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Justices Send Domino’s Driver Arbitration Case Back to 9th Cir.

Oct. 17, 2022, 1:38 PM

The US Supreme Court took up a wage lawsuit against Domino’s Pizza LLC by ingredient delivery drivers seeking to clarify which workers are engaged in interstate commerce and thus exempt from mandatory arbitration, solely for the purpose of sending the case back to the lower court.

The justices’ decision Monday vacated a December 2021 ruling from the US Court of Appeals for the Ninth Circuit finding that the drivers qualify for a federal law carveout from arbitration agreements because they deliver out-of-state products from Domino’s centralized California depot to franchise stores across the state.

The appeals court should take a second look at the case in light of the Supreme Court’s recent Southwest Airlines Co. v. Saxon decision, the justices said.

This case is playing out amid a surge of litigation over transportation workers’ attempts to avoid mandatory arbitration of their employment disputes.

The appeals court misinterpreted the Federal Arbitration Act, which generally encourages enforcement of agreements to take claims to arbitration rather than to court, Domino’s argued in its petition. Section 1 of the FAA exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” from arbitration.

The pizza chain giant had urged the high court to determine what class of transportation workers are covered by the exemption because Saxon was silent on that issue.

The question in Saxon was whether the FAA’s interstate commerce exemption applies to airplane cargo loaders. The justices unanimously concluded in June that a former Southwest ramp supervisor qualifies for the exemption because her involvement with transporting goods across state or international borders falls within those parameters. This holding allowed the supervisor to pursue her overtime dispute in court.

The high court, however, had said the exemption doesn’t cover all transportation workers. Domino’s argued that its appeal “is an ideal vehicle” to settle that question and a split among the Eleventh, Ninth, and Seventh Circuits.

“Without guidance from this court, the lower courts will continue to grapple with this issue, and identical cases filed in courthouses on opposite sides of state lines will have dissimilar results,” the company said. “This inconsistency, in turn, will create uncertainty for the business and labor communities alike.”

The drivers, meanwhile, argued that the Ninth Circuit’s decision is in line with Saxon because the high court said the arbitration carveout covers the movement of goods in interstate commerce, even if transportation workers do not cross state lines themselves.

The case is Domino’s Pizza LLC v. Carmona, U.S., No. 21-1572, cert. granted 10/17/22.

To contact the reporter on this story: Khorri Atkinson in Washington at katkinson@bloombergindustry.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Genevieve Douglas at gdouglas@bloomberglaw.com; Laura D. Francis at lfrancis@bloomberglaw.com