Wallace v. Grubhub Holdings, Inc.

• Citation: 970 F.3d 798
• Decision Date: 04 August 2020
• Docket Number: Nos. 19-1564 & 19-2156,s. 19-1564 & 19-2156
• Parties: Carmen WALLACE, individually and on behalf of all others similarly situated, et al., Plaintiffs-Appellants, v. GRUBHUB HOLDINGS, INC., and Grubhub, Inc., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

970 F.3d 798

Carmen WALLACE, individually and on behalf of all others similarly situated, et al., Plaintiffs-Appellants,

v.GRUBHUB HOLDINGS, INC., and Grubhub, Inc., Defendants-Appellees.

Nos. 19-1564 & 19-2156

United States Court of Appeals, Seventh Circuit.

Argued February 12, 2020

Decided August 4, 2020

Rehearing En Banc Denied September 9, 2020^*

Shannon Erika Liss-Riordan, Thomas Fowler, Attorneys, LICHTEN & LISS-RIORDAN, P.C., Boston, MA, James B. Zouras, Ryan F. Stephan, Attorneys, STEPHAN ZOURAS, LLP, Chicago, IL, for Plaintiffs - Appellants.

Todd M. Church, Attorney, LITTLER MENDELSON P.C., Chicago, IL, Robert William Pritchard, Joshua Vaughn, Attorneys, LITTLER MENDELSON, Pittsburgh, PA, Andrew Michael Spurchise, Attorney, LITTLER MENDELSON, New York, NY, for Defendants - Appellees.

Jennifer Bennett, Attorney, GUPTA WESSLER, San Francisco, CA, for Amicus Curiae PUBLIC JUSTICE.

Cory L. Andrews, Attorney, WASHINGTON LEGAL FOUNDATION, Washington, DC, for Amicus Curiae WASHINGTON LEGAL FOUNDATION.

Archis Ashok Parasharami, Attorney, MAYER BROWN LLP, Washington, DC, for Amici Curiae CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA, NATIONAL ASSOCIATION OF MANUFACTURERS.

Before Bauer, Kanne, and Barrett, Circuit Judges.

Barrett, Circuit Judge.

Section 1 of the Federal Arbitration Act exempts from the Act's coverage "contracts of employment" of two enumerated categories of workers—"seamen" and "railroad employees." But it also exempts the contracts of a residual category—"any other class of workers engaged in foreign or interstate commerce." This appeal requires us to decide whether food delivery drivers for Grubhub are exempt from the Act under § 1's residual category.

Grubhub calls itself an "online and mobile food-ordering and delivery marketplace." It provides a platform for diners to order takeout from local restaurants, either online or via its mobile app. When a diner places an order through Grubhub's app, Grubhub transmits the order to the restaurant, which then prepares the diner's meal. Once the food is ready, the diner can either pick it up herself or request that Grubhub dispatch a driver to deliver it to her.

Grubhub considers its drivers to be independent contractors rather than employees entitled to the protections of the Fair Labor Standards Act. The plaintiffs in these consolidated appeals—who worked as drivers in cities including Chicago, Portland, and New York—disagree. Between them, they filed two suits against Grubhub, alleging, among other things, that Grubhub violated the Fair Labor Standards Act by failing to pay them overtime. But their suits quickly hit a procedural roadblock. Each of the plaintiffs had signed a "Delivery Service Provider Agreement" that required them to submit to arbitration for "any and all claims" arising out of their relationship with Grubhub. In both cases, Grubhub moved to compel arbitration, and in both cases, the plaintiffs responded that the district court could not compel them to arbitrate because, as "workers engaged in foreign or interstate commerce," their contracts with Grubhub were exempt from the Federal Arbitration Act (FAA). Both district courts concluded that the FAA applied and compelled arbitration.

Enacted in 1925, the FAA was Congress's response to the general "hostility of American courts to the enforcement of arbitration agreements." Circuit City Stores, Inc. v. Adams , 532 U.S. 105, 111, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001). It sought to replace that "widespread judicial hostility" with a "liberal federal policy favoring arbitration." AT&T Mobility LLC v. Concepcion , 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (citation omitted). In pursuit of that goal, the FAA sweeps broadly, "requir[ing] courts rigorously to enforce arbitration agreements according to their terms." Epic Sys. Corp. v. Lewis , ––– U.S. ––––, 138 S. Ct. 1612, 1621, 200 L.Ed.2d 889 (2018) (citation and internal quotation marks omitted).

But its breadth is not unqualified. As relevant here, § 1 of 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. § 1.¹ In other words, it exempts two enumerated categories of workers—"seamen" and "railroad employees"—as well as what we will call the residual category—"any other class of workers engaged in foreign or interstate commerce." The plaintiffs insist that they fall within this last category. To decide whether they are right, we must determine what membership in that category requires.

