Court Opinion

ID: 4691914
Source: CourtListenerOpinion
Date Created: 2021-06-01 20:05:12.270171+00
Date Added: 2024-06-11T08:05:12.755414
License: Public Domain

Filed 6/1/21 Seifu v. Lyft CA2/4
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                       DIVISION FOUR

MILLION SEIFU,                                                 B301774

         Plaintiff and Respondent,                             (Los Angeles County
                                                               Super. Ct. No. BC712959)
         v.

LYFT, INC.,

         Defendant and Appellant.

      APPEAL from an order of the Superior Court of
Los Angeles County, Susan Bryant-Deason, Judge. Affirmed.
      Horvitz & Levy, Andrea L. Russi, Peder Batalden, Felix
Shafir; Keker, Van Nest & Peters, R. James Slaughter, Jo W.
Golub, Erin E. Meyer and Morgan E. Sharma for Defendant and
Appellant.
      Lichten & Liss-Riordan, Shannon Liss-Riordan for Plaintiff
and Respondent.
       Plaintiff Million Seifu worked as a driver for Lyft, Inc. In
2018, he filed suit against Lyft under the Private Attorneys
General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.).1 He
alleged that Lyft misclassified him and other drivers as
independent contractors rather than employees, thereby violating
multiple provisions of the Labor Code. Lyft moved to compel
arbitration based on the arbitration provision in the “Terms of
Service” (TOS) that it required drivers to accept in order to offer
rides through Lyft’s smartphone application.
       The trial court denied the motion, rejecting Lyft’s argument
that the clause in the arbitration provision waiving Seifu’s right
to bring a representative PAGA claim was enforceable. Lyft
makes the same argument on appeal. We agree with other
California courts that have unanimously found such PAGA
waivers unenforceable. We therefore affirm.
           FACTUAL AND PROCEDURAL HISTORY
       Lyft utilizes a smartphone application (app) that connects
drivers with riders seeking transportation services. In order to
use the Lyft technology platform and offer rides through the app,
drivers must agree to the TOS, which states that it “contains
provisions that govern how claims you and Lyft have against
each other can be brought. . . . These provisions will, with limited
exception, require you to submit claims you have against Lyft to
binding and final arbitration on an individual basis, not as a
plaintiff or class member in any class, group, representative
action, or proceeding.” (Capitalization omitted.)

      1All further statutory references are to the Labor Code
unless otherwise indicated.

                                2
        The arbitration provision in the TOS provided, “You and
Lyft mutually agree to waive our respective rights to resolution of
disputes in a court of law by a judge or jury and agree to resolve
any dispute by arbitration. . . . This agreement to arbitrate
(‘Arbitration Agreement’) is governed by the Federal Arbitration
Act and survives after the Agreement terminates or your
relationship with Lyft ends. . . . Except as expressly provided ...
[¶] . . . all disputes and claims between us . . . shall be exclusively
resolved by binding arbitration solely between you and Lyft.”
(Capitalization omitted.) The agreement further stated, “This
Arbitration Agreement is intended to require arbitration of every
claim or dispute that can lawfully be arbitrated, except for those
claims and disputes which by the terms of this Arbitration
Agreement are expressly excluded from the requirement to
arbitrate.” (Capitalization omitted.)
        The arbitration provision also included a “Representative
PAGA Waiver” stating, “Notwithstanding any other provision of
this Agreement or the Arbitration Agreement, to the fullest
extent permitted by law: (1) you and Lyft agree not to bring a
representative action on behalf of others under the Private
Attorneys General Act of 2004 (PAGA), California Labor Code
§ 2698 et seq., in any court or in arbitration, and (2) for any claim
brought on a private attorney general basis, including under the
California PAGA, both you and Lyft agree that any such dispute
shall be resolved in arbitration on an individual basis only (i.e., to
resolve whether you have personally been aggrieved or subject to
any violations of law), and that such an action may not be used to
resolve the claims or rights of other individuals in a single or
collective proceeding (i.e., to resolve whether other individuals
have been aggrieved or subject to any violations of law).”

