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holding that Colorado drivers who delivered packages for customers that included Amazon and Staples were transportation workers where they, inter alia , transported and handled goods that traveled interstate despite "the absence of any indication that Plaintiffs transported goods across state lines"
Summary of this case from Bissonette v. Lepage Bakeries Park St., LLCOpinion
Civil Action No. 17-cv-2005-NYW
2019-01-28
David WARD and Lisa Stummeier, individually and on behalf of all others similarly situated, Plaintiffs, v. EXPRESS MESSENGER SYSTEMS, INC. d/b/a OnTrac, and J & B Transportation, Inc., Defendants.
Camille Fundora Rodriguez, Sarah Rebecca Schalman-Bergen, Berger & Montague, PC-Philadelphia, Philadelphia, PA, Harold Lichten, Olena Savytska, Lichten & Liss-Riordan, P.C, Boston, MA, Brian David Gonzales, Brian D. Gonzales, PLLC, Fort Collins, CO, for Plaintiffs. Damon M. Ott, Robert Gordon Hulteng, Littler Mendelson, PC-San Francisco, San Francisco, CA, Joshua B. Kirkpatrick, Lauren Elizabeth Meyerholz, Littler Mendelson PC-Denver, Denver, CO, for Defendants.
Camille Fundora Rodriguez, Sarah Rebecca Schalman-Bergen, Berger & Montague, PC-Philadelphia, Philadelphia, PA, Harold Lichten, Olena Savytska, Lichten & Liss-Riordan, P.C, Boston, MA, Brian David Gonzales, Brian D. Gonzales, PLLC, Fort Collins, CO, for Plaintiffs.
Damon M. Ott, Robert Gordon Hulteng, Littler Mendelson, PC-San Francisco, San Francisco, CA, Joshua B. Kirkpatrick, Lauren Elizabeth Meyerholz, Littler Mendelson PC-Denver, Denver, CO, for Defendants.
ORDER ON MOTION TO COMPEL ARBITRATION
Nina Y. Wang, United States Magistrate Judge
This matter comes before the court on Defendants Express Messenger Systems, Inc. d/b/a OnTrac ("OnTrac") and J & B Transportation, Inc.'s ("J & B") (collectively, "Defendants") Motion to Dismiss Opt-in Plaintiffs Bound by Non-Disclosure and Dispute Resolution Agreement and Compel Their Claims to Arbitration ("Motion" or "Motion to Compel Arbitration"), filed on November 2, 2018. [#93]. The undersigned considers the Motion pursuant to 28 U.S.C. § 636(c) and the Order of Reference dated September 25, 2017 [#18]. The court concludes that oral argument will not materially assist in the resolution of this matter. Having considered the Motion and associated briefing, the applicable case law, and the entire docket, the court DENIES the Motion to Compel Arbitration.
Defendants' Reply argues that Plaintiffs did not meaningfully confer prior to filing their Response given that they originally consented to the Motion, and characterizes the Response as filed in bad faith, justifying an award of Defendants' fees and costs in moving to compel arbitration. See [#97 at 1-5, 10]; see also [#93 at 20 & n. 21, 22]. Though recognizing Defendants' frustrations, for reasons explained herein, the court does not find that Plaintiffs filed their Response in bad faith; nor does the court find fees and costs appropriate. Nevertheless, the court once again encourages the Parties to engage in robust conferrals, particularly when positions are reconsidered and/or changed.
BACKGROUND
The court discussed the background of this case in detail in its Order on Motion for Conditional Certification as a Collective Action issued on April 3, 2018, and will discuss it here only as it pertains to the instant Motion. See [#47]. Plaintiffs initiated this action on behalf of themselves and all other similarly situated persons that are or were drivers for Defendants within the last three years and classified as independent contractors. See generally [#8]. The court granted in part Plaintiffs' Motion for Conditional Certification, and directed the Parties to meet and confer regarding a proposed Notice and Consent Form for putative opt-in plaintiffs that "personally performed transportation services for J & B involving the delivery of OnTrac shipments" in Colorado. See [#47].
