Haider et al v. Lyft, Inc.

Filing 62

OPINION AND ORDER: Based on the record presently before the Court, rideshare drivers like Mohammad Islam regularly transport passengers across state lines. These are "activities within the flow of interstate commerce," and so their contracts with Lyft fall within the Federal Arbitration Act's exemption for contracts of employment of transportation workers. Circuit City, 532 U.S. at 118. The Court thus DENIES Lyft's motion insofar as it seeks to compel arbitration under the Federal Arbitration Act. The Court addresses Lyft's request to compel arbitration under state law and other pending motions by separate order. (As further set forth in this Order.) (Signed by Judge Alison J. Nathan on 3/31/2021) (cf)

Case 1:20-cv-02997-AJN Document 62 Filed 03/31/21 Page 1 of 10

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

3/31/2021

Bigu Haider, et al.,
Plaintiffs,
–v–

20-cv-2997 (AJN)
OPINION & ORDER

Lyft, Inc.,
Defendant.

ALISON J. NATHAN, District Judge:
Rideshare company Lyft, Inc., seeks to compel arbitration of a driver’s claims that it
unlawfully collected state taxes out of his pay. The Federal Arbitration Act ordinarily requires
courts to enforce arbitration provisions as written; however, it exempts contracts of employment
of transportation workers. The Court must decide whether the driver’s contract with Lyft falls
within this exemption. The Court concludes that it does and thus denies Lyft’s motion.
I.

Background
In deciding motions to compel arbitration under the Federal Arbitration Act, “courts

apply a ‘standard similar to that applicable for a motion for summary judgment.’” Nicosia v.
Amazon.com, Inc., 834 F.3d 220, 229 (2d Cir. 2016) (quoting Bensadoun v. Jobe-Riat, 316 F.3d
171, 175 (2d Cir. 2003)). This standard requires the Court to consider all relevant, admissible
evidence before it and to draw all reasonable inferences in favor of the non-moving party. Id.
The Court bases the following factual account on the evidence submitted in the parties’ pleadings
and affidavits.

Case 1:20-cv-02997-AJN Document 62 Filed 03/31/21 Page 2 of 10

Lyft operates a mobile-based ridesharing platform that matches riders with drivers for
personal transportation. Shah Decl., Dkt. No. 16, ¶ 3. Mohammad Islam worked as a driver for
Lyft from November 2014 through March 2020. Islam Decl., Dkt. No. 30, ¶ 2. To use Lyft’s
mobile phone application, he agreed to Lyft’s terms of service. Lieu Decl., Dkt. No. 19, ¶ 6.
Lyft updated those terms repeatedly during Islam’s employment, and with each update, he had to
agree to the new terms to continue driving. Id.; Shah Decl. ¶¶ 7–9. The terms Islam agreed to
included a provision requiring individual arbitration of any dispute with Lyft. Shah Decl. ¶ 8;
Terms of Service, Dkt. No. 16-1, § 17.
Although based in New York City, Islam frequently drove passengers across state lines
within the greater New York City metropolitan area. Islam typically took about four fares each
week between New York and New Jersey while working for Lyft full time. Islam Decl. ¶ 4. He
also made about two trips per month between New York and Connecticut. Id. In total, Islam
estimates that four or five percent of his fares involved travel across state lines. Id. ¶ 5. These
trips were typically longer than intrastate rides and accounted for a disproportionate share of
Islam’s work time and income. He estimates that interstate fares made up about twenty percent
of his total earnings. Id. ¶ 6. He frequently took fares to and from bus, train, ferry, and airport
terminals in New York and New Jersey. Id. ¶¶ 7–12. Those amounted to about twenty-five
percent of his total trips. Id. ¶¶ 8, 10.
Drivers outside the tri-state area make interstate trips less frequently, but not by a huge
margin. Lyft’s data shows that, nationally, a bit over two percent of its drivers’ trips start in one
state and end in another. Muir Decl., Dkt. No. 18, ¶ 6. That’s about half the number Islam
drove, or about two interstate fares each week for a full-time driver. Based on Islam’s
experience—which Lyft does not dispute—one would expect those longer fares to account for

