Lead Opinion
Concurrence by Judge HURWITZ;
Dissent by Judge IKUTA
OPINION
In this companion case to Van Dusen v. Swift, No. 15-15257 (“Van Dusen III”), Swift Transportation Company, Inc., Interstate Equipment Leasing, Inc., and senior executives at both companies (collectively “Swift”) seek a writ of mandamus ordering the district court to vacate its case man
I
The factual background of this case is set forth in some detail in the opinion in Van Dusen III. In short, two interstate truckers (collectively “Van Dusen”) entered into contracts with Swift that designated them as independent contractors and also contained a clause requiring them to arbitrate “[a]ll disputes and claims arising under, arising out of or relating to [the] [a]greement[s].” After contract termination, Van Dusen filed a collective and class action complaint against Swift alleging that Swift miselassified Van Dusen and others as independent contractors. Swift moved to compel arbitration and dismiss or stay the district court action. Van Du-sen objected that § 1 of the Federal Arbitration Act prevented the district court from compelling arbitration. The district court granted Swift’s motion to compel arbitration. The court also determined that an arbitrator should decide whether the § 1 exemption applies. The court subsequently denied Van Dusen’s motion to reconsider or certify an appeal. Van Dusen petitioned this Court for a writ of mandamus. In re Van Dusen,
On appeal, we applied law of the case as determined by Van Dusen I, and held that the district court, not an arbitrator, should decide the § 1 exemption in the first instance. Van Dusen v. Swift Transp. Co.,
II
“The writ of mandamus is a drastic and extraordinary remedy reserved only for really extraordinary causes.” Van Dusen I,
(1) The party seeking the writ has no other adequate means, such as a direct appeal, to attain the relief he or she desires. (2) The petitioner will be damaged or prejudiced in a way not correctable on appeal. (This guideline is closely*916 related to the first.) (3) The district court’s order is clearly erroneous as a matter of law. (4) The district court’s order is an oft-repeated error, or manifests a persistent disregard of the federal rules. (5) The district court’s order raises new and important problems, or issues of law of first impression.
Bauman,
These “factors are not exhaustive ... and should not be mechanically applied.” In re United States,
The first Bauman factor is whether there is any other adequate means, such as a direct appeal, to attain the relief the petitioner desires. Here, Swift has the remedy of direct appeal of the district court’s final order denying or compelling arbitration. The district court has not decided that question, and it is by no means certain that the district court will not ultimately compel arbitration on the basis of the contractor agreements alone. The case management order sets forth dates for the parties to file dispositive motions, and the court has not determined whether there is any fact deduced in discovery that would affect its determination of whether arbitration should be compelled. Once the district court has issued a final order with respect to arbitration, Swift can appeal directly.
The second Bauman factor, which is closely related to the first, examines whether the petitioner will be damaged or prejudiced in a way not correctable on appeal. Swift argues that “litigation of the § 1 exemption issue will determine the ultimate issue raised by Plaintiffs’ claim.” But even if this were the case, Swift can still appeal the district court’s final order. Any prejudice from the legal effect of the § 1 determination is correctable on appeal.
Swift also argues that it will incur unnecessary litigation expense if the district court proceeds with its case management order. However, “litigation costs are a factor weighing in favor of mandamus relief only in the most extreme circumstances.” In re Orange, S.A.,
The third Bauman factor is whether the district court’s order is clearly erroneous as a matter of law. This factor is the most important for our consideration. “While all the factors need not be present to issue the writ ... the absence of factor three — clear error as a matter of law — will always defeat a petition for mandamus.” In re United States,
Clear error is a highly deferential standard of review. Van Dusen I,
It is well established that “[t]he absence of controlling precedent weighs strongly
The district court did not commit clear error when it issued its case management order. It did so in response to our instructions in Van Dusen II that “the district court must determine whether the Contractor Agreements between each appellant and Swift are exempt under § 1 of the FAA before it may consider Swift’s motion to compel.”
Nor is the district court’s case management order contrary to other precedents of the Supreme Court or this Circuit. Further, there do not appear to be any decisions from our sister circuits on the question of whether the FAA compels a certain procedural choice in a district court’s § 1 determination. The absence of precedent weighs heavily against finding clear error. In re Morgan,
The fourth Bauman factor is whether the district court’s order is an oft-repeated error, or manifests a persistent disregard of the federal rules. Given the lack of precedent, we cannot say that the alleged error is “oft-repeated.” And the issuance of a case management order is not only consistent with, but required by, the federal rules. See Fed. R. Civ. P. 16(b).
