250 F. Supp. 3d 388
D. Ariz.2017Background
- Plaintiffs are delivery drivers who signed Owner Operator Agreements with Arizona Logistics (doing business as Diligent Delivery Systems) and performed deliveries for Parts Authority; they allege they were misclassified as independent contractors and bring FLSA, Arizona Wage Act, and unjust enrichment claims.
- Four Plaintiffs (Bonner, Ross, Williams, Harris) signed agreements containing detailed arbitration provisions (including a class/collective-action waiver and a 30-day opt-out).
- Plaintiff Six signed a different Owner Operator Agreement that required ADR but did not specify arbitration or include an opt-out.
- Defendants seek to compel individual arbitration and stay proceedings; Michigan Logistics and Parts Authority are non-signatories seeking to enforce the agreements.
- Plaintiffs allege the defendants functioned as joint employers / a unified operation, which bears on whether non-signatories may invoke arbitration.
- The court stayed the action and: compelled arbitration for the four plaintiffs with arbitration clauses; ordered Plaintiff Six to pursue ADR (but not compelled arbitration specifically); allowed non-signatories to invoke the clauses under equitable estoppel; and severed any unenforceable concerted-action waiver for Six.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiffs agreed to arbitrate | Plaintiffs challenge enforceability/applicability but concede they signed the agreements | Agreements (for Bonner, Ross, Williams, Harris) clearly require arbitration of these disputes | Bonner, Ross, Williams, Harris are compelled to individually arbitrate |
| Whether Plaintiff Six agreed to arbitration specifically | Six contends no binding arbitration because agreement only requires ADR and may have terminated | Defendants argue the ADR clause survives termination and requires ADR | Court: Six must pursue ADR per agreement, but arbitration cannot be specifically compelled because form was unspecified |
| Whether FAA applies | Plaintiffs argue some FAA exceptions may apply if they are employees engaged in interstate commerce | Defendants invoke FAA broadly; drivers are involved in commerce and §1 exceptions don’t apply here | FAA governs the arbitration clauses; court enforces arbitration where parties agreed |
| Whether non-signatories may enforce arbitration | Plaintiffs: non-signatories cannot bind signatories | Defendants: Michigan Logistics and Parts Authority can enforce via estoppel or as third-party beneficiaries | Court: Non-signatories may invoke arbitration under alternative estoppel given joint-employer/unified-operation allegations |
| Whether class/collective-action (concerted-action) waiver is enforceable | Plaintiffs: waiver violates NLRA and Morris absent opt-out | Defendants: opt-out makes waiver enforceable; if unenforceable it can be severed | Court: Waiver enforceable for the four with opt-out; for Six (no opt-out) waiver severable and ADR clause enforceable |
Key Cases Cited
- Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (construing FAA scope and §1 exemption)
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (federal policy favors arbitration; doubts resolved for arbitration)
- Tracer Research Corp. v. Nat’l Envtl. Servs. Co., 42 F.3d 1292 (9th Cir.) (arbitration is a matter of contract; court’s role limited to existence/scope)
- Litton Fin. Printing Div. v. NLRB, 501 U.S. 190 (arbitral/dispute-resolution provisions can survive contract expiration; presumption of survivability)
- Morris v. Ernst & Young, LLP, 834 F.3d 975 (9th Cir.) (NLRA may preclude enforcement of concerted-action waivers unless opt-out exists)
- Ragone v. Atlantic Video at Manhattan Ctr., 595 F.3d 115 (2d Cir.) (non-signatory may invoke arbitration where disputes are intertwined and joint-employer allegations exist)