2

Case 1:20-cv-02997-AJN Document 62 Filed 03/31/21 Page 3 of 10

about ten percent of the typical driver’s earnings. In absolute terms, rideshare drivers make
millions of interstate trips each year. See Soleimany Decl., Dkt. No. 31, Ex. D–E, I–J; Muir
Decl. ¶ 6; see also Opening Br., Dkt. No. 37, at 9. Lyft has not provided the Court any data on
the proportion of work time and earnings associated with interstate trips for drivers in specific
regions.
Lyft’s fare schedules, advertisements, and guidelines for drivers reflect that interstate
travel is a regular part of its business. Lyft permits drivers to drop passengers off up to a
hundred miles outside the driver’s coverage area—that is, the area where Lyft has approved the
driver to pick passengers up. Soleimany Decl., Ex. B. In New York, Lyft advertises its service
as a great way to “[h]ead out of town,” with service to airports including Newark Liberty
International Airport in New Jersey. Soleimany Decl., Ex. A. Its fare schedule includes a $20
surcharge for trips between New York and New Jersey, plus an additional $19 for trips starting
in New Jersey that cross the Verrazzano-Narrows Bridge into Brooklyn. Id. Other courts have
found that rideshare companies generate a significant portion of their earnings from trips to and
from airports and that Lyft has reached a deal with Delta Air Lines to allow passengers to book
rides directly through the airline’s app. See Islam v. Lyft, Inc., No. 20-cv-3004 (RA), 2021 WL
871417, at *5 (S.D.N.Y. Mar. 9, 2021); Capriole v. Uber Techs., Inc., 460 F. Supp. 3d 919, 930
(N.D. Cal. 2020); see also Soleimany Decl., Ex. I, at 9. For an additional fee, Lyft offers riders
priority pick-ups at airports. Soleimany Decl., Ex. I, at 11.
Islam and another driver sued Lyft claiming that the company unlawfully deducted New
York City sales tax and a Black Car Fund surcharge from drivers’ earnings, while New York law
instead requires those fees to be added to a rider’s fare. Compl., Dkt. No. 2, ¶¶ 3–5. These fees
amounted to a bit over ten percent of each driver’s earnings. Id. Lyft followed its rival Uber in

3

Case 1:20-cv-02997-AJN Document 62 Filed 03/31/21 Page 4 of 10

discontinuing this practice in 2017. Id. Lyft now moves to compel arbitration of Islam’s claims
under the Federal Arbitration Act and stay the case pending arbitration. Dkt. No. 14. Islam
cross-moves for discovery on the question of arbitrability, and Lyft opposes that motion. Dkt.
Nos. 32, 40.
II.

Discussion
“Section 2 of the Federal Arbitration Act (FAA) makes agreements to arbitrate ‘valid,

irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the
revocation of any contract.’” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 336 (2011)
(quoting 9 U.S.C. § 2). The FAA establishes “a liberal federal policy favoring arbitration
agreements.” Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1621 (2018). “But like most laws, this
one bears its qualifications.” New Prime Inc. v. Oliveira, 139 S. Ct. 532, 536 (2019). Section 1
of the FAA “excludes from the Act’s coverage ‘contracts of employment of seamen, railroad
employees, or any other class of workers engaged in foreign or interstate commerce.’” Circuit
City Stores, Inc. v. Adams, 532 U.S. 105, 109 (2001) (quoting 9 U.S.C. § 1). Courts, not
arbitrators, must decide whether an arbitration provision falls within this exemption. New Prime,
139 S. Ct. at 537.
The Supreme Court has offered lower courts some guidance on scope of § 1: the
exemption covers transportation workers, whether or not employed as independent contractors.
In Circuit City, the Court faced the argument that the “interstate commerce” language in § 1
should be read to extend to the limits of Congress’s commerce power. See Circuit City, 532 U.S.
at 113. That would reach too far, it said, and swallow the general rule. Instead, the Court turned
to cases interpreting similar language in statutes enacted roughly contemporaneously with the
FAA. Those cases held that “‘engaged in commerce’ ‘appears to denote only persons or

