In re Dusen

• Citation: 654 F.3d 838,17 Wage & Hour Cas.2d (BNA) 1707,11 Cal. Daily Op. Serv. 9396,2011 Daily Journal D.A.R. 11283
• Decision Date: 27 July 2011
• Docket Number: No. 10–73780.,10–73780.
• Parties: In re Virginia VAN DUSEN; John Doe; Joseph Sheer.Virginia Van Dusen; Joseph Sheer; John Doe, Petitioners,v.United States District Court for the District of Arizona, Phoenix, Respondent,Swift Transportation Co. Inc. Interstate Equipment; Interstate Equipment Leasing, Incorporated; Chad Killebrew; Jerry Moyes, Real Parties in Interest.
• Court: U.S. Court of Appeals — Ninth Circuit

654 F.3d 838

17 Wage & Hour Cas.2d (BNA) 1707

11 Cal. Daily Op. Serv. 9396

2011 Daily Journal D.A.R. 11,283

In re Virginia VAN DUSEN; John Doe; Joseph Sheer.Virginia Van Dusen; Joseph Sheer; John Doe, Petitioners,

v.United States District Court for the District of Arizona, Phoenix, Respondent,Swift Transportation Co. Inc. Interstate Equipment; Interstate Equipment Leasing, Incorporated; Chad Killebrew; Jerry Moyes, Real Parties in Interest.

No. 10–73780.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 9, 2011.Filed July 27, 2011.

Susan Martin, Martin & Bonnett, Phoenix, AZ, for the plaintiff-appellant.Ronald Holland, Sheppard, Mullin, Richter & Hampton, San Francisco, CA, for the defendant-appellee.Petition for Writ of Mandamus to the United States District Court for the District of Arizona. D.C. No. 2:10–cv–00899–JWS.

Before: PROCTER HUG, JR. and RICHARD A. PAEZ, Circuit Judges, and LIAM O'GRADY, District Judge.^*

OPINION

O'GRADY, District Judge:

This matter comes before us on petition for a writ of mandamus. Petitioners argue that the District Court erred by refusing to resolve their claim of exemption from arbitration under Section 1 of the Federal Arbitration Act (“FAA”) and Section 12–1517 of the Arizona Arbitration Act (“AAA”) before compelling arbitration pursuant to those acts. We agree that Petitioners make a strong argument that the District Court erred, but we nonetheless hold that this case does not warrant the extraordinary remedy of mandamus. We therefore deny the petition.

I. Factual and Procedural History

Petitioners Joseph Sheer (“Sheer”) and Virginia Van Dusen (“Van Dusen”) (collectively “Petitioners”) are interstate truck drivers who entered independent contractor operating agreements (“ICOAs”) with Swift Transportation Co., Inc. (“Swift”). In December 2009, Sheer brought suit against Swift and Interstate Equipment Leasing, Co., Inc. (“IEL”) in the United States District Court for the Southern District of New York. On March 24, 2010, Petitioners filed a Second Amended Collective and Class Action Complaint against Swift and IEL ¹ (collectively “Defendants”), alleging violations of the Fair Labor Standards Act, 29 U.S.C. § 206 et seq., forced labor in violation of 18 U.S.C. § 1589, unjust enrichment, and violations of California and New York labor laws. The trial court subsequently transferred the matter to the United States District Court for the District of Arizona.

On May 21, 2010, Defendants moved to compel arbitration pursuant to arbitration clauses contained in the ICOAs. Petitioners opposed the motion, asserting that the ICOAs were exempt from arbitration under Section 1 of the FAA (“Section 1”), which exempts “contracts of employment of seaman, railroad employees, or any other class of workers engaged in foreign or interstate commerce” from the FAA's provisions. 9 U.S.C. § 1. The District Court declined to rule on the applicability of the exemption, holding that the question of whether an employer/employee relationship existed between the parties was a question for the arbitrator to decide in the first instance. Finding that the ICOAs contained valid arbitration clauses, the District Court ordered arbitration. Petitioners subsequently moved for certification of an interlocutory appeal, which the District Court denied. Petitioners now seek mandamus relief before this court.

II. Discussion

A. Standard of Review

The writ of mandamus is a “drastic and extraordinary” remedy “reserved for really extraordinary causes.” Ex parte Fahey, 332 U.S. 258, 259–60, 67 S.Ct. 1558, 91 L.Ed. 2041 (1947). “[O]nly exceptional circumstances amounting to a judicial usurpation of power, or a clear abuse of discretion will justify the invocation of this ... remedy.” Cheney v. U.S. Dist. Court for Dist. of Columbia, 542 U.S. 367, 380, 124 S.Ct. 2576, 159 L.Ed.2d 459 (2004) (internal quotations and citations omitted). The petitioner bears the burden of showing that “its right to issuance of the writ is ‘clear and indisputable.’ ” Bankers Life & Cas. Co. v. Holland, 346 U.S. 379, 384, 74 S.Ct. 145, 98 L.Ed. 106 (1953) (quoting United States v. Duell, 172 U.S. 576, 582, 19 S.Ct. 286, 43 L.Ed. 559 (1899)).

