47 F.4th 428
5th Cir.2022Background
- Douglas Lopez was hired by Cintas as a route/last-mile driver; his duties included picking up items from a Houston warehouse (goods shipped from out of state) and delivering them to local customers.
- Lopez signed an employment agreement containing a broad arbitration clause, a delegation clause (arbitrator decides gateway issues), and a statement that the Federal Arbitration Act (FAA) governs the agreement.
- Cintas terminated Lopez; he sued under the ADA in state court and Cintas removed and moved to compel arbitration or dismiss.
- Lopez invoked the §1 FAA exemption for “contracts of employment of…any other class of workers engaged in foreign or interstate commerce,” claiming he is a transportation/last-mile worker exempt from the FAA; he also argued the arbitration clause was procedurally and substantively unconscionable due to his disability and the clause’s one-sided terms.
- The district court held Lopez was not within the §1 exemption and resolved the unconscionability claim against Lopez; Lopez appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lopez’s employment contract is exempt from the FAA under §1 as a “transportation worker” | Lopez: as a last-mile/local delivery driver he is part of a class of workers engaged in interstate commerce and thus exempt | Cintas: local drivers pick up after interstate transport and do not play a direct/necessary role in interstate commerce; FAA applies | Held: Not exempt. Local delivery drivers are not sufficiently "engaged in foreign or interstate commerce" under §1; affirm district court on this point |
| Whether the unconscionability challenge should be decided by the court or the arbitrator | Lopez: the arbitration provision is procedurally and substantively unconscionable (disability, unreadability, one-sidedness) | Cintas: the court may resolve arbitrability and enforce arbitration | Held: Arbitrator decides. Under Texas law unconscionability challenges attack contract validity (not formation), so the delegation clause sends that issue to arbitration; district court erred and case is vacated/remanded on this claim |
Key Cases Cited
- Southwest Airlines v. Saxon, 142 S. Ct. 1783 (2022) (framework for determining §1 transportation-worker exemption)
- Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) (construed §1 and applied ejusdem generis to limit exemption)
- New Prime Inc. v. Oliveira, 139 S. Ct. 532 (2019) (court decides whether §1 exemption applies before ordering arbitration)
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (2010) (delegation clauses can send validity questions to arbitrator)
- Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018) (federal policy favoring arbitration and enforcing arbitration agreements)
- Am. Express Co. v. Italian Colors Rest., 570 U.S. 228 (2013) (courts must rigorously enforce arbitration agreements per their terms)
- In re Poly-America, L.P., 262 S.W.3d 337 (Tex. 2008) (under Texas law unconscionable contracts are unenforceable—go to validity)
- Arnold v. HomeAway, Inc., 890 F.3d 546 (5th Cir. 2018) (distinguishes validity vs. existence challenges over who decides arbitrability)
- Kubala v. Supreme Prod. Servs., 830 F.3d 199 (5th Cir. 2016) (there must be a contract to compel arbitration)