On May 15, 2018, the court issued the Court-Authorized Notice and Consent Form to be mailed to putative opt-in plaintiffs. [#60; #60-1]. Per the court's Order, the Notice covered putative opt-in plaintiffs working for Defendants in the 3 years prior to the date of the Notice, and provided for a 60-day opt-in period. See [#60]. The Parties then appeared before the court for a Status Conference on June 20, 2018, at which Plaintiffs discussed their intent to file a motion seeking corrective and supplemental Notice after learning of OnTrac's dissemination of a Non-Disclosure and Dispute Resolution Agreement ("NDRA"). See [#65].
Relevant here, under the NDRA's title an enlarged disclaimer reads:
This Agreement is a binding contract that addresses important legal issues. Entering into the Agreement, in particular, the Arbitration Provision, will affect your legal rights. It is your sole responsibility to read and understand it. You are free to seek assistance or advice from an advisor of your choice before signing the Agreement if you so choose.
[#69-1 at 16 (emphasis in original) ]. Pursuant to the NDRA's "Dispute Resolution (Arbitration Provision)," disputes arising out of (1) the NDRA, (2) the relationship between a driver and OnTrac, (3) the driver's performance of OnTrac services, and (4) the interpretation and enforceability of the Arbitration Provision shall proceed to individual arbitration. [Id. at 19]. Specifically, the Arbitration Provision provides,
Except as it otherwise provides, this Arbitration Provision is intended to apply to the resolution of disputes that otherwise would be resolved in a court of law or any other forum other than arbitration, and requires all such
disputes to be resolved on an individual basis and only by an arbitrator through final and binding arbitration and not by way of a court or jury trial, nor a proceeding before any other governmental body, and not by way of a class, collective or representative action or proceeding.
[Id. (emphasis in original) ]. The NDRA also requires drivers to waive their rights to participate in or join class or collective actions against OnTrac, including collective arbitration, unless the driver joined such actions prior to signing the NDRA. See [id. at 20]. But drivers may opt out of the Arbitration Provision by "notifying [OnTrac] in writing" (signed and dated) within "30 days of [driver's] execution of the [NDRA]." [Id. at 22].
The United States Supreme Court recently held that such waivers in arbitration agreements does not render those agreements illegal or unenforceable. See Epic Sys. Corp. v. Lewis , ––– U.S. ––––, 138 S. Ct. 1612, 1621-32, 200 L.Ed.2d 889 (2018).
Because of the NDRA, Plaintiffs moved for the issuance of a corrective and supplemental notice, arguing that the NDRA confused drivers of their rights to participate in this litigation or deterred them from doing so. See [#69; #78]. The court granted in part the Motion for Corrective and Supplemental Notice, authorizing Plaintiffs to re-send the original Notice and Consent Form, with an additional 30-day opt-in window, to drivers whose Notice and Consent Form was returned undeliverable and to those drivers who worked for Loyalty Delivery Services. See [#85]. There are currently 14 plaintiffs in this matter.
This includes the two named Plaintiffs, David Ward and Lisa Stummeier, and 12 opt-in plaintiffs: Nita Sheldon [#1-1 at 2], Melissa McCoy [#1-1 at 3], Daniel Ballard [#63-1], Chris Chatman [#64-1 at 1], George Ball [#64-1 at 2], Taylor Pryor [#64-1 at 3], Jonathan Peasch [#66-1 at 1], Stephanie McClain [#66-1 at 2], Tommy McClain [#66-1 at 3], James Peterson [#72-1], Luz del Carmen Garcia [#73-1 at 1], and Roberto Ortega [#73-1 at 2]. The Parties confirmed this count during the Status Conference held on August 16, 2018. [#82]. Since that time, Plaintiffs have filed a Notice of Filing Opt-in Forms for two additional individuals, see [#84], but the court has since dismissed Matthew Oldenburg and Henrik Dilanian as improper opt-in plaintiffs, see [#102].
