Fli-Lo Falcon, LLC v. Amzn
97f4th1190
| 9th Cir. | 2024Background
- Amazon contracts with Delivery Service Partners (DSPs), which are business entities, to handle local delivery services for its customers.
- Three DSPs (Fli-Lo Falcon, Steel City Eagles, Stelvio Transport) filed a class action suit against Amazon, seeking damages and various forms of relief.
- Each DSP executes a DSP Agreement with Amazon that contains a binding arbitration provision, including a delegation clause referring arbitrability questions to the arbitrator under AAA rules.
- Amazon moved to compel arbitration per the DSP Agreements and the district court granted the motion, dismissing the case without prejudice.
- Plaintiffs appealed, arguing the Federal Arbitration Act's (FAA) transportation worker exemption applied and contesting the enforceability of the arbitration agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of FAA Section 1 (transportation worker exemption) to business entities | DSPs, as entities whose personnel perform transportation work, should qualify for the exemption | Only contracts of employment with natural persons (workers), not business entities, qualify | Exemption does not cover business entities or commercial contracts |
| Whether DSP Agreements are "contracts of employment" | Agreements are functionally employment contracts due to Amazon's control over DSPs | Agreements are commercial contracts between independent businesses | Such agreements are commercial, not employment, contracts |
| Enforceability of Delegation Clause via sophistication | DSPs are not sophisticated, so delegation clause shouldn’t apply | DSPs are sophisticated business entities, so delegation clause is enforceable | DSPs are sophisticated; delegation provision enforced |
| Arbitrability of unconscionability challenges | Unconscionability arguments should be heard by the court | Such challenges, per the delegation clause, should go to the arbitrator | Issues of unconscionability must be decided by arbitrator |
Key Cases Cited
- Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (Supreme Court held the transportation worker exemption is narrowly construed and covers only certain employment contracts)
- New Prime Inc. v. Oliveira, 139 S. Ct. 532 (Supreme Court determined independent contractors qualify as "workers" under the FAA exemption, but focused on contracts for performance of work by workers)
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (Established that clear delegation clauses compel arbitrability questions to the arbitrator)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (Court must enforce delegation when parties clearly and unmistakably delegate arbitrability)
- Brennan v. Opus Bank, 796 F.3d 1125 (Ninth Circuit held incorporation of AAA rules is clear and unmistakable evidence of delegation for sophisticated parties)