Oakley v. Domino's Pizza LLC

Citation516 P.3d 1237
Decision Date15 August 2022
Docket Number82659-0-I
Parties Justin L. OAKLEY, individually and on behalf of all those similarly situated, Respondent, v. DOMINO'S PIZZA LLC, a Foreign Limited Liability Company, Appellant.
CourtCourt of Appeals of Washington

Anthony Todaro, Alexandria Anne Cates, Attorney at Law, DLA Piper LLP (US), 701 5th Ave., Ste., 6900, Seattle, WA, 98104-7029, for Appellant.

James B. Pizl, Entente Law PLLC, 315 39th Ave., Sw Ste., 14, Puyallup, WA, 98373-3690, Adam J. Berger, Lindsay L. Halm, Jamal N. Whitehead, Schroeter Goldmark & Bender, 401 Union Street, Suite 3400, Seattle, WA, 98101, for Respondent.

PUBLISHED OPINION

Smith, A.C.J.

¶1 Justin Oakley, a former delivery and service driver at the Domino's Pizza supply chain center in Kent, filed a class action complaint against Domino's for violations of the Washington Minimum Wage Act1 and wage rebate act.2 Domino's appeals the trial court's denial of its motion to compel arbitration under the parties’ arbitration agreement. The court concluded that the agreement's choice of the Federal Arbitration Act3 (FAA) as its governing law was ineffective because Oakley was excluded from the FAA's scope as a transportation worker engaged in interstate commerce, and that the agreement's choice of the FAA could not be severed from the agreement. We agree that the choice of the FAA is ineffective, but conclude that this provision is severable. Nonetheless, because we conclude that the arbitration agreement's class action waiver is unconscionable, we affirm the trial court's denial of the motion to compel arbitration.

FACTS

¶2 Justin Oakley worked as a Delivery and Service driver at the Domino's Pizza supply chain center in Kent from November 2018 to January 2020. The Kent supply chain center is part of the Domino's supply chain division, which consists of a "network of 19 domestic and 5 Canadian Supply Chain Centers, a vegetable processing facility, a pressed product plant, and an Equipment & Supply Center." The supply chain division supplies more than 225 types of products, such as dough balls, pizza toppings, napkins, and cleaning supplies, to 99 percent of Domino's stores, of which there are some 15,000 worldwide. While most of these supplies are brought to the supply chain centers and then perhaps reapportioned before being delivered to Domino's restaurants, the supply chain centers also create the dough balls for the restaurants from raw ingredients.

¶3 As a Class A driver,4 Oakley drove a semi-truck with a refrigerated trailer on a multi-state route that usually included deliveries to Washington and Oregon and occasionally to Idaho, Montana, and Wyoming. Oakley's shifts all started and ended in Kent, and most of Oakley's deliveries were inside the state of Washington.5 Most Class A drivers "also routinely delivered supplies across state lines."

¶4 When Oakley began his employment, he signed an arbitration agreement. The agreement provided that disputes would be submitted to "binding arbitration under the Federal Arbitration Act," including disputes "relating to the scope, validity, or enforceability of this Arbitration Agreement." The agreement also specified that disputes would "be arbitrated only on an individual basis and not on a class, collective, multi-party, or private attorney general basis." It included a severability clause permitting the arbitrator or court to sever any term or provision deemed void, unenforceable, or in contravention of law, except that if the prohibition on class-wide actions was deemed invalid, then the entire arbitration agreement "shall be null and void." The agreement included an opt-out provision permitting Oakley to opt out within 30 days of signing the agreement. Oakley did not opt out.

¶5 On September 30, 2020, Oakley filed a class action complaint for damages, claiming that Domino's had violated the Washington Minimum Wage Act and wage rebate act. Domino's removed the case to federal court based on diversity jurisdiction, but the federal court remanded the case to superior court on February 11, 2021. Domino's then filed a motion to compel arbitration. The court denied the motion, concluding that Oakley was exempt from the FAA and that the agreement's choice of the FAA could not be severed from the agreement. Domino's appeals.

ANALYSIS

¶6 "We review a trial court's decision to grant a motion to compel or deny arbitration de novo." Walters v. A.A.A. Waterproofing, Inc., 151 Wash. App. 316, 320, 211 P.3d 454 (2009). "The party opposing arbitration bears the burden of showing that the agreement is not enforceable." Zuver v. Airtouch Commc'ns, Inc., 153 Wash.2d 293, 302, 103 P.3d 753 (2004).