In deciding whether to grant mandamus relief, we consider five factors: (1) whether the petitioner has other adequate means, such as a direct appeal, to attain the relief he or she desires; (2) whether the petitioner will be damaged or prejudiced in a way not correctable on appeal; (3) whether the district court's order is clearly erroneous as a matter of law; (4) whether the district court's order makes an “oft-repeated error,” or “manifests a persistent disregard of the federal rules”; and (5) whether the district court's order raises new and important problems, or legal issues of first impression. Bauman v. U.S. Dist. Court, 557 F.2d 650, 654–55 (9th Cir.1977).

The third factor, clear error as a matter of law, is a necessary condition for granting a writ of mandamus. Hernandez v. Tanninen, 604 F.3d 1095, 1099 (9th Cir.2010). The remaining Bauman factors, while useful as an analytical framework, seldom yield “bright-line distinctions.” Bauman, 557 F.2d at 655. “[Q]uestions of degree” and “conflicting indicators” frequently arise, id., rendering the factors unsuitable for mechanical application. In the final analysis, the decision of whether to issue the writ lies within our discretion. Cole v. U.S. Dist. Court for Dist. of Idaho, 366 F.3d 813, 817 (9th Cir.2004).

B. Clear Error

We begin by considering the third Bauman factor, clear error, because the absence of this factor will defeat a petition for mandamus. Hernandez, 604 F.3d at 1099; Burlington N. & Santa Fe Ry. Co. v. U.S. Dist. Court for Dist. of Mont., 408 F.3d 1142, 1146 (9th Cir.2005). “Clear error” is a highly deferential standard of review. Mandamus will not issue merely because the petitioner has identified legal error. Cal. Dep't of Water Res. v. Powerex Corp., 533 F.3d 1087, 1092 (9th Cir.2008); Will v. United States, 389 U.S. 90, 104, 88 S.Ct. 269, 19 L.Ed.2d 305 (1967) ( “Mandamus, it must be remembered, does not ‘run the gauntlet of reversible errors.’ ”) (quoting Bankers Life, 346 U.S. at 382, 74 S.Ct. 145). Rather, we must have “a definite and firm conviction that the district court's interpretation ... was incorrect.” DeGeorge v. U.S. Dist. Court for Cent. Dist. of Cal., 219 F.3d 930, 936 (9th Cir.2000).

1. The District Court Decision

Before the District Court, Petitioners argued that, because they were “employees” of Defendants, the ICOAs were exempt from arbitration under Section 1 of the FAA. For support, Petitioners cited various provisions from the ICOAs and from a separate lease, which purportedly demonstrated that Petitioners' relationships with Defendants were those of employees to employers. “The issue of whether an employer/employee relationship exists between the plaintiffs and defendants,” Petitioners added, “is not only central to the question of exemption from arbitration, it is also a central element of all of Plaintiffs' substantive claims other than unconscionability.” Pls.' Opp'n to Defs.' Mot. to Compel Arbitration 8 n. 5 (J.A. 46).

The District Court declined to rule on the applicability of the FAA exemption, holding that the ICOAs delegated the question of whether an employer/employee relationship existed to the arbitrator:

Deciding whether an employer-employee relationship exists between the parties falls within the scope of the arbitration agreement, because the arbitration agreement explicitly includes “any disputes arising out of or relating to the relationship created by the [Contractor Agreement],” as well as “any disputes as to the rights and obligations of the parties, including the arbitrability of disputes between the parties” under the terms of the arbitration agreement.

Mem. Op. 19 (J.A. 28).² The District Court further noted that resolving the question of whether an employer-employee relationship existed would require analysis of the ICOAs as a whole, as well as factfinding on the amount of control exerted over Petitioners by defendants. Id. To conduct such an analysis would, according to the District Court, exceed the proper role of courts in addressing threshold questions of arbitrability: to consider only the validity and scope of the arbitration clause itself. Id. (citing Republic of Nicaragua v. Standard Fruit Co., 937 F.2d 469, 477 (9th Cir.1991)).

Petitioners contend that the District Court's refusal to address the exemption issue prior to ordering arbitration constitutes clear error.³

2. Statutory Framework

Section 2 of the FAA states that “an agreement in writing to submit to arbitration an existing controversy arising out of ... a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. To enforce this provision, any party “aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court ... for an order directing that such arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. If, after hearing the parties, the district court is satisfied that “the making of the agreement for arbitration or the failure to comply therewith is not in issue,” the court must order the parties “to proceed to arbitration in accordance with the terms of the agreement.” Id.

The FAA, and Section 4's authority to compel arbitration, do not extend to all arbitration agreements. As Section 2 makes clear, the Act applies only to contracts “evidencing a transaction involving commerce,” or arising from a “maritime transaction.” 9 U.S.C. § 2. Section 1, titled “exceptions to operation of title,” imposes a further limit on the Act's scope, stating “nothing herein contained shall apply to contracts of employment of seamen, railroad employees,...