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Ouadani v. Dynamex Operations East, LLC

United States District Court, D. Massachusetts

May 10, 2017

DJAMEL OUADANI, on behalf of himself and all others similarly situated, Plaintiff,
v.
DYNAMEX OPERATIONS EAST, LLC Defendant.

          MEMORANDUM AND ORDER

          Patti B. Saris Chief United States District Judge

         INTRODUCTION

         Plaintiff Djamel Ouadani brings this putative class action against Defendant, Dynamex Operations East (“Dynamex”), alleging violations of the Fair Labor Standards Act (“FLSA”), and the Massachusetts misclassification and wage laws. Pending before the Court is Dynamex's motion to compel arbitration and dismiss under the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16 (2012), and Fed.R.Civ.P. 12(b)(1) (Docket No. 14). After reviewing the parties' briefs and hearing argument, the Court DENIES the motion to compel arbitration and dismiss (Docket No. 14).

         FACTUAL BACKGROUND

         The relevant facts are drawn from Ouadani's complaint, exhibits to the complaint, and the Dynamex-Selwyn and Birtha Shipping, LLC Independent Contractor Agreement, which Dynamex filed in support of its motion. See Docket No. 15, Ex. 1.[1]Dynamex has not disputed any of these facts for the purposes of evaluating its motion to compel arbitration.[2]

         Ouadani is a Cambridge, Massachusetts resident who responded to a Craigslist ad that Dynamex posted seeking delivery drivers in the Boston area. Dynamex contacted Ouadani and invited him to a meeting at Dynamex's offices in Wilmington, Massachusetts. Ouadani met with Dynamex employees, who described the services that Dynamex provided for Google Express. Ouadani also completed Dynamex paperwork (including his availability for delivery shifts), paid for a Dynamex t-shirt, and had his picture taken for a Dynamex ID badge. Dynamex employees told Ouadani that he would have to associate with one of three “Dynamex-affiliated vendors” in order to become a driver. Ouadani associated with Selwyn and Birtha Shipping, LLC (“SBS”), but he never interviewed with its owner and manager, Edward Alwis, who also worked as a Dynamex delivery driver. Neither Dynamex nor SBS classified Ouadani as an employee.

         Ouadani passed a drug test, received his Dynamex ID badge, a cell phone and scanner set up with Google Express software, and began performing delivery services, wearing his Dynamex shirt all the while. Dynamex also issued Ouadani a company email address, at which he received emails about shift scheduling, work policies, and delivery procedures. See Docket No. 1, Exs. 4-9. Ouadani made pickups and deliveries across greater Boston. SBS paid Ouadani an amount the former described as its payment from Dynamex less a 17.5 percent deduction, which SBS attributed to taxes and insurance. On August 22, 2016, Ouadani complained to Dynamex that he did not have the independence of a contractor and that he should be paid as an employee. The next day, Ouadani was permanently removed from the driver schedule, resulting in his termination.

         Nearly three months before Ouadani's interview with Dynamex, Alwis, on behalf of SBS, signed a contract with Dynamex. That contract governed the relationship between SBS and Dynamex at all relevant times. Included in that agreement was an obligation that SBS “furnish at its own discretion, selection, and expense any and all Personnel required, necessary or incidental to [SBS]'s performance” of contracted services. Docket No. 15, Ex. 1, at ¶ 6(b)(i). SBS was responsible for paying its employees for work performed in relation to the Dynamex-SBS independent contractor agreement. Id.

         The Dynamex-SBS independent contractor agreement included a sweeping arbitration provision governed by the FAA. The arbitration clause covers disputes brought by SBS, Dynamex, “or any agent acting on behalf of either.” Id. at ¶ 16(a)(i). The provision explicitly subjects to arbitration “disputes regarding any city, county, state or federal wage-hour law.” Id.

         DISCUSSION

         I. The Road to Arbitration

         Congress enacted the FAA in 1925 in “response to hostility of American courts to the enforcement of arbitration agreements, a judicial disposition inherited from then-longstanding English practice.” Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 111 (2001). To give effect to this purpose, section 2 of the FAA provides that written arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2 (2012); see also Circuit City, 532 U.S. at 111. In short, section 2 “is a congressional declaration of a liberal federal policy favoring arbitration agreements.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). “At a minimum, this policy requires that ambiguities as to the scope of the arbitration clause itself must be resolved in favor of arbitration.” PowerShare, Inc. v. Syntel, Inc., 597 F.3d 10, 15 (1st Cir. 2010).

         In cases where the applicability of the arbitration provision is unclear either in terms of scope or whether one or more parties is bound by the agreement, courts conduct additional inquiry. “[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” AT & T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 648 (1986) (quoting United Steelworkers of Am. v. Warrior & Gulf Navig. Co., 363 U.S. 574, 582 (1960)). The party seeking to compel arbitration must “demonstrate [1] that a valid agreement to arbitrate exists, [2] that the movant is entitled to invoke the arbitration clause, [3] that the other party is bound by that clause, and [4] that the claim asserted comes within the clause's scope.” Soto-Fonalledas v. Ritz-Carlton San Juan Hotel Spa & Casino, 640 F.3d 471, 474 (1st Cir. 2011); see also McCarthy v. Azure, 22 F.3d 351, 354-55 (1st Cir. 1994). Regarding the third prong, “courts should be extremely cautious about forcing arbitration in situations in which the identity of the parties who have agreed to arbitrate is unclear.” InterGen N.V. v. Grina, 344 F.3d 134, 143 (1st Cir. 2003).

         Where one of the parties to a dispute is not a signatory to the contract containing the arbitration clause, there are typically five bases for requiring nonsignatories to arbitrate: “1) incorporation by reference; 2) assumption; 3) agency; 4) veil-piercing/alter ego; and 5) estoppel.” Thomson-CSF, S.A. v. Am. Arbitration Ass'n, 64 F.3d 773, 776 (2d Cir. 1995). Two such ...


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