Amazon Flex Drivers Case Tied Up as Courts Shape Arbitration Law

Amazon.com Inc. faces an eight-year-old proposed class action that’s still in the early stages of litigation because it’s repeatedly been halted while the US Supreme Court developed federal arbitration doctrine.

The e-commerce giant revived its efforts this month to require delivery drivers for its Flex program to arbitrate their wage claims, after a federal judge gave it permission to file another motion seeking to move claims out of court. The company also filed a flurry of nearly two-dozen petitions asking federal district courts across the country to force plaintiffs out of the lawsuit and into individual arbitration.

The case illustrates how mandatory arbitration—often touted as a fast, efficient, low-cost alternative to courtroom litigation—can drag out disputes and sideline workers’ attempts to enforce their rights so courts can clarify gray areas in a century-old federal law.

The proposed wage class action against Amazon has been stayed for more than 80% of the time since Bernadean Rittman filed Fair Labor Standards Act and Washington state law claims in 2016. The lawsuit alleged that the company misclassified delivery drivers as independent contractors and therefore violated state and federal law by failing to pay them minimum wage and overtime compensation.

The glacial pace of litigation is a consequence of the US Supreme Court and the US Court of Appeals for the Ninth Circuit considering the scope of the Federal Arbitration Act, a 1925 law that companies invoke to enforce agreements to arbitrate claims brought by workers and consumers.

“All of this confusion was brought about by the Supreme Court twisting the language of the FAA to get the desired end of it covering as many disputes as possible,” said Richard Bales, a law professor at Ohio Northern University who’s written extensively on employment law and arbitration. The justices “keep having to jump through the hoops they’ve created for themselves to reach what appears to be their preferred policy outcome.”

The drivers’ wage lawsuit against Amazon was paused pending the Supreme Court’s decision in three FAA cases, as well as a pair of cases on the law that the court decided against considering. Litigation at the district court level was also on hold while the Ninth Circuit delved into arbitration issues, including Amazon’s bid to force drivers to arbitrate their wage claims.

Arbitration ‘Traffic Cop’

Lawmakers designed the FAA a century ago to apply to business-to-business disputes, while rulings in more recent decades have pulled the law away from its original intent, said Imre Szalai, a University of Loyola-New Orleans law professor who wrote a book on the history and evolution of arbitration laws.

The Supreme Court began expanding the reach of the FAA in the 1980s, primarily as a tool to ease federal courts’ civil caseloads, Szalai said. Businesses realized they could benefit from using arbitration agreements to keep employment and consumer disputes out of court, he said.

While other countries have modernized their arbitration laws by passing new legislation, the justices have been fine-tuning and filling in gaps in the nearly 100-year-old FAA so it can apply more broadly than it was designed, Szalai said.

The Supreme Court has issued 33 opinions in FAA cases over the past twenty years, according to a Bloomberg Law review of cases.

That puts the FAA near the top—if not at the very top—of statutes reviewed in the last two decades, said John Elwood, head of Arnold & Porter Kaye Scholer LLP’s appellate and Supreme Court practice.

“After all, in that context, the Supreme Court is acting as the traffic cop for the most common alternative means of dispute resolution to in-court litigation,” Elwood said.

The Antiterrorism and Effective Death Penalty Act, which governs standards for postconviction relief, is right up there with the FAA in frequency of Supreme Court review, while that pair is followed by laws like the Armed Career Criminal Act and the Immigration and Nationality Act, he said.

Yet even as the Supreme Court has repeatedly ruled in arbitration disputes, it’s often been deciding those cases narrowly, said Amy Schmitz, a law professor at Ohio State University who’s written books on arbitration. That approach has had negative consequences for litigants debating about arbitration in the lower courts, she said.

“The whole purpose of arbitration is to promote efficiency, but it’s not efficient for cases to be stayed while the Supreme Court rules on these issues,” Schmitz said. “It’s completely defeating the purpose.”

Transportation Worker Carveout

The Supreme Court’s incremental approach to the FAA is illustrated by its handling of the transportation worker exemption, an issue that’s been the subject of a litigation surge in recent years and lies at the heart of the Amazon drivers’ wage lawsuit.

The court in 2001 reversed the Ninth Circuit to rule that the FAA’s carveout for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” doesn’t apply broadly to all contracts of employment.

The justices revisited the exemption again in 2019, when they held that it can apply to agreements for purported independent contractors in the transportation industry.

Three years later, the court found that the exemption applied to an airline worker who loads cargo. And earlier this year, it ruled that a transportation worker need not work in the transportation industry to benefit from the exemption.

But the Supreme Court hasn’t ruled on the carveout’s application to the legions of delivery drivers vital to modern-day e-commerce. The court in April declined two petitions asking it to review whether they’re exempt from the FAA.

“It’s still really unclear whether the Amazon drivers are covered,” Schmitz said.

Court v. Arbitration, Continued

The plaintiffs in Rittmann v. Amazon scored a major win in 2020 when the Ninth Circuit held that drivers who made “last mile” deliveries were engaged in interstate commerce and can’t be forced into arbitration. That affirmed a Seattle federal court’s 2019 decision denying Amazon’s request to move the claims into individual arbitration.

Although the case has been on hold for much of its lifespan, the plaintiffs filed five amended complaints expanding the number of state wage laws Amazon allegedly violated by misclassifying local delivery drivers. The lawsuit was also consolidated with another driver misclassification case filed in the US District Court for the Western District of Washington.

In light of those moves—and dozens of other drivers joining the lawsuit—the number of plaintiffs in the lawsuit has grown to more than 100. The district court still has to consider whether to certify the class, which could trigger a massive expansion of the number of drivers in the lawsuit.

Nevertheless, Amazon contends that courts still have to resolve whether many of the drivers who are in the lawsuit must arbitrate their claims.

Many drivers are bound by arbitration agreements different than the ones that the Ninth Circuit analyzed, and some drivers don’t qualify as exempt even under the circuit court’s 2020 decision, Amazon said in court papers.

The petitions filed in district courts are “asking the court to enforce the arbitration process, something delivery partners agree to when they join the Amazon Flex program,” the company said in a statement.

But the drivers filed an emergency motion to block those petitions, calling them a “blatant and outrageous effort to forum shop and usurp” the prior ruling that declined to compel arbitration.

The drivers’ lawyer, Shannon Liss-Riordan of Lichten & Liss-Riordan PC, didn’t comment on the case.

The case is Rittmann v. Amazon.com, W.D. Wash., No. 16-01554.