Cotter v. Lyft, Inc.
23 Wage & Hour Cas.2d (BNA) 207, 60 F.Supp.3d 1059, 2014 U.S. Dist. LEXIS 109444 (2014)
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Rule of Law:
State wage and hour laws are presumed not to apply extraterritorially to work performed exclusively outside the state's borders. A contractual choice-of-law provision cannot create a statutory cause of action under those laws where one does not otherwise exist.
Facts:
- Lyft, Inc. is a company with its principal place of business in California.
- Lyft classified its drivers nationwide as independent contractors, a decision made in California.
- Patrick Cotter and Mejandra Maciel were residents of California who worked as drivers for Lyft in California.
- Cotter and Maciel sought to represent a nationwide class of Lyft drivers, including those who are residents of other states and who drove for Lyft exclusively in those other states.
Procedural Posture:
- Patrick Cotter and Mejandra Maciel filed a putative nationwide class action against Lyft, Inc. in the United States District Court for the Northern District of California.
- The complaint alleged violations of California's wage and hour laws on behalf of all Lyft drivers nationwide.
- The Court, on its own initiative, issued an order to show cause, questioning whether the plaintiffs could bring claims under California law on behalf of drivers who worked exclusively in other states.
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Issue:
Do California's wage and hour laws apply to work performed exclusively outside of California by drivers for a California-based company?
Opinions:
Majority - Vince Chhabria
No, California's wage and hour laws do not apply to work performed exclusively outside of California. State statutes are presumed not to have extraterritorial effect unless a contrary intent is clearly expressed. The California Supreme Court has consistently held that the state's labor laws apply to work performed in California, focusing on the location of the work rather than the location of the employer or its decision-makers. The text of the California Labor Code itself supports this interpretation, as it refers to protecting 'wage earners of California' and regulating employment 'in this state.' Furthermore, applying California's wage laws to employment in other states would raise serious constitutional concerns under the Commerce Clause by attempting to control conduct that occurs wholly outside California's borders. A choice-of-law provision in an employment agreement cannot create a statutory cause of action that the law itself does not provide, as statutory labor rights exist independently of any contract.
Analysis:
This decision reinforces the strong presumption against the extraterritorial application of state employment laws, prioritizing the location of the work performed over the location of the employer's headquarters. It solidifies the principle that parties cannot privately contract into a statutory scheme that the legislature has geographically limited. The ruling serves as a significant barrier to nationwide class actions under a single state's wage and hour laws, forcing plaintiffs to pursue such claims under the laws of the various states where the work was actually performed, which can greatly increase the complexity and cost of litigation.