The final Bauman factor is whether the district court’s order raises new and important problems, or issues of law of first impression. The question of whether the FAA compels district courts to decide § 1 exemptions on the basis of briefing alone is an issue of first impression, so this factor weighs in favor of Swift. However, Swift does have a remedy in the form of direct appeal to make its argument.
In sum, the Bauman factors weigh against the grant of mandamus relief. Swift has a remedy in urging its position before the district court in dispositive motions and, if the district court is adverse to Swift, in the form of direct appeal following the issuance of a final order. Normal litigation expense does not constitute sufficient prejudice to warrant relief, and the discovery cost has already been incurred. Most crucially, in the absence of controlling precedent, the district court order was not clearly erroneous. The district court’s order is not an “oft-repeated error,” if indeed it is an error at all, and certainly does not manifest a persistent disregard of the federal rules. Although the question may be one of first impression, Swift has a remedy. Therefore, applying the Bauman factors, we conclude that Swift is not entitled to the extraordinary relief of the issuance of a writ of mandamus.
PETITION DENIED.
Notes
. Van Dusen’s motions to take judicial notice of the existence of various district court docu
Concurrence Opinion
concurring:
If this were a direct appeal from a district court order denying Swift’s motion to compel arbitration, I might agree with Judge Ikuta that the issue before the district court is one of law not requiring discovery. But, because the district judge has neither granted nor denied Swift’s motion, there is no appealable order. What is before us, rather, is a petition for mandamus.
“Mandamus is a drastic remedy and is to be used only in extraordinary circumstances.” Johnson v. Consumerinfo.com, Inc.,
Dissenting Opinion
dissenting:
Interstate truck driver Van Dusen signed an agreement with Swift designating Van Dusen as an independent contractor. The agreement also stated that the parties would arbitrate any dispute. Van Dusen now says that she was actually an employee and the contract was really one of employment, so it was exempt from the Federal Arbitration Act (FAA). We have twice before given this district court a single task: Decide whether the agreement falls into the category of “contracts of employment” for purposes of the FAA. Instead, six years after our first ruling, the district court is erroneously requiring the parties to undertake an evidentiary hearing on the merits to decide whether Van Dusen is functionally an employee. Under the circumstances of this case, the extraordinary remedy of a writ of mandamus is warranted.
I
Van Dusen entered into a contractor agreement with Swift for the interstate transportation of freight. The parties agreed that Van Dusen was an independent contractor who would “determine the method, means and manner of performing work and services” under the agreement and could provide the same services for others. The parties also bargained to arbitrate “[a]ll disputes and claims arising under, arising out of or relating to” the contractor agreement, “including the arbi-trability of disputes between the parties.”
Notwithstanding this agreement, Van Dusen and other interstate truckers brought a .lawsuit in 2009 claiming that they were functionally employees and that Swift had violated the Fair Labor Standards Act (FLSA), 29 U.S.C. §201, and state wage laws by failing to pay them minimum wages (including overtime) and by making unlawful deductions from their wages. Van Dusen sought to certify a class of essentially all truckers who had driven under a contract with Swift since 2006.
Swift immediately moved to compel arbitration of these claims as provided in the contractor agreement. Van Dusen moved to block arbitration on the ground that the agreements themselves were exempt from
The district court initially concluded that the arbitrator should decide whether the form agreements were “contracts of employment.” We disagreed. See In re Van Dusen,
Instead of making this legal determination, the district court granted Van Du-sen’s motion for certification of an interlocutory appeal. When the case came back to us with the same question, whether a district court should assess whether a § 1 exemption applies, we unsurprisingly did not change our mind. We stated that our prior ruling was law of the case and law of the circuit, and we remanded to the district court to determine whether the contractor agreement was exempt under § 1. Van Dusen v. Swift Transp. Co., Inc.,
On remand, the district court did not follow our direction. Instead of addressing the only legal issue before it — whether the form contract is “a contract of employment” for purposes of § 1 — the district court issued a scheduling order for discovery, pretrial proceedings, and trial. The purpose of the proceedings was to determine one of the key substantive issues on dispute between the parties: the “plaintiffs’ status as employees or independent contractors.” Applying judicial interpretations of the scope of the FLSA, the district court held that its determination depended on the working relationship between Van Dusen and Swift, including such factors as “the employer’s right to control the work, the individual’s opportunity to earn profits from the work, the individual’s investment in equipment and material needed for the work, whether the work requires a specialized skill, and whether the work done by the individual is an integral part of the employer’s business.” The district court relied on Real v. Driscoll Strawberry Assocs., Inc.,
II
The district court erred in adopting this approach. Under the “expansive interpretation of the definitions of ‘employer’ and ‘employee’ under the FLSA,” the contract between the parties is merely a factor to consider; it is not conclusive regarding whether there is an employer-employee relationship between the parties for purposes of the FLSA. Id. “Economic realities, not contractual labels, determine employment status for the remedial purposes of the FLSA.” Id. at 755.
