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Cotter v. Lyft, Inc.

United States District Court, N.D. California

March 11, 2015

PATRICK COTTER, et al., Plaintiffs,
v.
LYFT, INC., Defendant

Page 1068

Cross motions for summary judgment by plaintiffs and defendant. Motions denied.

For plaintiff Cotter--Lichten & Liss-Riordan, by John Earl Duke, Shannon Liss-Riordan, and Carlson Legal Services, by Matthew David Carlson

For plaintiff Alejandra Maciel--Carlson Legal Services, by Matthew David Carlson

For defendant--Ogletree, Deakins, Nash, Smoak & Stewart, by Alex Santana, Christopher M. Ahearn, Thomas Michael McInerney, and Keker & Van Nest, by Alexander Barnes Dryer, Rachael Elizabeth Meny, Rebekah Leigh Punak, Robert James Slaughter

Page 1069

ORDER DENYING CROSS-MOTIONS FOR SUMMARY JUDGMENT

VINCE CHHABRIA, United States District Judge.

I.

The question in this case is whether Lyft drivers are " employees" or " independent contractors" under California law. The answer is of great consequence for the drivers, because the California Legislature has conferred many protections on employees, while independent contractors receive virtually none. The answer is also of great import to Lyft, because its business model assumes the drivers are independent contractors.

At first glance, Lyft drivers don't seem much like employees. We generally understand an employee to be someone who works under the direction of a supervisor, for an extended or indefinite period of time, with fairly regular hours, receiving most or all his income fro that one employer (or perhaps two employers). Lyft drivers can work as little or as much as they want, and can schedule their driving around their other activities. A person might treat driving for Lyft as a side activity, to be fit into his schedule when time permits and when he needs a little extra income.

But Lyft drivers don't seem much like independent contractors either. We generally understand an independent contractor to be someone with a special skill (and with the bargaining power to negotiate a rate for the use of that skill), who serves multiple clients, performing discrete tasks for limited periods, while exercising great discretion over the way the work is actually done. Traditionally, an independent contractor is someone a principal might have found in the Yellow Pages to perform a task that the principal or the principal's own employees were unable to perform--often something tangential to the day-to-day operations of the principal's business. See Antelope Valley Press v. Poizner, 162 Cal.App.4th 839 [75 Cal.Rptr.3d 887, 900] (Ct. App. 2008) (describing the traditional " notion [of] an independent contractor [as] someone hired to achieve a specific result that is attainable within a finite period of time, such as plumbing work, tax service, or the creation of a work of art for a building's lobby" ). Lyft drivers use no special skill when they give rides. Their work is central, not tangential, to Lyft's business. Lyft might not control when the drivers work, but it has a great deal of power over how they actually do their work, including the power to fire them if they don't meet Lyft's specifications about how to give rides. And some Lyft drivers no doubt treat their work as a full-time job--their livelihood may depend solely or primarily on weekly payments from Lyft, even while they lack any power to negotiate their rate of pay. Indeed, this type of Lyft driver--the driver who gives " Lyfts" 50 hours a week and relies on the income to feed his family--looks very much like the kind of worker the California Legislature has always intended to protect as an " employee."

Page 1070

The plaintiffs in this case were once Lyft drivers. They contend Lyft owes them money because it should have paid them as employees rather than independent contractors. For example, they argue that, under California law, Lyft should have reimbursed them for expenses, and that, at least sometimes, Lyft failed to pay them minimum wage. The plaintiffs propose to represent a class consisting of all people who have driven for Lyft in California since the company's inception in 2012. The plaintiffs and Lyft have filed cross-motions for summary judgment, with the plaintiffs urging the Court to declare them " employees" as a matter of law, and Lyft urging the Court to declare them " independent contractors" as a matter of law. But under California law, the question of how to classify a worker is typically for a jury. A court may only decide the question as a matter of law if application of the multitude of relevant factors would require any reasonable juror to reach the same conclusion. Here, because the numerous factors for deciding whether a worker is an employee or an independent contractor point in decidedly different directions, a reasonable jury could go either way. Accordingly, there must be a trial.

II.

Lyft operates a smartphone application, or " app," through which passengers are matched with nearby drivers who are available to transport people in their personal automobiles. Lyft markets itself as " Your friend with a car." Carlson Decl., Ex F at LYFT 000088. Cars that transport passengers for Lyft are easily recognizable, because Lyft gives each driver a " Carstache" (a big fuzzy pink mustache) to attach to the front of his car when using it to give " Lyfts." [1] To be a Lyft driver, a person must download the app, submit his car for inspection, undergo some form of background check, and submit to an in-person interview with a Lyft representative. See Cotter Depo. 40:21-46:13. To be a Lyft rider, a person must simply download the app onto her smartphone and register her credit card information. See Kirtikar Decl., p.1; Carlson Decl., Ex F at LYFT 000108.

The rider uses the app to hail a ride. Kirtikar Decl., p.1. Lyft's system forwards the request to the nearest driver who is logged in to the app. That driver may then accept, decline, or ignore the ride request. Id. If the driver declines the request or ignores it for a specified period, Lyft's system sends the request to the next closest driver who is logged on. If that driver accepts the ride, he is " matched" with the rider and generally proceeds to pick her up and drive her to her destination. However, the driver may cancel his acceptance before picking up the rider, or upon meeting the rider but before commencing the ride. Id.

At the time the plaintiffs drove for Lyft, the company operated on a " donation" system. After the driver dropped off the rider at her destination, the app recommended a donation for the ride. The rider could decide whether to accept this amount, pay a different amount, or pay nothing at all. If the rider took no action within 24 hours after the end of the ride, Lyft automatically charged the recommended amount to the rider's credit card. But if the rider chose to pay a different amount, Lyft instead charged that amount to the rider's credit card (or charged nothing, if the rider so chose). Lyft retained a 20 percent " administrative fee" from each

Page 1071

charge and paid the remainder to the driver, with the driver receiving payment from Lyft on a weekly basis for all rides given during that week. Goldin Depo. at 67:7-12. Lyft has since changed its system in some markets, including California, so that rather than ...


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