Lyft settles class action but would still be impacted by Uber verdict, attorney says

By Karen Kidd | Feb 22, 2016

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SAN FRANCISCO (Legal Newsline) – A now-settled class action lawsuit brought by Lyft drivers in California probably will have little bearing in the lawsuit against another ride-hailing service, Uber, set to go to trial in June, a Los Angeles attorney says.

However, the possible result of a trial in the Uber case would impact Lyft and the way it classifies its drivers, she added.

Lyft, based in San Francisco, recently agreed to a $12.25 million settlement of class action lawsuit, Cotter vs Lyft, Inc., filed Sept. 3, 2013, in San Francisco federal court by California Lyft drivers. The drivers alleged they were employees and not independent contractors and sought to have that designation recognized by the court.

Lyft also agreed to change parts of its terms of service for new drivers who sign up on its platform.

"The Lyft settlement is not likely to be considered as evidence by a trier of fact in the Uber case," said Taylor Burras, an associate in the Labor and Employment Department of Michelman & Robinson in Los Angeles.

"There are also key differences between the two cases that may not actually put them on the same footing, including the fact that Lyft has an arbitration agreement with a class waiver in its drivers’ contracts that has previously been found enforceable by the court where the Lyft case is pending.

"However, it’s possible that the settlement would affect the plaintiffs and/or Uber’s valuation of the case in any pre-trial settlement discussions," Burras said.

The Cotter case is one of several lawsuits scrutinizing shared economy businesses that rely on independent contractors to provide a variety of services, not just hailing rides.

Had plaintiffs prevailed in the Cotter case, Lyft drivers would have been reclassified as employees, which likely would have entitled them to the benefits of an employee.

The Uber case, O’Connor et al v. Uber Technologies, filed in the same court in San Francisco and scheduled to begin trial June 20, has attracted the most attention since it was filed Aug. 16, 2013. The case was certified as class action in December.

Last month, the U.S. Court of Appeals for the Ninth Circuit denied Uber's request for a delay.

A court-ordered website,, follows the Uber case.

While cases such as those against Lyft and Uber attract much attention, particularly among workers rights advocates, there are a number of reasons people are attracted in ride-hailing to make a living, Burras said.

"Uber and Lyft are well-known for offering flexible work schedules that let drivers 'be their own boss' and set their own hours," she said.

"However, many of these types of services provide no training while requiring drivers to maintain a minimum customer rating on the app. The drivers are also unable to set their own rates and, in the case of Uber, actually discourage drivers from accepting tips."

While classified as independent contractors, the drivers also are not entitled to protections and benefits usually provided to employees, such as minimum wage laws, unemployment insurance and Workers’ Compensation, Burras said.

In settled Lyft case, the court never got the opportunity to consider the question of reclassifying Lyft drivers.

"Lyft settled early and to avoid protracted litigation over the employee versus independent contractor classification issue," Burras said.

"Unlike the Uber case, the court had not even reached the point of certifying Lyft drivers as a class. This is significant because Lyft’s business model may remain intact, at least for now."

However, while the Lyft case may have no bearing on the Uber case, the Uber case could have significant bearing on Lyft and beyond, Burras said.

"The outcome of the Uber case, should it proceed through trial, could potentially impact the entire sharing economy depending on the specific facts considered and their application to other similar business models."

It still remains for the courts to decide whether ride-hailing drivers and others who provide services in shared economy businesses are properly classified as independent contractors, Burras said.

Workers will have quite an uphill battle in any case that may decide that, Burras said.

"Bringing a case as a class poses a lot of hurdles, which is why most class actions rarely make it to trial," she said.

"By reaching a settlement, the parties were able to address the key concerns of Lyft’s drivers without having to address some of these hurdles, including Lyft’s arbitration agreement, which could have precluded the drivers from proceeding with their claims on a class basis."

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