4

Case 1:20-cv-02997-AJN Document 62 Filed 03/31/21 Page 5 of 10

activities within the flow of interstate commerce.’” Id. at 118 (quoting Gulf Oil Corp. v. Copp
Paving Co., 419 U.S. 186, 195 (1974)). The Court thus held that “Section 1 exempts from the
FAA only contracts of employment of transportation workers.” Id. at 119. In New Prime, the
Court clarified that § 1 exempts “any contract for the performance of work by workers” engaged
in interstate commerce—including independent contractors. Id. at 541.
No circuit court has decided whether rideshare drivers fall within the exemption for
transportation workers. In Singh v. Uber Techs. Inc., 939 F.3d 210, 226 (3d Cir. 2019), the Third
Circuit held that the pleadings alone failed to reveal whether Uber drivers were “engaged in
interstate commerce or sufficiently related work” and remanded for discovery. In In re Grice,
974 F.3d 950, 957 (9th Cir. 2020), the Ninth Circuit denied mandamus on that question, noting
the dearth of circuit authority. District courts have split. See, e.g., Islam, 2021 WL 871417
(yes); Aleksanian v. Uber Techs. Inc., No. 19-cv-10308 (ALC), 2021 WL 860127 (S.D.N.Y.
Mar. 8, 2021) (no); Hinson v. Lyft, Inc., No. 20-cv-2209 (MHC), 2021 WL 838411 (N.D. Ga.
Feb. 26, 2021) (no); Gonzalez v. Lyft, Inc., No. 19-cv-20569 (BRM) (JAD), 2021 WL 303024
(D.N.J. Jan. 29, 2021) (maybe); Capriole, 460 F. Supp. 3d 919 (no); Cunningham v. Lyft, Inc.,
450 F. Supp. 3d 37 (D. Mass. 2020) (yes); Rogers v. Lyft, Inc., 452 F. Supp. 3d 904 (N.D. Cal.
2020) (no).
The Court begins with Lyft’s threshold argument that only those who transport goods are
engaged in interstate commerce. An overwhelming consensus rejects this view. See, e.g., Singh,
939 F.3d at 222; In re Grice, 974 F.3d at 956; Islam, 2021 WL 871417, at *11; Gonzalez, 2021
WL 303024, at *3; Cunningham v. Lyft, Inc., 450 F. Supp. 3d at 45; Rogers, 452 F. Supp. 3d at
914. And for good reason. In Circuit City, the Supreme Court looked to the meaning of the
phrase “engaged in interstate commerce” at the time of the FAA’s enactment. See Circuit City,

