Arbitration – Class action waiver – Wage Act

U.S. District Court

Where a plaintiff “last mile” delivery driver commenced a class action alleging improper classification as an independent contractor and violations of state wage laws, an arbitration clause in the parties’ agreement is unenforceable under Massachusetts law, but a transfer to the Western District of Washington is warranted pursuant to the first-to-file rule.

“Bernard Waithaka (‘Plaintiff’), commenced this class action lawsuit against Amazon.com Inc., and Amazon Logistics Inc. (‘Defendants’) alleging improper classification as independent contractors and violations of state wage laws.  Defendants have moved to compel arbitration or, in the alternative, to transfer or stay this litigation. (Docket No. 29) For the reasons stated below, Defendants’ motion is granted in part and denied in part. …

“The [Federal Arbitration Act (FAA)] contains an exception for ‘contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.’ 9 U.S.C. §1. Plaintiff contends that his employment as a last-mile delivery driver falls within this exception and consequently that the FAA does not apply. …

“… There is one area, however, where a consensus has emerged: truck drivers. ‘[T]hat is, drivers actually involved in the interstate transportation of physical goods ... have been found to be ‘transportation workers’ for purposes of the residuary exemption in Section 1 of the FAA.’ …

“Unlike truck drivers engaged in interstate commerce, however, Plaintiff does not carry goods across state lines. Defendants argue that this distinction precludes application of the exemption to last-mile drivers. …

“… [W]hile last-mile drivers themselves may not cross state lines, they are indispensable parts of Amazon’s distribution system. That system, of course, transports goods in interstate commerce. In the end, Plaintiff’s employment, like the plaintiff in Palcko [v. Airborne Express, Inc., 372 F.3d 588 (3d Cir. 2004)], is so closely related to interstate commerce as to be part of it. …

“… Because Amazon removed to this Court pursuant to CAFA, I will apply Massachusetts choice-of-law rules. …

“The Supreme Judicial Court has made clear that class action waivers embedded in arbitration agreements may violate public policy. …

“… Here, as noted above, the FAA does not apply because Plaintiff’s employment as a last-mile driver falls within the scope of the Section 1 transportation worker exemption. Accordingly, the Supreme Court’s holdings in [AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011)] and American Express [Co. v. Italian Colors Restaurant, 570 U.S. 228 (2013)] do not narrow state public policy rationales for prohibiting class action waivers in arbitration agreements. The requirement that plaintiffs must be effectively precluded from obtaining relief was a necessary condition to evade arbitration where the FAA governed the agreement based on the SJC’s reading of Concepcion. ... It is not necessary here.

“The Wage Act itself evidences an intent to permit plaintiffs to proceed as a class. Further, precluding class adjudication would negatively impact unnamed class members, especially those who may have smaller claims than Plaintiff. Because the FAA does not apply, these public policy rationales are is sufficient to invalidate the agreement. …

“Amazon argues that the Court should transfer this case based on the so-called ‘first-to-file’ rule. Alternatively, Amazon contends that the Court should transfer this case to the Western District of Washington under 28 U.S.C. §1404(a) or stay the action. I find Amazon’s arguments with respect to Section 1404 unconvincing. Nonetheless, transfer is warranted pursuant to the so-called ‘first-to-file’ rule. …

“… I find that Plaintiff falls within the FAA’s transportation worker exemption and that the arbitration agreement is unenforceable under Massachusetts law. Finally, pursuant to the first-to-file rule, I find that transfer to the Western District of Washington is warranted.”

Waithaka v. Amazon.com, Inc., et al. (Lawyers Weekly No. 02-384-19) (22 pages) (Hillman, J.) (Civil Action No. 18-40150-TSH) (Aug. 20, 2019).

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