Zamora et al v. Lyft, Inc.

Filing 40

ORDER by Judge Chhabria granting in part and denying in part 31 Motion to Dismiss; granting in part and denying in part 31 Motion to Strike; granting in part and denying in part 31 Motion to Stay. (vclc3S, COURT STAFF) (Filed on 11/7/2016)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA

ALEX ZAMORA, et al.,

Case No. 16-cv-02558-VC

Plaintiffs,
ORDER RE MOTION TO DISMISS,
STRIKE, OR STAY

v.

Re: Dkt. No. 31

LYFT, INC.,
Defendant.

I.

Conversion

As the parties agreed at the October 27 hearing, the motion to strike as to the nonCalifornia plaintiffs is granted, and the motion to stay as to the California plaintiffs is denied. If
the parties reach an impasse in discovery, they should submit a discovery letter in accordance
with the Court's standing order.
II.

Breach of contract

Lyft's motion to dismiss is denied. The plaintiffs argue that each Prime Time pop-up
created a contract between the rider and Lyft, with the driver expressly named as beneficiary.
The elements of contract formation are plausibly alleged. Bell Atl. Corp. v. Twombly, 550 U.S.
544, 556 (2007). And the plaintiffs' theory of contract liability is sufficiently clear from the
operative complaint. See FAC (Dkt. 19) at ¶¶ 24-25, 36, 72.
The merger clause in Lyft's terms of service is irrelevant. A merger clause prevents the
use of parol evidence to alter the terms of an existing contract. It doesn't prevent all subsequent
attempts at contract formation or amendment. See Restatement (Second) of Contracts §§ 213-16
(1981). To the extent Lyft argues that riders couldn't have agreed to a contract by "clicking

through" a Prime Time pop-up, Lyft appears – surprisingly, given its platform – to be making a
categorical argument against clickwrap agreements. But clickwrap agreements aren't
categorically invalid, and Lyft hasn't explained why the agreements alleged in this case can be
held at the Rule 12(b)(6) stage to lack the element of mutual assent. Lyft draws an analogy to
the recent Uber case. See O'Connor v. Uber Techs., Inc., 58 F. Supp. 3d 989, 999-1000 (N.D.
Cal. 2014). But there the plaintiffs weren't relying on express language; they were alleging an
implied-in-fact contract based on Uber's advertising to its customers. The Prime Time pop-ups
offer stronger foundation for a contract claim.
Lyft's motion to strike as to the non-California plaintiffs is denied. The plaintiffs'
pleadings are too unsettled on their nationwide claims – and the parties' briefs too thin on the
choice-of-law analysis – for a proper consideration of Lyft's motion at this stage. See Mazza v.
Am. Honda Motor Co., 666 F.3d 581, 589-94 (9th Cir. 2012). Lyft may renew its choice-of-law
argument at a later date – at or before class certification – once Lyft has fully briefed the Mazza
analysis based on the plaintiffs' newly amended complaint. Unless and until the plaintiffs can
show that factual development specific to the nationwide class will have some bearing on this
analysis, discovery with respect to the non-California plaintiffs' claims is stayed.
III.

Tortious interference with prospective economic advantage

The plaintiffs have expressed their intention to clarify what wrongful acts support the
tortious interference claim. Accordingly, Lyft's motion to dismiss is granted, and the plaintiffs
have leave to amend. However, the Court cautions the plaintiffs' counsel that they have an
obligation to perform a good-faith inquiry into their factual contentions and the applicable law,
and to assert only those theories they genuinely believe have merit. See Fed. R. Civ. Pro. 11.
IV.

