Transportation Executive Summary: United States Supreme Court Denies Review on Cases Regarding Arbitration of Transportation Issues
On April 22, 2024, in separate cases, Amazon.com Inc. (“Amazon”) and Domino’s Pizza LLC (“Domino’s Pizza”) failed to secure review from the United States Supreme Court on whether its drivers qualify for a transportation workers exemption. However, in Amazon.com v. Miller, Justice Kavanaugh stated that he would have granted the petition. No. 23-424, 2024 WL 1706098, at *1 (U.S. Apr. 22, 2024) (Amazon); No. 23-427,144 S.Ct. 1391 (U.S. Apr. 22 2024). As arbitration is an important dispute resolution mechanism to the transportation industry, the denial of certiorari on these issues is worthy of commentary.
The petitions for certiorari arose from lower Ninth Circuit Court decisions wherein the Circuit, separately, denied motions to compel arbitration for Amazon and Domino’s Pizza drivers who asserted claims against those entities. The issue below turned on whether last-mile operators were engaged in interstate commerce. If the workers were involved in interstate commerce, mandatory arbitration of their claims would not be allowed under the Federal Arbitration Act (“FAA”). The Ninth Circuit held that the delivery drivers were a “class of workers engaged in foreign or interstate commerce,” which fall within the section 1 exemption of the Federal Arbitration Act (“FAA”) to keep the wage-and-hour allegations in court instead of mandatory arbitration. Miller v. Amazon.com, Inc., No. 21-36048, 2023 WL 5665771, at *1 (9th Cir. Sept. 1, 2023); Carmona v. Domino's Pizza, LLC, 21 F.4th 627, 628 (9th Cir. 2021), affirmed following remand, 73 F.4th 1135 (9th Cir. 2023), certiorari denied, 144 S.Ct. 1391 (2024). The full text of the statute is set out below.1
In Miller v. Amazon.com, Inc., the plaintiffs worked as Amazon Flex drivers delivering the last-leg of the locally stored goods shipped from other states or countries. 2023 WL 5665771, at *1. The Ninth Circuit provided four justifications for applying the section 1 exemption of the FAA. First, the Rittmann decision (a previous Ninth Circuit decision) already established that Amazon Flex delivery drivers engage in interstate commerce by delivering goods moving in interstate commerce to their final destinations. Id.; see Rittmann v. Amazon.com, Inc., 971 F.3d 904 (9th 2020). Furthermore, Saxon (a previous United States Supreme Court case) demonstrates that the Amazon Flex delivery drivers do not need to physically transport goods across borders so long as they are part of a “class of workers engaged in foreign or interstate commerce.” Miller v. Amazon.com, Inc., 2023 WL 5665771, at *1; see Southwest Airlines Co. v. Saxon, 142 S. Ct. 1783 (2022). Second, the distinction between last-mile deliveries and tip-eligible local deliveries was deemed irrelevant as long as the drivers performed duties typical of Amazon Flex delivery drivers. Miller v. Amazon.com, Inc., 2023 WL 5665771, at *1. Third, under the FAA, “class of workers” is defined by their contracts of employment, which for the Amazon Flex delivery drivers would include last-mile deliveries and not just tip-eligible local deliveries. Id. Thus, the delivery drivers are part of the stream of interstate commerce to fall under the section 1 exemption of the FAA. Id. Lastly, notwithstanding the exemption, the court determined the arbitration provision would also be unenforceable under state law. Id.
Similarly, in Carmona v. Domino's Pizza, LLC, the Ninth Circuit concluded that Domino’s drivers, like Amazon drivers, engage in interstate commerce by transporting goods to their final destinations. 73 F.4th 1135, 1136 (9th Cir. 2023). However, Domino’s Pizza stated two grounds for different treatment: (1) the chain of interstate commerce broke when the goods were not ordered before arriving at the warehouse, and (2) the ingredients ceased being in the stream of commerce after repackaging at the Supply Center. Id. at 1138. The Ninth Circuit rejected these arguments, noting that a temporary “halt in the movement of goods” at the Supply Center was merely “a convenient intermediate step in the process.” Id. Unlike Schechter, where the products were transformed from ingredients into meals before the drivers delivered them, Domino’s Pizza only reorganizes the packages. Id.; see A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 (1935). Thus, the delivery drivers engage in interstate commerce and section 1 of the FAA would bar arbitration of their claims. Carmona v. Domino’s Pizza, 73 F.4th at 1136.
The United States Supreme Court's denial of the certiorari petition leaves unresolved the exact scope of the FAA exemption. For now, parties must rely on the expanded transportation worker exemption reached in Saxon.
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Contact John F. Fatino for more information about trucking and transportation matters at 515-288-6041. Maddie M. Meister, J.D. candidate, University of Iowa College of Law, assisted in the preparation of these materials.
1§1. "Maritime transactions" and "commerce" defined; exceptions to operation of title
"Maritime transactions", as herein defined, means charter parties, bills of lading of water carriers, agreements relating to wharfage, supplies furnished vessels or repairs to vessels, collisions, or any other matters in foreign commerce which, if the subject of controversy, would be embraced within admiralty jurisdiction; "commerce", as herein defined, means commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any such Territory and any State or foreign nation, or between the District of Columbia and any State or Territory or foreign nation, but 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.