Young v. Shipt, Inc.
| Decision Date | 27 September 2021 |
| Docket Number | 1:20-CV-05858 |
| Citation | 563 F.Supp.3d 832 |
| Parties | Samantha YOUNG, on behalf of herself and all others similarly situated, known and unknown, Plaintiff, v. SHIPT, INC., Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Ian M. Silvers, Pro Hac Vice, Jerusalem Beligan, Pro Hac Vice, Bisnar Chase, LLP, Newport Beach, CA, Michael Louis Fradin, Michael L. Fradin, Attorney at Law, Skokie, IL, for Plaintiff.
Andrew B. Murphy, Faegre Drinker Biddle & Reath LLP, Minneapolis, MN, Andrew M. Kasabian, Pro Hac Vice, Matt Aidan Getz, Pro Hac Vice, Theane Evangelis, Pro Hac Vice, Dhananjay Saikrishna Manthripragada, Pro Hac Vice, Gibson, Dunn & Crutcher LLP, Los Angeles, CA, Gregory P. Abrams, Faegre Drinker Biddle & Reath LLP, Chicago, IL, Michele L. Maryott, Pro Hac Vice, Gibson, Dunn & Crutcher LLP, Irvine, CA, for Defendant.
Samantha Young is a former shopper, driver, and delivery person (she calls herself and others like her "Shoppers") for Shipt, Inc., a technology company that connects retail customers to local merchants and Shoppers for same-day, local selecting, purchasing, and delivery of groceries and household goods. Young alleges that she and her fellow Shoppers have been classified by Shipt as independent contractors, blocking them from receiving certain wages that are due to them. Young brings this proposed class action against Shipt, seeking additional wages under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 216(b) ; the Illinois Minimum Wage Law, 820 ILCS 105/1, et seq. ; and the Illinois Wage Payment and Collection Act (IWPCA), 820 ILCS 115/1, et seq.1 Shipt has moved to dismiss the case for improper venue, arguing that Young's claims must be resolved via arbitration. For the reasons explained in the Opinion, Shipt is right: the claims must be arbitrated.
Shipt is a technology company that provides online grocery-shopping and delivery services. R. 1, Compl. ¶ 6. The company describes itself as connecting customers and Shoppers via the Shipt Marketplace Application to facilitate same-day, on-demand retail shopping and delivery services in major metropolitan areas, including in Illinois. R. 26-1, April Hutchins Declaration ¶¶ 5–7. Customers place orders for goods using Shipt's platform. Id. ¶ 4. The platform then notifies nearby Shoppers of the customer's order. Id. If a Shopper chooses to accept the order, then they will visit the store, locate and purchase the selected items, and (if requested by the customer) provide same-day, local delivery. Id.
Moving away from the Shipt-customer-Shopper relationship, the Shipt-Shopper relationship is governed by an Independent Contractor Services Agreement (Shipt labels this agreement by its acronym, ICSA). Hutchins Decl. ¶ 14. This is the agreement that Young alleges misclassifies her and other Shoppes as an independent contractor. Shipt sends potential Shoppers the ICSA through HelloSign, a program that facilitates the electronic exchange of signed documents. Id. ¶ 15. Shoppers are also provided a separate, optional Arbitration Agreement. Id. ¶ 14. Young signed both the ICSA and the Arbitration Agreement in April 2019. Id. ¶ 19.
Young worked as a Shopper for Shipt from April 2019 through August 2019. Compl. ¶ 5. Young filed this proposed collective and class action, alleging that Shipt misclassified its drivers as independent contractors and violated the wage-and-hour requirements under the Fair Labor Standards Act, the Illinois Minimum Wage Law, and the Illinois Wage Payment and Collection Act. Id. ¶¶ 1, 15.
Shipt now moves to dismiss the action under the Federal Arbitration Act, 9 U.S.C. §§ 3 – 4, arguing that the case is in the wrong venue, Fed. R. Civ. P. 12(b)(3). Specifically, Shipt asserts that the Arbitration Agreement declares that "any and all disputes, claims, or controversies" arising out the relationship between Young and Shipt must "be resolved through mandatory, binding arbitration." R. 26-5, Def.’s Arbitration Agr. § 1. Young declined to opt out of the Arbitration Agreement, and Shipt thus contends that the claims must be arbitrated.
