Labor & Employment Law Daily Amazon asks Justices to determine whether ‘last mile’ gig drivers are exempt under FAA
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Sunday, November 15, 2020

Amazon asks Justices to determine whether ‘last mile’ gig drivers are exempt under FAA

By Pamela Wolf, J.D.

As a class, these gig drivers are not engaged to transport goods or passengers across state or national boundaries, Amazon contends.

In a case that is one more reminder of the legal complexities posed by the gig economy, Amazon.com, Inc., and Amazon Logistics, Inc., are asking the Supreme Court to scrutinize a divided Ninth Circuit decision holding that “Amazon Flex” drivers who use their personal vehicles to make local deliveries in a single state are interstate workers exempt from the FAA’s enforcement provisions and need not arbitrate their claims because the online retailer sells goods that travel in interstate commerce before the drivers pick them up for delivery.

Ninth Circuit below. Below, in Rittmann v. Amazon.com, Inc., the Ninth Circuit affirmed the lower court’s denial of a motion to compel arbitration filed by Amazon.com in a lawsuit challenging Amazon’s classification of drivers in its AmFlex program as independent contractors. Agreeing with the First Circuit, the appeals court determined that AmFlex delivery providers in this case were transportation workers engaged in interstate commerce and were thus exempt from the FAA’s enforcement provisions pursuant to § 1. The appeals court further held that the parties did not enter into a valid agreement to arbitrate and that there was no other ground upon which it could enforce the arbitration provision.

“Last mile” deliveries. The drivers in this case contracted with Amazon Logistics to provide delivery services for AmFlex. Historically, Amazon.com shipped its products using large third-party delivery providers. Recently, it has supplemented those delivery services by contracting with local delivery providers through its AmFlex program, in which Amazon contracts with individuals to make “last mile” deliveries of products using the AmFlex smart phone application.

Flex drivers not engaged in interstate commerce. In a petition for certiorari filed on November 4, Amazon has asked the High Court to determine whether the FAA’s exemption for classes of workers engaged in foreign or interstate commerce prevents the Act’s application to local transportation workers who, as a class, are not engaged to transport goods or passengers across state or national boundaries.

According to Amazon, in two prior decisions construing the exemption, the Supreme Court clarified the meaning of the phrase “contracts of employment” and held that the residual clause, “any other class of workers engaged in foreign or interstate commerce,” is narrowly limited to transportation workers. However, the Court has never explained how to determine when transportation workers are “engaged in foreign or interstate commerce.”

Circuit split. The courts of appeals are split over this question, particularly disagreeing as to whether the exemption includes classes of workers who perform purely local transportation activities, Amazon observed. In the First and Ninth Circuits, the critical factor is whether the workers work for businesses that depend on the movement of goods or passengers across state lines, while in the Fifth, Seventh, and Eleventh Circuits, the exemption’s plain language turns on whether the class of workers itself is engaged in interstate transportation of goods or passengers. The Third and Eighth Circuits are somewhere in between these two positions, considering the workers’ activities as one factor among many.

Nature of the work. Drivers may work for several different companies using their personal vehicles and their smart phone. According to Amazon, “the nature of the work—using one’s own car and smartphone to drive goods or passengers around town—is largely consistent from one company to the next.” Some of these workers have in recent years brought worker-misclassification lawsuits against these companies, despite having agreed to arbitrate such disputes.

Inconsistent rulings. Here, the Ninth Circuit held a driver’s agreement exempt from the FAA because Amazon sells goods shipped from around the country. But a Seventh Circuit decision (authored by then-Judge Barrett, newly appointed to the High Court) looked past the origins of the delivered goods and ruled that Grubhub drivers’ agreements are not exempt, Amazon noted. The Third Circuit, however, has adopted a multifactor approach requiring fact discovery to determine whether Uber drivers’ agreements are exempt.

As a result of these decisions, “the same person performing the same type of work at the same time through the same means is required to arbitrate against some [putative] employers but not others,” Amazon pointed out, reiterating the words of the dissent in the Ninth Circuit ruling.

“This conflict and confusion frustrate the FAA’s very purpose,” according to Amazon. “The FAA exists to allow parties to structure their dealings to avoid litigation’s costs and delays. Contracting parties cannot do that if they are consigned to litigate in certain courts because of basic disagreement over when the FAA applies. The FAA’s applicability must be uniform and predictable nationwide.”

Ninth Circuit wrong on the merits. Amazon contends that the Ninth Circuit’s ruling, “which broadens the FAA’s exemption based on criteria that have no grounding in the statute’s text, history, or purposes,” is wrong on the merits, as the dissent explained. Because the retailer contends that the Ninth Circuit’s decision is in conflict with decisions of other circuits and the High Court, as well as the statute’s language, structure, history, and purposes, certiorari should be granted and the Ninth Circuit’s ruling reversed.

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