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Despite Settlement, Lyft Must Face 2nd Labor Suit

SAN FRANCISCO (CN) — A federal judge on Monday refused to dismiss renewed claims that ride-hail giant Lyft mislabeled drivers as independent contractors and denied them employment benefits.

Lead plaintiff Alex Zamora sued Lyft in May for taking a portion of primetime ride fees supposedly promised to drivers. Zamora's lawsuit came as the ride-hail company was finalizing the terms of a $27 million deal with a nationwide class of drivers in a separate class action, Cotter v. Lyft.

Earlier this year, U.S. District Judge Vince Chhabria denied Zamora's motion to intervene and block the Cotter settlement.

After the $27 million deal was preliminarily approved, Zamora filed an amended complaint with new claims mirroring those alleged in Cotter — namely that Lyft mislabeled drivers as contractors and denied them benefits, including reimbursement for vehicle expenses, meal breaks and overtime wages.

In a ruling issued Monday, Chhabria refused to dismiss claims that Lyft violated contracts with riders by not giving drivers the full amount charged for primetime ride premiums.

Zamora says Lyft "consistently claimed" that 100 percent of primetime ride fees, which it charges during high-demand ride times, would go to drivers.

The judge rejected Lyft's argument that riders clicking through pop-ups on their apps, in which they agreed to pay premiums, did not constitute a binding contract.

Chhabria said the "clickwrap agreements aren't categorically invalid" and that Lyft failed to explain how they lacked "the element of mutual assent."

He also refused to dismiss claims of conversion and failure to reimburse drivers for vehicle-related expenses.

However, Chhabria did dismiss claims of fraud and tortious interference with prospective economic relations, finding the plaintiffs failed to adequately show wrongful conduct.

He also dismissed claims that Lyft failed to accurately record drivers' work hours and denied them meal and rest breaks. He said the plaintiffs must articulate how Lyft required employees to report for work and impeded their breaks.

Chhabria also dismissed the plaintiffs' claim for civil penalties against Lyft under California's Private Attorneys General Act, finding the plaintiffs failed to exhaust administrative remedies by first filing a complaint with the state's labor department.

All claims were dismissed with leave to amend.

It was not immediately clear how the $27 million Cotter v. Lyft settlement, which is scheduled for a final approval hearing on Dec. 1, might impact claims alleged in the Zamora suit.

Attorneys for the Zamora plaintiffs and Lyft did not immediately return phone calls seeking comment Tuesday afternoon.

Zamora is represented by Jahan Sagafi of Outten & Golden in San Francisco.

Lyft is represented by Rachel Meny of Keker & Van Nest in San Francisco.

The Zamora plaintiffs have until Dec. 15 to file a second amended complaint.

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