Islam v. Lyft, Inc.

Background

The court had previously granted Lyft’s motion to compel arbitration. It agreed with MD Islam that, as a Lyft driver, he belonged to a nationwide class of workers involved in interstate commerce under Section 1 of the Federal Arbitration Act (FAA). As a result, the FAA could not provide the basis for requiring him to arbitrate. The court nevertheless held that New York law provided an alternative basis for enforcing the arbitration provision and stayed the case.

Islam moved for reconsideration of that decision. In the alternative, he asked the court to certify the earlier order for an interlocutory appeal, which is an appeal before the case has ended. He argued that the court committed clear error by enforcing the arbitration agreement under New York law after finding that the FAA did not apply. He relied on the contract’s statement that the arbitration provision was “governed by” the FAA and argued that the parties intended the FAA to be the only law governing arbitration. He also argued that the arbitration provision was invalid under a New York statute concerning arbitration of discrimination claims.

Reconsideration

The court denied the motion for reconsideration. It explained that reconsideration requires an intervening change in controlling law, new evidence, clear error, or a need to prevent manifest injustice. The court found that Islam did not identify controlling authority requiring a different result. Although the court recognized that the choice-of-law issue was close and subject to reasonable debate, it adhered to its earlier conclusion that the FAA’s inapplicability removed the FAA’s enforcement mechanisms but did not necessarily make the arbitration agreement unenforceable under all other law.

The court also rejected Islam’s argument that the arbitration provision was invalid under New York law because it required arbitration of discrimination claims. The court said it had already considered and rejected that argument and that Islam presented no new authority showing that the earlier ruling was clearly wrong.

Stay and dismissal

The court also declined to lift the stay and dismiss the action. Although the earlier order had cited a federal decision interpreting the FAA’s stay requirement, the court held that New York law independently required a stay when a court orders arbitration. Therefore, compelling arbitration under state law rather than the FAA did not require dismissal instead of a stay.

Interlocutory appeal

The court certified its March 9, 2021 order for an interlocutory appeal under 28 U.S.C. § 1292(b). It identified two potentially appropriate questions for the Court of Appeals for the Second Circuit:

1. Whether a driver for a national ridesharing platform belongs to a class of workers involved in interstate commerce such that the FAA does not apply to the driver’s employment contract. 2. Whether an arbitration clause governed by the FAA may be enforced under state law when the FAA is found not to apply.

The court found the requirements for certification satisfied. It concluded that the questions were controlling legal questions with substantial disagreement in the case law and that an appeal could materially advance the litigation. The court also emphasized that the issues affected many ridesharing disputes and that the Second Circuit had not squarely resolved them.

Disposition

The motion for reconsideration was denied. The court’s March 9, 2021 opinion and order compelling arbitration was certified for an interlocutory appeal. The case remained stayed rather than being dismissed.