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Waithaka v. Amazon.Com, Inc.

United States District Court, D. Massachusetts

August 20, 2019

BERNARD WAITHAKA, on behalf of himself and others similarly situated, Plaintiffs,
v.
AMAZON.COM, INC. and AMAZON LOGISTICS, INC., Defendants.

          ORDER AND MEMORANDUM ON DEFENDANTS' MOTION TO COMPEL ARBITRATION OR, IN THE ALTERNATIVE, TO TRANSFER OR STAY

          TIMOTHY S. HILLMAN DISTRICT JUDGE.

         Bernard Waithaka (“Plaintiff”), commenced this class action lawsuit against Amazon.com Inc., and Amazon Logistics Inc. (“Defendants”) alleging improper classification as independent contractors and violations of state wage laws. Defendants have moved to compel arbitration or, in the alternative, to transfer or stay this litigation. (Docket No. 29) For the reasons stated below, Defendants' motion is granted in part and denied in part.

         Background

         Plaintiff is a delivery driver for Defendants and classified as an independent contractor. As a result of that classification, Plaintiff (and other drivers similarly classified) must supply their own vehicles and pay expenses necessary to perform their jobs, such as insurance, gas, phone, and data plan. Consequently, Plaintiff alleges that his hourly wage fell below the minimum required by Massachusetts law.

         The parties' agreement contained an arbitration agreement, which reads:

YOU AND AMAZON AGREE TO RESOLVE DISPUTES BETWEEN YOU AND AMAZON ON AN INDIVIDUAL BASIS THROUGH FINAL AND BINDING ARBITRATION, UNLESS YOU OPT OUT OF ARBITRATION WITHIN 14 CALENDAR DAYS OF THE EFFECTIVE DATE OF THIS AGREEMENT, AS DESCRIBED BELOW IN SECTION 11.

(Docket No. 31-2, at 10) (emphasis in original). In addition, the agreement contained the following choice-of-law provision:

12. Governing Law.
The interpretation of this Agreement is governed by the law of the state of Washington, except for Section 11 of this Agreement, which is governed by the Federal Arbitration Act and applicable federal law.

(Docket No. 31-2, at 15).

         Discussion

         Written arbitration agreements are governed pursuant to the Federal Arbitration Act. 9 U.S.C. §§1-301. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001) (holding that the FAA extends to employees other than transportation workers in employment cases). The FAA was enacted to combat “longstanding judicial hostility to arbitration agreements and to ‘place such agreements upon the same footing as other contracts.'” United States ex rel. Hagerty v. Cyberonics, Inc., 146 F.Supp.3d 337 (D. Mass. 2015) (quoting Allied-Bruce Terminix Cos., Inc. v. Dobson, 513 U.S. 265, 271 (1995)). When “construing an arbitration clause, courts and arbitrators must ‘give effect to the contractual rights and expectations of the parties.'” Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 682 (2010) (quoting Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989)). The FAA institutes “a liberal federal policy favoring arbitration agreements” thus “establish[ing] . . . as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983).

         1. FAA Transportation Worker Exemption

         The FAA contains an exception for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. Plaintiff contends that his employment as a last-mile delivery driver falls within this exception and consequently that the FAA does not apply.

         In Circuit City v. Adams, the Supreme Court, interpreting the exemption, relied on the general principle of statutory interpretation ejusdem generis, which provides that general words following specific words in statutes should be interpreted to be similar in nature to the specific words they follow. 532 U.S. 105, 114-15 (2001). Accordingly, the Court held that “the residual clause should be read to give effect to the terms ‘seamen' and ‘railroad employees,' and should itself be controlled and defined by reference to the enumerated categories of workers which are recited just before it.” Id. at 115. Therefore, the question presented is whether reading the residual clause to apply to last-mile delivery drivers gives effect to the enumerated categories of workers in the exception.