UCL

The Court is very skeptical of the plaintiffs' argument for applying the UCL to a
nationwide class. The plaintiffs' California "nexus" is difficult to discern in, say, a ride between
a Hawaiian rider and a Hawaiian driver, riding in a Hawaiian car, to and from Hawaiian
destinations, partly under the auspices of an alleged Hawaiian Prime Time contract. In fact, the

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plaintiffs' own theory of contract liability seems to undermine their argument that California
conduct has any meaningful relevance to the out-of-state plaintiffs' claims, other than by virtue
of Lyft's San Francisco headquarters. Nonetheless, as the plaintiffs' UCL theories remain
somewhat unsettled at this stage, dismissing the nationwide UCL claim in its entirety would be
premature. For the time being, then, the nationwide and California classes are analyzed together
for UCL purposes. Lyft may renew its extraterritoriality argument when it revisits the larger
choice-of-law argument against a nationwide class.
To the extent the plaintiffs' claim proceeds under the unlawful prong, Lyft's motion to
dismiss is denied, as conversion supports an unlawfulness theory. The plaintiffs have suggested
that their tortious interference and breach of contract claims also support UCL liability. But they
have agreed that their tortious interference claim should be dismissed, and they haven't clearly
identified the "independently unlawful" nature of Lyft's alleged breach of contract. Sybersound
Records, Inc. v. UAV Corp., 517 F.3d 1137, 1152 (9th Cir. 2008). The plaintiffs therefore have
leave to amend if they wish to reassert these additional unlawfulness theories more clearly.
To the extent the plaintiffs proceed under the unfair prong, Lyft's motion to dismiss is
denied. Neither the California Supreme Court nor the Ninth Circuit has abandoned the traditional
balancing test for UCL unfairness. See Lozano v. AT&T Wireless Servs., Inc., 504 F.3d 718, 736
(9th Cir. 2007). The plaintiffs have satisfied this test at the pleading stage in alleging that Lyft's
Prime Time pop-ups reduced riders' incentive to tip based on an economic promise Lyft then
refused to honor.
To the extent the plaintiffs proceed under the fraudulent prong, Lyft's motion to dismiss
is granted. The plaintiffs may amend, provided they have some good-faith basis for alleging
fraudulent conduct. See Fed. R. Civ. Pro. 11.
V.

California Labor Code

Lyft's motion to dismiss the expense reimbursement claim is denied. Listing discrete
expenditures is unnecessary where the plaintiffs have pled "factual content that allows the court
to draw the reasonable inference that the defendant is liable for the misconduct alleged."

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Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Lyft's related motion to stay is also denied. The
parties can submit a discovery letter if a dispute arises.
Lyft's motion to dismiss is granted as to the reporting time, meal break, and rest break
claims. The plaintiffs have leave to amend, but the Court notes that the plaintiffs' current
theories appear ill-suited to claims of this kind. If the plaintiffs choose to replead, they must – at
a minimum – articulate some theory of how Lyft "required [them] to report for work" and
impeded their meal and rest breaks. Cal. Code Regs. tit. 8, § 11090; see also Brinker Rest. Corp.
v. Superior Court, 53 Cal. 4th 1004, 1034, 1039 (2012).
The plaintiffs have agreed to replead their overtime, minimum wage, and wage statement
claims. The plaintiffs have also agreed that their recordkeeping claim must be repled under
PAGA. These claims are dismissed with leave to amend.
The PAGA claim is dismissed for failure to satisfy the administrative exhaustion
requirement. The Court disagrees with the plaintiffs' contention that statutorily mandated
exhaustion is a formality. The plaintiffs must therefore send a new letter to LWDA, dated on or
after October 27, 2016, and wait out the requisite notice period. See Cal. Lab. Code
§ 2699.3(a)(2)(A). Once the period has elapsed, the plaintiffs may then include their PAGA
claim in the present action. The Court sees no reason why the renewed PAGA claim, presumably
based on the same set of facts as before, shouldn't relate back to the original complaint. See, e.g.,
Ramirez v. Ghilotti Bros. Inc., 941 F. Supp. 2d 1197, 1208-10 (N.D. Cal. 2013).
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The plaintiffs' amended complaint shall be filed no earlier than December 15, 2016. If
the Court approves a final settlement in Cotter v. Lyft before that time, the amended complaint
should reflect the plaintiffs' reasoned view of the settlement's effect on their claims.
IT IS SO ORDERED.
Dated: November 7, 2016
______________________________________
VINCE CHHABRIA
United States District Judge

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