Majority
II
Muller's employment with RMFL ended in September 2014. Two years later, he filed a putative class action complaint against RMFL, asserting causes of action for unpaid wages, unpaid rest breaks, incomplete wage statements, missed meal periods, waiting time penalties, and unfair competition.
RMFL moved to compel individual arbitration. In support of its motion, RMFL provided two declarations by its operations manager, who attested that "[o]ver 99 [percent] of all cargo RMFL transports begins its trip and originates from outside the State of California," but that Muller's assigned deliveries were "exclusively within the State of California." (Italics added.) Muller opposed the motion, but he did not dispute his delivery work for RMFL was entirely intrastate.
After hearing oral argument and taking the matter under submission, the trial court issued an order granting in part and denying in part RMFL's motion to compel in the manner noted above. RMFL timely appealed the order.
DISCUSSION
A. General Principles
Because an order denying a petition to compel arbitration is appealable, we may review the portion of the trial court's order denying RMFL's motion to compel arbitration of Muller's cause of action for unpaid wages. ( Code Civ. Proc., § 1294, subd. (a).)
"When a trial court's order [denying a petition to compel arbitration] is based on a question of law, we review the denial de novo. [Citation.] Decisions on issues of fact are reviewed for substantial evidence. [Citation.]" ( Performance Team Freight Systems, Inc. v. Aleman (2015) 241 Cal.App.4th 1233 , 1239, 194 Cal.Rptr.3d 530 ( Performance Team ).)
Section 1 of the FAA provides a limited exemption from FAA coverage 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 .) In Circuit City, the United States Supreme Court concluded section 1 's catchall phrase " 'any other class of workers engaged in foreign or interstate commerce' " does not refer to all workers involved in foreign or interstate commerce, but rather only to "transportation workers." ( Circuit City, supra, 532 U.S. at pp. 119, 121, 121 S.Ct. 1302 .)
The Supreme Court reasoned the plain meaning of " 'engaged in' " interstate commerce in section 1 is narrower in scope than the open-ended phrase " 'involving' " commerce in section 2. ( Circuit City , 532 U.S. at pp. 118-124, 121 S.Ct. 1302 .) Unlike section 2 's reference to "involving commerce," which "indicates Congress' intent to regulate to the outer limits of its authority under the Commerce Clause" and thus is afforded an "expansive reading," section 1 's reference to "engaged in commerce" is "narrower," and therefore "understood to have a more limited reach," requiring "a narrow construction" and a "precise reading." ( Id. at pp. 114, 115, 118-119, 121 S.Ct. 1302 .)
A more difficult question arises, however, when the truck driver never crosses state lines in performing his or her duties. (See Performance Team, supra, 241 Cal.App.4th at p. 1240, 194 Cal.Rptr.3d 530 [noting it is "not clear" whether drivers whose routes are only "to destinations within California" qualify as transportation workers under section 1 ].) Is the mere act of transporting goods that originated in other states sufficient to trigger the exemption? Or must the driver personally cross state lines in performing his or her job duties?
While this appeal was pending, our colleagues in the Fifth District concluded interstate travel is not necessary for section 1 to apply and held a delivery driver may fall "within the scope of the exemption even though his deliveries were exclusively to destinations within California." ( Nieto v. Fresno Beverage Co., Inc . (2019) 33 Cal.App.5th 274 , 282, 245 Cal.Rptr.3d 69 .) The Nieto court began by noting courts have consistently held that drivers who are actually involved in the interstate transportation of physical goods are transportation workers under section 1. ( Id. at p. 281, 245 Cal.Rptr.3d 69 .) It also observed
3 State and federal courts throughout the country have reached the same conclusion. (See, e.g., Kienstra, supra, 702 F.3d at p. 957 [truckers based in Illinois who "occasionally transported loads into Missouri" "were interstate transportation workers within the meaning of § 1," because if the driver "crosses state lines he is 'actually engaged in the movement of goods in interstate commerce' "]; Harden v. Roadway Package Systems, Inc. (9th Cir. 2001) 249 F.3d 1137 , 1140 [delivery driver who "contracted to deliver packages 'throughout the United States, with connecting international service' ... [was] engaged in interstate commerce that is exempt from the FAA"]; Vargas v. Delivery Outsourcing, LLC (N.D. Cal., Mar. 14, 2016, No. 15-CV-03408-JST) 2016 U.S. Dist. LEXIS 32634 , 2016 WL 946112 , at *4 ( Vargas ) ["[d]elivery drivers may fall within the exemption for 'transportation workers' even if they make interstate deliveries only 'occasionally' "]; In re Swift Transportation Co., Inc. (Tex. App. 2009) 311 S.W.3d 484 , 487-489 [Texas truck driver who transported goods in Illinois was a transportation worker]; Gagnon v. Service Trucking Inc. (M.D. Fla. 2003) 266 F.Supp.2d 1361 , 1364, vacated pursuant to settlement agreement ["truck driver ... who transports goods across state lines" is a transportation worker].)
