596 F.Supp.3d 261
D. Mass.2022Background
- Plaintiffs Margarito Canales and Benjamin Bardzik (through their company T&B Dough Boys, Inc.) were classified as independent-distributor franchisees to deliver baked goods for Defendants and signed Distributor Agreements that incorporate an Arbitration Agreement (individual arbitration, class-action waiver, and a delegation clause).
- Plaintiffs allege they worked ~60–80 hours/week (spending at least ~50 hours/week driving and 20–30 hours supervising drivers), paid expenses, and were underpaid in violation of Massachusetts wage laws and related state claims.
- The Arbitration Agreement requires individual arbitration of covered claims, includes a class-action waiver, and delegates arbitrability issues to an arbitrator except for FAA applicability and the validity/enforceability of the class waiver.
- Defendants moved to dismiss or, alternatively, to compel arbitration under the Federal Arbitration Act (FAA).
- The central legal question decided was whether Plaintiffs fall within §1 of the FAA (the transportation-worker exemption), which the parties agreed the court must resolve for FAA applicability; the court held Plaintiffs are exempt and therefore the FAA does not compel arbitration.
- The court denied the motion to compel arbitration under the FAA but left open arbitration under Massachusetts law (i.e., whether the class-action waiver is enforceable under state law) and granted leave for a renewed, limited briefing on that state-law issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1 of the FAA (transportation-worker exemption) applies | Plaintiffs: they are transportation workers who primarily transport goods in the stream of interstate commerce (50+ hours driving) | Defendants: plaintiffs are independent distributors whose primary duties are customer service, business development, and supervising others, not driving | Court: Plaintiffs are transportation workers closely related to interstate commerce; §1 exemption applies, so FAA does not govern arbitration |
| Who decides arbitrability | Plaintiffs: FAA applicability reserved to court; other arbitrability issues delegated to arbitrator per contract | Defendants: delegation clause delegates arbitrability to arbitrator and should be enforced | Court: FAA applicability decided by court (per contract); many other arbitrability questions are delegated and may belong to arbitrator per Henry Schein, but court did not resolve those now |
| Enforceability of class-action waiver under Massachusetts law | Plaintiffs: Massachusetts public policy forbids contractual waiver of employment class relief | Defendants: waiver is valid and enforceable | Court: Under Waithaka, Massachusetts likely voids class-action waivers when FAA does not apply; court did not finally decide and requested focused state-law briefing |
| Motion to dismiss or compel arbitration (overall relief) | Plaintiffs: oppose dismissal/compel; FAA inapplicable | Defendants: move to dismiss or compel arbitration | Court: Motion DENIED as to FAA-based compulsion; defendants may renew a narrowed motion addressing state-law arbitration issues |
Key Cases Cited
- Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) (§1 of the FAA limited to seamen, railroad employees, and other transportation workers)
- Waithaka v. Amazon.com, Inc., 966 F.3d 10 (1st Cir. 2020) (first‑circuit holding last‑mile delivery workers are transportation workers engaged in interstate commerce)
- Tenney Eng’g, Inc. v. U.E., Loc. 437, 207 F.2d 450 (3d Cir. 1953) (formulation: workers "so closely related" to interstate transport may be "practically a part" of it)
- Palcko v. Airborne Express, Inc., 372 F.3d 588 (3d Cir. 2004) (supervisory employee who directly supported package shipments can fall within §1)
- Saxon v. Southwest Airlines Co., 993 F.3d 492 (7th Cir. 2021) (ramp manager assisting with cargo/loading falls within §1)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) (courts must respect clear delegation clauses sending arbitrability to arbitrators)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (FAA places arbitration agreements on equal footing with other contracts)
- Bissonnette v. Lepage Bakeries Park St., LLC, 460 F. Supp. 3d 191 (D. Conn. 2020) (district court previously enforced distributor agreements in favor of arbitration; court here distinguished that decision)