As with any question of statutory interpretation, our inquiry "begins with the text." Ross v. Blake , ––– U.S. ––––, 136 S. Ct. 1850, 1856, 195 L.Ed.2d 117 (2016). And the first thing we see in the text of the residual category is that the operative unit is a "class of workers." So we know that in determining whether the exemption applies, the question is "not whether the individual worker actually engaged in interstate commerce, but whether the class of workers to which the complaining worker belonged engaged in interstate commerce." Bacashihua v. U.S. Postal Serv. , 859 F.2d 402, 405 (6th Cir. 1988) (emphasis added). That means that a member of the class qualifies for the exemption even if she does not personally "engage in interstate commerce." Id. By the same token, someone whose occupation is not defined by its engagement in interstate commerce does not qualify for the exemption just because she occasionally performs that kind of work. Hill v. Rent-A-Center , 398 F.3d 1286, 1289–90 (11th Cir. 2005).

That immediately leads to the next question: What does it mean for a class of workers to be "engaged in interstate commerce"? The Supreme Court's decision in Circuit City goes a long way toward providing an answer. In that case, the plaintiff argued that § 1's residual category reached all employment contracts within Congress's commerce power—essentially, all employment contracts—leaving the FAA applicable only to commercial arbitration agreements. 532 U.S. at 114, 121 S.Ct. 1302. The Court rejected the proposition that the exemption was coterminous with Congress's authority to regulate employment contracts, holding instead that the residual clause applies only to the employment contracts of workers engaged in the movement of goods in interstate commerce. Id. at 119, 121 S.Ct. 1302.

In reaching that result, the Court explained that the phrase "engaged in commerce" as used in § 1 meant something narrower than "affecting commerce" or "involving commerce" as used in § 2. While the latter two phrases evoke the full reach of Congress's commerce power, the phrase "engaged in commerce" has "a more limited reach," id. at 115, 121 S.Ct. 1302, referring instead to "active employment" in interstate commerce. Id. at 116, 121 S.Ct. 1302 (citation omitted). The narrower reading is confirmed by the presence of specific exemptions for "seamen" and "railroad workers," the Court said, for if the residual category were a blanket exemption for all employment contracts, these specific exemptions would have been wholly unnecessary. Id. at 114, 121 S.Ct. 1302. Far from being superfluous, the enumerated categories play a key role in defining the scope of the residual clause, which should "be controlled and defined by reference to the enumerated categories of workers which are recited just before it." Id. at 115, 121 S.Ct. 1302. That is to say, "[t]he wording of § 1 calls for the application of the maxim of ejusdem generis ," id. at 114, 121 S.Ct. 1302, the rule that "[w]here general words follow an enumeration of two or more things, they apply only to persons or things of the same general kind or class specifically mentioned." ANTONIN SCALIA & BRYAN A. GARNER, READING LAW: THE INTERPRETATION OF LEGAL TEXTS 199 (2012). The residual clause, then, exempts only workers who are akin to "seamen" and "railroad employees," a category that the Court described as "transportation workers." Circuit City , 532 U.S. at 119, 121 S.Ct. 1302.

Both we and our sister circuits have repeatedly emphasized that transportation workers are those who are "actually engaged in the movement of goods in interstate commerce." Int'l Brotherhood of Teamsters Local Union No. 50 v. Kienstra Precast, LLC , 702 F.3d 954, 956 (7th Cir. 2012) (quoting Circuit City , 532 U.S. at 112, 121 S.Ct. 1302 ).² 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. Compare New Prime Inc. v. Oliveira , ––– U.S. ––––, 139 S. Ct. 532, 539, 202 L.Ed.2d 536 (2019) (observing that interstate truckers are plainly transportation workers), with Hill , 398 F.3d at 1289–90 (holding that furniture salespeople are not "transportation workers" even if they occasionally deliver furniture to out-of-state customers). Then, if such a class exists, we ask in turn whether the plaintiff is a member of it. Compare Kienstra Precast , 702 F.3d at 957 (holding that truckers were part of the class of interstate truckers because they hauled some deliveries across state lines), with Lenz v. Yellow Transp., Inc ., 431 F.3d 348, 351–53 (8th Cir. 2005) (holding that a customer service representative at an interstate trucking company was not a member of the relevant class). Sometimes that determination is easy to make—as it is for truckers who drive an interstate route. See , e.g ., New Prime , 139 S. Ct. at 539. Sometimes that determination is harder—as it is for truckers who drive an intrastate leg of an interstate route. See , e.g ., Waithaka v. Amazon.com, Inc. , No. 19-1848, ––– F.3d ––––, ––––, 2020 WL 4034997, at *11 (1st Cir. July 17, 2020) (holding that a last-leg delivery driver qualified as a transportation worker). Whether easy or hard, though, the inquiry is always focused on the worker's active engagement in the enterprise of moving goods across interstate lines....