Now, Defendants seek to dismiss and compel to arbitration opt-in plaintiffs Chris Chatman, Luz Garcia Lopez, Roberto Ortega, and James Peterson (collectively, the "NDRA Plaintiffs") given that each executed the NDRA prior to joining this collective action. See [#93 at 1, 5-6]. Despite the initial appearance that Plaintiffs did not oppose the Motion, e.g. , [#93-3 at ¶ 2; #97-1 at ¶2], Plaintiffs have since responded, including a sur-reply with leave of the court, in opposition to the Motion. Plaintiffs argue that the NDRA Plaintiffs are transportation workers and are exempt from the Federal Arbitration Act; if not, the court should stay this matter as to the NDRA Plaintiffs pending arbitration rather than dismiss them. See [#95; #104-1]. The Motion is now ripe, and I consider the Parties' arguments below.
LEGAL STANDARD
The Federal Arbitration Act ("FAA") provides that contractual agreements to arbitrate disputes "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 3 of the FAA obliges courts to stay litigation on matters that the parties have agreed to arbitrate; and section 4 authorizes a federal district court to compel arbitration for a dispute over which it would have jurisdiction. 9 U.S.C. §§ 3, 4. But because "arbitration is a matter of contract," the court cannot require a party "to submit to arbitration any dispute which he has not agreed so to submit." Howsam v. Dean Witter Reynolds, Inc. , 537 U.S. 79, 84, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) (citation omitted). For this reason, courts "should apply ordinary state-law principles that govern the formation of contracts." First Options of Chicago, Inc. v. Kaplan , 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). The party seeking to compel arbitration bears the burden of establishing that the matter at issue is subject to arbitration. See Hancock v. Am. Tel. & Tel. Co., Inc. , 701 F.3d 1248, 1261 (10th Cir. 2012) ; GATX Mgmt. Servs., LLC v. Weakland , 171 F. Supp. 2d 1159, 1162 (D. Colo. 2001).
Courts typically apply a two-step inquiry when questioning the enforceability of an arbitration clause: (1) did the parties agree to arbitrate the dispute; and (2) if so, are there "legal constraints external to the parties' agreement [that] foreclose[ ] the arbitration of those claims." Williams v. Imhoff , 203 F.3d 758, 764 (10th Cir. 2000). An arbitration agreement is enforceable if there exists a valid agreement to arbitrate, and if the dispute falls within the scope of that agreement. See National American Insurance Co. v. SCOR Reinsurance Co. , 362 F.3d 1288, 1290 (10th Cir. 2004). "Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator." Riley Manufacturing Co., Inc. v. Anchor Glass Container Corp. , 157 F.3d 775, 779 (10th Cir. 1998).
ANALYSIS
For purposes of the instant Motion, the Parties do not dispute that they agreed to arbitrate their disputes under the NDRA, nor do Plaintiffs necessarily challenge the legal validity of the NDRA and its Arbitration Provision. Rather, the Parties' specific dispute concerns whether the NDRA Plaintiffs, as drivers for J & B delivering OnTrac shipments in Colorado, are exempt from the FAA as transportation workers. Compare [#95; #104-1] with [#97]. For the following reasons, I respectfully conclude that the NDRA Plaintiffs (like all Plaintiffs) are transportation workers and are therefore exempt from the FFA.
The FAA was enacted in 1925 in response "to widespread judicial hostility to arbitration agreements[,]" and reflects a "liberal policy favoring arbitration[.]" AT & T Mobility LLC v. Concepcion , 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (internal citations and quotation marks omitted). But despite this liberal policy, § 1 of the FAA excludes certain workers from its ambit. Pertinent here, § 1 states, "nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. Courts generally construed § 1's exclusions narrowly "to include only employees actually engaged in the channels of foreign or interstate commerce[.]" See, e.g. , McWilliams v. Logicon, Inc. , 143 F.3d 573, 576 (10th Cir. 1998) (agreeing with courts holding the same). "Vindicating the McWilliams view, the [Supreme Court of the United States] held that the FAA excludes only employment contracts of transportation workers engaged in foreign or interstate commerce." Int'l Bhd. of Elec. Workers, Local #111 v. Pub. Serv. Co. of Colorado , 773 F.3d 1100, 1106 (10th Cir. 2014) (emphasis in original) (citing Circuit City Stores, Inc. v. Adams ("Circuit City") , 532 U.S. 105, 119, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001) ).