         Although the Court narrowly interpreted the exemption, it did not provide any further guidance regarding which transportation workers fall within its scope. The First Circuit has not yet had the occasion to address how courts should interpret the residual clause. And “[a]lthough several other circuit courts throughout the country have addressed the topic, little consensus has been realized.” Kowalewski v. Samandarov, 590 F.Supp.2d 477, 484 (S.D.N.Y. 2008). There is one area, however, where a consensus has emerged: truck drivers.[1] “[T]hat is, drivers actually involved in the interstate transportation of physical goods . . . have been found to be ‘transportation workers' for purposes of the residuary exemption in Section 1 of the FAA.” Id.; see also Lenz v. Yellow Transp., Inc., 431 F.3d 348, 351 (8th Cir. 2005) (“Indisputably, if Lenz were a truck driver, he would be considered a transportation worker under § 1 of the FAA.”); Palcko v. Airborne Express, 372 F.3d 588, 593-94 (3d Cir. 2004) (assuming that truck drivers fall within the scope of the exemption); Harden v. Roadway Package Sys., 249 F.3d 1137, 1140 (9th Cir. 2001) (“As a delivery driver . . . Harden contracted to deliver packages ‘throughout the United States, with connecting international service.' Thus, he engaged in interstate commerce that is exempt from the FAA.”); Carr v. Transam Trucking, Inc., 2008 WL 1776435, at *2 (N.D. Tex. Apr. 14, 2008) (“Truck drivers, like plaintiff, are considered ‘transportation workers' within the meaning of this exemption.”); Veliz v. Cintas Corp., 2004 WL 2452851, at *5 (N.D. Cal. Apr. 5, 2014) (“The most obvious case where a plaintiff falls under the FAA exemption is where the plaintiff directly transports goods in interstate [commerce], such as [an] interstate truck driver whose primary function is to deliver mailing packages form one state into another.”).

         Unlike truck drivers engaged in interstate commerce, however, Plaintiff does not carry goods across state lines. Defendants argue that this distinction precludes application of the exemption to last-mile drivers. See Magana v. Doordash, Inc., 343 F.Supp.3d 891, 899 (N.D. Cal. 2018) (concluding exemption did not apply to a plaintiff who did “not allege that he ever crossed state lines as part of his work. As such, there is no allegation that he engaged in interstate commerce under the definition of the narrowly-construed term.”). Vargas v. Delivery Outsourcing, LLC, 2016 WL 946112, at *4 (N.D. Cal. Mar. 14, 2016) (finding drivers not within the residual exemption because the evidence did “not support the conclusion that Plaintiffs made interstate deliveries even occasionally.”); Levin v. Caviar, Inc., 146 F.Supp.3d 1146, 1152 (N.D. Cal. 2015) (finding a driver who delivered prepared meals did not fall within the exemption because he did “not shown that he or any other similarly situated delivery driver ever made trips across state lines” and because the defendant did “not identify itself as being engaged in the interstate transport of goods . . . nor are the prepared meals Plaintiff delivers a type of good . . . that is ‘indisputably' part of the ‘stream of commerce.'”).

         The cases above, however, are distinguishable from the facts here. The plaintiffs in Magana and Levin, for instance, delivered prepared meals from local restaurants or merchants to local customers. See Magana, 343 F.Supp.3d at 895; Levin, 146 F.Supp.3d at 1154 (“[I]ngredients contained in the food that Plaintiff ultimately delivered from restaurants ended their interstate journey when they arrived at the restaurant where they were used to prepare meals.”). Here, however, the goods do not stop and a restaurant where they are cooked and combined to create a new product. Instead there is a “continuity of movement” of the goods delivered by Amazon interstate until they reach customers. See Walling v. Jacksonville Paper Co., 317 U.S. 564, 568 (1943) (“A temporary pause in their transit does not mean that [goods] are no longer ‘in commerce' within the meaning of [the Fair Labor Standards Act]. As in the case of an agency if the halt in the movement of the goods is a convenient intermediate step in the process of getting them to their final destinations, they remain ‘in commerce' until they reach those points. Then there is a practical continuity of movement of the goods until the reach the customers for whom they are intended. That is sufficient. Any other test would allow formalities to conceal the continuous nature of the interstate transit which constitutes commerce.”).[2] In addition, in Vargas, the plaintiff delivered delayed airline luggage to its owners. The luggage, however, “was not a ‘good' to be delivered until it was delayed or lost by the airline and then discovered when it was already intrastate. Much like a food delivery service, a luggage delivery service is not engaged in interstate commerce because it is not in the business of shipping goods across state lines, even though it delivers good that once travelled interstate.” Rittmann v. Amazon.com, Inc., 2019 WL 1777725, at *3 (W.D. Wash. Apr. 23, 2019) (distinguishing delivery drivers in Vargas from last-mile delivery drivers for Amazon). Here, on the other hand, the goods are “goods” for their entire journeys across state lines.

