Opinion
Civil Action No. 1:23-cv-00419-DDD-MEH
2024-01-16
Chantel SPAIN, Plaintiff v. Freeman JOHNSON, and Lyft, Inc., Defendants.
Olga Yeva Steinreich, Roman Balaban, Sarah Ann Wolter, Steven Paul Johnston, Balaban Law LLC, Denver, CO, for Plaintiff. Madison Engel, Rebecca Kirsten Wagner, Campbell Wagner & Frazier, LLC, Greenwood Village, CO, Robert Alan Zahradnik-Mitchell, Wells Anderson & Race LLC, Denver, CO, for Defendant Freeman Johnson. Paul Joseph Rupprecht, Amy Theresa Johnson, Richard Andrew Lane, III, Trevor Joel Alexander, Lewis Brisbois Bisgaard & Smith LLP, Denver, CO, Tate Christopher Hughes, O'Hagan Meyer, Denver, CO, for Defendant Lyft, Inc.
Olga Yeva Steinreich, Roman Balaban, Sarah Ann Wolter, Steven Paul Johnston, Balaban Law LLC, Denver, CO, for Plaintiff.
Madison Engel, Rebecca Kirsten Wagner, Campbell Wagner & Frazier, LLC, Greenwood Village, CO, Robert Alan Zahradnik-Mitchell, Wells Anderson & Race LLC, Denver, CO, for Defendant Freeman Johnson.
Paul Joseph Rupprecht, Amy Theresa Johnson, Richard Andrew Lane, III, Trevor Joel Alexander, Lewis Brisbois Bisgaard & Smith LLP, Denver, CO, Tate Christopher Hughes, O'Hagan Meyer, Denver, CO, for Defendant Lyft, Inc.
ORDER GRANTING MOTION TO STAY AND COMPEL ARBITRATION
Daniel D. Domenico, United States District Judge.
Plaintiff Chantel Spain brought this case after being injured in a car accident she alleges was caused by the negligence of Defendant Freeman Johnson, who was driving her at the time for fellow Defendant Lyft, Inc. Doc. 4. Lyft has filed a motion to stay and compel arbitration, saying Ms. Spain agreed to arbitrate any such claims when signing up for its services. Doc. 11. Lyft is right, so the motion is granted.
BACKGROUND
In September 2021, Ms. Spain hailed a ride on Lyft's app and was picked up by Mr. Freeman. She was seriously injured in a multivehicle car accident she says was caused by Mr. Freeman's failure to yield the right of way when entering an intersection on Tower Road in Denver, Colorado. Doc. 4 at 5-6. Ms. Spain alleges, and for purposes of this order, it is assumed to be true, that Mr. Freeman was at fault and was the agent of Lyft, Inc., at the time of the accident.
To use Lyft's rideshare services, Ms. Spain, like others, had to create a Lyft user account in order hail a ride. See Doc. 11-1. Creating an account required clicking a button that said the user accepted Lyft's terms of service. Id. at 2-3. Ms. Spain first created a Lyft account in November 2019. Id. at 3. At that time, the first page of the terms of service included the following:
PLEASE BE ADVISED: THIS AGREEMENT CONTAINS PROVISIONS THAT GOVERN HOW CLAIMS BETWEEN YOU AND LYFT HAVE AGAINST EACH OTHER CAN BE BROUGHT (SEE SECTION 17 BELOW). THESE PROVISIONS WILL, WITH LIMITED EXCEPTION, REQUIRE YOU TO SUBMIT CLAIMS YOU HAVE AGAINST LYFT TO BINDING AND FINAL ARBITRATION ...
By entering into this Agreement, you expressly acknowledge that you understand this Agreement (including the dispute resolution and arbitration provisions in Section 17) and accept all of its terms. IF YOU DO NOT AGREE TO BE BOUND BY THE TERMS AND CONDITIONS OF THIS AGREEMENT, YOU MAY NOT USE OR ACCESS THE LYFT PLATFORM.