The Nieto court then concluded the delivery driver was "engaged in interstate commerce during his employment" in light of the following admitted facts: the employer sold and distributed beer, wines, and other beverages that originated in other states and countries; although the employer's drivers did not transport goods across state lines, they were nevertheless subject to federal Department of Transportation regulations and other federal laws and regulations governing motor vehicle safety; they traversed interstate highways and roads; and, in the words of the employer in its briefing, its drivers transported the items as part of a "practical continuity of movement" in the flow of interstate commerce. ( Nieto , supra , 33 Cal.App.5th at p. 284, 245 Cal.Rptr.3d 69 , quoting Walling v. Jacksonville Paper Co . (1943) 317 U.S. 564 , 63 S.Ct. 332 , 87 L.Ed. 460 .) Thus, concluded the court: "It is apparent from the above information and concessions that Nieto's deliveries, although intrastate, were essentially the last phase of a continuous journey of the interstate commerce (i.e., beer and other beverages delivered to VWB's warehouse from out-of-state) being transported until reaching its destination(s) to VWB's customers. Accordingly, as a delivery truck driver for VWB, Nieto was engaged in interstate commerce through his participation in the continuation of the movement of interstate goods to their destinations. Therefore, the trial court did not err in concluding that Nieto was employed as a transportation worker engaged in interstate commerce to whom the exemption of section 1 of the FAA was applicable." ( Ibid. )
In reaching this conclusion, the Nieto court relied in part on Christie v. Loomis Armored US, Inc . (D.Colo. 2011) [ 2011 U.S. Dist. LEXIS 141994 , 2011 WL 6152979 , at *3, *7] ( Christie ). In Christie , the district court held a driver "need not actually transport goods across state lines to be part of a class of employees engaged in interstate commerce. 'Interstate commerce' includes not only goods that travel across
4 The Nieto court did not address the conflicting federal precedent discussed infra .
4. Application
Recognizing the apparent split in this area, but taking into account the circumstances as a whole, we conclude Muller was " ' "actually engaged in the movement of goods in interstate commerce" ' " ( Circuit City, supra , 532 U.S. at p. 112, 121 S.Ct. 1302 ) and qualifies as a transportation worker under section 1. His employer, RMFL, is a licensed motor carrier company in the business of transporting freight and thus is part of the transportation industry. And the
RMFL contends the agreement prohibits class arbitration because other appellate courts reached this conclusion when analyzing identical arbitration agreements. RMFL misses the point. The issue is not how to interpret the agreement, but who interprets it. Simply put, the trial court cannot do the arbitrator's job for the arbitrator. Because the threshold question of classwide arbitrability is left for the arbitrator, any arguments regarding whether or not the agreement prohibits class arbitration must be left for the arbitrator's consideration.
III.
DISPOSITION
The order is affirmed. Muller shall recover his costs on appeal. ( Cal. Rules of Court, rule 8.278(a)(1).)
WE CONCUR:
BEDSWORTH, ACTING P. J.
GOETHALS, J.
1 To be precise, this first cause of action was for "failure to pay separately and hourly for time spent by drivers on rest breaks, pre- and post-trip inspection time, loading & unloading time, cleaning, fueling and paperwork time [ Cal. Labor Code §§ 1194 ; 1194.2 and 226.2]." For simplicity's sake, we refer to it as Muller's cause of action for unpaid wages.
For the reasons set forth below, we affirm the trial court's order. The court correctly concluded Muller is exempt from FAA coverage under section 1. Even though Muller did not physically transport goods across state lines, his employer is in the transportation industry, and the vast majority of the goods he transported originated outside California. Thus, section 229 requires staying the prosecution of his cause of action for unpaid wages while the other five causes of action proceed to arbitration. The court also correctly concluded the arbitrator, not the court, must determine whether to conduct the arbitration on an individual or classwide basis.
FACTS
RMFL is a licensed motor carrier company that employs truck drivers to transfer freight to and from various destinations from its six California terminals. Over 99 percent of the cargo RMFL transports originates from outside California, but RMFL only transports the cargo within California. The record is silent on whether freight transported by RMFL within California is later transported by other carriers to destinations outside California.
