Law360 (May 22, 2020, 7:27 PM EDT) -- A Massachusetts federal judge said that Lyft drivers suing to gain employee status have a good shot at proving they're being misclassified as independent contractors, but they haven't shown they've been irreparably harmed enough to justify an emergency preliminary injunction amid the pandemic.
U.S. District Judge Indira Talwani denied Friday an emergency bid by Lyft Inc. drivers Melody Cunningham, Frunwi Mancho, Martin El Koussa and Vladimir Leonidas to be immediately reclassified as employees instead of independent contractors in order to secure worker protections, such as paid sick leave, during the global coronavirus pandemic.
Notably, Judge Talwani said the drivers could ultimately prevail on their underlying misclassification claim and that an injunction would benefit the public interest. However, the drivers haven't established any immediate or irreparable harm by their current status as independent contractors to justify something as extraordinary as an emergency injunction, according to Friday's ruling.
To beat back the drivers' misclassification claim, Lyft has argued in court documents that it's simply a technology company and the makers of an app-based platform that connects potential riders with drivers. It's an argument the company has repeatedly raised to counter the drivers' claims that they are essential to Lyft's core business, a transportation service provider, so they really should be employees, according to court documents.
Under Massachusetts so-called independent contractor law and the worker classification standard that applies in the state, Lyft would have a hard time proving its continued use of independent contractor drivers comports with the law, Judge Talwani said.
"Based on the record in front of the court, the court finds a substantial likelihood of success on the merits that, despite Lyft's careful self-labeling, the realities of Lyft's business — where riders pay Lyft for rides — encompasses the transportation of riders," Judge Talwani said Friday. "The 'realities' of Lyft's business are no more merely 'connecting' riders and drivers than a grocery store's business is merely connecting shoppers and food producers, or a car repair shop's business is merely connecting car owners and mechanics."
Lyft equips drivers with tools to provide Lyft's transportation services to riders and Lyft earns a percentage of proceeds from those rides. And despite Lyft's contention that it receives no services from drivers, its own pricing model and structured relationship with drivers shows Lyft to be directly dependent on the drivers' services, Judge Talwani explained.
"Thus for purposes of the independent contractor law [in Massachusetts], the drivers will be considered employees," the judge said.
"Drivers also are clearly not incidental to Lyft's business and Lyft does not argue that it could continue as a company without drivers," the judge added. "Thus, applying the independent contractor law would not 'expand the boundaries' of Lyft's business, but merely ensure that Massachusetts wage, overtime and sick time law applies to the drivers who perform the service that Lyft's business provides to riders."
Judge Talwani further rejected Lyft's "red herring" argument that forcing it to reclassify drivers as employees would destroy the flexibility and independence that drivers have to set their schedules, saying "the threatened harm claimed by defendants is illusory." She was also persuaded by the drivers' arguments, buoyed by an amicus brief from the state attorney general, demonstrating there's a strong public interest both in the proper classification of workers and in workers' access to paid sick time, according to the decision.
Ultimately, even though the drivers claimed the "extraordinary circumstances caused by the COVID-19 pandemic" justified an emergency injunction, Judge Talwani said it's too much of a stretch to pin drivers' potential coronavirus exposure or their decisions to drive while sick on a lack of paid sick leave from Lyft.
"To the extent that plaintiffs are arguing that their own health is endangered by driving when sick, the court cannot find that defendants are the legal cause of any such harm," Judge Talwani said.
"And while Lyft's determination to fight payment of sick leave benefits may prove short-sighted if riders fear that Lyft drivers are driving while sick because they cannot afford to be home without sick time, the court does not find that interference with this purpose amounts to an irreparable injury to plaintiffs themselves," the judge added.
Judge Talwani had already rejected the Lyft drivers' earlier bid for an injunction. She didn't buy their arguments that the irreparable harm was to the "public writ large" due to lost tax revenue, general economic damage, lower wages and diminished labor standards, court records show. However, Judge Talwani handed the Massachusetts drivers a small victory in late March when she ruled that Lyft couldn't force the dispute into arbitration. The judge found that the Lyft drivers fell within the definition of transportation workers engaged in interstate commerce who are exempt from arbitration under Section 1 of the Federal Arbitration Act. Lyft promptly appealed that holding to the First Circuit.
Meanwhile, the drivers' attorney Shannon Liss-Riordan of Lichten & Liss-Riordan PC said Friday that she is pleased that the court recognized that Lyft is likely violating the law by classifying its drivers as independent contractors.
"The court agreed that the issues we have raised are a matter of public of interest, which favor the drivers being properly classified as employees. We respectfully disagree with the court on her finding that there is no irreparable injury," Liss-Riordan said in a statement Friday. "Not paying drivers state-mandated sick pay will put more of Lyft's 57,000 drivers in Massachusetts back on the roads for more days than they otherwise would be driving because drivers need to work in order to feed and house themselves and their families. They are putting their own health at risk by continuing to work, as well as the health of Lyft's passengers."
Counsel and representatives for Lyft were not immediately available for comment Friday.
The drivers are represented by Shannon Liss-Riordan, Adelaide H. Pagano and Anne Kramer of Lichten & Liss-Riordan PC.
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 and Rohit K. Singla, Justin P. Raphael, Jeffrey Y. Wu, Benjamin G. Barokh and Adele M. El-Khouri of Munger Tolles & Olson LLP.
The case is Cunningham v. Lyft Inc. et al., case number 1:19-cv-11974, in the U.S. District Court for the District of Massachusetts.
--Additional reporting by Brian Dowling and Chris Villani. Editing by Jay Jackson Jr.
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