But the district court was not called upon to address the “economic realities” of the relationship between Van Dusen and Swift. The only issue before the district court is a legal one. As we have explained, § 1 “explicitly carves out a category of
Determining whether a contract qualifies as a “contract of employment” requires a categorical approach that focuses solely on the words of the contract and the definition of the relevant category. We have previously undertaken the task of determining whether, as a rpatter of law, a contract was ^n employment contract. See Modzelewski v. Resolution Trust Corp.,
The district court should have followed a similar approach. It should have first defined “contract of employment” for purposes of the FAA using standard tools of statutory construction. The court should then have determined whether the contract includes terms and conditions of employment. This information is clear on the face of the contract. Categorizing the nature of a contract requires only the examination of its terms; in no event is there a need to conduct discovery and a trial to consider the “economic realities” of the relationship of the parties to the ’contract.
Indeed, by requiring the parties to litigate the underlying substance of Van Du-sen’s claim — whether the economic realities of Van Dusen’s work for Swift made Van Dusen an employee for purposes of the FLSA — the district court risks depriving Swift of the benefits of its contract.
Ill
Under the circumstances of this case, where the district court has declined to make the key legal decision three times over the span of six years, the extraordinary remedy of mandamus is warranted. To determine whether the petitioner has established a right to this remedy, we consider the five factors from Bauman v. U.S. Dist. Court,
(1) Whether the petitioner has other adequate means, such as a direct appeal, to attain the relief he or she desires; (2) whether the petitioner will be damaged or prejudiced in a way not correctable on appeal; (3) whether the district court’s order is clearly erroneous as a matter of law; (4) whether the district court’s order makes an oft-repeated error, or manifests a persistent disregard of the federal rules; and (5) whether the district court’s order raises new and important problems, or legal issues of first impression.
In re Perez,
We have held that “the absence of factor three — clear error as a matter of law — will always defeat a petition for mandamus.” DeGeorge v. U.S. Dist. Court for Cent. Dist. of Cal.,
The remaining Bauman factors likewise weigh in favor of granting the remedy. Van Dusen does not dispute that the first two Bauman factors are satisfied. The district court’s order is not appealable, and therefore Swift has no adequate means to obtain review. See Valenzuela-Gonzalez v. U.S. Dist. Court for Dist. of Ariz.,
This case also satisfies the fourth and fifth Bauman factors. The district court’s order makes an “oft-repeated error, or manifests a persistent disregard of the federal rules.” As the history of this case shows, the district court has repeated the same error three times. Twice before we explained that the district court must determine whether the contractor agreement falls into the category of “contracts of employment.” Van Dusen I,
Finally, this case presents a novel and important issue of law. We have not yet explained in a published opinion how a court must proceed when a party to a contract containing an arbitration agreement challenges the contract on the ground that it is exempt under § 1. A failure to address this issue and correct the district court’s erroneous approach may encourage plaintiffs in many different contexts to sidestep an agreement to arbitrate by strategically claiming that their contract is exempt and that it is necessary to litigate the key merits issue outside of arbitration.
Because the Bauman factors weigh in favor of granting Swift’s petition and mandamus is clearly warranted in this case, I dissent.
. Contrary to Judge Hurwitz's concurring opinion, there is still much at stake in this case. Although discovery is complete, the district court’s scheduling order anticipates a five day trial to determine the relationship of the parties. Our granting the writ would limit the scope of the district court’s inquiry to the proper legal question and save the parties the substantial costs of trial. Moreover, the argument made by the majority and Judge Hur-witz that we should not grant mandamus because "discovery has now closed,” Maj. op. at 916, is less than compelling when it is our delajy in issuing a decision in this case that allowed discovery to be completed.