DC AG Backs Lyft Driver In Sick Leave Arbitration Dispute

Law360 - Linda Chiem
July 22, 2020

The Washington, D.C., attorney general’s office weighed in on a Lyft driver’s suit challenging the ride-hailing company’s failure to provide paid sick leave, saying in a Tuesday court filing that D.C. public policy discourages companies from trapping workers and consumers behind mandatory arbitration clauses.

D.C. Attorney General Karl Racine’s office filed an amicus brief to clarify where D.C. public policy lands on the issue of contracts of adhesion or other unconscionable mandatory arbitration agreements. The brief was filed in plaintiff Cassandra Osvatics’ proposed class action accusing Lyft Inc. of flouting the D.C. Accrued Sick  and  Safe Leave Act by failing to offer paid sick leave to thousands of drivers amid the COVID-19 pandemic. Osvatics is trying to fend off Lyft’s motion to compel arbitration.

Based on precedent from the D.C. Circuit’s 2010 decision in Keeton v. Wells Fargo Corp.  and 2015 decision in Andrew v. American Import Center , it’s likely that Lyft’s mandatory arbitration agreements would be found to be unconscionable, according to the D.C. attorney general’s office. Keeton and Andrew established that trial courts must take a harder look at arbitration agreements containing terms that are stacked in favor of companies and leave workers or consumers without reasonable choice.

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Additionally, the D.C. attorney general’s office disputed Lyft’s assertion that D.C.’s Revised Uniform Arbitration Act flatly “requires” arbitration of Osvatics’ claim if the court found that the Federal Arbitration Act didn’t apply to the dispute.

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Mikael Rojas of Outten & Golden LLP, an attorney for Osvatics and the proposed class, said in a statement to Law360 on Wednesday that the D.C. attorney general’s amicus brief, like the positions taken by many other states, “drives home the point that forced arbitration is a threat to the rights of workers and consumers and should not be enforced under D.C. law.”

Osvatics filed suit in May alleging Lyft’s refusal to offer paid sick leave to drivers during the global COVID-19 pandemic is jeopardizing public health and safety and leaving drivers vulnerable to exposure to the novel coronavirus.

Determined to keep the dispute in court instead of being pushed into private arbitration, Osvatics argued that she and similarly situated Lyft drivers are interstate workers who are exempt from arbitration under the Federal Arbitration Act. But Lyft has argued that the FAA’s so-called transportation worker exemption doesn’t stretch so far as to include ride-hail or ride-share drivers, according to court filings.

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Osvatics, a Maryland resident, says Lyft drivers routinely connected with and picked up passengers from airports, train stations and bus terminals within the District of Columbia metropolitan area and neighboring Virginia, which more than establishes the interstate nature of their work, she said.

She also said that Lyft cannot alternatively enforce its arbitration agreement under the D.C. Revised Uniform Arbitration Act because its terms of service expressly requires that arbitration is “governed” by the FAA, and not any state law.

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No stranger to employment-related litigation concerning their treatment of drivers, Lyft and its larger rival Uber Technologies Inc. have been hit with a rash of new or revised lawsuits in recent months that are more aggressively challenging their policies concerning paid sick leave for drivers in light of the COVID-19 pandemic.

Existing lawsuits primarily claiming that the ride-hailing companies are flouting state and local wage and hour laws by classifying their drivers as independent contractors instead of employees have since been rejiggered to also assert paid sick leave claims.

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Osvatics is represented by Christopher M. McNerney, Sally J. Abrahamson, Mikael A. Rojas and Pooja Shethji of Outten & Golden LLP.