5

Case 1:20-cv-02997-AJN Document 62 Filed 03/31/21 Page 6 of 10

532 U.S. at 117–18. Though much has changed in the Court’s commerce jurisprudence since
1925, the Court has never drawn a distinction between the interstate transportation of people and
goods. See, e.g., Edwards v. People of State of California, 314 U.S. 160, 172 (1941) (“it is
settled beyond question that the transportation of persons is ‘commerce’”). To the contrary,
when construing similar language in federal antitrust statutes, the Supreme Court has expressly
held that the transportation of passengers between train stations “is clearly a part of the stream of
interstate commerce.” United States v. Yellow Cab Co., 332 U.S. 218, 228 (1947). Nothing in
Circuit City suggests the Supreme Court intended to depart from this long-settled rule.
And so the Court turns to whether Lyft drivers like Islam transport passengers within the
flow of interstate commerce. Looking only at Lyft drivers in the New York City area, this is not
a close case. Lyft markets its service as one allowing interstate travel. Its fare schedule
contemplates interstate travel. And its drivers cross state lines on more days than not. Lyft does
not dispute Islam’s evidence that interstate trips took a disproportionate amount of his work time
and accounted for twenty percent of his earnings. Interstate travel is a central component of
Lyft’s business in the tri-state area. The Court has little trouble concluding that its drivers here
are members of a class of workers engaged in interstate commerce, and thus that they fall within
the FAA’s exemption for contracts of employment of transportation workers.
The Court reaches the same conclusion when considering rideshare drivers as a class
without regard to geography. To begin with, the sheer number of interstate trips rideshare
drivers make places them “within the flow of interstate commerce.” Circuit City, 532 U.S. at
118. Based on Lyft’s own data, its full-time drivers take passengers across state lines about
twice each week on average. Undisputed record evidence reflects that these trips are longer,
more time-consuming, and more lucrative than intrastate trips. These trips make up a significant

6

Case 1:20-cv-02997-AJN Document 62 Filed 03/31/21 Page 7 of 10

part of Lyft’s business—based on Lyft’s data, millions of interstate fares each year. “From the
perspective of an individual driver, these interstate trips are a regular component of his or her
day-to-day work.” Islam, 2021 WL 871417, at *8.
Of course, not every rideshare driver takes passengers across state lines. But that’s true
too for workers expressly covered by the exemption like railroad employees. Many railroad
employees work intrastate routes. See Soleimany Decl., Ex. H, at 7. Yet the Supreme Court has
explained that contemporaneous understandings of that term included “all persons actually
engaged in any capacity in train operation or train service of any description”—not only those
who personally cross state lines. New Prime, 139 S. Ct. at 543 & n.12 (quoting Act of June 1,
1898, 30 Stat. 424). No class of transportation worker spends all its time straddling a state
border, and “there is no basis in the text of § 1 for drawing a line between workers who do a lot
of interstate transportation work and those who cross state lines only rarely.” Int’l Brotherhood
of Teamsters Local Union No. 50 v. Kienstra Precast, LLC, 702 F.3d 954, 958 (7th Cir. 2012);
see Islam, 2021 WL 871417, at *7. Weekly interstate trips are enough.
The courts that have found rideshare drivers did not fall within the exemption for
transportation workers have largely done so on an apparent instinct that their trips across state
lines must be vanishingly rare. See, e.g., Rogers, 452 F. Supp. 3d at 916; Hinson, 2021 WL
838411, at *6; cf. Capriole, 460 F. Supp. 3d at 929 (finding that Massachusetts Uber drivers
were not engaged in interstate commerce because less than a third of a percent of their trips
crossed state lines). That instinct may resemble reality in San Francisco, some two hundred
miles from the closest land border with another state. Not so much in New York, New Jersey,
Connecticut, and many other parts of the country. And Lyft’s data belies it. The factual record

7

Case 1:20-cv-02997-AJN Document 62 Filed 03/31/21 Page 8 of 10

here shows that Lyft drivers regularly take passengers across state lines. The Court rejects Lyft’s
invitation to substitute a vague notion of Lyft’s general business model for the evidence before it.
The great weight of authority further holds that interstate travel is not strictly necessary to
place a worker within the flow of interstate commerce. See, e.g., Rittmann v. Amazon.com, Inc.,
971 F.3d 904, 916 (9th Cir. 2020); Waithaka v. Amazon.com, Inc., 966 F.3d 10, 26 (1st Cir.
2020). Both Rittmann and Waithaka held that last-mile delivery drivers qualify as transportation
workers because they form a vital link in the chain of interstate transportation. “By virtue of
their work transporting goods or people ‘within the flow of interstate commerce,’” those workers
“are ‘a class of workers engaged in . . . interstate commerce’” even though they never personally
cross state lines. Waithaka, 966 F.3d at 26 (alteration in original) (quoting Circuit City, 532 U.S.
at 118). The Supreme Court reached essentially the same conclusion in Yellow Cab, 332 U.S. at
228: “When persons or goods move from a point of origin in one state to a point of destination in
another, the fact that a part of that journey consists of transportation by an independent agency
solely within the boundaries of one state does not make that portion of the trip any less interstate
in character.”
To be sure, Yellow Cab did not hold that all local activities of vehicles for hire involve
interstate commerce. It distinguished between taxicab companies who contracted with railroads
and those who only infrequently drove passengers to train stations. See id. at 228–32. Thus,
taxicabs operating exclusively within one city do not engage in interstate commerce by making
“casual and incidental” trips to train stations. Id. at 231.
Lyft drivers’ trips to air, train, and bus terminals are hardly incidental. Lyft does not
dispute Islam’s evidence that twenty-five percent of his trips began or ended at these hubs of
interstate travel. Nor does it offer any evidence that this proportion is atypical. Lyft’s corporate