In Circuit City the Supreme Court rejected the notion that "contracts of employment of ... any other class of workers engaged in ... commerce" excluded all employment contracts from the FAA. See 532 U.S. at 113-14, 121 S.Ct. 1302. Instead, the Supreme Court explained, canons of statutory construction suggested that courts should give effect to the terms "seamen" and "railroad employees," which narrowed the category of "any other class of workers" to transportation workers. See id. at 114-15, 119, 121 S.Ct. 1302. Further, the Supreme Court found significant the use of "engaged in ... commerce," which implied that Congress did not intend to regulate to the outer limits of its Commerce Clause authority. See id. at 115-18, 121 S.Ct. 1302. Thus, the Supreme Court held that, in addition to "seamen" and "railroad employees," § 1 "exempts from the FAA only contracts of employment of transportation workers"—a conclusion in accord with "Congress'[s] demonstrated concern with transportation workers and their necessary role in the free flow of goods" in interstate commerce. See id. at 119, 121, 121 S.Ct. 1302.
Recently, the Supreme Court further refined the applicability of § 1 to transportation workers. See New Prime, Inc. v. Oliveira ("New Prime") , ––– U.S. ––––, 139 S. Ct. 532, 202 L.Ed.2d 536 (2019). Specifically, the Supreme Court considered two questions: (1) "When a contract delegates questions of arbitrability to an arbitrator, must a court leave disputes over the application of § 1's exception for the arbitrator to resolve?" and (2) "[D]oes the term ‘contracts of employment’ refer only to contracts between employers and employees, or does it also reach contracts with independent contractors?" Id. at 536-537. Concerning the first question, the Supreme Court concluded that the FAA's "terms and sequencing" bestowed courts with the authority to decide in the first instance whether § 1's exclusions applied. See id. at 537-538 (explaining that this adhered to the court's authority to determine initially whether an agreement to arbitrate existed). As to the second question, the Supreme Court held that "contracts of employment," as ordinarily understood in 1925 when Congress passed the FAA, "mean[s] nothing more than an agreement to perform work[,]" which encompasses "not only agreements between employers and employees but also agreements that require independent contractors to perform work." Id. at 539-540. The Supreme Court found support for this conclusion in Congress's use of the term "workers" (as in "any ... class of workers") as opposed to "employees" or "servants," and rejected the notions that "contracts of employment" necessarily meant employer-employee relationships or that courts could nonetheless order arbitration for transportation workers in conformance with the liberal policy favoring arbitration. See id. at 540-44.
There the plaintiff worked as a truck driver for the defendant, an interstate trucking company. The employment contract between the plaintiff and the defendant purported to establish the plaintiff as an independent contractor, and subjected the parties to binding arbitration. The plaintiff alleged that, despite all this, the defendant failed to pay its drivers proper wages under the Fair Labor Standards Act, and that the plaintiff was exempt from arbitration because he was a transportation worker. The Court of Appeals for the First Circuit held that the court, not the arbitrator, was to determine the applicability of § 1's transportation worker exception and that the term "contract of employment" covered not only contracts establishing an employer-employee relationship but also those purporting to establish an independent contractor relationship. See Oliveira v. New Prime, Inc. , 857 F.3d 7, 9-12, 15, 16-24 (1st. Cir. 2017). The Supreme Court granted certiorari to consider these issues. See New Prime, Inc. v. Oliveira , ––– U.S. ––––, 138 S. Ct. 1164, 200 L. Ed. 2d 313 (2018).
Applying the above principles to this matter leads the court to conclude that the NDRA Plaintiffs are exempt from the FAA. First, as New Prime indicates, it is for this court to decide whether § 1's exclusions apply to the NDRA Plaintiffs. Second, regardless of the Parties' divergent theories concerning an employer-employee or independent contractor relationship, § 1 applies to the "contracts of employment" at issue in this matter. See New Prime , 139 S.Ct. at 539-44. Thus, the remaining issue for the court to decide is whether the NDRA Plaintiffs constitute transportation workers. I find that they do.
