21 F.4th 627
9th Cir.2021Background
- Domino’s Southern California Supply Center purchases goods (often from out-of-state suppliers), receives deliveries from third-party carriers, and prepares those goods for distribution to local Domino’s franchisees.
- Domino’s employees (the D&S drivers) pick up goods at the Supply Center and deliver them to franchisees in California.
- Three D&S drivers sued Domino’s under California labor laws and sought class treatment; each driver had an employment agreement requiring disputes to be resolved by FAA arbitration.
- Domino’s moved to compel arbitration under the FAA; the district court denied the motion, holding the drivers fall within the §1 FAA exemption for “any other class of workers engaged in foreign or interstate commerce.”
- Domino’s appealed; the Ninth Circuit affirmed, holding the drivers are engaged in a single, unbroken stream of interstate commerce and thus exempt from the FAA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether D&S drivers are within the §1 FAA exemption ("workers engaged in foreign or interstate commerce") so arbitration cannot be compelled | Drivers: their work involves transporting goods that were procured out-of-state and delivered to franchisees, so interstate commerce is central to their job | Domino’s: franchisees order in-state and some goods are altered at the Supply Center, so drivers’ work is intrastate and not covered by §1 | Held: Drivers are engaged in a continuous interstate stream (analogous to Amazon drivers); §1 exemption applies, arbitration not compelled |
| Whether in-state ordering or limited processing at the Supply Center severs the interstate stream | Drivers: ordering method and limited repackaging do not break the interstate nature of the supply chain | Domino’s: post-arrival alterations and local ordering mean goods left the stream of interstate commerce | Held: Neither in-state ordering nor the limited repackaging here severs the interstate stream; exemption still applies |
Key Cases Cited
- Rittmann v. Amazon.com, Inc., 971 F.3d 904 (9th Cir. 2020) (drivers who carried packages that had traveled across state lines for the last leg were engaged in continuous interstate transportation)
- In re Grice, 974 F.3d 950 (9th Cir. 2020) (critical factor is the nature of the business for which the workers performed activities)
- Capriole v. Uber Techs., Inc., 7 F.4th 854 (9th Cir. 2021) (exemption applies when workers operate in a single, unbroken stream of interstate commerce central to their job)
- Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) (residual clause of §1 must be narrowly construed to effectuate the FAA)
- A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935) (processing that transforms goods into a new product may break the interstate stream; distinguished on the facts here)