Jurisdiction

¶7 As an initial matter, Domino's contends that the court does not have the authority to address this case because the arbitration agreement requires referring any disputes "relating to the scope, validity, or enforceability" of the agreement to arbitration. We conclude that we have limited jurisdiction to hear this case.6

¶8 Generally, "[c]ourts, not arbitrators, determine the threshold matter of whether an arbitration clause is valid and enforceable." Saleemi v. Doctor's Assocs., Inc., 176 Wash.2d 368, 376, 292 P.3d 108 (2013). However, under both federal and Washington law, questions about the validity of an arbitration question may be delegated to the arbitrator if the parties’ agreement "clearly and unmistakably" provides that they should be. AT&T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 649, 106 S. Ct. 1415, 89 L. Ed. 2d 648 (1986) ; Hill v. Garda CL Nw., Inc., 179 Wash.2d 47, 53, 308 P.3d 635 (2013). Nonetheless, and notwithstanding such a delegation clause, the question of whether an arbitration agreement falls within the scope of the transportation worker exception of 9 U.S.C. § 1 is a question for the courts. New Prime Inc. v. Oliveira, ––– U.S. ––––, 139 S. Ct. 532, 538, 202 L. Ed. 2d 536 (2019) ("[A] court may use §§ 3 and 4 to enforce a delegation clause only if .... the contract in which the clause appears doesn't trigger § 1 ’s ‘contracts of employment’ exception."). See also 9 U.S.C. § 3 (court should stay proceedings and refer a case to arbitration only "upon being satisfied that the issue involved" in the case "is referable to arbitration").

¶9 Here, the arbitration agreement refers "any ... dispute ... relating to the scope, validity, or enforceability" of the agreement to binding arbitration. This is a clear and unmistakable delegation of these issues to the arbitrator. Tacoma Narrows Constructors v. Nippon Steel-Kawada Bridge, Inc., 138 Wash. App. 203, 215, 156 P.3d 293 (2007) (clause referring "all disputes" to arbitration did not clearly and unmistakably delegate issue of arbitrability to arbitrator); Raven Offshore Yacht, Shipping, LLP v. F.T. Holdings, LLC, 199 Wash. App. 534, 538, 541, 400 P.3d 347 (2017) (arbitration agreement's requirement that arbitration be conducted in accordance with Maritime Arbitration Association (MAA) rules, which provide that arbitrator has jurisdiction over " ‘any issues with respect to ... the existence, scope or validity of the underlying arbitration agreement,’ " was clear and unmistakable delegation of those issues to arbitrator (quoting MAA 9(a))). Notwithstanding this delegation, Oakley contends that he falls into the transportation worker exemption of the FAA, which is a question for the courts under New Prime.7 139 S. Ct. at 538. Therefore, we first address the applicability of the FAA.

Applicability of the FAA

¶10 Next, Domino's contends that the court erred by concluding that the FAA's transportation worker exception applied to Oakley's employment. We disagree.

¶11 The FAA provides that it does not "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. In Circuit City Stores, Inc. v. Adams, the U.S. Supreme Court held that a narrow interpretation of this language was appropriate given "the location of the phrase ‘any other class of workers engaged in ... commerce’ in a residual provision, after specific categories of [transportation] workers have been enumerated," and given the narrow meaning of the words "engaged in commerce" relative to "the more open-ended formulations ‘affecting commerce’ and ‘involving commerce.’ " 532 U.S. 105, 118, 121 S. Ct. 1302, 149 L. Ed. 2d 234 (2001) (alteration in original) (quoting 9 U.S.C. § 1 ). Accordingly, the Court concluded that this language "exempts from the FAA only contracts of employment of transportation workers." Circuit City, 532 U.S. at 119, 121 S.Ct. 1302. More recently, the court held that "any class of workers directly involved in transporting goods across state or international borders" falls within this exemption. Sw. Airlines Co. v. Saxon, 596 U.S. ––––, 142 S. Ct. 1783, 1789, 213 L.Ed.2d 27 (2022).

¶12 The Circuit Courts have defined the test for whether an employee fits within the transportation exemption in various, generally complementary ways. "To determine whether a class of workers meets that definition, we consider whether the interstate movement of goods is a central part of the class members’ job description." Wallace v. Grubhub Holdings, Inc., 970 F.3d 798, 801 (7th Cir. 2020).8 "[T]o fall within the exemption, the workers must be connected not simply to the goods, but to the act of moving those goods across state or national borders." Wallace, 970 F.3d at 802 (Grubhub food delivery workers were not exempt from the FAA even though the food they delivered may have previously moved in interstate commerce; that interstate movement was not part of the transaction the workers were involved in); McWilliams v. Logicon, Inc., 143 F.3d 573, 576 (10th Cir. 1998) ( § 1 exemption applies only to "employees actually engaged in the channels of foreign or interstate commerce."). The Ninth Circuit recently held that the exemption applies to a "worker employed...

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