, some of whom
B.
Because we find that the FAA applies, we need not examine the role of the Massachusetts Uniform Arbitration Act. See Smith Barney, Inc. v. Critical Health Sys. of N.C., Inc. of Raleigh, N.C., 212 F.3d 858, 860–61 (4th Cir. 2000) (“Once a dispute is covered by the [FAA], federal law applies to all questions of interpretation, construction, validity, revocability, and enforceability.” (alteration in original) (quoting In re Salomon Inc. S‘holders’ Derivative Litig., 68 F.3d 554, 559 (2d Cir. 1995))).
III.
Thinking that this case would remain in the district court rather than be rerouted to arbitration, the district court entertained and denied plaintiffs’ requests for a preliminary injunction. Now that we have determined that the FAA applies, it is clear that the dispute between these parties will be for the arbitrator to decide. In normal course, that would be the end of it, and we would not need to consider the merits of plaintiffs’ appeal from the denial of their injunctive requests. See Next Step Med. Co., Inc. v. Johnson & Johnson Int‘l, 619 F.3d 67, 70 (1st Cir. 2010) (holding that the decision to arbitrate the entire
Assuming (incorrectly) that arbitration was not required, the district court nevertheless denied plaintiffs’ requested injunction, for failure to establish any immediate threat of irreparable injury. Cunningham, 2020 WL 2616302, at *1, *13–14; Cunningham v. Lyft, No. 1:19-cv-11974-IT, 2020 WL 1323103, at *3 (D. Mass. Mar. 20, 2020). Reviewing that denial for legal error or abuse of discretion, Russomano v. Novo Nordisk Inc., 960 F.3d 48, 53 (1st Cir. 2020), we have little to add to that cogent analysis. Plaintiffs offer no actual evidence of any harm to themselves that is of a type considered irreparable by an award of damages. They devote their argument instead to a claim that the public interest calls for an injunction so as to provide higher payments to other Lyft drivers, whose behavior in the absence of
IV.
For the forgoing reasons, the district court‘s decision denying defendants’ motion to compel arbitration is reversed, and the decisions denying plaintiffs’ motions for a preliminary injunction are affirmed.
Notes
Cunningham, 450 F. Supp. 3d at 40 (alteration in original).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.