         Courts have also held that while physically transporting goods across state lines is a factor to be considered, it is not a necessary condition to the application of the residual exemption. See Palcko v. Airborne Express, Inc., 372 F.3d 588, 593-94 (3d Cir. 2004) (“[H]ad Congress intended the residual clause of the exemption to cover only those workers who physically transported goods across state lines, it would have phrased the FAA's language accordingly.”); Lenz v. Yellow Transp., Inc., 431 F.3d 348, 352 (8th Cir. 2005); Bacashihua v. United States Postal Serv., 859 F.2d 402, 405 (6th Cir. 1988) (finding that the concern is “not whether the individual worker actual engaged in interstate commerce, but whether the class of workers to which the complaining worker belonged engaged in interstate commerce”); Christie v. Loomis Armored US, Inc., 2011 WL 6152979, at *3 (D. Colo. Dec. 9, 2011) (“[A]n employee need not actually transport goods across state lines to be part of a class of employees engaged in interstate commerce.”). But see Magana, 343 F.Supp.3d at 899 (finding exemption did not apply where plaintiff did “not allege that he ever crossed state lines as part of his work”). In Palcko, the plaintiff worked for Airborne, a package transportation and delivery company engaged in intrastate, interstate, and international shipping. 372 F.3d at 590. The plaintiff supervised truck drivers who “delivered packages from Airborne's facility near the Philadelphia International Airport to their ultimate destinations in the Philadelphia area, and picked up packages form customers in the Philadelphia area and brought them back to Airborne's facility for shipment.” Id. Nonetheless, the Third Circuit held that the plaintiff fell within the residual exemption despite the fact there was no evidence that any of the drivers whom she supervised delivered packages across state lines because her work “was so closely related to interstate and foreign commerce as to be in practical effect part of it.” Id. at 593.

         In Lenz, the Eight Circuit provided the follow list of factors to assist courts in determining whether an employee fits within the § 1 exemption of the FAA:

[F]irst, whether the employee works in the transportation industry; second, whether the employee is directly responsible for transporting the goods in interstate commerce; third, whether the employee handles goods that travel interstate; fourth, whether the employee supervises employees who are themselves transportation workers, such as truck drivers; fifth, whether, like seamen or railroad employees, the employee is within a class of employees for which special arbitration already existed when Congress enacted the FAA; sixth, whether the vehicle itself is vital to the commercial enterprise of the employer; seventh, whether a strike by the employee would disrupt interstate commerce; and eighth, the nexus that exists between the employee's job duties and the vehicle the employee uses in carrying out his duties.

431 F.3d at 352. Here, the Plaintiff clearly works in the transportation industry and handles goods that travel interstate. Further, the vehicle Plaintiff uses to deliver packages is vital to Amazon's commercial enterprise and central to Plaintiff's job duties.[3]

         And while courts have held that crossing state lines is not necessary to apply the exemption, they have also held that transporting goods intrastate that have previously moved interstate can be sufficient to apply the exemption. See, e.g., Nieto v. Fresno Beverage Co. Inc., 33 Cal.App. 5th 274, 284 (2019) (“Nieto's deliveries, although intrastate, were essentially the last phase of a continuous journey of the interstate commerce . . . being transported until reaching its destination(s) to VWB's customers. Accordingly, as a delivery truck driver for VWB, Nieto was engaged in interstate commerce through his participation in the continuation of the movement of interstate goods to their destinations.”); Rittmann, 2019 WL 1777725, at *3 (finding last-mile delivery drivers for Amazon within the residual exemption because Amazon is in the business of shipping good across state lines); see also Lenz, 431 F.3d at 352 (instructing courts to consider whether employees handle goods that travel in interstate). Thus, while last-mile drivers themselves may not cross state lines, they are indispensable parts of Amazon's distribution system. That system, of course, transports goods in interstate commerce. In the end, Plaintiff's employment, like the plaintiff in Palcko, is so closely related to interstate commerce as to be part of it.

         In addition, courts have considered whether a strike by the employee would disrupt interstate commerce. See, e.g., Lenz, 431 F.3d 348, 352. Here, I find that a strike by last-mile delivery drivers for Amazon would disrupt interstate commerce. Amazon is the largest online retailer in the United States, accounting for about half of the e-commerce market. See Docket No. 34-3. Accordingly, a strike would almost certainly interrupt interstate commerce. “A strike by Plaintiffs would be akin to local UPS or FedEx drivers striking-a strike by UPS or FedEx drivers, who only personally travel intrastate, would cause a ripple effect in interstate commerce because goods travelling interstate would still not make it to their final ...


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