Rittmann v. Amazon.com, Inc.

• Citation: 971 F.3d 904
• Decision Date: 19 August 2020
• Docket Number: No. 19-35381,19-35381
• Parties: Bernadean RITTMANN, individually and on behalf of all others similarly situated; Freddie Carroll, individually and on behalf of all others similarly situated; Julia Wehmeyer, individually and on behalf of all others similarly situated; Raef Lawson, individually and on behalf of all others similarly situated; in his capacity as Private Attorney General Representative; Iain Mack, in his capacity as Private Attorney General Representative, Plaintiffs-Appellees, v. AMAZON.COM, INC.; Amazon Logistics, Inc., Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

971 F.3d 904

Bernadean RITTMANN, individually and on behalf of all others similarly situated; Freddie Carroll, individually and on behalf of all others similarly situated; Julia Wehmeyer, individually and on behalf of all others similarly situated; Raef Lawson, individually and on behalf of all others similarly situated; in his capacity as Private Attorney General Representative; Iain Mack, in his capacity as Private Attorney General Representative, Plaintiffs-Appellees,

v.AMAZON.COM, INC.; Amazon Logistics, Inc., Defendants-Appellants.

No. 19-35381

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 3, 2020 Seattle, Washington

Filed August 19, 2020

M. SMITH, Circuit Judge:

Defendants Amazon.com, Inc. and Amazon Logistics, Inc. (together, Amazon) appeal the district court's order denying their motion to compel arbitration of Plaintiff Raef Lawson's federal and state wage and hour claims. Lawson is one of four named Plaintiffs in this suit. Unlike the other named Plaintiffs, Lawson agreed to all of Amazon's Terms of Service (TOS) when he signed up to work as a delivery provider for Amazon's app-based delivery program, Amazon Flex (AmFlex), including the arbitration provision at issue here.

The primary issue that we address is whether AmFlex delivery workers are exempt from the Federal Arbitration Act's (FAA), 9 U.S.C. § 1, et seq ., enforcement provisions because they are transportation workers engaged in interstate commerce. In denying Amazon's motion to compel, the district court concluded that AmFlex delivery providers fall within the scope of the FAA's transportation worker exemption pursuant to § 1 because they deliver goods shipped from across the United States. The court further determined that the TOS bars application of Washington state law to the arbitration provision. As a result, the court concluded that there is no valid arbitration agreement between Amazon and Lawson, and denied the motion to compel. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

I. The AmFlex Program

Plaintiffs Bernadean Rittmann, Freddie Carroll, Julia Wehmeyer, and Raef Lawson contracted with Amazon Logistics, Inc. to provide delivery services for AmFlex. Amazon Logistics, Inc. is a subsidiary of Amazon.com, Inc., an online retailer that sells its own products and provides fulfillment services for third-party sellers who also sell their products on Amazon.com.

Historically, Amazon has shipped products by using large third-party delivery providers such as FedEx and UPS. Recently, it has supplemented those delivery services by contracting with local delivery providers through its AmFlex program, which is available in certain metropolitan areas in the United States. In the AmFlex program, Amazon contracts with individuals to make "last mile" deliveries of products from Amazon warehouses to the products’ destinations using the AmFlex smart phone application. AmFlex participants use a personal vehicle or bicycle, or public transportation, to deliver products ordered through the Amazon website or mobile applications. They pick up assigned packages from an Amazon warehouse and drive an assigned route to deliver the packages. AmFlex delivery providers occasionally cross state lines to make deliveries, but most of their deliveries take place intrastate. At the end of each shift, the delivery providers return undelivered packages to Amazon's warehouses.

II. The AmFlex Terms of Service

To sign up for the AmFlex program, individuals must agree to the AmFlex Independent Contractor TOS in the app, the most recent version of which—and the one at issue here—was updated in October 2016. In relevant part, the TOS provides that:

YOU AND AMAZON AGREE TO RESOLVE DISPUTES BETWEEN YOU AND AMAZON ON AN INDIVIDUAL BASIS THROUGH FINAL AND BINDING ARBITRATION , UNLESS YOU OPT OUT OF ARBITRATION WITHIN 14 CALENDAR DAYS OF THE EFFECTIVE DATE OF THIS AGREEMENT, AS DESCRIBED BELOW IN SECTION 11. If you do not agree with these terms, do not use the Amazon Flex app or participate in the Program or provide any Services.

Section 11 of the TOS in turn provides that:

b) TO THE EXTENT PERMITTED BY LAW, THE PARTIES AGREE THAT ANY DISPUTE RESOLUTION PROCEEDINGS WILL BE CONDUCTED ONLY ON AN INDIVIDUAL BASIS AND NOT ON A CLASS OR COLLECTIVE BASIS.