                                  3
       Drivers who did not wish to be bound by the arbitration
provision could opt out in the 30-day period following their
acceptance of the TOS. Those who did not exercise this option in
that time were bound by the arbitration provision.
       Lyft updated the TOS periodically, and required drivers to
agree to the updated terms in order to continue offering rides
through the Lyft platform. Seifu agreed to the updated TOS in
July 2017 and April 2018; he did not opt out of the arbitration
provision.
       Seifu filed a complaint against Lyft in July 2018, alleging a
single PAGA claim on behalf of the state of California and other
similarly situated individuals who worked as drivers for Lyft in
California.2 He alleged that Lyft willfully misclassified its
drivers as independent contractors, resulting in numerous Labor
Code violations. He sought civil penalties under PAGA, as well
as injunctive relief.
       Lyft petitioned to compel arbitration of Seifu’s individual
PAGA claim and stay proceedings in the trial court pending
arbitration. Lyft asserted that the PAGA waiver in Seifu’s
arbitration agreement was enforceable under the recent United
States Supreme Court opinion in Epic Systems Corp. v. Lewis
(2018) ____U.S.____, 138 S.Ct. 1612 (Epic). Lyft acknowledged
the prior holding in Iskanian v. CLS Transportation Los Angeles,
LLC (2014) 59 Cal.4th 348 (Iskanian) that PAGA waivers were
unenforceable, but argued that Iskanian was effectively

      2 Seifu later amended his complaint to add three other
drivers as named plaintiffs, as well as additional claims. This
appeal concerns only Seifu’s PAGA claim, the thirteenth cause of
action in the operative Third Amended Complaint.

                                 4
overruled by Epic.3
      Seifu opposed the petition to compel arbitration. He argued
that Iskanian remained good law and therefore the PAGA waiver
was unenforceable.
      The court denied the petition to compel arbitration, finding
that the PAGA waiver was unenforceable under Iskanian. Lyft
timely appealed.
                           DISCUSSION
I.    Standard of Review
      Where, as here, the trial court’s order denying a motion to
compel arbitration “rests solely on a decision of law,” we review
that decision de novo. (Robertson v. Health Net of California, Inc.
(2005) 132 Cal.App.4th 1419, 1425.)
II.   Enforceability of PAGA Waiver
      Lyft argues that Epic, supra, 138 S.Ct. 1612 abrogated “the
Iskanian PAGA Rule prohibiting the enforcement of a
representative-action waiver,” and therefore the trial court erred
in refusing to enforce the waiver in Seifu’s arbitration agreement.
We are not persuaded.
      In Iskanian, supra, 59 Cal.4th 348, our Supreme Court held
“that an employee’s right to bring a PAGA action is unwaivable,”
and that “where . . . an employment agreement compels the

      3 Lyft also argued that if the court found the PAGA waiver
unenforceable, it should nevertheless compel Seifu’s claim for
“underpaid wages” under section 558 to arbitration, as that claim
sought damages rather than penalties under PAGA. This issue
was mooted when the California Supreme Court issued ZB, N.A.
v. Superior Court (2019) 8 Cal.5th 175, 198, holding that a
plaintiff cannot seek “underpaid wages” under section 558
through a PAGA claim.

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waiver of representative claims under the PAGA, it is contrary to
public policy and unenforceable as a matter of state law.” (Id. at
pp. 383-384.) The Iskanian court noted that the Legislature
enacted PAGA to enhance the state’s enforcement of labor laws
by “allow[ing] aggrieved employees, acting as private attorneys
general, to recover civil penalties for Labor Code violations, with
the understanding that labor law enforcement agencies [are] to
retain primacy over private enforcement efforts.” (Id. at p. 379.)
Thus, the governmental entity “is always the real party in
interest” and a “PAGA representative action is therefore a type of
qui tam action.” (Id. at p. 382.) As such, a PAGA action to
recover civil penalties is “‘fundamentally a law enforcement
action designed to protect the public and not to benefit private
parties.’” (Id. at p. 387.)
      Epic, supra, 138 S.Ct. 1612 “was one of three cases
consolidated by the United States Supreme Court that raised the
issue of the FAA’s preemptive effect over private employment
arbitration agreements prohibiting class and collective actions.
The Court considered whether the FAA was in conflict with other
federal laws, including section 7 of the National Labor Relations
Act (NLRA), which guarantees workers the right to self-
organization, to form, join, or assist labor organizations, to
bargain collectively through representatives of their own
choosing, and to engage in other concerted activities for the
purpose of collective bargaining or other mutual aid or
protection.” (Olson v. Lyft, Inc. (2020) 56 Cal.App.5th 862, 868
(Olson), discussing Epic, supra, 138 S.Ct. at p. 1624.) “The Court
found no such conflict, and refused to ‘read a right to class actions
into the NLRA’ and rejected any NLRA exception to the FAA.
([Epic, supra, 138 S.Ct.] at p. 1619.) So, in each of the three