Doc. 11-2 at 1. The highlighted parenthetical linked directly to the arbitration provision, which was headlined "DISPUTE RESOLUTION AND ARBITRATION AGREEMENT" and stated "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, as set forth below." See id. at ¶ 17(a). This arbitration agreement applies to all "claims" between the user and Lyft, its affiliates, subsidiaries, employees, and agents. Id. "Claims" is broadly defined to capture all disputes arising from the use of Lyft's rideshare services. See id.
In December 2020, Lyft updated its terms of service, sending users (including Ms. Spain) an email saying so and providing a link to the new provisions. Doc. 11-3. The arbitration provisions remained substantively identical. See Docs. 11-2 at ¶ 17(a), 11-4 at ¶ 17(a).
ANALYSIS
Lyft says Ms. Spain is bound by the language of the terms of service to submit any claims to arbitration rather than litigation in a court of law. Ms. Spain does not appear to dispute that the terms of service at all relevant times included an agreement to arbitrate disputes with Lyft, or that she clicked on the relevant boxes and affirmations in creating her account. She nonetheless makes two arguments that the arbitration clause is not enforceable against her: first, that the clause was not conspicuous enough to conclude she actually agreed to it; second, that even if she did it is procedurally and substantively unconscionable and thus unenforceable. See Doc. 20.
I. Agreement to Arbitrate
As Ms. Spain points out, a motion to compel arbitration presents a two-fold inquiry. First, the court "must determine whether a valid agreement to arbitrate exists between the parties to the action and [second] whether the issues being disputed are within the scope of the arbitration agreement." Doc. 20 at 2 (quoting Vallagio at Inverness Respondent. Condo. Ass'n, Inc. v. Metro. Homes, Inc., 412 P.3d 709, 713 (Colo. Ct. App. 2015)). Ms. Spain argues that whether she actually agreed to the arbitration clause is at least disputable and thus not amenable to resolution as a matter of law. See id. at 3-8.
Since this case is in federal court based on its diversity jurisdiction, the parties agree that Colorado substantive law applies.
The parties agree that, in general, electronic terms of service can create a legally binding contract as long as the language in question does so and the parties' conduct manifests an intent to accept the contractual language. See Marquardt v. Perry, 200 P.3d 1126, 1129 (Colo. App. 2008). Ms. Spain, however, argues that the second half of this issue can't be determined here because Lyft did not show "how the Terms of Service were presented to Plaintiff while she was setting up her Lyft account.... [and] failed to show how the Terms and Conditions were presented
to Plaintiff on her mobile device including the size and color of the font, how a user affirmatively accepts the Terms of Service, or how the Terms and Conditions appeared on Plaintiff's mobile device." Doc. 20 at 6. This she says, means "Lyft failed to show how Plaintiff demonstrated her unambiguous assent to arbitrate." Id. And that means that it failed to carry its burden to show that "the contractual terms were reasonably conspicuous and whether [her] alleged assent to them was unambiguous." Grosvenor v. Qwest Corp., 854 F. Supp. 2d 1021, 1026 (D. Colo. 2012) (quotation omitted). She then says Lyft failed to show that she clicked on a link Lyft emailed to her when it updated the terms of service in December 2020. Doc. 20 at 6.
Lyft responds first by noting "the party resisting arbitration bears the burden of proving that the claims at issue are unsuitable for arbitration." Doc. 21 at 3 quoting Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 91, 121 S. Ct. 513, 522, 148 L.Ed.2d 373 (2000). I am not confident, however, that the cases cited by Lyft, including Green Tree, apply to the threshold question of whether an agreement to arbitrate exists rather than to the subsidiary question whether particular claims fall within an arbitration provision.
