SAN FRANCISCO (CN) – A proposed nationwide class of delivery drivers cannot evade arbitration to sue Amazon in court for allegedly mislabeling them independent contractors because the retail giant is not a transportation company “engaged in interstate commerce,” a federal judge said in court Friday.
“They’re a store,” U.S. Senior District Judge Maxine Chesney said of the Seattle-based online retail giant. “They’re not a transportation company like FedEx or DHL.”
Recent Supreme Court rulings have come down in favor of upholding arbitration clauses and class waivers, which force workers to pursue claims of labor law violations through private arbitration as individuals, rather than suing as a class in court.
However, the law relied on in those decisions – the Federal Arbitration Act – contains an exemption for transportation workers “engaged in foreign or interstate commerce.” Courts across the nation have split on whether certain categories of drivers are exempt under the law.
That was the central question Judge Chesney focused on during a nearly two-hour hearing on Amazon’s motion to compel arbitration Friday.
Chesney boxed various court rulings on the subject into three categories.
The first set of rulings says courts must look at the nature of an employer’s business, not the worker’s activities, to decide if the exemption applies. In that case, even a mechanic working for an interstate trucking company would be deemed exempt from arbitration as a worker “engaged in interstate commerce.”
A second set of rulings reached the opposite conclusion, holding that a worker is only exempt if he or she drives across state lines for their job, regardless of their employer’s business.
The 11th Circuit adopted an even stricter standard in the 2005 ruling Hill v. Rent-a-Center, holding that both the employer and employee must be involved in interstate commerce for the exemption to apply.
In this case, Chesney said, because the plaintiff delivers products locally for Amazon, the court must decide whether Amazon is a transportation company engaged in interstate commerce.
Plaintiffs’ attorney Stephen O’Dell of Marlin & Saltzman in Agoura Hills, California, told Chesney that these drivers are “the last link in an unbroken chain” of interstate commerce, delivering goods from all across the nation to their final destination.
O’Dell cited a 2017 SEC filing in which Amazon said it shipped products for millions of small and medium-sized businesses from every U.S. state to consumers throughout the world.
But Chesney said no information was presented on how much of Amazon’s business involves shipping products for third-party companies.
“I don’t know that it changes the nature of the beast,” Chesney said. “Their primary purpose is to sell things.”
Chesney further held that lead plaintiff Yolanda Champion did not have an employment contract with Amazon because she signed an agreement with Amazon’s business partner, NEA Delivery.
The judge said she would issue a ruling compelling individual arbitration and staying the case pending arbitration.
Chesney’s decision conflicts with an April 2019 ruling in the Western District of Washington, which held that a group of Amazon delivery drivers were exempt from arbitration because Amazon is “one of the country’s largest businesses engaged in the interstate shipment of packages and goods.” Amazon has appealed that ruling.
After the hearing, O’Dell said he believes the issue is ripe for Ninth Circuit review now that two courts have split on whether Amazon delivery drivers count as transportation workers exempt from arbitration under the Federal Arbitration Act.
O’Dell noted the case in Washington state differs from his client’s case because the drivers there were hired directly by Amazon as contractors. His client was hired through an intermediary.
The attorney said his client would need to ask Chesney permission to appeal her ruling to compel arbitration. He said his client had not yet decided whether to seek permission to appeal.