Haider v. Lyft, Inc.

Background

Lyft’s terms of service for drivers included an arbitration requirement. In December 2020, Lyft revised the terms to provide that Delaware law would govern the arbitration provision if the Federal Arbitration Act did not apply. The revised terms also allowed drivers to opt out by emailing Lyft within 30 days after accepting the agreement.

The court had previously held that Lyft rideshare drivers were exempt from the Federal Arbitration Act’s exemption for transportation workers. It therefore asked the parties to address whether the drivers’ claims could be arbitrated under state law. The drivers did not dispute that their claims were arbitrable under Delaware law or that the revised terms required application of Delaware law if the Federal Arbitration Act did not apply. Instead, they argued that Lyft could not enforce terms introduced after the lawsuit began and that they had opted out of the revised arbitration provision.

Bigu Haider and Mohammad Islam sent emails to Lyft on January 8, 2021, stating that they intended to opt out of the revisions. They later accepted the revised terms through Lyft’s app: Islam on January 14 and Haider on January 26. Neither sent another opt-out email after accepting the terms.

Court’s analysis

The court held that Federal Rule of Civil Procedure 23(d), which permits courts to regulate communications in class actions, did not prohibit Lyft from making ordinary revisions to its existing terms of service. The court distinguished cases involving new arbitration agreements directed at potential class members under coercive or misleading circumstances. It also rejected the argument that the New York professional-conduct rule concerning communications with represented parties barred enforcement of the revised terms. The court concluded that the terms were not procedurally unfair and were enforceable against drivers who agreed to them.

The court next held that the drivers had not effectively opted out. The agreement required strict compliance with its procedure, which allowed an opt-out only within 30 days after the driver executed the agreement. Because the drivers sent their emails before accepting the revised terms through the app, the court found that the emails did not satisfy the agreement. The court also rejected Islam’s argument that using the Lyft app before receiving the revised terms constituted acceptance.

The court separately held that, even if Lyft’s earlier terms applied, Islam was barred from relitigating whether his claims were arbitrable under state law. The court relied on the decision of another judge in a prior related proceeding involving Islam, which had resolved the same mixed factual and legal issue. The court found that Islam had fully litigated that issue and lost on the merits.

Disposition

The court GRANTED Lyft’s motion to compel arbitration under state law and STAYED the case pending the outcome of arbitration. It did not reach Lyft’s renewed arguments under the Federal Arbitration Act. The order resolved Docket Number 67.