U.S. District Judge Vince Chhabria, Northern District of California
U.S. District Judge Vince Chhabria, Northern District of California (Hillary Jones-Mixon / The Recorder)

SAN FRANCISCO — A federal judge has ruled Lyft drivers cannot bring class wage-and-hour claims against the company, in an order likely to set up the issue for appeal.

Plaintiffs sought to represent a nationwide class of drivers they claim were misclassified as contractors and denied minimum wage and other rights. But the two named plaintiffs drove for the ride-share company exclusively in California and are seeking judgment under California employment laws. Therefore, they cannot represent drivers in other states, U.S. District Judge Vince Chhabria ruled Thursday in the Northern District of California.

“California wage and hour laws asserted here simply do not apply to employees who work exclusively in another state,” he wrote. “Therefore, regardless of the connection between Lyft and California, Lyft drivers who worked in other states cannot bring claims under California’s wage and hour statutes.”

Plaintiffs attorney Shannon Liss-Riordan of Boston firm Lichten & Liss-Riordan was puzzled by the order, which contradicts a favorable ruling she received last year from a judge right down the hallway in a similar case.

“Ultimately, I think it’s going to be taken up by a higher court in California,” she said.

Liss-Riordan also represents a nationwide class of Uber Technologies Inc. drivers who claim they were misclassified as contractors and stiffed on tips and expenses. In 2013, U.S. District Judge Edward Chen ruled out-of-state drivers have valid California claims because Uber’s licensing agreement specifies disagreements will be resolved according to California law.

While Uber argued the U.S. Constitution’s Commerce Clause prohibits states from regulating commercial activities beyond their boundaries, Chen said “applying a state’s law to conduct for which parties have chosen to be bound by that state’s law through contract does not violate the Commerce Clause.”

Lyft’s contract stipulates the same. But Chhabria ruled plaintiffs’ claims do not stem from the contract or involve interpretation of the contract’s terms, so they are not governed by the choice-of-law provision.

Even if the claims were covered, he continued, the choice of law would be moot. The California Labor Code limits application of its laws to within the state.

“It does not apply extraterritorially,” Chhabria wrote. “Parties cannot, by contract, extend its reach.”

Lyft is represented by Ogletree, Deakins, Nash, Smoak & Stewart. Founding shareholder Thomas McInerney referred questions to a Lyft spokeswoman, who called the ruling “well-reasoned and thoughtful.”

Liss-Riordan said she respectfully disagrees with the court’s analysis.

“It’s interesting Judge Chhabria didn’t cite to Judge Chen’s decision in the Uber case,” she said, “which seems a little odd given that Judge Chen addressed the exact same question in Uber.”

Contact the reporter at mkendall@alm.com.