Who Is ‘Engaged in Commerce’ Under FAA Section 1? Not Food Delivery Drivers

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

Arbitrator’s Joke Not Sufficient to Vacate Award in Putative Antitrust Class Action

A poor joke and unsubstantiated hero worship were insufficient to overturn an arbitrator’s award in favor of Travis Kalanick and Uber Technologies Inc., according to U.S. District Judge Jed S. Rakoff. In an Aug. 3 memorandum and order, Rakoff denied the plaintiff’s motion to vacate an arbitration award in the defendants’ favor arising from a putative class action alleging that Uber’s surge pricing model was illegal price-fixing. Meyer v. Kalanick, Case No. 1:15-cv-09796 (S.D. N.Y. Aug. 3, 2020).

The Arbitration Runup

In December 2015, Spencer Meyer filed a putative class action against Uber co-founder Travis Kalanick, claiming that Uber’s pricing model was horizontal price-fixing violative of antitrust law. Once Uber was joined as a necessary party, Kalanick and Uber moved to compel arbitration. Continue Reading

D.C. District Court Refuses to Issue Preliminary Injunction Against Alleged Retaliation in Sex Discrimination Class Action

In the 1991 movie “Silence of the Lambs” and the book on which it was based, FBI trainee Clarice Starling is tasked with working with the now-infamous Hannibal Lector to find a serial killer. That movie won a Best Actress Oscar for Jodie Foster as well as Oscars for Anthony Hopkins and the movie’s scriptwriters and director.

But not every trainee paints the same exciting picture of life as a female FBI agent in training. In Bird v. Barr, Case No. 1:2019cv01581 (D.D.C., July 23, 2020), a group of women FBI trainees claimed that they and others were victims of sex discrimination in the FBI’s basic training program for new agents and intelligence analysts. After the action was filed, one plaintiff and one potential witness in Phoenix alleged that a supervisor had retaliated against them by, among other things, threatening termination, requiring additional documentation for a Family and Medical Leave Act leave, not giving them meaningful assignments or refusing requests to work alternative work schedules. The plaintiffs filed a motion for an order preliminarily enjoining the FBI “from engaging in any retaliation against any plaintiff or witness in this action.” Continue Reading

New Jersey Supreme Court Requires Delivery Drivers to Arbitrate Regardless of FAA Transportation Workers Exemption

As we noted in our June 10, 2019 blog post, many have questioned whether state arbitration laws could be applied when some transportation workers are held to be exempt from the Federal Arbitration Act (FAA) based on Section 1 of that act. This quandary was fueled by New Prime, Inc. v. Oliveira, 139 S. Ct. 532 (2019), and lower court opinions trying to harmonize Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 113, 119 (2001), with the diverse group of workers involved in and around the movement of goods and passengers. See our April 29, 2019; April 3, 2020; and June 1, 2020 blogs detailing the potential tests to determine who might qualify as a transportation worker in interstate commerce. In other words, must they cross state lines, be directly involved in the process, carry goods rather than passengers or be in the actual stream of interstate rather than local commerce? Continue Reading

Ninth Circuit Finds No Right of Contribution or Indemnity Under the FLSA

Joint or single employer liability has gotten a lot of attention in recent years, where a company is held responsible for the employment obligations of a sufficiently interrelated contractor or corporate entity. Our sister blog, the Employment Law Spotlight, has reviewed many of these issues in detail. See, e.g., our January 13, 2020 blog.

But what happens after an entity is found liable for the wage and hour violations of a different employer? Does it have an implied right of contribution or indemnity?

That was the question posed in Scalia v. Employer Solutions Staffing Group, LLC, Case No. 18-16493 (9th Cir. Mar. 2, 2020). As with some other significant cases, we had thought this was an interesting opinion, but with the pandemic hopefully easing we are just now getting to it. Continue Reading

Sixth Circuit Addresses RICO and FLSA Claims

Successful FLSA plaintiffs will likely receive not only the claimed unpaid overtime or minimum wage, but also liquidated (double) damages and payment of their attorney fees. But what if they want . . . more? Will a RICO claim get them additional funds?