Muller worked as an RMFL truck driver for less than a year. Like other RMFL drivers, all his trips were entirely within California; he never transported freight across state lines. According to RMFL's records, Muller's deliveries typically involved driving from RMFL's Fresno terminal to locations like San Jose or Sacramento, and then back to Fresno.
At RMFL's request, Muller signed a two-page written agreement requiring him to "utilize binding arbitration to resolve all disputes that may arise out of the employment context." The agreement required any claim Muller has
1. The FAA and the Section 1 Exemption for "Transportation Workers"
Congress enacted the FAA in 1925 to remedy the general hostility of American courts to the enforcement of arbitration agreements. To effectuate that purpose, the FAA compels judicial enforcement of a wide range of written arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary. ( Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105 , 111, 121 S.Ct. 1302 , 149 L.Ed.2d 234 ( Circuit City ); Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227 , 237-238, 199 Cal.Rptr.3d 332 .) When the FAA applies, it preempts any state law rule that " 'stand[s] as an obstacle to the accomplishment of the FAA's objectives.' " ( Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 , 384, 173 Cal.Rptr.3d 289 , 327 P.3d 129 .)
The FAA's basic coverage provision, section 2, makes the FAA applicable to contracts "evidencing a transaction involving commerce." ( 9 U.S.C. § 2 .) Courts broadly construe section 2 to "provide for the enforcement of arbitration agreements within the full reach of the Commerce Clause." ( Perry v. Thomas (1987) 482 U.S. 483 , 490, 107 S.Ct. 2520 , 96 L.Ed.2d 426 ( Perry ).) "Accordingly, in most cases, the FAA mandates arbitration when contracts involving interstate commerce contain arbitration provisions." (
2. Divergent Tests for Who Qualifies as a "Transportation Worker"
The term "transportation worker" was not at issue in Circuit City , so the Supreme Court did not adopt a specific definition. Although the Court noted with approval one appellate court's definition of transportation workers as "those workers ' "actually engaged in the movement of goods in interstate commerce" ' " ( Circuit City, supra , 532 U.S. at p. 112, 121 S.Ct. 1302 ), it did not elaborate on what type of connection the worker must have to interstate commerce, to what degree his or her duties must involve transportation, to what degree the employer's industry must be related to transportation, or whether the worker must cross state lines for the exemption to apply.[2]
In the 18 years since the Supreme Court decided Circuit City , state and federal courts have grappled with these unresolved issues, but "little consensus has been realized." ( Kowalewski v. Samandarov (S.D.N.Y. 2008) 590 F.Supp.2d 477 , 482 ( Kowalewski ).) Some decisions have focused on whether the employer is in the
2 Although the Supreme Court recently interpreted section 1 again in New Prime Inc. v. Oliveira (2019) --- U.S. ----, 139 S.Ct. 532 , 534, 202 L.Ed.2d 536 , it did not elaborate on the meaning of the term "transportation workers."
The decisions become more varied when the employee is one step removed from the actual physical delivery of goods. For example, "[t]wo courts have concluded that postal workers, who process packages that move interstate, are exempt under § 1 [citations], while another court has held that a worker who loaded and unloaded trucks that moved across state lines was not a transportation worker [citation]. One court has even determined that the supervisor of interstate truck drivers was considered a transportation worker. [Citation.]." ( Lorntzen v. Swift Transportation, Inc . (D. Kan. 2004) 316 F.Supp.2d 1093 , 1097 ( Lorntzen ); see Lenz v. Yellow Transp., Inc . (8th Cir. 2005) 431 F.3d 348 , 351 ( Lenz ) [whether an employee who "works for a transportation company but is not a truck driver or transporter of goods" is a transportation worker is a "more difficult question"].) Suffice it to say there is no agreed-upon bright-line rule on who falls within the section 1 exemption.
In Lenz, the Eighth Circuit Court of Appeals attempted to synthesize the factors courts often consider in determining the exemption applies, and it identified eight "non-exclusive" factors for consideration when evaluating whether an employee "is so closely related to interstate commerce that he or she fits within the § 1 exemption of the FAA." ( Lenz, supra , 431 F.3d at p. 352.) Those factors are: "first, whether the employee works in the transportation industry; second, whether the employee is directly responsible for transporting the goods in interstate commerce; third, whether the employee handles goods that travel interstate; fourth, whether the employee supervises employees who are themselves transportation workers, such as truck drivers; fifth, whether, like seamen or railroad employees, the employee is within a class of employees for which special arbitration already existed when Congress enacted the FAA; sixth, whether the vehicle itself is vital to the commercial enterprise of the employer; seventh, whether a strike by the employee would disrupt interstate commerce; and eighth, 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)." ( Ibid. )
3. Whether Truckers Are "Transportation Workers"
As noted, this particular case involves a truck driver. Courts are somewhat divided on whether and when truckers and delivery drivers qualify as "transportation workers."