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consolidated cases, the Supreme Court upheld collective action
waivers and compelled individualized arbitration.” (Olson, supra,
56 Cal.App.5th at p. 869, citing Epic, supra, 138 S.Ct. at p. 1632.)
       Numerous Courts of Appeal have rejected the contention
that Iskanian is no longer good law in the wake of Epic. (See,
e.g., Contreras v. Superior Court of Los Angeles County (2021) 61
Cal.App.5th 461, 470-471; Olson, supra, 56 Cal.App.5th at pp.
872-873; Provost v. YourMechanic (2020), 55 Cal.App.5th 982,
997-998; Collie v. The Icee Co. (2020) 52 Cal.App.5th 477, 480;
Correia v. NB Baker Electric, Inc. (2019) 32 Cal.App.5th 602, 620
(Correia).) “On federal questions, intermediate appellate courts
in California must follow the decisions of the California Supreme
Court, unless the United States Supreme Court has decided the
same question differently.” (Correia, supra, 32 Cal.App.5th at p.
619, citing Auto Equity Sales, Inc. v. Superior Court (1962) 57
Cal.2d 450, 455.) In Correia, Division One of the Fourth
Appellate District explained: “Iskanian held that a ban on
bringing PAGA actions in any forum violates public policy and
that this rule is not preempted by the FAA because the claim is a
governmental claim. [Citation.] Epic did not consider this issue
and thus did not decide the same question differently. [Citation.]
Epic addressed a different issue pertaining to the enforceability
of an individualized arbitration requirement against challenges
that such enforcement violated the [National Labor Relations
Act].” (Correia, supra, 32 Cal.App.5th p. 619, italics in original.)
Thus, “[b]ecause Epic did not overrule Iskanian’s holding, we
remain bound by the California Supreme Court’s decision.” (Id.
at p. 620.)

                                7
       Agreeing with this conclusion, Olson, supra, 56 Cal.App.5th
862, rejected the same arguments Lyft raised here. Notably, Lyft
argued, as it does here, that Epic “eroded Iskanian’s private-
public distinction,” based on Lyft’s characterization of Murphy
Oil4 as a “government enforcement action.” The court in Olson
concluded that Lyft’s “position finds no support in either the text
of Epic . . . or the claimed ‘logic’ of its reasoning: Murphy Oil did
not involve the ‘enforcement rights’ of the NLRB,” nor was the
NLRB pursuing public claims. (Olson, supra, 56 Cal.App.5th at
p. 873.) By contrast, “Iskanian noted that PAGA claims involve
fundamentally public claims.” (Id. at p. 873, citing Iskanian,
supra, 59 Cal.4th at pp. 384–385; see also ZB, N.A. v. Superior
Court, supra, 8 Cal.5th at p. 198 [“Iskanian established an
important principle: employers cannot compel employees to waive
their right to enforce the state’s interests when the PAGA has
empowered employees to do so.”].)
       In sum, we agree with the reasoning stated in Olson,
Correia, and the other authorities cited above, and conclude that
Lyft’s argument regarding the PAGA waiver’s enforceability is
without merit.5 We also join Olson in declining to reach Lyft’s
final argument that “the FAA should preempt the Iskanian
PAGA rule even absent intervening precedent.” (See Olson,
supra, 56 Cal.App.5th at p. 874.) Lyft raises this argument in
summary fashion, purporting to “preserve the point for Supreme

      4Murphy  Oil USA, Inc. v. N.L.R.B. (5th Cir. 2015) 808 F.3d
1013 (Murphy Oil), was one of the three cases consolidated in
Epic. (See Epic, supra, 138 S.Ct. at p. 1620.)
      5We need not reach Seifu’s alternative argument that Lyft

drivers are exempt from coverage under the FAA pursuant to the
transportation worker exemption. (9 U.S.C. § 1.)

                                 8
Court review.”
                         DISPOSITION
      The order denying the motion compel arbitration is
affirmed. Seifu shall recover his costs on appeal.
  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                        COLLINS, J.

We concur:

WILLHITE, ACTING P.J.

CURREY, J.

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