PHILADELPHIA – A federal judge has sent litigation from a Philadelphia entrepreneur and musician who claimed rideshare company Lyft stole and misappropriated his concepts for corporate philanthropy without compensation for 90 days, to arbitration.
Marcus Pickett of Philadelphia first filed suit in the U.S. District Court for the Eastern District of Pennsylvania on Dec. 21, 2020 versus Lyft, Inc., of San Francisco, Calif.
“In 2016, Pickett created a concept to transform how Lyft promoted and increased its ridesharing business and engaged with and helped communities in need. Pickett’s ideas included that Lyft should combine and broaden the different existing ad hoc Lyft programs designed to help different communities, implement other ideas he had for programs, and combine them all into a single initiative that Pickett named “LyftUp,” the suit stated.
“Pickett felt that if Lyft unified its initiatives under a single brand, Lyft would have a greater capacity not only to do good, but also to strengthen and expand its ridesharing business. Pickett’s ideas also included potential partnerships with musicians and other celebrities to promote the program.”
Beginning in 2016, Pickett said he shared all of his ideas with Lyft, on the terms that they would be kept confidential and if they were ever used by the company, that Pickett would be financially compensated.
Once Pickett revealed his ideas to Lyft, he said Lyft executives led him to believe that his ideas were being deliberated internally, and that someone would contact him about his ideas.
“In early 2020, Lyft announced to the public that it had launched a new initiative called LyftUp. Pickett was floored when he learned that Lyft had used his ideas without his knowledge and without compensation. Lyft even used the logo that Mr. Pickett had designed, flip-flopping only the two colors used for the words LyftUp in the logo design he had provided Lyft,” per the suit.
“Lyft’s egregious misrepresentations to induce Pickett to reveal his ideas, and Lyft’s subsequent breaches of its agreement with Pickett, are counter to Lyft’s public claims as a company built on ‘values and culture.’ Pickett has been damaged by Lyft’s misrepresentations and breaches. As such, defendant Lyft should be required to stop using the LyftUp name and also be forced to compensate Pickett for the value of the confidential ideas that Lyft used without permission or compensation in breach of their agreement.”
Counsel for Lyft filed a motion to compel arbitration and stay proceedings depending on the outcome of that arbitration proceeding on May 3, 2021, under the Federal Arbitration Act.
The basis of this argument is that Pickett and Lyft signed a consulting agreement, where the parties mutually promised to resolve any disputes through binding arbitration.
However, Pickett’s counsel filed an opposing response to the defense’s compulsory arbitration motion on June 1, requesting it be denied for three principal reasons.
“First, the Driver Advisory Council consulting agreement is not valid because it was procured through fraud by Lyft employees…who represented when signed that it did not cover Mr. Pickett’s LyftUp ideas. Second, the Driver Advisory Agreement is limited in scope and does not cover the issues alleged in the complaint,” the response stated.
“Third, because there are fact questions about the Driver Advisory Agreement’s applicability to the allegations in the complaint, the Court should deny the motion to compel arbitration and permit discovery. Mr. Pickett also opposes Lyft’s attempted ‘reservation’ of its now expired right to file a motion to dismiss under Rule 12 of the Federal Rules of Civil Procedure should it lose the present motion to compel arbitration. Lyft’s attempted ‘reservation’ was not accompanied by any motion to extend the deadline to file a motion to dismiss and Lyft Inc. has waived any right to now file a motion to dismiss under Rule 12.
On July 29, 2021, U.S. District Court for the Eastern District of Pennsylvania Judge J. Curtis Joyner ordered the case be stayed for 90 days, during which time the parties will determine if the claims are able to be resolved through arbitration.
UPDATE
U.S. District Court for the Eastern District of Pennsylvania Judge Gerald J. Pappert ordered the case sent to arbitration through a memorandum opinion issued May 16.
“Pickett makes overlapping and unspecific arguments as to why his claims are not subject to arbitration. He essentially contends there was no mutual assent to the consulting agreement or its arbitration or delegation provisions and that disputes over his LyftUp concept are not subject to arbitration,” Pappert said.
“Having considered the parties’ arguments and reviewed their submissions, the Court grants Lyft’s motion and stays the case pending arbitration. Pickett and Lyft clearly delegated arbitrability questions to an arbitrator. Even if the agreement’s delegation clause was not enforceable, the Court would compel arbitration because the parties agreed to arbitrate and the agreement’s terms encompass disputes over LyftUp.”
According to Pappert, LyftUp is governed by the arbitration agreement signed between the parties.
“The arbitration agreement’s language controls, and Pickett’s idea for LyftUp falls well within it. The parties’ conduct after he signed the consulting agreement confirms this. Lyft never said anything to Pickett that suggested LyftUp was exempt from the arbitration agreement. While one employee told Pickett his idea needed to be ‘national,’ none ever mentioned the consulting agreement or its arbitration agreement when discussing the concept with him,” Pappert said.
“Further, the record refutes Pickett’s assertions that he separated LyftUp from the Local Driver Advisory Council and, as a result, the arbitration agreement. Pickett paid lip service to his idea being distinct from the LDAC when communicating with Lyft employees, but he repeatedly used his LDAC role to tout the concept. When pitching LyftUp, Pickett began by mentioning his LDAC membership and included his LDAC contact information. He told Lyft representatives he discovered his concept in part while serving as an LDAC ‘local ambassador,’ and that he applied for the LDAC to gain the company’s trust so it would take the idea seriously.”
For counts of fraud, breach of contract, promissory estoppel and unjust enrichment, the plaintiff is seeking a permanent injunction against the defendant from continuing to use the name LyftUp in breach of its contract, damages to be determined at trial, pre-judgment and post-judgment interest, punitive damages; and such other relief as the Court deems just and proper.
The plaintiff is represented by Jeffery A. Dailey and Alfred A. Brown of Dailey LLP, in Philadelphia.
The defendant is represented by Caroline Layne Rice, Matthew N. Klebanoff and Thomas Nelson Brown of Hangley Aronchick Segal Pudlin & Schiller, also in Philadelphia.
U.S. District Court for the Eastern District of Pennsylvania case 2:20-cv-06389
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com