By Linda Chiem

Law360 (May 13, 2021, 7:41 PM EDT) -- A Lyft driver suing for sick leave benefits during the COVID-19 pandemic sought permission Thursday to pursue a fast-tracked D.C. Circuit appeal of a recent ruling that determined rideshare and ride-hail drivers are not workers engaged in interstate commerce who would otherwise be exempt from arbitration.

Plaintiff Cassandra Osvatics asked U.S. District Judge Ketanji Brown Jackson to certify for interlocutory appeal her decision that Lyft Inc.'s arbitration agreement was binding and enforceable and that Osvatics did not fit the definition of an interstate transportation worker to qualify for the Federal Arbitration Act's Section 1 exemption to keep her dispute in court.

Osvatics said Thursday that an immediate D.C. Circuit review was warranted because there have been "widely disparate" district court rulings on whether Lyft and other rideshare or ride-hail drivers are engaged in interstate commerce for the purposes of the exemption. Section 1 of the FAA exempts from arbitration "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." But the statute does not define the phrase "engaged in foreign or interstate commerce," nor does it specifically identify which "class[es] of workers" count toward the exemption leaving those issues to be heavily litigated in recent years.

"At least 11 district courts have examined Section 1 as applied to rideshare drivers: some found that rideshare drivers are not sufficiently engaged in interstate commerce, some found that they are, and some found that threshold discovery is required to answer the question," Osvatics said.

"Absent appeal, the parties may be forced to litigate this case to judgment twice: individually in arbitration, and then as a class action in court should the D.C. Circuit overturn the order on appeal after arbitration," she continued. "Thus, resolution of this threshold issue now has the potential to materially advance this litigation and save the parties significant time and cost."

Judge Jackson issued a brief March 31 order granting Lyft's motion to compel arbitration and followed it up with an April 22 opinion detailing her findings. Osvatics' proposed class action alleges that the ride-hailing company's refusal to offer paid sick leave to thousands of drivers during the pandemic jeopardized public health and safety and left its drivers vulnerable to exposure to the novel coronavirus.

An immediate appeal is especially important because the dispute centers on Lyft's uniform policy of classifying its D.C. drivers as independent contractors instead of employees to dodge providing sick leave and other benefits that come with employee status.

"The importance of expeditiously resolving the appeal of this order extends beyond the named parties to this action to potentially thousands of D.C. Lyft drivers in plaintiff's proposed class [who are] also impacted by the policies plaintiff challenges," Osvatics said in Thursday's motion. "Unless plaintiff is permitted to pursue her paid sick leave claims on their behalf (during a once-in-a-generation pandemic), these Lyft drivers will have little chance of receiving sick pay, and Lyft's alleged misclassification decision will be effectively unreviewable because there will be no way to systemically challenge the policy as illegal."

Osvatics argued in court briefs that Lyft could not hide behind an arbitration provision in its terms of service to escape judicial scrutiny for flouting the D.C. Accrued Safe and Sick Leave Act. But Judge Jackson was not persuaded by Osvatics' argument that she wasn't fully aware of what she was agreeing to when she accepted Lyft's terms. The judge further said that when determining who qualifies for the Section 1 exemption, the relevant "class of workers must be assessed at a nationwide level rather than a specific geographic area." And even if Lyft drivers sometimes transport passengers to and from airports and train stations — before or after those passengers have traveled interstate — the Lyft drivers themselves are in the business of providing rides, not the business of offering interstate transportation, the judge said. 

Osvatics, a Maryland resident, sued Lyft in May 2020. But Lyft argued that drivers who sign up to use the Lyft app clearly agree to settle all their legal disputes with the company through individual arbitration and that they are barred from pursuing any class actions. And Osvatics knew what she was getting into, Lyft said in court filings. Osvatics, who drove for Lyft from about November 2015 to June 2018, first accepted the company's terms of service on Oct. 4, 2015, then again on Oct. 30, 2016, May 4, 2018, and May 4, 2020, according to Lyft.

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

The Ninth Circuit is weighing an appeal involving a group of Massachusetts Uber drivers whose lawsuit was transferred to the Northern District of California last year,and whose emergency motion for a preliminary injunction was denied. Had it been granted, the injunction would have forced Uber to reclassify its drivers as employees and grant them paid sick leave. The district court judge held that "Uber drivers do not perform an integral role in a chain of interstate transportation" that would make them exempt from arbitration under Section 1 of the FAA.

One of Osvatics' attorneys, Pooja Shethji of Outten & Golden LLP, said in a statement to Law360 Thursday that Section 1 of the FAA provides an "essential avenue" for Osvatics and other rideshare drivers to have their day in court.  

"Appellate review at this stage of the litigation would provide much-needed clarity on how that exemption should be applied, especially as courts continue to grapple with the issue," Shethji said.

Counsel or representatives for the other parties could not be immediately reached for additional comment Thursday.

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

Lyft is represented by Elaine J. Goldenberg, Rachel G. Miller-Ziegler, Rohit K. Singla and Justin P. Raphael of Munger Tolles & Olson LLP.

The case is Cassandra Osvatics v. Lyft Inc., case number 1:20-cv-01426, in U.S. District Court for the District of Columbia.

--Editing by Peter Rozovsky.

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