34 Cal.App.5th 1056
Cal. Ct. App.2019Background
- Plaintiff William Muller was an RMFL truck driver who made routes exclusively within California; RMFL disclosed that over 99% of the cargo it transports originates outside California.
- Muller signed an employment agreement requiring disputes to be resolved by binding arbitration under the Federal Arbitration Act (FAA).
- Muller sued RMFL in a putative class action alleging unpaid wages, missed meal/rest breaks, wage statement violations, waiting time penalties, and unfair competition.
- RMFL moved to compel arbitration of all claims; the trial court compelled arbitration for five claims but denied arbitration for Muller's unpaid-wages claim and stayed that cause pending arbitration of the others.
- The key legal question was whether Muller is a "transportation worker" under 9 U.S.C. § 1 and thus exempt from the FAA, which would allow him to pursue the unpaid-wages claim in court under Cal. Lab. Code § 229.
- The trial court found Muller exempt from the FAA; the Court of Appeal affirmed, and held the arbitrator (not the court) decides classwide arbitrability.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1 FAA exemption for "transportation workers" applies | Muller: he is a transportation worker because RMFL is a motor carrier and most cargo originated out-of-state | RMFL: Muller never crossed state lines, so §1 does not apply; FAA governs and preempts §229 | Held: §1 exemption applies; Muller is a transportation worker despite intrastate routes because employer is in transportation industry and >99% cargo originated outside CA |
| Whether FAA preempts Cal. Lab. Code §229 for unpaid-wages claim | Muller: §229 preserves judicial wage claims even if arbitration agreement exists | RMFL: FAA applies and preempts §229, so unpaid-wages claim must be arbitrated | Held: FAA inapplicable; §229 governs the unpaid-wages claim (trial court correctly stayed that claim pending arbitration of others) |
| Standard for deciding who determines classwide arbitrability | Muller: arbitration agreement vests "all disputes" in arbitrator, so arbitrator should decide | RMFL: court should decide or agreement prohibits class arbitration | Held: Under Sandquist, interpret agreement under state contract law; here arbitration clause gives arbitrator authority, so arbitrator decides classwide arbitrability |
| Appealability of order on who decides class arbitrability | Muller: RMFL lacks an appealable order as order compelling arbitration is not appealable | RMFL: contends right to appeal | Held: Court doubts appealability; in any event, rule affirmed — arbitrator decides class arbitrability |
Key Cases Cited
- Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (U.S. 2001) (§1 FAA exemption limited to transportation workers)
- Perry v. Thomas, 482 U.S. 483 (U.S. 1987) (FAA construed broadly to cover contracts "involving commerce")
- Performance Team Freight Sys., Inc. v. Aleman, 241 Cal.App.4th 1233 (Cal. Ct. App.) (standards for reviewing FAA exemption findings)
- Lenz v. Yellow Transp., Inc., 431 F.3d 348 (8th Cir. 2005) (multi-factor test for §1 transportation-worker analysis)
- Nieto v. Fresno Beverage Co., Inc., 33 Cal.App.5th 274 (Cal. Ct. App.) (intrastate driver may be §1 exempt when goods are in continuous interstate flow)
- Sandquist v. Lebo Automotive, Inc., 1 Cal.5th 233 (Cal. 2016) (who decides class arbitration depends on contract interpretation under state law)
- Palcko v. Airborne Express, Inc., 372 F.3d 588 (3d Cir. 2004) (supervisory employees tied to interstate shipments may be §1 exempt)