On The Case

3,420 Lyft drivers claim the company won’t pay arbitration fees to launch their cases

(Reuters) - Here we go again.

Earlier this month, I told you about 12,500 Uber drivers who went to federal court with claims that Uber, after litigating for years to force drivers to pursue wage-and-hour claims in individual arbitration, was refusing to pay the requisite fees to launch their cases. Now it’s Lyft’s turn in the barrel. On Thursday, 3,420 Lyft drivers filed a petition for an order compelling arbitration in federal court in San Francisco.

Like their Uber counterparts, the Lyft drivers contend the company requires them to arbitrate disputes individually – but has refused to allow that process to begin. According to the petition, Lyft is required to pay a $1,900 initial fee, plus a $750 case management fee, for every arbitration demand drivers file at the American Arbitration Association (AAA), the forum Lyft designated in its contracts with drivers. (Drivers are required to pay $300 but, according to the petition, most qualify for a fee waiver because of their income levels.)

Want more On the Case? Listen to the On the Case podcast.

Drivers began filing demands against Lyft in October. To date, according to the petition, Lyft has not paid initial fees in any of the cases, despite a Dec. 10 deadline from AAA in the initial batch of 1,123 filings. AAA subsequently told lawyers for the drivers that it will not even bill Lyft for fees in thousands of other cases until the company pays filing fees for the first batch. The drivers’ petition requests a court order requiring Lyft to pay the requisite fees for all of the filed cases within 30 days and to pay initial fees in future cases within 14 days of receiving an AAA invoice.

There is a wrinkle. The drivers’ petition was filed by the plaintiffs’ firm Keller Lenkner, recently founded by onetime litigation financiers Ashley Keller and Travis Lenkner. (Keller and Lenkner seem to have learned from the client lead generation tactics of mass tort plaintiffs’ lawyers whose cases they used to fund; it’s not easy signing up thousands of clients.) The petition to compel Lyft to pay filing fees recounts that a Keller Lenkner lawyer approached Lyft last September with a heads-up that the firm was about to launch mass arbitration against the company. Keller Lenkner, according to the petition, invited Lyft to discuss alternatives to arbitrating thousands of individual claims but the two sides couldn’t come to an agreement.

Instead, after Keller Lenkner filed the first round of arbitration demands in October, Lyft sued the law firm in federal court in San Francisco, claiming it had engaged in a civil conspiracy. Lyft alleged that Keller Lenkner lawyer Warren Postman had been privy to confidential Lyft documents in his previous job with the U.S. Chamber of Commerce’s Litigation Center. Postman, on behalf of the Chamber, had sued to block Seattle from adopting an ordinance that would have permitted drivers for ride-sharing companies to engage in collective bargaining with ride-sharing companies that classified them as contractors. Lyft was not a party in the Chamber case but alleged that behind the scenes, it worked closely with Postman on the case.

The collaboration, according to Lyft, involved reams of confidential material related to the very misclassification arguments drivers would be asserting in arbitration. Lyft said Keller Lenkner was hopelessly conflicted and sought to bar the firm from representing drivers.

Keller Lenkner, in the new petition to compel Lyft to pay arbitration fees, asserts that Lyft’s civil suit was a stall tactic. It claims that Lyft asked AAA to suspend administration of the drivers’ cases in light of the suit. When AAA declined, the petition said, Lyft sent another letter to AAA, asserting that it should not have to pay filing fees unless Keller Lenkner disclosed its “plans to litigate” the arbitrations and identified who would take over for drivers if the firm were barred from representing them. According to the Keller Lenkner petition, Lyft said it would not pay filing fees unless the firm met those conditions.

A Lyft spokesperson declined to comment on the petition in an email response to my query.

There’s an extremely good reason why the new Lyft allegation bears such a distinct resemblance to the bombshell from Uber drivers earlier this month: Keller Lenkner is orchestrating the mass arbitration strategy against both ride-sharing companies. The firm didn’t file the Uber drivers’ petition for an order compelling Uber to pay their arbitration fees, which was signed by Larson O’Brien. But one of the exhibits accompanying the petition shows that it was Keller Lenkner that amassed thousands of driver cases and approached Uber about negotiating an alternative to arbitrating more than 12,000 individual cases.

Like Lyft, Uber claims Keller Lenkner is conflicted from representing drivers who claim to have been misclassified as contractors because of Postman’s work at the U.S. Chamber. In October, Uber filed a motion to disqualify Keller Lenkner from a limousine company’s suit alleging Uber engages in unfair business practices by treating drivers as contractors.

Uber, which was a co-plaintiff with the U.S. Chamber in the litigation challenging Seattle’s driver protection ordinance, said Postman had access to years of its core attorney work product, thanks to “hundreds of emails, regularly scheduled teleconferences and face-to-face meetings” in which Uber and the Chamber executed their attack on the Seattle law. (The motion was not filed in a case involving drivers’ claims against Uber but did refer in a footnote to Keller Lenkner’s “thousands of individual arbitrations against Uber on behalf of drivers.”)

Keller Lenkner said in its opposition to Uber’s disqualification motion that Postman’s client was the Chamber, never Uber, and that he was simply not privy to confidential Uber documents relevant to litigation brought by his new firm. “Nothing in Mr. Postman’s past gives him any privileged insight into misclassification or any of the other issues in this case,” the brief said. Keller Lenkner also accused Uber of opportunism, positing that if Uber managed to get the firm bounced from the Diva case it would “surely will use (the disqualification) to attack Keller Lenkner’s ability to represent drivers” in thousands of arbitrations.

U.S. District Judge Edward Chen of San Francisco heard arguments on Uber’s disqualification motion last month. He’s also overseeing the Uber drivers’ petition to compel Uber to pay their initial arbitration fees and Lyft’s suit against Keller Lenkner. Presumably, Judge Chen’s docket will soon include the new petition calling on Lyft to pay drivers’ arbitration fees as well.

This article has been corrected. An earlier version incorrectly characterized Seattle’s ordinance. The previous article also incorrectly said Judge Chen had heard arguments in the Uber drivers’ case to compel the payment of arbitration fees and in Lyft’s suit against Keller Lenkner.