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Amazon Delivery Drivers Can Avoid Arbitration, 9th Cir. Says (1)

Aug. 19, 2020, 3:48 PM; Updated: Aug. 19, 2020, 6:31 PM

Amazon.com Inc. drivers who say they were shorted on wages can move forward with a proposed nationwide class action as transportation workers exempt from the Federal Arbitration Act, a U.S. appeals court said.

Drivers who made “last mile” deliveries are engaged in interstate commerce and can’t be forced into arbitration and kept out of court, despite agreements the online retail giant claims they signed, Judge Milan D. Smith of the U.S. Court of Appeals for the Ninth Circuit wrote Wednesday in a 2-1 opinion.

The appeals court panel upheld a Seattle federal court ruling that nixed compulsory individual arbitration for claims that the drivers were misclassified as independent contractors and are owed unpaid minimum wages and overtime.

The Ninth Circuit’s decision could have wide effects, as Amazon and other companies have tried to avoid class claims through arbitration agreements. The U.S. Supreme Court has largely bolstered the federal law that governs arbitration, and more than half of employers use such agreements.

The case stems from Bernadean Rittmann’s Fair Labor Standards Act claims on behalf of as many as 10,000 delivery drivers. The decision aligned with a recent ruling in the First Circuit, and also noted, like the Seventh Circuit, that “last mile” delivery drivers for Amazon differ from local gig workers who deliver prepared meals.

Acknowledging the act exempts transportation workers who are engaged in interstate commerce, Amazon argued that those workers must actually cross state lines for the exemption to apply, and that the suing drivers made only local deliveries.

Writing for the majority, Milan Smith said that crossing state lines wasn’t necessary to be involved in interstate commerce. Joining him in the ruling was U.S. Circuit Judge Randy Smith.

U.S. Circuit Judge Daniel Bress dissented, arguing that the FAA exemption for certain transportation workers didn’t apply to the Amazon drivers. He said that for a delivery worker to be “engaged in” interstate commerce, the worker must belong to a “class of workers” that crosses state lines in the course of making deliveries.

The Amazon workers’ attorney, Shannon Liss-Riordan, called the Ninth Circuit’s decision “a significant ruling.” She said she hopes that Congress will reverse Supreme Court rulings that upheld arbitration agreements over the last decade, “allowing powerful corporations to shield themselves from class action lawsuits.”

With this ruling, the workers will be able to pursue the case as a national class action to continue to argue they should be classified as employees, rather than contractors, and thus are entitled to benefits, Liss-Riordan said.

The court stayed this case pending Amazon’s appeal, before deciding the workers’ class certification motion.

Neither Amazon nor its attorneys immediately responded to requests for comment. Morgan, Lewis & Bockius and K&L Gates represent Amazon. Lichten & Liss-Riordan and Frank Freed Subit & Thomas represent the workers.

The U.S. Supreme Court last year said in New Prime v. Oliveira that a long-haul truck driver didn’t have to arbitrate his misclassification lawsuit because he fell under the exemption for workers engaged in interstate commerce. The justices also took away the argument that workers labeled as independent contractors can’t benefit from that exemption.

That ruling sparked questions in courts across the country about which types of workers should fall under that category, including gig economy companies that deliver food, and even passengers. At least one federal appeals court has ruled that drivers transporting passengers or delivering goods qualify for that exemption, as long as they’re involved in interstate commerce.

The case is Rittmann v. Amazon.com, Inc., 9th Cir., No. 19-35381, opinion 8/19/20.

(Updates with case details and additional reporting throughout.)

To contact the reporter on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com

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