Rittmann v. Amazon.com, Inc.

383 F.Supp.3d 1196

Bernadean RITTMANN, et al., Plaintiffs,

v.AMAZON.COM, INC., et al., Defendants.

CASE NO. C16-1554-JCC

United States District Court, W.D. Washington, at Seattle.

Signed April 23, 2019

Adelaide Pagano, Harold Lichten, Shannon Liss-Riordan, Lichten & Liss-Riordan, P.C., Boston, MA, Michael C. Subit, Marc C. Cote, Frank Freed Subit & Thomas, Daniel Foster Johnson, Breskin Johnson & Townsend PLLC, Seattle, WA, Matthew David Carlson, Lichten and Liss-Riordan PC, San Francisco, CA, Douglas Walter Perlman, Farzad Rastegar, Raestegar Law Goup APC, Torrance, CA, for Plaintiffs

Allison N. Powers, Meredith Riccio, Morgan Lewis & Bockius, Chicago, IL, Christopher Banks, Robin Marie Lagorio, Theresa Mak, Amy A. McGeever, Andrea Fellion, Morgan Lewis & Bockius, San Francisco, CA, James Walsh, Jr., Richard G. Rosenblatt, Morgan Lewis & Bockius, Princeton, NJ, John S. Battenfeld, Brian D. Fahy, Morgan Lewis and Bockius LLP, Los Angeles, CA, Suzanne J. Thomas, K & L Gates LLP, Seattle, WA, for Defendants

ORDER

John C. Coughenour, UNITED STATES DISTRICT JUDGE

This matter comes before the Court on Defendants' motion to compel arbitration (Dkt. No. 36). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby DENIES the motion for the reasons explained herein.

I. BACKGROUND

Plaintiffs are delivery drivers working for Defendants Amazon.com or Amazon Logistics. (Dkt. No. 76 at 1.) Plaintiffs are parties to individual contracts with Defendants (collectively, the "contract"), and Defendants have classified Plaintiffs as independent contractors.¹ (Id. ) Of the tens of thousands of putative class members, all but approximately 165 are parties to a contract with Defendants containing a provision mandating individual arbitration (the "Arbitration Provision"). (See Dkt. Nos. 49 at 4, 77 at 2, 37-1, 37-2.) The Arbitration Provision further mandates that the Federal Arbitration Act ("FAA") will govern any disputes arising between the parties. (See Dkt. Nos. 37-1 at 5, 37-2 at 7.)

Directly after the contract's Arbitration Provision, a provision entitled "Governing Law" (the "Governing Law Provision") states: "These Terms are governed by the law of the state of Washington without regard to its conflict of laws principles. However, the preceding sentence does not apply to [the Arbitration Provision ], which is governed by the Federal Arbitration Act and applicable federal law." (Dkt. No. 37-1 at 5.)

At the heart of Plaintiffs' complaint is their allegation that Defendants have misclassified Plaintiffs as independent contractors instead of employees. (See Dkt. No. 83.) Simultaneous to when this lawsuit was filed, the Ninth Circuit and the United States Supreme Court were poised to answer questions relevant to the arbitrability of Plaintiffs' claims. (See Dkt. No. 77.) As a result, the Court stayed this action, pending those decisions. (Id. ) Those questions have now been answered, and the parties stipulate to a partial lift of the stay so that the Court can determine the arbitrability of Plaintiffs' claims. (See Dkt. Nos. 100, 101.)

II. DISCUSSION

A. Federal Arbitration Act

Arbitration clauses "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 (" Section 2"). The Supreme Court has held that Section 2 should be construed broadly to "provide for the enforcement of arbitration agreements within the full reach of the Commerce Clause." Perry v. Thomas , 482 U.S. 483, 490, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987). Because of the FAA's broad reach, the Court is limited to "determining (1) whether a valid agreement to arbitrate exists, and if it does, (2) whether the agreement encompasses the dispute at issue." Cox v. Ocean View Hotel Corp. , 533 F.3d 1114, 1119 (9th Cir. 2008) (quoting Chiron Corp. v. Ortho Diagnostic Sys., Inc. , 207 F.3d 1126, 1130 (9th Cir. 2000) ). "[A]ny 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, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983).

Plaintiffs argue that there is no valid agreement to arbitrate because the Arbitration Provision is unenforceable, as Plaintiffs fall within the exemption to the FAA codified at 9 U.S.C. § 1 (" Section 1" or the "transportation worker exemption").² (Dkt. Nos. 46, 104, 107.) Section 1 exempts "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. The parties dispute whether Plaintiffs are engaged in interstate commerce.³ (Dkt. Nos. 103, 104, 107, 108.)

