(CN) – Amazon urged a Ninth Circuit panel on Monday to find its local delivery drivers must arbitrate their labor grievances, a decision that could force the court to define the boundaries of interstate commerce.
Attorneys for Amazon and its drivers sparred over whether an exemption for transportation workers outlined in the Federal Arbitration Act applies to workers who deliver packages within a city or state. The question rests on whether drivers who almost never leave the state are still “engaged in foreign or interstate commerce.”
From Amazon’s standpoint, it makes no difference where the package originated. If it’s picked up and delivered locally, the driver isn’t covered by the arbitration exemption.
“Local delivery drivers are not exempt interstate commerce workers, whether they are employed by a large company like Amazon or a small company like a mom and pop store close by,” Amazon attorney David Salmons told the panel, comprising U.S. Circuit Judges Milan Smith, N. Randy Smith and Daniel Bress. Both Smiths are George W. Bush appointees, Bress was appointed by Donald Trump.
"What you focus on is the activities that the worker is engaged to perform. They pick up in their local area, they deliver in their local area, and the path of the goods before they pick it up is entirely happenstance from their point of view,” Salmons said.
He noted only one plaintiff said in a declaration that he once drove a package from New York to New Jersey.
The case brought by Seattle resident Bernadean Rittmann is one of many accusing the logistics giant of misclassifying delivery drivers as independent contractors and denying them overtime pay.
Salmons differentiated them from the truck drivers classified as independent contractors in New Prime v. Oliveira, where the U.S. Supreme Court ruled unanimously that transportation contractors qualify for the arbitration exemption. Rittmann and the rest of the Amazon class operate more closely to pizza delivery drivers, or drivers for local florists, Salmons said.
Judge Milan Smith doubted the comparison. “The local pizza parlor may only be in business in that state. But Amazon is the one of the biggest companies in the United States, maybe in the world,” he said. “What the employer does and the nature of its business is critical, is it not?”
Salmons answered, "For purposes of the exemption I don’t think so. The requirement here is not that the employer be engaged in interstate commerce, it’s that the class of worker is engaged in interstate commerce.”
He said the Supreme Court’s decision in Circuit City v. Adams compels a narrow construction of the arbitration exemption. In the 2001 case, the high court found the Federal Arbitration Act exemption is limited to transportation workers such as “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”
Judge N. Randy Smith said he had some difficulty accepting that drivers would not fall into this group, considering railroad employees can transport cargo exclusively intrastate.
It was a concern shared by Judge Milan Smith, who asked, “Where does the stream of interstate commerce end? You got a package from a merchant in New York through Amazon and they deliver it to the local folks. Does it end when the independent contractor delivers it to the person who bought it?”
Salmons said the judges focused too much on the products and packages, saying, “I would most emphatically urge the court to not make this mistake of treating the connection of the goods to commerce or using it to define the scope of the exemption.”
Labor attorney Harold Lichten urged the opposite. "My brother is simply wrong in that you look at the worker. You look at whether the worker is engaged in the flow of interstate commerce,” he said. “Circuit City said repeatedly that you look at whether the worker is engaged in the flow of interstate commerce.”
Judge N. Randy Smith said this interpretation was also problematic. Since the Amazon drivers are only doing local deliveries, they don’t seem to be the type of interstate transportation workers who would fall under the arbitration act’s exemption.
“These workers do not seem to be engaged in interstate transportation. All they do is transport goods around their city,” he said. "They may end up going to New Jersey once in a while, but they’re not engaged in interstate commerce at all. They’re engaged in delivering packages.”
Lichten replied: "That’s what ‘engaged in interest commerce’ is. There’s no question Amazon says that thousands of packages are handled by these drivers that come from other states. It’s not necessary to cross state lines – that has nothing to do with it.”
The body of case law on the arbitration act exemption is vast, and federal courts have recently split on whether it should cover Amazon drivers.
Last year, U.S. District Judge Maxine Chesney in the Northern District of California ruled delivery drivers must arbitrate with Amazon since it’s “not a transportation company like FedEx or DHL.”
U.S. District Judge Coughenour ruled the opposite in Rittmann’s case, calling Amazon “one of the country’s largest businesses engaged in the interstate shipment of packages and goods.”
Coughenour said Amazon drivers do engage in interstate commerce, since any work stoppage would bring business to a halt.
“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 destination,” he wrote.
It was an allusion Lichten also made.
“If you had a complete cessation of packages going out from Amazon the whole system would break down. The last mile is no different from the first mile,” Lichten said.
Before the panel took the arguments under submission, Judge Milan Smith noted that the First Circuit will be hearing arguments in an identical case later this week. Lichten said he will be arguing for the class of drivers, led by Bernard Waithaka.
“I’ll tell them you were for me the entire time,” Lichten joked.
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