Immediato v. Postmates, Inc.

• Citation: 54 F.4th 67
• Decision Date: 29 November 2022
• Docket Number: 22-1015
• Parties: Damon IMMEDIATO, Stephen Levine, and Eric Wickberg, on Behalf of themselves and all others similarly situated, Plaintiffs, Appellants, v. POSTMATES, INC., Defendant, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

54 F.4th 67

Damon IMMEDIATO, Stephen Levine, and Eric Wickberg, on Behalf of themselves and all others similarly situated, Plaintiffs, Appellants,

v.POSTMATES, INC., Defendant, Appellee.

No. 22-1015

United States Court of Appeals, First Circuit.

November 29, 2022

Shannon Liss-Riordan, with whom Michelle Cassorla and Lichten & Liss-Riordan, P.C. were on brief, for appellants.

Theane Evangelis, with whom Blaine H. Evanson, Dhananjay S. Manthripragada, Shaun A. Mathur, Allison L. Mather, and Gibson, Dunn & Crutcher LLP were on brief, for appellee.

Before Lynch and Selya, Circuit Judges, and McElroy,^* District Judge.

SELYA, Circuit Judge.

This appeal requires us to determine whether couriers who deliver goods from local restaurants and retailers are transportation workers engaged in interstate commerce such that they are exempt from the Federal Arbitration Act (FAA or Act). See 9 U.S.C. § 1. The district court concluded that they were not exempt, compelled arbitration of the parties' dispute, and dismissed the appellants' suit. The appellants assign error: they insist that our decision in Waithaka v. Amazon.com, Inc., in which we held that Amazon delivery drivers responsible for the final leg of interstate package deliveries were exempt from the FAA, demands a different outcome. 966 F.3d 10, 13 (1st Cir. 2020).

The appellants are comparing plums with pomegranates. Unlike the Amazon delivery drivers in Waithaka, the couriers here are not actively engaged in the interstate transport of goods and, thus, are not within a class of workers exempted from the Act. Accordingly, we affirm the judgment below.

I

The genesis of this appeal can be traced back to the district court's grant of the appellee's motion to compel arbitration. Because the motion to compel was made in conjunction with a motion to stay, "we draw the relevant facts from the operative complaint and the documents submitted to the district court in support of the motion to compel arbitration." Cullinane v. Uber Techs., Inc., 893 F.3d 53, 55 (1st Cir. 2018).

Defendant-appellee Postmates, Inc. operates an online and mobile platform that enables customers to order take-out meals from local restaurants as well as comestibles and sundries from local grocery stores. Once an order is placed, the appellee arranges — at the customer's behest — for a courier to deliver the order. As relevant here, nearly all orders placed in Massachusetts (99.66%) are fulfilled within the state, and the average distance travelled by a courier during a delivery is about 3.7 miles.

Individuals register as couriers through a mobile application. As part of that registration, they must accept the appellee's "Fleet Agreement," which generally sets forth the rights and obligations of the parties and — in the bargain — classifies couriers as independent contractors. The agreement contains a mutual arbitration provision that is "governed exclusively" by the FAA and applies to "any and all claims" against the appellee. Such claims include those that arise from disputes over the terms of the Fleet Agreement itself, as well as those that sound in federal, state, or local law.

The mutual arbitration provision requires that all such disputes be resolved through final and binding arbitration in accordance with rules set forth by the American Arbitration Association (AAA). The provision also includes a class action waiver and forecloses the arbitration of representative actions. Couriers may opt out of the mutual arbitration provision within thirty days of accepting the Fleet Agreement but are otherwise bound by its terms.

Plaintiffs-appellants Damon Immediato, Stephen Levine, and Eric Wickberg worked as couriers for the appellee, making deliveries in the greater Boston area. All of them consented to the Fleet Agreement without opting out of the mutual arbitration provision.¹ Ostensibly aggrieved by the conditions under which they worked, they filed suit in a Massachusetts state court on their own behalf and on behalf of a putative class of similarly situated couriers. They alleged that the appellee had misclassified them as independent contractors when they were in fact employees. They further alleged that, as such, they were entitled to employee benefits and protections afforded under Massachusetts law, including the reimbursement of necessary business expenses, the payment of a minimum wage, and paid sick leave.

The appellee removed the suit to the federal district court, see 28 U.S.C. §§ 1332(d), 1441, 1453, and moved to compel arbitration.² The appellants objected, contending that they belonged to a class of workers exempt from the FAA under 9 U.S.C. § 1. The district court ruled that the exemption did not apply, granted the appellee's motion, and stayed the court case pending the completion of arbitration.

