Sobaszkiewicz v. FedEx Ground Package System, Inc.
4:18-cv-07553
N.D. Cal.Aug 28, 2020Background
- Plaintiffs (Overpeck, Sterling, Sobaszkiewicz) sued FedEx Corp. and FedEx Ground in a putative class action alleging multiple California wage-and-hour and UCL claims arising from FedEx Ground’s ISP (Independent Service Provider) network model.
- JJ&L Trucking, an ISP that contracted with FedEx Ground, was later joined as a necessary party and filed a crossclaim against FedEx Ground under the California Unfair Competition Law (UCL), alleging the ISP agreement and FedEx’s control harmed JJ&L and forced continued performance after a large upfront investment.
- The ISP Agreement between FedEx Ground and JJ&L contains an arbitration clause that expressly delegates questions of formation, validity, enforceability, interpretation, and scope of the arbitration agreement to the arbitrator.
- FedEx Ground moved to strike JJ&L’s crossclaim or, in the alternative, to compel arbitration and consolidate with ongoing arbitration; FedEx also filed motions to seal contract/arbitration documents.
- The court denied the motion to strike, held FedEx Ground had not waived arbitration, found the delegation clause divested the court of the gateway arbitrability question, granted the motion to compel arbitration, and dismissed JJ&L’s crossclaim without prejudice. The court denied the sealing motions without prejudice as not narrowly tailored.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Motion to strike crossclaim under Rule 12(f) | JJ&L did not directly respond on strike; plaintiffs previously filed an unauthorized response but were struck. | FedEx: strike the crossclaim because it is subject to arbitration. | Denied — FedEx failed to show the crossclaim was redundant, immaterial, impertinent, scandalous, or legally insufficient; Rule 12(f) not proper vehicle to dismiss for arbitration. |
| Whether FedEx waived right to arbitrate | JJ&L: FedEx delayed and litigated in court; delay and conduct show waiver and prejudice. | FedEx: no delay after JJ&L filed its crossclaim; it promptly moved to compel arbitration. | Denied — Court found no waiver: FedEx moved promptly after crossclaim; JJ&L did not show prejudice beyond self-inflicted costs. |
| Who decides arbitrability (delegation clause) | JJ&L challenged arbitrability only via waiver; did not meaningfully attack delegation clause’s validity. | FedEx: ISP agreement delegates arbitrability to arbitrator; court lacks jurisdiction over gateway issues. | Granted — Delegation clause clearly and unmistakably delegates arbitrability to arbitrator; under Rent-A-Center and Henry Schein the court must compel arbitration of gateway issues. |
| Remedy after compelling arbitration (stay vs. dismissal) | JJ&L: no position on stay vs. dismissal. | FedEx: dismissal or stay; prefers dismissal to avoid parallel litigation. | Dismissed without prejudice — Ninth Circuit allows dismissal where all claims in the action/claim are arbitrable; dismissal avoids procedural complexity here. |
| Motions to seal contract and briefing materials | Plaintiffs/cross-claimant did not oppose sealing substantively. | FedEx: contract and arbitration materials are proprietary and should be sealed. | Denied without prejudice — Court applies "compelling reasons" standard for dispositive motion; FedEx failed to narrowly tailor or identify specific sealable portions; may refile within 14 days. |
Key Cases Cited
- Whittlestone, Inc. v. Handi‑Craft Co., 618 F.3d 970 (9th Cir. 2010) (standards and disfavor for motions to strike under Rule 12(f))
- Martin v. Yasuda, 829 F.3d 1118 (9th Cir. 2016) (waiver of arbitration & heavy burden to show prejudice, elements for waiver)
- Rent‑A‑Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (parties may clearly delegate gateway arbitrability questions to arbitrator)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) (courts must honor delegation clauses even if arbitrability arguments appear wholly groundless)
- Johnmohammadi v. Bloomingdale’s, Inc., 755 F.3d 1072 (9th Cir. 2014) (stay vs. dismissal after compelling arbitration; dismissal permitted when all claims are arbitrable)
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (policy favoring arbitration and resolving doubts in favor of arbitration)
- AT&T Techs., Inc. v. Comm’n Workers, 475 U.S. 643 (1986) (denial of arbitration where clause cannot reasonably be interpreted to cover dispute)
- Kamakana v. City & County of Honolulu, 447 F.3d 1172 (9th Cir. 2006) (sealing standard; compelling reasons for dispositive materials)
- Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985) (FAA requires enforcement of arbitration agreements)
- Simula, Inc. v. Autoliv, Inc., 175 F.3d 716 (9th Cir. 1999) (affirming dismissal where all claims were subject to arbitration)