Lyft can't force its drivers in Massachusetts to arbitrate claims they are being misclassified as independent contractors rather than employees, a federal judge ruled Friday, saying the workers are exempt from the Federal Arbitration Act.
The decision from U.S. District Judge Indira Talwani hands the drivers a small victory in their case, which also seeks a court order to force
Lyft Inc. to provide paid sick leave amid the coronavirus pandemic.
Within minutes of Judge Talwani's order, Lyft gave the court notice it would appeal the denial of arbitration to the First Circuit.
Judge Talwani's decision also found that Lyft's class action waiver in its terms and conditions can't be enforced because it "contravenes public policy" against such waivers in wage lawsuits.
The drivers' attorney, Shannon Liss-Riordan, called the ruling "a very important decision for the court" and said it goes further in detailing ride-hailing drivers' exemption from the Federal Arbitration Act than any other decision she's seen.
"This argument was really made possible by the Third Circuit decision last fall in
Singh 
that this court relied on," Liss-Riordan told Law360, citing the opinion in Singh v.
Uber Technologies Inc., which said drivers qualified as transportation workers for the exemption but needed to prove to the district court on remand that they were involved with interstate commerce.
Judge Talwani found that the Lyft drivers were involved in interstate commerce based on their occasional trips delivering passengers to New Hampshire. The judge noted that the drivers often pick up people from Boston Logan International Airport who had flown in from beyond Massachusetts state borders, and bring them to their final destination in the Boston area.
"A worker can be engaged in interstate commerce even if he doesn't personally cross a state border," Judge Talwani wrote.
Attorney General Maura Healey likewise focused on the arbitration issue in an amicus brief her office filed earlier Friday. The brief backed efforts by drivers with Lyft and Uber, in a separate but closely related case, to be granted sick leave through an injunction.
Healey countered both companies' contention that the claims are subject to arbitration by advancing the very argument that Judge Talwani later outlined.
"While their legal status is still being determined, ride-sharing drivers, and the public they serve, face immediate threat of irreparable harm due to the current global health crisis," Healey said, citing the risk that drivers will potentially transmit the virus to riders.
Drivers for both companies said earlier this week they were still working working
despite being sick with what they fear could be COVID-19, continuing to pick up riders because they had no other way to pay their bills, according to affidavits supporting requests for injunctions.
Lyft blasted those accounts, saying they amount to "callous and insidious politics" and "attempts by opportunistic lawyers to capitalize on a national emergency."
The calls for injunctions stem from the drivers' push to be classified as employees of the two companies, not as independent contractors, which leaves them without benefits including overtime, sick pay and mileage reimbursement.
Healey's arguments also respond to
Judge Talwani's denial of the drivers' initial injunction requests, which were made under the state's wage law, on the grounds that the statute doesn't provide for a person to seek relief on the public's behalf. The drivers asked for the public relief in part because they said they could not be forced into arbitration.
"Such 'public injunctive relief' is available" under the worker misclassification statute, Healey wrote, since the law explains that its list of approved reliefs isn't exhaustive.
Representatives for Uber, Lyft, and the attorney general's office were not immediately available for comment on Friday.
Massachusetts is represented by Karla E. Zarbo of the Massachusetts Attorney General's Office.
The drivers in both cases are represented by Shannon Liss-Riordan, Adelaide H. Pagano and Anne Kramer of
Lichten & Liss-Riordan PC.
Uber and its CEO Dara Khosrowshahi are represented by Joshua S. Lipshutz, Theodore J. Boutrous, Theane Evangelis, Michele L. Maryott, Brandon Stoker and Heather L. Richardson of
Gibson Dunn & Crutcher LLP.
Lyft, its CEO Logan Green and company co-founder and President John Zimmer are represented by James D. Smeallie, Andrew E. Silvia, David J. Santeusanio and Michael T. Maroney of
Holland & Knight LLP.
The cases are Capriole v. Uber Technologies Inc. et al., case number
1:19-cv-11941, and Cunningham v. Lyft Inc. et al., case number
1:19-cv-11974, in the
U.S. District Court for the District of Massachusetts.
--Editing by John Campbell.
Update: This story has been updated with the judge's decision, Lyft's intent to appeal and reaction from the drivers' attorney.
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