Uber Driver’s Fake Rides Lawsuit Steers Clear of Arbitration

• Arbitration pacts a frequent flashpoint in Uber driver litigation
• Lawsuit outside Uber arbitration agreement’s scope; filed in capacity as driver for rival Lyft

Uber can’t push out of court and into confidential arbitration a lawsuit alleging its staff made a rival company’s service less appealing by creating bogus ride requests, a state appeals court in California ruled.

The allegations raised in the lawsuit are beyond the scope of an arbitration agreement the driver had with Uber, Justice Peter J. Siggins wrote May 8 for the First District Court of Appeal. Ryan Smythe, who drove for Uber Technologies Inc. and rival Lyft Inc., said Uber personnel created Lyft accounts with which they placed and canceled calls for transportation service. The goal was to tie up Lyft drivers so genuine customers couldn’t find a ride and frustrate genuine drivers who couldn’t get a customer, he said.

Uber’s arbitration agreements are a frequent flash point in driver litigation. Some courts put fights over arbitration on hold while the U.S. Supreme Court heard a trio of cases involving other companies’ arbitration pacts. Following the high court’s May 21 ruling that upheld the validity of agreements that steer multiple plaintiffs’ pay lawsuits into arbitration, courts have begun thawing frozen cases in Uber’s favor.

Smythe’s arbitration agreement with Uber doesn’t apply because it covers only claims arising out of his relationship with Uber as a driver, Siggins said. He filed the lawsuit in his capacity as a Lyft driver, claiming that Uber suppresses his ability to earn money with Lyft, Siggins said. Presiding Justice William R. McGuiness and Justice Stuart R. Pollak joined the opinion.

The ruling upholds a decision by a lower court judge who rejected Uber’s effort to move the case from court to arbitration.

R. Parker White and William Brelsford with Poswall, White, & Brelsford in Sacramento, Calif., and Jeffrey Fulton in Sacramento represented Smythe.

William Stern and Claudia Vetesi with Morrison & Foerster LLP in San Francisco represented Uber.

The case is Smythe v. Uber Techs., Inc., 2018 BL 203332, Cal. Ct. App., 1st Dist., No. A149891, order denying arbitration affirmed 6/8/18.

To contact the reporter on this story: Jon Steingart in Washington at jsteingart@bloomberglaw.com

To contact the editor responsible for this story: Terence Hyland at thyland@bloomberglaw.com