The Seventh Circuit has explained that a motion seeking dismissal based on an arbitration clause is best conceptualized as an objection to venue and, thus, properly brought under Civil Rule 12(b)(3). Auto. Mechs. Local 701 Welfare and Pension Funds v. Vanguard Car Rental USA, Inc. , 502 F.3d 740, 746 (7th Cir. 2007). Generally speaking, improper-venue motions under Rule 12(b)(3) require the Court to assume the truth of the plaintiff's factual allegations and draw reasonable inferences in its favor—unless the defense offers evidence to the contrary. Faulkenberg v. CB Tax Franchise Sys., LP , 637 F.3d 801, 806 (7th Cir. 2011). If evidence is offered and a factual dispute is introduced, the Court is not limited to consideration of the pleadings, and the Court may consider evidence submitted with the motion without converting it to a summary judgment motion. Id. at 809–10.
Under the Federal Arbitration Act, an arbitration provision in a "contract evidencing a transaction involving commerce ... 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. Sections 3 and 4 of the Arbitration Actempower federal courts to stay litigation and compel arbitration according to the terms of the parties’ agreement. 9 U.S.C. §§ 3, 4. Because "arbitration is a matter of contract," however, a federal court cannot require a party "to submit to arbitration any dispute which he has not agreed so to submit." Howsam v. Dean Witter Reynolds, Inc. , 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) (cleaned up).2 To compel arbitration under the Federal Arbitration Act, this Court first must find that (1) a written arbitration agreement exists between the parties; (2) there is a dispute among the parties within the scope of the arbitration agreement; and (3) one of the parties is refusing to comply with the arbitration agreement by declining to participate in arbitration. See Zurich Am. Ins. Co. v. Watts Indus., Inc. , 417 F.3d 682, 690 (7th Cir. 2005). The party opposing arbitration bears the burden of establishing why the arbitration provision should not be enforced. Green Tree Fin. Corp.-Alabama v. Randolph , 531 U.S. 79, 91–92, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000).
Shipt contends that this case is not properly in federal court because Young "expressly agreed to submit any and all disputes arising out of the parties’ relationship ... to individual arbitration." Def. Br. at 1. Shipt points to the independent-contractor agreement (which it labels the ICSA), which provides that, unless Young opts out, "any and all claims arising out of or relating to th[e] [ICSA] shall be resolved by binding arbitration pursuant to" a separate Arbitration Agreement. R. 26-4, Def.’s Exh. C, ICSA § 16. Shipt argues that all three prerequisites for compelling arbitration are satisfied here. First, there is a written arbitration agreement between Young and Shipt. Second, Young's claims fall within the scope of that arbitration agreement. Lastly, Young has refused to participate in arbitration proceedings.
Young does not argue that either the ICSA or the Arbitration Agreement is invalid or otherwise unenforceable. Although she was given the opportunity to opt out of the Agreement, she did not. Young also concedes that, if the Federal Arbitration Act applies, then the Arbitration Agreement is covered by Section 2 of the Act (because the agreement does involve "commerce," 9 U.S.C. § 2 ) and HER claims must be submitted to individual arbitration.
Young instead counters Shipt's motion by asserting that the Court cannot compel Shoppers to arbitrate because they are exempt from the Arbitration Act under 9 U.S.C. § 1, commonly referred to as the transportation-worker exemption. R. 31, Pl. Br. at 5–6. Young alternatively asks the Court to allow limited discovery on the exemption if "there is not enough evidence to make an informed decision." Id. at 13.
Section 1 excludes from the Federal Arbitration Act's coverage "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. This is a wholesale exemption from the Act—transportation workers covered by this exemption do not come within the purview of the Arbitration Act at all. Not surprisingly, then, federal courts—rather than an arbitrator—must determine whether the exemption applies or not. New Prime Inc. v. Oliveira , ––– U.S. ––––, 139 S. Ct. 532, 537, 202 L.Ed.2d 536 (2019) ; see Wallace v. Grubhub Holdings Inc., No. 18 C 4538, 2019 WL 1399986, at *2 (N.D. Ill. Mar. 28, 2019), aff'd , 970 F.3d 798 (7th Cir. 2020). For § 1 ’s transportation-worker exemption to apply, there must be (1) a "contract of employment" involving (2) "[transportation] workers engaged in foreign or interstate commerce." New Prime Inc. , 139 S. Ct. at 536.
On the first element—whether there is a "contract of employment"—Shipt hints that the ICSA does not qualify. Def. Br. at 8 n.1. That is plainly wrong. In New Prime , the Supreme Court held that contracts of "employment" under § 1 encompass more than just contracts of "employees"—instead, contracts of employment can include "agreements to perform work," including those of independent contractors. 139 S. Ct. at 543–44. Because Young was an independent contractor, there is no doubt that Shipt and Young engaged in a "contract of employment" within the meaning of the transportation-worker exemption.
The only question remaining, then, is whether Shipt Shoppers qualify as a "class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. To understand the scope of this residual category, "our inquiry begins with the text." Saxon v. Sw....
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