Colon v. Strategic Delivery Solutions, LLC
210 A.3d 932
N.J. Super. Ct. App. Div.2019Background
- Plaintiffs (Colon, Mejia, Diaz) signed identical Independent Vendor Agreements with Strategic Delivery Solutions, LLC (SDS) to provide transportation/delivery services; agreements labeled them independent contractors and were governed by New Jersey law.
- Agreements included: (1) an arbitration clause invoking the FAA and AAA rules, (2) a waiver of jury trial, and (3) a waiver of class/collective proceedings; arbitration costs provision and choice-of-law (vendor residence) clause appear.
- Plaintiffs sued SDS and Myriam Barreto under the New Jersey Wage and Hour Law (WHL) and Wage Payment Law (WPL), alleging misclassification and unpaid overtime; they sought class relief and a jury trial.
- Defendants moved to compel individual arbitration and dismiss the complaint; the trial court granted summary judgment compelling arbitration and enforcing the jury- and class-waivers.
- On appeal, the court vacated the dismissal and remanded to determine whether plaintiffs were engaged in interstate transportation (FAA §1 exemption). The court held that if the FAA does not apply, the New Jersey Arbitration Act (NJAA) requires arbitration; it also found the jury- and class-waivers were clear and enforceable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FAA §1 exemption ("contracts of employment of ... workers engaged in interstate commerce") applies | Plaintiffs: they performed interstate transportation services and thus are exempt from the FAA | Defendants: agreements cover local delivery; FAA applies and mandates arbitration | Remanded: trial court must determine interstate-commerce factual question; summary judgment premature |
| If FAA §1 exemption applies, does that preclude application of NJAA? | Plaintiffs: parties only invoked FAA; NJAA should not apply if FAA exempt | Defendants: NJAA governs arbitration agreements in NJ and can apply if FAA doesn't | Held: FAA does not preempt state arbitration statutes; if FAA exempt, NJAA still applies and enforces arbitration |
| Whether plaintiffs waived right to a jury trial | Plaintiffs: statutory wage claims entitle them to jury; cannot be deprived by contract | Defendants: clear contractual jury-waiver tied to arbitration | Held: waiver is clear and unambiguous; plaintiffs waived jury trial tied to arbitration |
| Whether plaintiffs waived right to pursue class or collective actions | Plaintiffs: class relief necessary and was not validly waived | Defendants: agreement contains explicit individual-only remedy clause | Held: class-waiver was clear and enforceable; arbitration (or litigation) must proceed individually |
| Dismissal of claims against Barreto | Plaintiffs: trial court did not explain dismissal of Barreto | Defendants: (not clearly explained) | Remanded: trial court failed to state reasons; must address dismissal against Barreto on remand |
Key Cases Cited
- Circuit City Stores v. Adams, 532 U.S. 105 (federal policy favors enforcement of arbitration agreements)
- New Prime, Inc. v. Oliveira, 139 S. Ct. 532 (FAA §1 exemption applies to agreements to perform transportation work, including independent contractors)
- Atalese v. U.S. Legal Servs. Group, 219 N.J. 430 (arbitration agreement validity reviewed as contract; clear and unambiguous waiver required)
- Martindale v. Sandvik Inc., 173 N.J. 76 (upholding clear jury-waiver language tied to arbitration)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (separation of arbitrability questions between courts and arbitrators)
- Palcko v. Airborne Express, Inc., 372 F.3d 588 (Third Circuit: FAA does not expressly preempt state arbitration statutes)
- Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (class/collective-action waiver does not violate NLRA)