8

Case 1:20-cv-02997-AJN Document 62 Filed 03/31/21 Page 9 of 10

disclosures reflect marketing partnerships with airlines and hotels, and it offers riders priority
pick-ups at airports with a paid subscription. Like the taxicab companies in Yellow Cab that
contracted with local train stations, Lyft has “worked to integrate its transportation services” with
at least one air carrier. Islam, 2021 WL 871417, at *5. Both the quantity and nature of Lyft’s
connections to hubs of interstate travel lead the Court to conclude that its drivers engage in
interstate commerce even when they do not personally cross state lines. They “form a part of the
channels of interstate commerce, and are thus engaged in interstate commerce as we understand
that term.” Rittmann, 971 F.3d at 917. This Court thus follows several others in holding that
workers like Islam who “facilitate [interstate] movement, as the first or last leg of the journey,”
are engaged in interstate commerce. Cunningham, 450 F. Supp. 3d at 46; see Rittmann, 971 F.3d
at 917; Waithaka, 966 F.3d at 26.
Lyft drivers regularly transport passengers across state lines. More regularly still, they
transport passengers to and from hubs of interstate travel. A wealth of precedent reflects that
either alone would be enough to conclude that they are engaged in interstate commerce, and that
their contracts with Lyft thus fall within the FAA’s exemption for contracts of employment of
transportation workers. The Court concludes that Islam’s contract is exempt from the FAA.
The Court stresses that it reaches this result on the factual record before it. That record
reflects that a significant portion of Lyft’s business—both in the New York area and nationally—
involves interstate transportation. The Court is mindful of the Third Circuit’s opinion in Singh,
939 F.3d at 226, which held that a rideshare company was not entitled to compel arbitration but
remanded for discovery. Nothing in this order shall prejudice Lyft from renewing its motion if a
more developed factual record shows that Islam is not among a class of workers engaged in
interstate commerce.

9

Case 1:20-cv-02997-AJN Document 62 Filed 03/31/21 Page 10 of 10

Conclusion
Based on the record presently before the Court, rideshare drivers like Mohammad Islam
regularly transport passengers across state lines. These are “activities within the flow of
interstate commerce,” and so their contracts with Lyft fall within the Federal Arbitration Act’s
exemption for contracts of employment of transportation workers. Circuit City, 532 U.S. at 118.
The Court thus DENIES Lyft’s motion insofar as it seeks to compel arbitration under the Federal
Arbitration Act. The Court addresses Lyft’s request to compel arbitration under state law and
other pending motions by separate order. 1
SO ORDERED.

Dated: March 31, 2021
New York, New York

__________________________________
ALISON J. NATHAN
United States District Judge

1

The Court notes that another court in this district recently decided the same question in another case
between the same parties, holding that rideshare drivers fall within the § 1 exemption. See Islam, 2021
WL 871417, at *12. Because neither party has raised the issue of collateral estoppel, and because the
Court reaches the same result, it declines to decide the preclusive effect of Islam at this juncture.

10