The TOS is governed by "the law of the state of Washington without regard to its conflict of laws principles, except for Section 11 of [the] Agreement, which is governed by the Federal Arbitration Act and applicable federal law." The TOS further provides that, "If any provision of this Agreement is determined to be unenforceable, the parties intend that this Agreement be enforced as if the unenforceable provisions were not present and that any partially valid and enforceable provisions be enforced to the fullest extent permissible under applicable law."

Plaintiffs Rittmann, Carroll, and Wehmeyer timely opted out of arbitration when they signed up for AmFlex and thus are not subject to the arbitration provision. Plaintiff Lawson, however, did not opt out. He then went on to make deliveries in the Los Angeles area.

III. The District Court Proceedings

In 2016, Plaintiffs Rittmann, Carroll, and Wehmeyer filed this proposed collective and class action lawsuit alleging that Amazon misclassifies AmFlex users as independent contractors rather than employees. In 2017, they filed a Second Amended Complaint (SAC), adding Lawson as a plaintiff. The SAC alleges violations by Amazon of the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. § 201, et seq ., the California Labor Code, and Washington state and Seattle municipal wage and hour laws. Plaintiffs seek to bring the FLSA claims as a nationwide collective action and their state claims as state-wide class actions.

Amazon moved to compel Lawson's claims to arbitration. The district court stayed the proceedings pending the resolution of Epic Systems Corp. v. Lewis , ––– U.S. ––––, 138 S. Ct. 1612, 200 L.Ed.2d 889 (2018), Van Dusen v. Swift Transportation Co. , No. 17-15102 (9th Cir. Jan. 20, 2017), and New Prime Inc. v. Oliveira , ––– U.S. ––––, 139 S. Ct. 532, 202 L.Ed.2d 536 (2019). Following the Supreme Court's decision in New Prime , the parties supplemented their briefing on the motion to compel.

The district court denied Amazon's motion to compel. The court determined that Plaintiffs fell within the FAA's transportation worker exemption, which exempts from the FAA's arbitration enforcement provisions the "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 court then considered whether the arbitration provision in Section 11 was otherwise valid and enforceable. Pointing to the text of the TOS's governing law provision, the court determined that the FAA did not govern Section 11 in light of the application of the FAA's exemption, and that the parties did not intend Washington law to apply either. As a result, the court determined that it was not clear what law would apply to the provision, or whether the parties intended to arbitrate disputes in the event the FAA did not apply. Accordingly, the court concluded that there was no valid agreement to arbitrate and denied Amazon's motion to compel arbitration. Amazon timely appealed, and the district court stayed proceedings pending this appeal.

JURISDICTION AND STANDARDS OF REVIEW

We have jurisdiction pursuant to 9 U.S.C. § 16(a)(1)(B). We review an order denying a motion to compel arbitration de novo. O'Connor v. Uber Techs., Inc. , 904 F.3d 1087, 1093 (9th Cir. 2018). We review the validity of an arbitration clause de novo. Cape Flattery Ltd. v. Titan Maritime, LLC , 647 F.3d 914, 917 (9th Cir. 2011). The factual findings underlying a district court's decision are reviewed for clear error. Id. The interpretation and meaning of contract provisions are questions of law that we review de novo. Tompkins v. 23andMe, Inc. , 840 F.3d 1016, 1021 (9th Cir. 2016).

ANALYSIS

The FAA generally provides that arbitration agreements "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. The FAA contains a number of enforcement mechanisms for private parties to compel arbitration pursuant to a valid arbitration agreement. The FAA, however, exempts certain contracts from its scope, specifically the employment contracts of "seamen, railroad employees, [and] any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1 ; Circuit City Stores, Inc. v. Adams , 532 U.S. 105, 118–19, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001). This appeal requires us to decide whether the AmFlex delivery providers in this case fall within the scope of the exemption. Because we conclude that they do, and thus that their employment contracts are not subject to the FAA, we consider and reject Amazon's further argument that there is nevertheless a valid and enforceable arbitration agreement between the parties.

I. The FAA's Transportation Worker Exemption

Amazon challenges the district court's conclusion that AmFlex delivery providers are exempt from the FAA as transportation workers "engaged in foreign or interstate commerce." 9 U.S.C. § 1. According to Amazon, its delivery providers participate in "purely intrastate activities " when they make last mile deliveries and thus are not "engaged in interstate commerce ." Amazon's position rests on the notion that transportation workers must actually cross state lines to be "engaged in interstate commerce" for the exemption to apply. We reject that construction of that statute. Properly construed, § 1 encompasses the contracts of the AmFlex delivery providers in this case.

A. The Meaning of "Engaged in Interstate Commerce" in § 1

To resolve Amazon's appeal, we must first interpret the meaning of the phrase "engaged in interstate or foreign commerce," as used in § 1 of the FAA. We begin by briefly turning to the Supreme Court's...