Trial News

Amazon delivery drivers who contracted with the e-commerce company to perform “last mile” deliveries cannot be forced into arbitration because they are exempt from the Federal Arbitration Act (FAA) as workers engaged in interstate commerce, the Ninth Circuit has ruled. Under §1 of the FAA, transportation workers engaged in interstate commerce are not bound by the act’s provisions, and the court found that the plaintiffs fell within the exemption because they deliver goods that are part of the stream of interstate commerce, regardless of whether they cross state lines for their portion of the shipping and delivery process. (Rittmann v. Amazon.com, Inc., 2020 WL 4814142 (9th Cir. Aug. 19, 2020).)

The three plaintiffs contracted with Amazon.com, Inc., subsidiary Amazon Logistics, Inc., to provide delivery services through the company’s AmFlex program. Through AmFlex, the internet retailer contracts with individual delivery drivers, rather than large companies such as FedEx and UPS, to do “last mile” product deliveries. Using their own vehicles or bicycles, drivers pick up packages from an Amazon warehouse and deliver them to customers.

When the plaintiffs signed up to deliver packages for Amazon, their contracts included a forced arbitration clause. Two plaintiffs opted out of this provision, but one did not. In 2016, the plaintiffs filed collective and class actions against Amazon alleging that the company misclassifies its AmFlex delivery people as independent contractors rather than employees in violation of the Fair Labor Standards Act and California and Washington labor laws. The defendant moved to compel arbitration, and that motion was stayed until after the U.S. Supreme Court ruled in Epic Systems Corp. v. Lewis and New Prime Inc. v. Oliviera. The district court then denied the motion to compel, finding that the plaintiffs were covered by the FAA’s transportation worker exemption. The court further held that the arbitration agreement could not be enforced under state law because it was unclear from the contract whether the parties intended to arbitrate disputes if the FAA did not apply. The defendant appealed, and the Ninth Circuit affirmed.

Section 1 of the FAA exempts employment contracts for “seamen, railroad employees, [and] any other class of workers engaged in foreign or interstate commerce.” On appeal, Amazon argued that this exemption did not apply to its AmFlex delivery drivers because their “last mile” deliveries involved intrastate deliveries and they argued that the delivery drivers must cross state lines while performing their duties to be considered engaging in interstate commerce.

Focusing on the meaning of “engaged in commerce” in §1, the Ninth Circuit concluded that provision applies to workers who are transporting goods that have been shipped across state lines even if the workers themselves do not cross state lines. “The ordinary meaning of those words does not suggest that a worker employed to deliver goods that originate out-of-state to an in-state destination is not ‘engaged in commerce’ any less than a worker tasked with delivering goods between states,” the court said.

The court pointed to a recent First Circuit decision involving AmFlex drivers that reached the same conclusion (Waithaka v. Amazon.com, Inc., 2020 WL 4034997 (July 17, 2020)) and case law from the Supreme Court and other circuits interpreting “engaged in commerce” as not requiring the worker at issue to actually cross state lines. Instead, the drivers fall under the FAA’s exemption because they are the final stage in a continuous journey in the stream of interstate commerce. The court explained that case law distinguishes this situation from those in which the worker is only tangentially involved in interstate commerce—such as a shipping company’s customer service representative who never physically transports goods.

Because of Amazon’s worldwide reach and expansive shipping and delivery network, the Ninth Circuit held that this interpretation of §1 applies to AmFlex drivers. The packages they deliver come from Amazon warehouses whose products originated in other states and countries, and the AmFlex delivery people are the last link in the same chain.

San Francisco consumer attorney Jennifer Bennett, who was involved in an amicus brief submitted by Public Justice in support of the plaintiffs, explained that “it has long been understood that last-mile workers—be they railroad employees or FedEx drivers or Amazon drivers—are integral to interstate commerce. Without them, nothing would get to its destination, and commerce would shut down. That’s why Congress exempted them from the statute.”

The court was not persuaded by Amazon’s contention that the chain splits when a product arrives in a warehouse, making the delivery process within a state a separate chain. It held that the chain of interstate commerce continues because the warehouses are simply waypoints for the products that remain in Amazon’s control and are all part of one Amazon transaction. “The interstate transactions between Amazon and the customer do not conclude until the packages reach their intended destination,” the court explained.

Boston attorney Shannon Liss-Riordan, who represents the plaintiffs, said, “This is a significant ruling, as the Ninth Circuit now joins the First Circuit on this same issue. . . . Both courts affirmed that drivers may be engaged in interstate commerce even though they do not cross state lines themselves. In reaching this conclusion, the Ninth and First Circuits properly considered what Congress understood interstate commerce to mean at the time it enacted the Federal Arbitration Act—which is exactly what the U.S. Supreme Court reminded us in Oliveira v. New Prime that courts need to do when applying the transportation worker exemption to the FAA. . . . We look forward to pursuing this case as a national class action on behalf of Amazon drivers to seek their proper classification as employees and the full wages they are owed.”

Kate Halloran is the senior associate editor for Trial.