From JDSupra, Richard Reibstein discusses a recent case in which the appellate court said that the lower court must determine whether the drivers were employed in the interstate transportation industry and whether they actually engaged in interstate commerce to be able to decide if they were exempt from arbitration under the Federal Arbitration Act (FAA). Richard writes:
LAST MILE INDEPENDENT CONTRACTOR DELIVERY DRIVERS NOT EXEMPTED FROM ARBITRATION UNDER THE FAA. Florida last-mile delivery drivers may need to arbitrate their FLSA claims according to the U.S. Court of Appeals for the 11th Circuit, which reversed a federal district court’s order denying a motion to compel under the Federal Arbitration Act (FAA). Plaintiff, a Florida resident suing on behalf of himself and those similarly situated, is a driver/courier for U.S. Pack and, in that capacity, he used his personal vehicle to pick up from the company’s Florida warehouses car parts manufactured in and shipped from other states and countries. He then delivered the car parts to local retailers. Plaintiff sued the company and its related entities for overtime violations under the FLSA due to alleged misclassification of the last-mile drivers as independent contractors and not employees. The independent contractor agreement in question contained an arbitration clause, prompting the company to make a motion to compel arbitration under the FAA and Florida’s arbitration law.
The district court denied the motion, concluding the drivers satisfied the interstate transportation worker exemption to the FAA because they “transported goods that had traveled in interstate commerce and the transportation of goods in interstate commerce was not incidental to their job….” On appeal, the drivers argued that the term “‘class of workers engaged in foreign or interstate commerce’ means that even if the class isn’t actually engaged in foreign or interstate commercial transportation itself, it is still exempt from arbitration so long as the goods and materials it delivers traveled in foreign or interstate commerce.” The 11th Circuit rejected that argument and reversed, concluding that the district court had misapplied the law because it focused on the movement of the goods and not the class of workers. The appeals court remanded the case for the district court to apply the proper test and determine whether the drivers are in a class of workers employed in the interstate transportation industry and whether the class actually engages in interstate commerce. Additionally, the court dismissed for lack of appellate jurisdiction the company’s appeal of the district court’s order denying the motion to compel arbitration under the Florida state arbitration law. Hamrick v. Partsfleet, LLC, No. 19-cv-13339 (11th Cir. June 22, 2021).