5 The Christie and Nieto courts both relied on Palcko v. Airborne Express, Inc. (3d Cir. 2004) 372 F.3d 588 ( Palcko ), in which the Third Circuit Court of Appeals held an employee need not cross state lines to qualify as a transportation worker. The plaintiff in Palcko was not a delivery driver; rather, she supervised drivers who delivered interstate packages from the Airborne Express facility near the Philadelphia airport to their ultimate destinations within the Philadelphia area. ( Id. at p. 590.) Although neither the plaintiff nor the drivers under her supervision delivered the packages across state lines, the Palcko court concluded the plaintiff was exempt from FAA coverage because her direct supervision of package shipments made her work " 'so closely related [to interstate and foreign commerce] as to be in practical effect part of it.' " ( Id. at pp. 593-594.) Although the plaintiff in Palcko was not a trucker, the case is noteworthy because the fact the plaintiff never personally crossed state lines did not prevent the court from finding section 1 applied. ( See ibid . ["had Congress intended [section 1 ] to cover only those workers who physically transported goods across state lines, it would have phrased the FAA's language accordingly"].) The Nieto court also relied on cases interpreting the Fair Labor Standards Act ( 29 U.S.C. §§ 201 et seq . ) (FLSA), which applies to workers who are "engaged in commerce or in the production of goods for commerce" ( id. at §§ 203, subd. (s)(1), 206, subd. (a), 207, subd. (a)). We are not convinced FLSA cases are instructive in interpreting section 1. Unlike section 1 of the FAA, which must "be afforded a narrow construction" ( Circuit City, supra, 532 U.S. at p. 106, 121 S.Ct. 1302 ), "[c]ourts interpret the employment definitions in the FLSA broadly and comprehensively to accomplish the remedial purposes of the [FLSA]" ( Gunn v. Stevens Security & Training Services, Inc . (N.D. Ill., Jan. 26, 2018, No. 17 CV 6314) [ 2018 U.S. Dist. LEXIS 13498 , 2018 WL 572512 , at *1] ).
More recently, several federal district courts concluded a delivery driver who does not cross state lines is not a transportation worker under section 1. (See, e.g., Bonner v. Michigan Logistics Inc. (D. Ariz. 2017) 250 F.Supp.3d 388 , 392, 397 [drivers hired by delivery logistics company who performed deliveries for automotive parts shop and who did not move goods across state lines were not transportation workers]; Vargas, supra , 2016 WL 946112 , at *4-5 [driver who delivered airline passengers' delayed luggage solely within California was not a transportation worker where there was no evidence he "[made] interstate deliveries even occasionally"]; Levin, supra, 146 F.Supp.3d at pp. 1152-1154 [driver who delivered locally prepared food to California customers and who never "made trips across state lines" was not a transportation worker].)[6] These
6 Two other recent district court opinions reached similar results. (See Magana v. DoorDash, Inc. (N.D. Cal. 2018) 343 F.Supp.3d 891 , 899-900 [food delivery driver who never crosses states lines is not a transportation worker]; Lee v. Postmates Inc. (N.D. Cal., Oct. 15, 2018, No. 18-CV-03421-JCS) 2018 WL 4961802 , at *8 ["couriers who deliver goods from local merchants to local customers" are not exempt under section 1 ].) Both opinions have been appealed and are currently pending review by the Ninth Circuit.
The Eighth Circuit's multifactor analysis from Lenz supports our conclusion. Muller, a trucker, undeniably worked in the transportation industry; he transported goods in interstate commerce, at least in the sense that the goods he transported originated outside California and he transported them during part of their journey to their ultimate destination; he handled goods that had traveled interstate; the vehicle he drove was vital to RMFL's commercial enterprise; a strike by RMFL's drivers would interrupt the free flow of goods coming into California from other states and countries in the same way a strike by seamen or railroad employees would; and he could not perform his job without his truck, reflecting the close nexus between his job duties and the vehicle he used in carrying out his duties. (See Lenz, supra , 431 F.3d at p. 352.) Thus, six of the eight Lenz factors are met.
