Certain Grubhub Inc. delivery drivers brought two putative collective and class actions asserting that they were misclassified as independent contractors, resulting in both federal and state wage and hour violations. The drivers – who worked in Chicago, Portland and New York – had signed Delivery Service Provider Agreements that required arbitration but claimed their agreements were exempt from the Federal Arbitration Act (FAA) because they were “workers engaged in foreign or interstate commerce.” The district courts disagreed and compelled arbitration under the FAA.

The Analysis

Now, in a sometimes-colorful August 4th decision, the Seventh Circuit has affirmed both judgments.  Wallace v. Grubhub Holdings, Inc., Nos. 19-1564 and 19-2156 (7th Cir. Aug. 4, 2020).  Judge Amy Barrett, who authored the decision, began her interpretation with the text of § 1 of the FAA which declares:  “nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”  9 U.S.C. § 1.  Most relevant to the decision was the residual category “any other class of workers engaged in foreign or interstate commerce” and its “membership”.  Perhaps the most meaningful portion of the decision was that the “operative unit” was a “class of workers” not simply individual workers who claim to have worked in commerce.  So, a worker “whose occupation is not defined by . . . engagement in interstate commerce does not qualify for the exemption . . . .”  And, merely because a worker “occasionally” performs that class of work, is not enough.  Hill v. Rent-A-Center, 398 F. 3d 1286, 1289-90 (11th Cir. 2005). Continue Reading