18th Annual Workplace Class Action Report - 2022 Edition

748 Annual Workplace Class Action Litigation Report: 2022 Edition about applying standard choice-of-law principles to reach the conclusion that state law applied to the arbitration agreement in the absence of the FAA. Osvatics, et al. v. Lyft, Inc., 2021 U.S. Dist. LEXIS 77559 (D.D.C. April 27, 2021). Plaintiff, a rideshare driver, filed a class action alleging that Defendant misclassified drivers as independent contractors rather than employees and thereby violated of District of Columbia law by failing to provide paid sick leave to its drivers. Defendant filed a motion to compel arbitration of Plaintiff’s claims pursuant to an arbitration provision contained in its independent contractor agreement. The Court granted the motion. Plaintiff contended: (i) that she was not bound by the arbitration clause in Defendant’s Terms of Service because she no longer intended to drive for Defendant when she most recently agreed to the Terms of Service; (ii) that the Federal Arbitration Act (“FAA”) and its enforcement provisions did not govern the arbitration agreement here because drivers (in the D.C. area or nationally) comprise a "class of workers engaged in . . . interstate commerce" under the § 1 residual clause of the FAA; and (iii) assuming that the FAA did not apply, the law of the District of Columbia would not permit enforcement of the arbitration agreement. The Court determined that Plaintiff’s express agreement to abide by the Terms of Service, along with her failure to opt-out of the arbitration agreement at any time, was sufficient to establish a binding agreement between Plaintiff and Defendant concerning the submission of disputes to arbitration. Id . at *15. The Court also found that drivers as a class were not "engaged in . . . interstate commerce" within the meaning of § 1. The Court concluded that unlike seamen and railroad workers, for whom the interstate movement of goods and passengers over long distances and across state lines was "a central part” of their job description, drivers offered services that were primarily local and intrastate in nature. Id. at *34- 35. The Court reasoned that rideshare drivers were "in the general business of giving people rides, not the particular business of offering interstate transportation to passengers." Id. at *35. The Court thus determined that any interstate trips were only by chance, and not provided in the course of an ordinary day. The Court also reasoned that the fact that drivers frequently transported passengers to and from airports and train stations was not determinative of the interstate commerce inquiry, as the Supreme Court had interpreted the language "in commerce" as encompassing "only persons or activities within the flow of interstate commerce," which in turn requires some "practical, economic continuity in the generation of goods and services for interstate markets and their transport and distribution to the consumer." Id. at *36. The Court therefore ruled that Plaintiff was not exempt from the FAA, and under the terms of the valid agreement entered into by the parties, the motion to compel arbitration must be granted. U.S. Chamber Of Commerce, et al. v. Bonta, 2021 U.S. App. LEXIS 27659 (9th Cir. Sept. 15, 2021). Plaintiffs challenged § 432.6 of the California Labor Code (“CLC”) on the basis that it was preempted by § 2 of the Federal Arbitration Act (“FAA”). Specifically AB 51, which added § 432.6 to the California Labor Code, was enacted with the purpose of ensuring that individuals were not retaliated against for refusing to consent to the waiver of rights and procedures established in the California Fair Employment and Housing Act and the California Labor Code; and to ensure that any contract relating to those rights and procedures be entered into as a matter of voluntary consent, and not as a result of coercion. Plaintiffs contended that other provisions of California law, specifically § 433 of the CLC and § 12953 of the Government Code, rendered violations of § 432.6 a misdemeanor offense and exposed employers to potential civil sanctions. The District Court concluded that AB 51 placed agreements to arbitrate on unequal footing with other contracts and also that AB 51 stood as an obstacle to the purposes and objectives of the FAA. As a result, the District Court preliminarily enjoined enforcement of § 432.6(a)-(c) as to arbitration agreements covered by the FAA. On Defendant’s appeal, the Ninth Circuit held that the District Court erred in finding that Plaintiffs were likely to succeed on the merits of their claim that § 432.6 was preempted, since § 432.6 neither conflicted with the language of § 2 of the FAA nor created a contract defense by which executed arbitration agreements might be invalidated or not enforced. Moreover § 432.6 did not it stand as an obstacle to the purposes and objectives of the FAA. However, the Ninth Circuit held that the civil and criminal sanctions attached to a violation of § 432.6, i.e ., § 12953 of the California Government Code and § 433 of the CLC, were preempted by the FAA because they stood as an obstacle to the liberal federal policy favoring arbitration agreements. For these reasons, the Ninth Circuit reversed in part the District Court’s order and vacated the preliminary injunction.