Docker overlayfs errors after upgrade

after upgrading to ubuntu 18.04 and lxd 3.0.1 i can no longer use docker inside an unprivileged container using storage driver overlay.
# docker run ubuntu
docker: Error response from daemon: error creating overlay mount to /var/lib/docker/overlay/816c03178519320e6c4bce75272200bb9d4b9d538a22fcff8f0a6dbab3e94807-init/merged: operation not permitted.

the container has security.nesting: “true” set.
is there a workaround to get overlay working with lxd 3.0.1 without having to set the container to privileged?

Thank you!