Vargas v. Delivery Outsourcing, LLC
| Decision Date | 14 March 2016 |
| Docket Number | Case No. 15-cv-03408-JST |
| Court | U.S. District Court — Northern District of California |
| Parties | SALVADOR VARGAS, Plaintiff, v. DELIVERY OUTSOURCING, LLC, et al., Defendants. |
Before the Court is Defendant Delivery Outsourcing, LLC's Motion to Compel Arbitration and Stay Proceedings.1 ECF No. 19. For the reasons set forth below, the Court will grant the motion.
Defendant Delivery Outsourcing, LLC ("DO"), a Florida-based limited liability company, contracts with businesses and individuals to deliver delayed luggage to airline passengers. ECF No. 19-1; ECF No. 1-1 ¶ 6. Defendant Luggage Services and Logistics, LLC ("LSL") is a Florida limited liability company and Defendant Bags, Inc. ("Bags") is a Florida corporation. ECF No. 1-1 ¶¶ 7-8. On or around July 16, 2012, Plaintiff Salvador Vargas ("Plaintiff") entered into an Owner/Operator Agreement with DO to deliver delayed bags and luggage to air travelers in the Bay Area. See ECF No. 19-3, Merriam Decl., Ex. A (the Agreement). Plaintiff, a California resident, worked as a luggage delivery driver from July 2012 to May 2014. ECF No. 1-1 ¶ 13. He was paid for each delivery made and used his own vehicle to deliver luggage for Defendants. Id. ¶¶ 15-16. On May 16, 2014, Defendants terminated Plaintiff's employment. Id. ¶ 36.
On May 15, 2015, Plaintiff filed a complaint in San Mateo Superior Court alleging that Defendants misclassified him as an independent contractor, thereby depriving him of the rights guaranteed to employees under California law. ECF No. 1-1 ¶¶ 14-38. He also alleges that while employed with Defendants, he faced workplace discrimination due to his age and race or national origin. Plaintiff identifies as Latino and was approximately 70 years old at the time the alleged discrimination took place. Id. ¶¶ 30-35. Plaintiff contends he was wrongfully terminated on account of his age, race, and/or national origin. Id. ¶ 114. Plaintiff brings eleven claims for Defendants' failure to pay minimum wage pay, pay all hours worked, pay overtime compensation, permit rest periods, permit meal periods, reimburse business expenses, and furnish accurate wage statements; waiting time penalties; unfair competition; discrimination; and wrongful termination. See generally ECF No. 1-1. Plaintiff seeks damages, restitution, waiting time penalties, costs, and attorneys' fees. Id. at 15-16.2
On July 23, 2015, Defendant DO removed this action to this Court pursuant to 28 U.S.C. §§ 1441 and 1446. ECF No. 1.
In support of its motion to compel arbitration, DO attaches Plaintiff's Owner/Operator Agreement. See ECF No. 19-3, Decl. of Jessica Merriam ("Merriam Decl."), Ex. A. The Agreement is seven-pages long and printed in small type. Plaintiff signed and dated the Agreement, but DO did not. The sixth page is a fill-in-the-blank form where Plaintiff provided information about his vehicle, automobile insurance, and driver's license. See id. at 9. The last page is titled "Owner/Operator List of Understandings," which lists fifteen statements with Plaintiff's initials next to each statement. Id. at 10. A question is posed at the top of the list: "Before reading this document, can you read and speak English?" Id. Neither "yes" nor "no" is circled. Id.
Section 14, the provision on governing law, venue, and jurisdiction, appears on the fourth and fifth pages of the Owner/Operator Agreement. See id. at 7-8. The provision defines"disputes" as "[a]ny and all disputes which may arise or pertain in any way to this Agreement . . . ." Id. at 7. It also requires that disputes be submitted on an individual basis to final and binding private arbitration administered by the American Arbitration Association ("AAA") using AAA's Rules for Commercial Arbitration. The section further includes a delegation clause stating that "[w]hether a dispute is arbitral shall be determined by the arbitrator." Id. However, the section also discloses that "[i]f any provision of this Agreement or portion thereof is held to be unenforceable by a court of law or equity, said provision or portion thereof shall not prejudice the enforceability of any other provision or portion of the same provision . . . ."
