Edwards v. Doordash, Inc.

• Decision Date: 25 April 2018
• Docket Number: No. 17-20082,17-20082
• Citation: 888 F.3d 738
• Parties: Dewey EDWARDS, Individually and on behalf of all others Similarly Situated, Plaintiff–Appellant v. DOORDASH, INCORPORATED, Defendant–Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

888 F.3d 738

Dewey EDWARDS, Individually and on behalf of all others Similarly Situated, Plaintiff–Appellant

v.DOORDASH, INCORPORATED, Defendant–Appellee

No. 17-20082

United States Court of Appeals, Fifth Circuit.

April 25, 2018

Alfonso Kennard, Jr., Esq., Senior Counsel, Kennard Richard, P.C., Houston, TX, for Plaintiff–Appellant.

Robert Francois Friedman, Esq., Attorney, Littler Mendelson, P.C., Dallas, TX, Kerry E. Notestine, Attorney, Allison C. Williams, Littler Mendelson, P.C., Houston, TX, for Defendant–Appellee.

Before WIENER, ELROD, and SOUTHWICK, Circuit Judges.

LESLIE H. SOUTHWICK, Circuit Judge:

DoorDash is a California company that provides food-delivery service by using independent contractors it calls Dashers. A Dasher named Dewey Edwards brought suit against the company and sought conditional class certification. The district court, concluding there was an arbitration agreement with a valid delegation clause, granted DoorDash's motion to compel arbitration and dismissed Edwards's claims without addressing the class certification motion. We AFFIRM.

FACTUAL AND PROCEDURAL BACKGROUND

DoorDash customers in over two hundred cities can use a mobile application to order food from certain restaurants. A Dasher will deliver the order to the customer. DoorDash requires Dashers to sign an Independent Contractor Agreement ("ICA"). The ICA that Edwards signed contains this arbitration clause:

Contractor and Company agree that final and binding arbitration will be the exclusive means of resolving any disputes between Contractor and Company. Any such disputes shall be resolved by pursuant [sic] to the commercial rules of the American Arbitration Association (AAA) and such arbitration shall be held in Palo Alto, California. Judgment on any award rendered by the arbitrator may be entered in any court having jurisdiction over the award. Contractor and Company agree to bring any disputes in arbitration on an individual basis only and not as a class or other collective action basis. Accordingly, there will be no right or authority for any dispute to be brought, heard or arbitrated as a class or other collective action. This class and collective action waiver shall not be severable from this Agreement in any case in which the dispute is filed as such a class or collective action and a civil court of competent jurisdiction finds that this waiver is unenforceable. In such instance, the class or collective action must be litigated in a civil court of competent jurisdiction.

Edwards's ICA also includes this choice-of-law provision: "This Agreement shall be governed by and construed in accordance with the laws of the State of California without reference to the conflict-of-laws principles thereunder."

Edwards filed suit against DoorDash in the United States District Court for the Southern District of Texas, alleging Fair Labor Standards Act ("FLSA") violations. He also moved for conditional certification of a class of similarly situated individuals nationwide on the same day. In response, DoorDash filed both an emergency motion to stay the conditional certification and a motion to compel individual arbitration and dismiss the suit. The magistrate judge who was referred the case partially granted DoorDash's motion, stating the arbitration issue would be considered first and the certification issue later. Edwards objected, but his objection was overruled.

After an evidentiary hearing and supplemental briefing, the magistrate judge issued a report and recommendation that the motion to dismiss should be granted and Edwards should be compelled to arbitrate his claims. The district court agreed. Edwards timely appealed.

DISCUSSION

On appeal, Edwards has two primary contentions. First, he argues the district court erred in deciding the arbitrability question before class certification. Second, he argues the district court erred in enforcing the arbitration agreement. Before addressing each argument, we consider our jurisdiction.

I. Whether this court has appellate jurisdiction

Edwards categorized his appeal as interlocutory even though the suit was dismissed in order for arbitration to proceed. Interlocutory appeals of orders compelling arbitration are prohibited. 9 U.S.C. § 16(b). What is permitted, though, is an appeal of a final decision regarding arbitration. Id. § 16(a)(3). A final decision is one that "ends the litigation on the merits and leaves nothing more for the court to do but execute the judgment." Green Tree Servicing, L.L.C. v. Charles , 872 F.3d 637, 639 (5th Cir. 2017) (quoting Green Tree Fin. Corp.–Ala. v. Randolph , 531 U.S. 79, 86, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000) ).