In contrast to Section 2, Section 1 is construed narrowly. See Circuit City Stores, Inc. v. Adams , 532 U.S. 105, 118, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001) ("The plain meaning of the words ‘engaged in commerce’ is narrower than the more open-ended formulations ‘affecting commerce’ and ‘involving commerce.’ "). As a result, many courts in the Ninth Circuit have construed the transportation worker exemption to require a stricter association between the employee and interstate commerce than might otherwise be required under other legislation. See, e.g. , Magana v. DoorDash, Inc. , 343 F. Supp. 3d 891, 899 (N.D. Cal. 2018) ; Bonner v. Mich. Logistics Incorp. , 250 F. Supp. 3d 388, 397 (D. Ariz. 2017) ; Levin v. Caviar, Inc. , 146 F. Supp. 3d 1146, 1152–54 (N.D. Cal. 2015) ; Lee v. Postmates Inc. , 2018 WL 6605659, slip op. at 7 (N.D. Cal. 2018). Courts in this circuit have recognized that, in order for a delivery driver to qualify for the transportation worker exemption, the delivered good must have originated, or transformed into its final condition, in a different state than the delivery state. See Magana , 343 F. Supp. 3d at 899 ; Levin , 146 F. Supp. 3d at 1152–54 ; Vargas v. Delivery Outsourcing, LLC , 2016 WL 946112, slip op. at 3–5 (N.D. Cal. 2016). In this case, Plaintiffs deliver packaged goods that are shipped from around the country and delivered to the consumer untransformed. The Court concludes that Plaintiffs' work is readily distinguishable from the workers discussed in the above-cited case law.

For example, in Lee v. Postmates , the court found that the plaintiffs had not established that they fell within the transportation worker exemption because they "do not cite any case holding that making only local deliveries, for a company that does not hold itself out as transporting goods between states , constitutes engaging in interstate commerce within the meaning of the statute." Lee , 2018 WL 6605659, slip op. at 7 (emphasis added). But here, Defendants are akin to UPS and FedEx—they are widely known as a company able to transport goods across the country to consumers in a couple of days. To be sure, Defendants admit that they historically contracted with UPS and FedEx for the services that Plaintiffs now provide. (Dkt. No. 37 at 2.)

And in Levin v. Caviar , the court found that local food delivery did not constitute interstate commerce, despite the fact that the ingredients had travelled interstate, because the ingredients "ended their interstate journey when they arrived at the restaurant where they were used to prepare meals." Levin , 146 F. Supp. 3d at 1154. Again, this case is different: Defendants are in the business of delivering packages and goods across the country that are not transformed or modified during the shipping process. Plaintiffs deliver goods in the same condition as they were shipped, and the goods are shipped around the country.

In Vargas v. Delivery Outsourcing , the court found that the plaintiff did not fall within the transportation worker exemption, despite the fact that he was in the business of delivering delayed airline luggage to its owners. Vargas , 2016 WL 946112, slip op. at 1, 3–5. But in Vargas , the luggage was not a "good" to be delivered until it was delayed or lost by the airline and then discovered when it was already intrastate. See id. 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 goods that once travelled interstate. As mentioned above, Defendants are in the business of shipping goods across state lines.

Several out-of-circuit cases are more relevant to the facts at issue here because they have dealt with goods that often travel interstate without transformation. For example, in Palcko v. Airborne Express , the Third Circuit found that the plaintiff supervisor, who did not deliver packages herself, fell within the transportation worker exemption because she supervised employees who delivered packages, even though those employees' delivery routes were entirely intrastate. Palcko v. Airborne Express, Inc. , 372 F.3d 588, 590, 593 (3d Cir. 2004) ; see also Zamora v. Swift Transp. Corp. , 2008 WL 2369769, slip op. at 9 (W.D. Tex. 2008). In Palcko , the package delivery at issue involved the interstate shipment of untransformed goods, unlike prepared food delivery.

And in Christie v. Loomis Armored US , the court found that the plaintiff fell within the transportation worker exemption, even though he travelled strictly intrastate, because he delivered currency, "a good that is undisputedly in the stream of interstate commerce." Christie v. Loomis Armored US, Inc. , 2011 WL 6152979, slip op. at 3 (D. Colo. 2011). The Christie court reasoned that a delivery person "need not actually transport goods across state lines to be part of a class of employees engaged in interstate commerce." Id.

Consider the following hypothetical: A national freight company delivers finished goods to individuals and businesses using a series of distribution centers located across the country. The company employs both "long-haul" and "short-haul" drivers—the former transporting goods from distribution...