That was the question the Sixth Circuit has answered in a pair of cases arising out of a small local pizza chain in western Michigan. In Torres v. Vitale, Case No. 19-1515 (6th Cir. March 31, 2020), and in Collier v. Logiudice, Case No. 19-1829 (6th Cir. June 26, 2020), the plaintiffs worked at one or more of the five “Vitale’s” family-owned pizza restaurants near Grand Rapids. According to the complaints, the company operated essentially two payroll systems. Hours up to 40 per week were recorded and paid through the regular payroll. Hours over 40 were recorded separately by hand and then paid out in cash at regular (not overtime) rates and (apparently) without any tax withholding. Continue Reading

Illinois District Court Decertifies FLSA Collective With 1,600 Opt-Ins

Just before the pandemic triggered closings across the country, we identified an Illinois case as a good candidate for discussion. As the pandemic has eased, we’re taking the time now to address issues relating to the decision as to whether an off-the-clock case that has been conditionally certified should be permitted to remain as a collective action.

In Meadows v. NCR Corporation, Case No. 16 CV 6221 (N.D. Ill. March 4, 2020), the plaintiffs were hourly employees whose duties related to the servicing of ATMs and registers at customer sites. They brought a collective action claiming entitlement to additional overtime, alleging a nationwide policy requiring that they and those like them were forced to work off-the-clock, focusing in particular on travel to customer locations. Continue Reading

Court Vacates Jury Award Due to Problems With Plaintiffs’ Expert Reports

Few collective actions are tried, and even when they are, unexpected problems can easily arise. Those problems in a recent case led to the court vacating a jury verdict for the plaintiffs due to what might be characterized as an untimely expert report. But the case really came down to an initial expert report that used incorrect methodology to exaggerate damages, an approach that backfired badly for the plaintiffs.

The case of Petrone v. Werner Enterprises, Inc., Case No. 8:11CV401 (D. Neb. June 22, 2020), involved trainee truck drivers. The plaintiffs contended that during their training, they were not properly compensated for breaks of short duration (such as 15 minutes) or for time spent resting in the sleeper berth of their trucks. In 2011, they brought a collective action under the Fair Labor Standards Act and a class action under Nebraska law. Continue Reading

Following AAA Rules, the Sixth Circuit Sends Non-Solicitation Action to Arbitration

We recently described how organization rules, like those of the American Arbitration Association (AAA), can have a legal impact on whether a court or an arbitrator resolves a dispute. See our blog post of May 4, 2020, regarding a recent Third Circuit opinion involving those rules. Now the Sixth Circuit has reconfirmed it.

In Blanton v. Domino’s Pizza Franchising LLC, No. 19-2388 (6th Cir. June 17, 2020), the U.S. Court of Appeals for the Sixth Circuit decided that an arbitrator should hear the dispute involving an alleged non-solicitation agreement a national pizza restaurant chain required in its franchise agreements. Continue Reading

Second Circuit Upholds Fluctuating Work Week Despite Potential Payroll Issues

More than 75 years ago, just four years after the passage of the Fair Labor Standards Act (FLSA), the United States Supreme Court recognized what has now become known as the fluctuating work week (or “FWW”) as an alternative to the strict payment of overtime at time and a half. Overnight Motor Transportation Co. v. Missel, 316 U.S. 572 (1942). The general idea is that an employer guarantees a nonexempt employee a fixed amount of pay for the work week – whether over or under 40 hours – in exchange for paying overtime at half-time rates rather than at time and a half. The Supreme Court reasoned in 1942 that the arrangement had a mutual benefit to the employer and the employee: The employee was guaranteed a set amount for budgeting and planning purposes; the employer had some relief on overtime.

It took the U.S. Department of Labor (DOL) 28 years to issue regulations on the topic, at which time it came up with the label of “fluctuating work week.” 29 C.F.R. § 778.114. Since then, there have been numerous opinion letters and cases outlining when and when not the employer might take advantage of an FWW arrangement. We’ve previously blogged about some of those cases here and here. Continue Reading

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