Here, the decision is final as to Edwards. All that remained for his claim was for the court to enter a final judgment. Although there were three other plaintiffs whose claims had not yet been dismissed, the final judgment rule applies to Edwards. We have exercised jurisdiction over an appeal when the order appealed from disposed of all of the appellants' claims, even though it did not resolve yet another plaintiff's claims. Barrett v. Atl. Richfield Co ., 95 F.3d 375, 379 (5th Cir. 1996). This is not an interlocutory appeal as Edwards argues, and instead this court has jurisdiction under Section 16(a)(3).

II. Whether the district court erred in compelling arbitration before considering the class certification

Edwards insists the district court erred in ruling on DoorDash's motion to dismiss and compel arbitration before it ruled on Edwards's motion to certify a class. The magistrate judge concluded that arbitrability was a threshold question and therefore ruled on that without considering the motion for conditional certification. DoorDash characterizes the decision as one relating to docket management and urges this court to review for an abuse of discretion. See Woodson v. Surgitek , Inc., 57 F.3d 1406, 1417 (5th Cir. 1995). Edwards, on the other hand, urges us to review the decision de novo. Because we would affirm under either standard, we need not discuss the proper standard of review.

The magistrate judge relied on a recent Fifth Circuit opinion to support the decision to rule on arbitrability without ruling on the conditional class certification. See Reyna v. Int'l Bank of Commerce , 839 F.3d 373, 376 (5th Cir. 2016). There we held that arbitrability claims should be resolved at the outset, even before considering conditional class certification. See id. We rejected the plaintiff's contention that "[i]n collective action suits brought under the FLSA, courts rule on first-stage conditional certification and notice before ruling on the validity and enforceability of any purported arbitration agreement." Id. We distinguished Reyna from other cases in which district courts had certified a collective action before determining the arbitrability of the claims. Id. Those cases involved numerous factual distinctions, including the presence of additional opt-in plaintiffs. Id. at 376–77. Reyna was different because it involved "a defendant who promptly moved to compel the sole plaintiff to arbitrate his claim, pursuant to an arbitration agreement that undisputedly exist[ed]." Id. at 377.

The rationale for the holding in Reyna, though, was not limited to these factual differences. We also stated that arbitrability is a threshold question, as a contrary holding "would present a justiciability issue: a court could conditionally certify a collective action solely on the basis of a claim that the plaintiff was bound to arbitrate and was therefore barred from bringing it in court in the first place." Id. The court also stated that determining whether claims had to be arbitrated "prior to conditional certification more closely aligns with the ‘national policy favoring arbitration’ embodied by the FAA." Id. at 378 (quoting AT&T Mobility LLC v. Concepcion , 563 U.S. 333, 346, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) ).

Edwards's arguments against applying Reyna are limited to identifying factual differences. He says that his case has more than one named plaintiff, that no four-step grievance procedure exists, and that the validity of the arbitration agreement is disputed. What Edwards fails to do, however, is explain why those differences compel a different result. As in Reyna, we agree that "whether the named plaintiffs must arbitrate their claims should be decided well before the nationwide notification issue is reached." Id. at 377 (quoting Carter v. Countrywide Credit Indus., Inc. , 189 F.Supp.2d 606, 618 (N.D. Tex. 2002) ). We continue to hold that arbitrability is a "threshold question" to be determined "at the outset," a holding consistent with the "national policy favoring arbitration." Id. at 377–78 (citations omitted).

III. Whether the district court erred in enforcing the arbitration agreement

Edwards also argues that the district court erred in concluding that there is a valid arbitration agreement with a delegation clause—which is a written agreement sending disputes about arbitrability to an arbitrator—and, accordingly, finding that the FLSA claims were questions for the arbitrator. Edwards's central argument is that the arbitration agreement, as well as the ICA that contains it, are unenforceable. Specifically, Edwards argues the arbitration agreement is unconscionable; the class waiver contained within it is unenforceable; and the ICA containing the arbitration agreement is illusory and lacked consideration. DoorDash argues that once we conclude there is a delegation clause, our proper inquiry ends and the order granting the motion to compel arbitration and dismiss should be affirmed. We review that argument de novo . Banc One Acceptance Corp. v. Hill , 367 F.3d 426, 428 (5th Cir. 2004).

A court makes two determinations when deciding a motion to enforce an arbitration agreement. Klein v. Nabors Drilling USA L.P. , 710 F.3d 234, 236 (5th Cir. 2013). First, the court asks whether there is a valid agreement to arbitrate and, second, whether the current...