I am persuaded though that Lyft's evidence shows that Ms. Spain agreed to the terms of service, including the arbitration provisions. Attached to Lyft's motion is a declaration of Alex Sniegowski, a Safety Program Senior Specialist at Lyft (Doc. 11-1), along with printouts of the terms of service in place when Ms. Spain created her Lyft account (Doc. 11-2), the email sent to Ms. Spain when the terms were updated in December 2020 (Doc. 11-3), and those new terms of service (Doc. 11-4). That evidence shows that in creating her account, Ms. Spain was required to affirmatively accept Lyft's terms of service. See Doc. 11-1 at 2-3. The full text of the terms of service is available on the app or Lyft's website. Id. When Lyft updated the terms of service in December 2020, it emailed users including Ms. Spain a link to the new terms with the bolded and underlined statement, "Your continued use of Lyft will confirm that you have reviewed and agreed to the updated Terms." Id. at 3; Doc. 11-3.
As Lyft notes, this sort of process is now ubiquitous, and has generally been held to be sufficient to create binding terms. See Vernon v. Qwest Commc'ns Int'l, Inc., 925 F. Supp. 2d 1185, 1191 (D. Colo. 2013) (finding assent where subscribers were subject to "clickwrap agreement"); Hancock v. Am. Tel. & Tel. Co., 701 F.3d 1248, 1256 (10th Cir. 2012) (noting that clickwrap agreements are "increasingly common and have routinely been upheld").
Ms. Spain argues that "Lyft failed to provide any links or screenshots showing what Plaintiff saw when she was setting up her Lyft user account. Lyft failed to show how the Terms and Conditions were presented to Plaintiff on her mobile device including the size and color of the font, how a user affirmatively accepts the Terms of Service, or how the Terms and Conditions appeared on Plaintiff's mobile device." Doc. 20 at 6. Lyft provided a supplemental declaration that fills in some of those details (Doc. 21-2), but even without it the evidence was sufficient to show Ms. Spain agreed to Lyft's terms of service. The question is not whether Lyft can prove that Ms. Spain actually read the particular provision she now wishes to evade. In her words, the question "is as follows: 'did the consumer have reasonable notice, either actual or constructive, of the terms of the putative agreement and did the consumer manifest assent to those terms?'" Doc. 20 at 5 (quoting Vernon v.
Qwest Commc'ns Int'l, Inc., 857 F. Supp. 2d 1135, 1149 (D.Colo. 2012)).
The answer to both of those questions is yes. Ms. Spain was provided with the terms of service repeatedly and was clearly told she was agreeing to them when creating her account and when using Lyft's service. That was at least constructive notice of those terms, including the arbitration agreement. Whether Ms. Spain actually read the provisions or, like most of us, just scrolled through and clicked the box, is not necessary to know. She repeatedly manifested her assent to Lyft's terms by creating and using her account scores of times after being informed, clearly, that doing so amounted to agreeing to the terms of service. That is all that is required under the law to her to be bound by them. See Marquardt, 200 P.3d at 1129. She may not have subjectively known she was agreeing to an arbitration clause, but, objectively, she agreed to what Lyft had included in its terms of service; to the extent she did not want to agree to arbitrate her claims, she had an opportunity to choose not to use Lyft's app, but didn't. See Osvatics v. Lyft, Inc., 535 F. Supp. 3d 1, 11 (D.D.C. 2021) (Jackson, J.) ("it is well established that Lyft's method of obtaining [] assent to its Terms of Service—presenting the terms of the agreement and requiring users to click 'I Agree' before they can access the service [] constitutes a valid means of offer and acceptance").
II. Unconscionability
Ms. Spain also argues that the arbitration provision can't be enforced because it is both procedurally and substantively unconscionable. The procedural argument is largely a reframing of the argument above about contract formation, and is unpersuasive. While Lyft's terms of service are a standardized form, the terms were readily available to Ms. Spain and other Lyft users, the use of arbitration is common and not unreasonable (in fact it is encouraged by Congress), and the mass nature of Lyft's service means that tens of thousands of other consumers are able to review the same terms. The circumstances here simply don't support the idea that this provision was snuck in or forced upon an unsuspecting or unsophisticated consumer with no other options. Cf. Davis v. M.L.G. Corp., 712 P.2d 985, 991 (Colo. 1986).