Despite its pronunciation in Circuit City that § 1 applied only to "seamen," "railroad employees," and "transportation workers," the Supreme Court did not define transportation worker. See 532 U.S. at 109, 119, 121, 121 S.Ct. 1302. Various courts to consider the issue have concluded that a transportation worker generally works in the transportation industry and directly engages in the movement of goods in interstate commerce or works so closely to the movement of goods in interstate commerce as to be in practical effect part of it. E.g. , Int'l Bhd. of Teamsters Local Union No. 50 v. Kienstra Precast, LLC , 702 F.3d 954, 957 (7th Cir. 2012) (holding that the union-plaintiff's workers were transportation workers because they transported loads of goods across state lines); Lenz v. Yellow Tranps. Inc. , 431 F.3d 348, 351-52 (8th Cir. 2005) (holding that a customer service representative, though working in trucking industry, was not actually involved in flow of goods in interstate commerce); Palcko v. Airborne Express, Inc. , 372 F.3d 588, 593 (3d Cir. 2004) (holding that the plaintiff, a field service supervisor in Philadelphia for the defendant-shipping company, was a transportation worker because she supervised the delivery of goods in interstate commerce); Harden v. Roadway Package Sys., Inc. , 249 F.3d 1137, 1140 (9th Cir. 2001) ("As a delivery driver for RPS, 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."). Indeed, the United States Court of Appeals for the Tenth Circuit ("Tenth" "Circuit") adheres to this approach. See, e.g. , Shankle v. B-G Maint. Mgmt. of Colo., Inc. , 163 F.3d 1230, 1233 (10th Cir. 1999) (concluding that a janitor was not directly engaged in the channels of interstate commerce despite the employer's services "affect[ing] interstate commerce at some level"); McWilliams , 143 F.3d at 574, 576 (holding that a "work area controller" that sold computer simulated military exercises throughout the United States did not directly affect the channels of interstate commerce).
Defendants contend that the NDRA Plaintiffs, like all Plaintiffs, are not transportation workers because they did not move goods in interstate commerce; they instead made only intrastate deliveries in Colorado. See [#97 at 6-7 & n. 2]. Plaintiffs counter that they are all transportation workers because they are all drivers in the transportation industry, and though they may not have transported goods across state lines, they directly engaged in the movement of goods in interstate commerce. See [#104-1 at 2-3]. For the following reasons, I agree with Plaintiffs.
The court finds several cases persuasive on this point. First, in Palcko v. Airborne Express, Inc. , the Third Circuit held that the plaintiff, a field supervisor, who supervised drivers for defendant, a package transportation and delivery company that engaged in intrastate, interstate, and international shipping, was a transportation worker despite no evidence that the plaintiff delivered packages or that the drivers she supervised ever made deliveries outside the Philadelphia metropolitan area. See 372 F.3d at 590, 593 (finding the "direct supervision of package shipments makes [the plaintiff's] work so closely related [to interstate and foreign commerce] as to be in practical effect part of it." (first brackets added; internal quotation marks omitted)). The Third Circuit rejected the contention that transportation workers are only those "who physically transported goods across state lines," because had Congress intended as much, "it would have phrased the FAA's language accordingly." Id. at 593-94.
Second, drawing from Palcko , a court in this District concluded that the plaintiff who was a driver for the defendant, a company that transported currency across state lines, was a transportation worker. See Christie v. Loomis Armored US, Inc. , No. 10-CV-02011-WJM-KMT, 2011 WL 6152979, at *3 (D. Colo. Dec. 9, 2011). Because the plaintiff transported currency, "a good that is undisputedly in the stream of interstate commerce," the court held that the plaintiff was a transportation worker exempt from the FAA under § 1, even though there was no evidence that the plaintiff transported currency across state lines. See id.
