The Federal Arbitration Act (FAA) was enacted to encourage the use of private arbitration agreements. Section 1 of the FAA provides that the statute “shall not apply to ‘contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” See 9 U.S.C. Sec. 1. Many workers have attempted to argue they fall with the FAA’s exclusion for “any other class of workers engaged in foreign or interstate commerce” (commonly referred to as the “residual clause”). A consensus has emerged that “workers dedicated to the interstate shipment of physical goods” fall within the residual clause of Section 1 of the FAA.
On September 30, 2019, the U.S. District Court for the District of Massachusetts issued an order compelling a DoorDash driver to arbitrate his claim for failure to pay minimum wage and overtime. DoorDash is nationwide food delivery service that allows customers to order food delivery via its mobile app or website. Once a customer places a food order, the order is electronically transmitted to the restaurant and then to DoorDash drivers, who are free to accept delivery of the order. If the driver accepts the order, the driver must pick up the food and deliver the food to the customer. In this case, each driver is required to agree to an employment agreement that contains a mutual arbitration clause requiring them to arbitrate “any justiciable disputes between them exclusively through final and binding arbitration.” The named plaintiff alleged that DoorDash failed to pay its drivers Massachusetts’ minimum wage of $11 per hour, after accounting to expenses.
In ultimately concluding the DoorDash driver was not a transportation worker engaged in interstate commerce, the district court found Lenz v. Yellow Transp., Inc., 431 F.3d 348, 351 (8th 2005) to be especially persuasive. In Lenz, the Eighth Circuit listed several factors to consider whether a worker is engaged in interstate commerce:
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.
In analyzing the Lenz factors, the district court found some factors favored finding the plaintiff a transportation worker engaged in interstate commerce, but weighing all the factors in their totality, the district court found it especially persuasive that plaintiff never argued that the DoorDash drivers regularly or even on a limited basis crossed state lines to complete their deliveries. Also, the district court analyzed whether there was any argument that food to be delivered could be considered as part of interstate commerce. In other words, could the DoorDash driver be considered as part of an overall delivery system to deliver food? For example, in Waithaka v. Amazon.com Inc., 2019 WL 3938053 (D. Mass. 2019), the court held that last-mile delivery drivers were engaged in interstate commerce because there was a “continuity of movement” of the goods that customers ordered from Amazon. See also Walling v. Jacksonville Paper Co., 317 U.S. 564, 568 (1943) (holding that goods remain in interstate commerce where there is a practical continuity of movement to the intended customer). Here, the district court concluded DoorDash drivers were instructed to effectuate deliveries from individual restaurants, rather than being asked to arrange for delivery of finished products from an original manufacturer who might be located across state lines or overseas.
Under the circumstances, the district court concluded that the DoorDash driver is not a transportation worker exempted under Section 1 of the FAA and the arbitration agreement must be enforced.
David Y. Loh is a member with Cozen O'Connor in New York City, New York.
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