The fourth Lenz factor - whether the employee supervised employees who are themselves transportation workers - is inapplicable. That leaves the fifth factor - whether, like seamen or railroad employees, Muller was in a class of employees for which special arbitration already existed when Congress enacted the FAA. This is the only Lenz factor that weighs against Muller being a transportation worker. Unlike seamen and railroad employees, there is no federal arbitration legislation specifically governing the resolution of disputes between truck drivers and their employers, which suggests Congress did not intend to exclude truckers from FAA coverage. That said, considering six of eight Lenz factors weigh in favor of Muller being a transportation worker, the fifth Lenz factor is not conclusive.
RMFL argues Muller never crossed state lines in making his deliveries and thus was not "engaged in" interstate commerce. The intrastate nature of Muller's work, however, should not be viewed in a vacuum. "[A]n employee's classification for purposes of § 1 [should be reached] after a case-by-case, factual determination." (See Lorntzen, supra , 316 F.Supp.2d at p. 1097.) The various other
Because the FAA is inapplicable, our analysis is exclusively guided by California law, and more specifically, section 229. (Cf. Perry , supra , 482 U.S. at p. 491, 107 S.Ct. 2520 [if FAA applies, FAA preempts the application of section 229 ]; Performance Team, supra, 241 Cal.App.4th at p. 1240, 194 Cal.Rptr.3d 530 .)
Section 229 authorizes lawsuits for unpaid wages even if the parties agreed to arbitrate these claims: "Actions to enforce the provisions of this article for the collection of due and unpaid wages claimed by an individual may be maintained without regard to the existence of any private agreement to arbitrate."
Section 229 renders the parties' arbitration agreement ineffective on Muller's cause of action for unpaid wages. The trial court therefore correctly stayed the prosecution of Muller's unpaid wages cause of action pending the arbitration of his other claims.
D. Who Decides the Issue of Classwide Arbitrability
The final issue raised on appeal is the question of who decides whether the arbitration will be on an individual or classwide basis. As noted, the trial court concluded the arbitrator, not the court, must answer that question.
RMFL asks us to reverse this portion of the order, but it is not clear RMFL may appeal that ruling. RMFL cites Code of Civil Procedure section 1294, but none of section 1294 's subdivisions apply to an order directing the arbitrator to evaluate the availability of classwide arbitration.[7] Further, the portion of the order in question was made in conjunction with the trial court's decision to compel five out of six causes of action to arbitration, and "an order compelling arbitration is not appealable." ( Vivid Video, Inc. v. Playboy Entertainment Group, Inc. (2007) 147 Cal.App.4th 434 , 442, 54 Cal.Rptr.3d 232 .)
Even if we were to assume the issue is appealable and reach the merits of RMFL's argument, we would affirm. In Sandquist v. Lebo Automotive, Inc. (2016) 1 Cal.5th 233 , 205 Cal.Rptr.3d 359 , 376 P.3d 506 ( Sandquist ), our Supreme Court concluded there is "[n]o universal rule" about who decides whether an arbitration agreement permits class arbitration.
7 "An aggrieved party may appeal from: [¶] (a) An order dismissing or denying a petition to compel arbitration. [¶] (b) An order dismissing a petition to confirm, correct or vacate an award. [¶] (c) An order vacating an award unless a rehearing in arbitration is ordered. [¶] (d) A judgment entered pursuant to this title. [¶] (e) A special order after final judgment." (Code Civ. Proc., § 1294.)
Cases cited
- Performance Team Freight Systems, Inc. v. Aleman 241 Cal.App.4th 1233 p. 752
- Circuit City Stores, Inc. v. Adams 121 S.Ct. 1302 p. 753, p. 758, p. 1062, p. 1063
- Muro v. Cornerstone Staffing Solutions, Inc. 20 Cal.App.5th 784 p. 755
- Garrido v. Air Liquide Industrial U.S. LP 241 Cal.App.4th 833 p. 755
- Nieto v. Fresno Beverage Co. 33 Cal.App.5th 274 p. 755, p. 756, p. 1066
- Walling v. Jacksonville Paper Co. 317 U.S. 564 p. 756
- Carbajal v. CWPSC, Inc. 245 Cal.App.4th 227 p. 1062
- Iskanian v. CLS Transportation Los Angeles, LLC 59 Cal.4th 348 p. 1062
- Perry v. Thomas 482 U.S. 483 p. 1062, p. 1070
- Vivid Video, Inc. v. Playboy Entertainment Group, Inc. 147 Cal.App.4th 434 p. 1070
- Sandquist v. Lebo Automotive, Inc. 1 Cal.5th 233 p. 1070