Substantively, as noted, arbitration of disputes is generally not unconscionable, and in fact is encouraged by Congress. See 9 U.S.C. § 2. Ms. Spain, or her counsel, apparently prefers to bring her case directly in court, but that does not make it unconscionable. See, e.g., Bekele v. Lyft, Inc., 918 F.3d 181 (1st Cir. 2019). Indeed, parties can "agree to arbitrate gateway questions of arbitrability including the enforceability ... of the arbitration agreement," as they appear to have done here. Jones v. Waffle House, Inc., 866 F.3d 1257, 1264 (11th Cir. 2017); Doc. 11-4 at ¶ 17(a) (parties agreeing to submit the "scope, applicability, enforceability, revocability, or validity of the Arbitration Agreement" to the arbitrator); see also Wolfire Games, LLC v. Valve Corp., No. C21-0563-JCC, 2021 WL 4952220, at *2 (W.D. Wash. Oct. 25, 2021) (noting that, unless party specifically challenges the conscionability of a delegation provision, the court must allow arbitrator to determine whether arbitration clause is unconscionable).
III. Scope of the Arbitration Clause
Ms. Spain alternatively argues that this dispute is not within the scope of the provision in the applicable terms of service. Doc. 20 at 10-11. She notes that her claims against Lyft "are entirely related to and arise from the negligent conduct of Defendant Johnson. In this regard, Plaintiff
has a vicarious liability claim against Defendant Lyft for the negligent conduct of Defendant Johnson." Id. at 11. That is so, but does not bring the claims outside the scope of the arbitration provision. The provision in effect at the time says that "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." Doc. 11-4 at ¶ 17(a). It further specifies that it applies to "any dispute, claim or controversy ... arising out of or relating to: ... the Lyft Platform, the Rideshare Services ... and all other federal and state statutory and common law claims." Id.
This is clearly a "dispute" arising out of Ms. Spain's use of Lyft's platform and rideshare services, and vicarious liability is a state common law claim. Even if not, the provision includes a delegation clause that says a dispute about the scope of the agreement is for the arbitrator to decide, as discussed above. See Doc. 11-4 at ¶ 17(a).
IV. Public Policy
Ms. Spain's last argument is that arbitrating her claims against Lyft while allowing her claims against Mr. Johnson to proceed in court "violates Colorado's Public Policy of Judicial Economy." Doc. 20 at 11. Ms. Spain provides no authority for this Public Policy of Judicial Economy, although it sounds like a good idea to me. And she is probably right that sending the dispute with Lyft to arbitration while litigating with Mr. Johnson in this court may lead to some repeated effort and possible inconsistencies. But that is not sufficient reason for a court to ignore a binding agreement to arbitrate, which, again, is generally preferred by Congress. And of course, Ms. Spain and Mr. Johnson could always submit their dispute to arbitration if they choose to avoid these inefficiencies that way. The agreement will not be voided for this reason.
CONCLUSION
Defendant Lyft's Motion to Stay and Compel Arbitration (Doc. 11) is GRANTED.
Section 3 of the FAA provides that "if any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court ... shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement." 9 U.S.C. § 3. Lyft seeks a stay under this provision of the case as to it only, which is also GRANTED. See also Doc. 43 (staying discovery as to Defendant Lyft).
The case between Plaintiff and Defendant Lyft is HEREBY STAYED pending conclusion of the arbitration proceeding. The parties shall file joint status reports regarding the status of the arbitration every THREE MONTHS, starting May 1, 2024, and within TWO WEEKS upon termination of the arbitration proceedings.