Lower Courts in 'Real Muddle' Over FAA's Reach, Says Amazon's Cert Petition

Lower courts are in a “real muddle” over the Federal Arbitration Act's reach, said Amazon's U.S. Supreme Court cert petition Thursday. The petition asked SCOTUS to reverse the 9th U.S. Circuit Court of Appeals Sept. 1 affirmance of the district court's December 2021 denial of Amazon's motion to compel arbitration in a case involving delivery drivers in the Amazon Flex program.

In that decision, the U.S. District Court for Western Washington concluded that 13 plaintiffs, led by Jennifer Miller, fell within the FAA transportation worker exemption and that no state law applies to Amazon’s arbitration provision in 2016 terms of service, making the arbitration provision “invalid and unenforceable.” U.S. District Judge Barbara Rothstein based her decision largely on Rittman v. Amazon in the same court. She granted Amazon’s motion to stay the case pending appeal in March 2022.

The 2021 class action alleges Amazon violated the Washington Consumer Protection Act by “unfairly and deceptively retaining portions of tips” that belonged to Amazon Flex delivery drivers. Plaintiff Jennifer Miller, a Massachusetts resident, alleges the Amazon Flex app informed drivers they would receive 100% of tips they earned while delivering with Flex. A previous version of that communication said Amazon would “pass to you 100% of tips you earn,” the complaint (docket 2:21-cv-00204) said. The order page for customers also states 100% of tips are passed on to drivers, it said.

But in 2016 and continuing “at least” through August 2019, Amazon “retained portions of drivers’ tips instead of distributing them all to the drivers,” alleged the complaint. Amazon changed its tip retention practices only after the FTC began investigating the practices in a February 2021 lawsuit, it said. Miller claimed two violations of unfair business practices under the Washington Consumer Protection Act.

The FAA exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce,” said Amazon in its petition. It cited the U.S. Supreme Court’s recent grant of certiorari in Bissonnette v. LePage Bakeries Park St. “to resolve one circuit split over this exemption.” The issue in Bissonnette is whether, to be exempt from the FAA, a class of workers actively engaged in interstate transportation must also be employed by a company in the transportation industry.

That is “only part of the confusion,” Amazon said, referencing “an even broader acknowledged circuit split over the test for being engaged in foreign or interstate commerce.” In particular, it said, is "whether this language encompasses local delivery drivers who pick up and deliver goods --including, as in this case, food and other items stocked and supplied locally -- that distinct classes of transportation workers have previously moved across state lines."

SCOTUS also flagged the matter in Southwest Airlines v. Saxon “but had no need to resolve it,” said the petition. In that ruling, SCOTUS ruled that plaintiff Latrice Saxon frequently unloads and unloads cargo on and off airplanes that travel in interstate commerce, so she belongs to a “class of workers engaged in foreign or interstate commerce” to which the FAA’s exemption applies.

Since the ruling in Saxon, appeals courts have “openly rejected one another’s positions on whether local delivery drivers who have had no role in the goods’ transportation across state lines at some prior point in time, can nevertheless be exempt from the FAA,” said the petition. “This disagreement is wholly separate from the disagreement in Bissonnette over whether the statute contains a transportation-industry requirement, and it has generated far more confusion,” Amazon said.

Applying the “general framework” from Saxon, the 5th Circuit determined that local delivery drivers are not exempt from the FAA merely because they deliver goods previously shipped from other states, said the petition, citing Lopez v. Cintas Corp. In so ruling, the 5th Circuit “acknowledged, but declined to follow, contrary pre-Saxon decisions from the 1st and 9th Circuits, Amazon said, citing Rittman. The 9th Circuit "recognizes that the 5th Circuit disagrees with Rittmann,” said the petition, citing Carmona v. Domino’s Pizza, but the 9th Circuit “refuses to revise its Rittmann line of precedent in light of Saxon, even after this Court remanded one such case for further consideration in light of Saxon,” it said. The 1st Circuit “likewise continues to treat Waithaka as good law after Saxon," it said, citing Fraga v. Premium Retail Services.

“These recent decisions widen pre-Saxon rifts over how to interpret the FAA exemption,” Amazon said. Before Saxon, several courts recognized that local delivery drivers “do not belong to a ‘class of workers engaged in foreign or interstate commerce’ merely because other classes of workers have transported the goods across state lines in other vehicles,” it said.