Section 14 also contains a choice of law provision requiring the application of Florida law. Id. Finally, the Agreement requires that arbitration take place in Orlando, Florida, and actions to enforce or vacate the arbitral award also take place in Orlando, Florida. Id. at 7-8.
On December 22, 2015, DO filed its motion to compel arbitration of Plaintiff's claims and stay further judicial proceedings pending completion of arbitration. ECF No. 19. Defendants LSL and Bags moved to join in DO's motion to compel arbitration. ECF No. 20.
On January 21, 2016, Plaintiff filed his opposition to the motion, arguing that the Federal Arbitration Act ("FAA") does not apply to the agreement and that the arbitration agreement is unconscionable and unenforceable. ECF No. 24.
After reviewing Defendant's motion and Plaintiff's opposition, the Court ordered both parties to provide the Court with supplemental briefing on whether Plaintiff is an interstate transportation worker under Section 1 of the FAA. ECF No. 25.
On February 11, 2016, DO filed its reply in support of the motion contending that Section 1 does not apply to the agreement. ECF No. 26.
On February 18, 2016, Plaintiff filed his sur-reply. ECF No. 27.
The Court heard oral argument on March 10, 2016. ECF No. 28.
The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332.
The Court may take judicial notice of a fact "that is not subject to reasonable dispute because it . . . can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 201(b)(2).
In support of its motion to compel arbitration, DO requests that the Court take judicial notice of: (1) the American Arbitration Association's Commercial Arbitration Rules and Mediation Procedures; and (2) the American Arbitration Association's Employment Arbitration Rules and Mediation Procedures. ECF No. 19-4. Plaintiff does not oppose the request.
Because AAA's arbitration rules can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned, the Court will take judicial notice.
The Federal Arbitration Act ("FAA") applies to arbitration agreements in any contract affecting interstate commerce. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001); 9 U.S.C. § 2. Under the FAA, arbitration agreements "shall be valid, irrevocable, and enforceable, save upon such grounds that exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. This provision reflects "both a liberal federal policy favoring arbitration, and the fundamental principle that arbitration is a matter of contract." AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (internal citations omitted).
On a motion to compel arbitration, the court's role under the FAA is "limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue." Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). If the court is "satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement." 9 U.S.C. § 4. Where the claims alleged in a complaint are subject to arbitration, the Court may stay the action pending arbitration. Id. § 3.
The FAA extends to all contracts "evidencing a transaction involving commerce," or arising from a "maritime transaction." 9 U.S.C. § 2. However, under Section 1 of the FAA, an exemption to the FAA exists for "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1; see also Circuit City, 532 U.S. at 112.
A district court must first "assess whether a Section 1 exemption applies before ordering arbitration." In re Van Dusen, 654 F.3d 838, 845 (9th Cir. 2011). A plaintiff opposing arbitration under the FAA has "the burden of demonstrating the exemption." Cilluffo v. Central Refrigerated Services, Inc., No. EDCV 12-00886 (VAP), 2012 WL 8523507, at *3 (C.D. Cal. Sept. 24, 2012), order clarified, No. EDCV 12-00886 VAP, 2012 WL 8523474 (C.D. Cal. Nov. 8, 2012) (citing Rogers v. Royal Caribbean Cruise Line, 547 F.3d 1148, 1151 (9th Cir. 2008)).
Plaintiff contends that he falls within the Section 1 FAA exemption because he occasionally delivered luggage to Nevada as an employee to DO. ECF No. 24 at 7-8. To claim the Section1 exemption Plaintiff must demonstrate that he is (1) an employee (2) engaged in interstate commerce. The Court turns first to the question of whether Plaintiff was "engaged in interstate commerce."
Transportation workers are "workers actually engaged in the movement of goods in interstate commerce." Circuit City, 532 U.S. at 112. In Circuit City, the Supreme Court applied Section 1 narrowly and distinguished the limited reach of the phrase "engaged in commerce," which covers "only persons or activities within the flow of interstate commerce," from the terms "affecting commerce" or "involving commerce." Id. at 118. The Court noted that the latter terms refer to "Congress' intent to regulate to the outer limits of its authority under the Commerce Clause." Id. at 115.
Section 1's exemption was intended to reach workers who would, by virtue of a strike, "interrupt the free flow of goods to third parties in the same way that a seamen's strike...
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