404 F.Supp.3d 335
D. Mass.
2019
Read the full case

Background

  • Plaintiff Bernard Waithaka is an Amazon last-mile delivery driver classified as an independent contractor and sues on behalf of a putative Massachusetts class for unpaid wages/reimbursement under state law.
  • The parties’ driver agreement contains an arbitration clause requiring individual arbitration unless the driver timely opted out, and a governing-law clause stating Washington law governs the agreement except that Section 11 is governed by the FAA.
  • Defendants moved to compel arbitration under the Federal Arbitration Act (FAA) or, alternatively, to transfer or stay the action.
  • The court considered whether Waithaka falls within the FAA’s Section 1 transportation-worker exemption (which would remove the agreement from FAA coverage).
  • The court assessed which law governs enforceability of the arbitration/class-waiver provisions if the FAA does not apply and whether Massachusetts public-policy principles invalidate the class-waiver.
  • The court also addressed transfer of this Massachusetts action to the Western District of Washington under the first-to-file rule (there was an earlier nationwide FLSA action against Amazon pending in Washington).

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether the FAA §1 transportation-worker exemption applies to last-mile Amazon drivers Waithaka argued last-mile drivers are not engaged in interstate commerce and thus §1 applies to exempt them from the FAA Amazon argued last-mile drivers are part of an interstate distribution system and not exempt Court: Waithaka falls within the §1 exemption because drivers handle goods moving in a continuous interstate stream and are integral to Amazon’s interstate distribution (strike risk would disrupt interstate commerce)
If FAA inapplicable, which law governs arbitration clause and is it enforceable Waithaka: Massachusetts law applies and can invalidate class-waiver on public-policy grounds Amazon: Washington choice-of-law clause applies (and FAA provision covers arbitration) Court: Washington law does not govern the arbitration provision (contract disavows applying Washington to Section 11); Massachusetts choice-of-law rules point to Massachusetts law
Enforceability of class-action waiver under Massachusetts law Waithaka: Under Feeney/Machado and state wage-law policy, the class-waiver is unenforceable because it undermines class enforcement and unnamed members’ rights Amazon: Feeney/Machado are limited by FAA preemption principles; here Plaintiff’s individual damages are large enough to vindicate rights in arbitration Court: Because FAA does not apply, Massachusetts public-policy rationales suffice to invalidate the class-waiver and the arbitration agreement is unenforceable to the extent it bars class proceedings
Whether transfer to Western District of Washington is warranted Waithaka: Plaintiff defended forum choice; argued Washington transfer unnecessary Amazon: Transfer appropriate under first-to-file (and alternatively §1404) because overlapping nationwide FLSA action was filed first Court: Declined §1404 transfer on convenience grounds but granted transfer under the first-to-file rule to the Western District of Washington

Key Cases Cited

  • Circuit City Stores v. Adams, 532 U.S. 105 (Sup. Ct. 2001) (interpreting FAA §1 transportation-worker exemption and ejusdem generis analysis)
  • Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1 (Sup. Ct. 1983) (federal policy favoring arbitration; doubts resolved for arbitration)
  • Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (Sup. Ct. 2010) (give effect to parties’ contractual expectations in arbitration clauses)
  • Walling v. Jacksonville Paper Co., 317 U.S. 564 (Sup. Ct. 1943) (continuity-of-movement concept for interstate commerce)
  • Lenz v. Yellow Transp., Inc., 431 F.3d 348 (8th Cir. 2005) (factors for §1 exemption analysis)
  • Palcko v. Airborne Express, Inc., 372 F.3d 588 (3d Cir. 2004) (local delivery workers can be part of interstate commerce when work is closely related to interstate shipments)
  • Oliveira v. New Prime, Inc., 857 F.3d 7 (1st Cir. 2017) (assumed truck drivers fall within §1 exemption; discussed scope)
  • AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (Sup. Ct. 2011) (FAA preemption of state rules invalidating class-waivers under the FAA)
  • American Express Co. v. Italian Colors Restaurant, 570 U.S. 228 (Sup. Ct. 2013) (class-waivers enforceable under FAA even if individual arbitration makes statutory relief impracticable)
  • Feeney v. Dell Inc., 908 N.E.2d 753 (Mass. 2009) (state-law invalidation of class-waiver based on public-policy concerns)
  • Machado v. System4 LLC, 989 N.E.2d 464 (Mass. 2013) (applied Feeney reasoning to Wage Act claims; clarified FAA interaction)
Read the full case