Finally, in Lenz v. Yellow Transportation, Inc. , the Eighth Circuit explained, "[i]ndisputably, if [the plaintiff] were a truck driver, he would be considered a transportation worker under § 1 of the FAA." 431 F.3d at 351 (citing Harden v. Roadway Package Sys., Inc. , 249 F.3d 1137 (9th Cir. 2001) ). The Eighth Circuit went on to identify eight non-exhaustive factors that may guide the court's inquiry into the matter, including whether:
1. the employee works in the transportation industry;
2. the employee is directly responsible for transporting the goods in interstate commerce;
3. the employee handles goods that travel interstate;
4. the employee supervises employees who are themselves transportation workers, such as truck drivers;
5. like seamen or railroad workers, the employee is within a class of employees for which special arbitration already existed when Congress enacted the FAA;
6. the vehicle itself is vital to the commercial enterprise of the employer;
7. a strike by the employee would disrupt interstate commerce; and
8. the nexus that exists between the employee's job duties and the vehicle the employee uses in carrying out his duties (i.e., a truck driver whose only job is to deliver goods cannot perform his job without a truck).
Though not formally adopted by the Tenth Circuit, the Lenz court drew these factors from Lorntzen v. Swift Transportation, Inc. , 316 F.Supp.2d 1093, 1097 (D. Kan. 2004). And at least two other courts in this Circuit have applied the Lenz factors. See Bell v. Ryan Transp. Serv., Inc. , 176 F. Supp. 3d 1251, 1255-58 (D. Kan. 2016) (holding that a freight broker for a logistics company was not a transportation worker); Wallace v. Yellow Transp., Inc. , No. CIV-05-1213-T, 2006 WL 8436597, at *2-3 (W.D. Okla. Aug. 8, 2006) (holding that a docket supervisor was not a transportation worker).
Here, Plaintiffs are all drivers for J & B and delivered OnTrac shipments in Colorado, using either their own vehicle or one provided by Defendants. See [#8 at ¶¶ 32, 34, 36, 38-39, 42-44; #37-6 at ¶¶ 10, 13-14, 16, 17, 19, 22; #37-7 at ¶¶ 6, 9-10, 12-15; #37-8 at ¶¶ 2-3, 5, 6, 9, 12, 13]. OnTrac is a Delaware corporation that "provides regional same-day and overnight package delivery services within Arizona, California, Nevada, Oregon, Washington, Utah, Colorado[,] and Idaho" for customers such as Amazon, Staples, and various pharmaceutical companies. [#8 at ¶¶ 15, 19; #37-6 at ¶ 6; #40-1 at ¶ 2]. J & B is a Colorado corporation that "provides regional same-day and overnight package delivery services for OnTrac's [sic] customers within Colorado," and has expended its operations into New Mexico, Wyoming, and Minnesota. See [#8 at ¶¶ 2, 16, 20; #37-7 at ¶ 3; #40-2 at ¶¶ 2, 6].
Based on the foregoing, I find that Plaintiffs work in the transportation industry, are directly responsible for transporting goods in interstate commerce, handle goods that travel in interstate commerce, use vehicles that are vital to the commercial enterprises of Defendants, are employees that would disrupt the flow of interstate commerce if they went on strike, and cannot perform their job duties without the use of their own or Defendants' vehicles. This is sufficient to deem Plaintiffs transportation workers. Cf. Zamora v. Swift Transp. Corp. , No. EP-07-CA-00400-KC, 2008 WL 2369769, at *4-9 (W.D. Tex. June 3, 2008) (concluding that a Terminal and Planning Manager for a large trucking company was a transportation worker under the Lenz factors). This is so even in the absence of any indication that Plaintiffs transported goods across state lines. See Diaz v. Mich. Logistics Inc. , 167 F. Supp. 3d 375, 380 n.3 (E.D.N.Y. 2016) ("Plaintiffs sufficiently allege that they were engaged in interstate transportation, notwithstanding that they did not actually drive across state lines, as Plaintiffs were directly responsible for transporting and handling automotive parts that allegedly moved in interstate commerce—the heart of Defendants' business." (citing Christie , 2011 WL 6152979, at *3 )).
Accordingly, the NDRA Plaintiffs, as transportation workers, are exempt from the FAA under § 1. And for this reason, the court does not conclude that Plaintiffs filed their Response to the Motion to Compel Arbitration in bad faith; thus, the court concludes that Defendants are not entitled to fees and costs associated with bringing the instant Motion.
CONCLUSION
Therefore, IT IS ORDERED that:
(1) Defendants' Motion to Compel Arbitration [#93] is DENIED.