In arbitration, the appellee made offers of judgment to the appellants individually. Those offers were accepted. The district court then approved the awards and dismissed the case.

This timely appeal followed. In it, the appellants challenge both the district court's order compelling arbitration and the resultant order of dismissal.

II

We have jurisdiction to review a district court's "final decision with respect to an arbitration." Lamps Plus, Inc. v. Varela, ––– U.S. ––––, 139 S. Ct. 1407, 1414, 203 L.Ed.2d 636 (2019) (quoting 9 U.S.C. § 16(a)(3) ). Our review is de novo. See Waithaka, 966 F.3d at 16.

Enacted in 1925, the FAA provides that written arbitration agreements "shall be valid, irrevocable, and enforceable." 9 U.S.C. § 2. Thus, courts are required to place those agreements "on an equal footing with other contracts and enforce them according to their terms." AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (internal citations omitted). The sweep of the Act extends to arbitration clauses in any contract that "evidenc[es] a transaction involving commerce," 9 U.S.C. § 2, which is to say that the Act extends to any contract that falls within Congress's extensive power to regulate activities "affecting" interstate commerce, Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 277, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995) (holding that term "involving commerce" reflects "an intent to exercise Congress'[s] commerce power to the full").

Even so, employment contracts for certain classes of workers are exempt from the FAA. See Waithaka, 966 F.3d at 16. In this regard, the Act provides that "nothing herein contained shall apply 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. The Supreme Court has interpreted the residual clause of this exemption to apply only to "transportation workers," meaning workers who play a "necessary role" in the interstate transport of goods. Sw. Airlines Co. v. Saxon, ––– U.S. ––––, 142 S. Ct. 1783, 1789-90, 213 L.Ed.2d 27 (2022) (quoting Cir. City Stores, Inc. v. Adams, 532 U.S. 105, 121, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001) ). Whether workers are classified as employees or independent contractors, though, is of no consequence in construing the exemption: the term "contracts of employment" applies "in a broad sense to capture any contract for the performance of work by workers." New Prime Inc. v. Oliveira, ––– U.S. ––––, 139 S. Ct. 532, 541, 202 L.Ed.2d 536 (2019) (emphasis omitted).

The appellants contend that they belong to a class of workers encompassed by the residual clause of section 1 and are therefore outside the grasp of the FAA. Alternatively, they contend that if they do not fall within the section 1 exemption (because they are not workers "engaged in foreign or interstate commerce"), then their contracts with the appellee must perforce be outside the coverage of section 2. We address each of these contentions in turn.³

A

To determine whether the appellants are exempt transportation workers under section 1, we first must define the relevant "class of workers" to which the appellants belong, and then ascertain "whether that class is ‘engaged in foreign or interstate commerce.’ " Sw. Airlines, 142 S. Ct. at 1788 (quoting 9 U.S.C. § 1).

A "class of workers" is defined by the "actual work" that those workers typically do on the job, not necessarily by the industry in which they work. Id. Here, the appellants belong to a class of couriers who deliver both meals prepared at local restaurants and goods sold by local retailers. Those deliveries are made in response to individual orders placed by local customers within the state; and in the course of each delivery, the couriers traverse, on average, only a few miles.

Having delineated the relevant class of workers, the issue reduces to whether that class is "engaged in foreign or interstate commerce." 9 U.S.C. § 1. Unlike the words "involving commerce" in section 2, the phrase "engaged in ... commerce" in section 1 does not invoke the full extent of Congress's commerce power but, rather, has "a more limited reach." Cir. City, 532 U.S. at 115, 121 S.Ct. 1302 ; see Wallace v. Grubhub Holdings, Inc., 970 F.3d 798, 800 (7th Cir. 2020) (describing scope of section 1's "engaged in commerce" language as "narrower" than scope of the phrase "involving commerce" found in section 2 ). That limited reach extends only to workers who are "actively" engaged in moving "goods across borders via the channels of foreign or interstate commerce." Sw. Airlines, 142 S. Ct. at 1790. Put another way, the workers must play a "necessary role in the free flow of goods" across state or international borders. Id. (quoting Cir. City, 532 U.S. at 121, 121 S.Ct. 1302 ). It follows, we think, that section 1 plainly applies to workers who in fact carry cargo across state borders. See New Prime, 139 S. Ct. at 536, 539. It also applies to those who load and unload cargo in the course of interstate shipments as that work is "so closely related to interstate transportation as to be practically a part of it." Sw. Airlines, 142...