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Employee drivers operating wholly within the state of California may be found to be engaged in foreign and interstate commerce, in which case the Federal Arbitration Act does not apply to them even though their employment contract is to the contrary

California

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USA

Drivers Who Delivered Domino’s Pizza Ingredients from a California Supply Center to California Franchisees Were Engaged in Interstate Commerce In Carmona v. Domino’s Pizza, LLC, No. 21-55009 (9th Cir. Dec. 23, 2021), Domino’s Pizza, LLC brought a motion to compel arbitration of a putative class action in which Domino’s drivers asserted various violations of California labor law. The District Court denied the motion after finding that the drivers were exempt from the Federal Arbitration Act (“FAA”), notwithstanding that their contracts provided that disputes between the drivers and Domino’s would be submitted to arbitration under the FAA. The United States Court of Appeals for the Ninth Circuit affirmed. Section 1 of the FAA exempts workers engaged in foreign and interstate commerce Section 1 of the FAA, referred to as the “residual clause,” exempts certain employment contracts from the arbitration mandate. The critical factor in determining if the residual clause applies is the nature of the business for which a class of workers performed their activities. The exemption applies if the class of workers is engaged in a “single, unbroken stream of interstate commerce” that renders interstate commerce a “central part” of their job description. Drivers did not need to cross state lines for the residual clause to apply The plaintiff drivers transported goods from a Domino’s supply center located in California to individual franchisees within the state of California. The Court found that Domino’s was directly involved in the procurement and delivery of interstate goods and the plaintiff drivers transported those goods for the last leg to their final destinations. Thus, the Court held that the drivers operated in a single, unbroken stream of interstate commerce that rendered interstate commerce a central part of their job description, and the residual clause applied. Domino's is directly involved in the procurement and delivery of interstate goods Domino’s also argued that the residual clause did not apply because the goods that the drivers delivered were not in the same form in which they arrived at the Supply Center. The Court disagreed and noted that while some of the goods are transformed into pizza dough at the Supply Center, other items were simply reapportioned, weighed, packaged, and stored before being delivered to franchisees by the drivers. Thus, the Court found that the relevant goods were not transformed into a different form before being delivered by the drivers. Disposition The Court affirmed the District Court’s finding that the FAA did not apply to the drivers’ claims because the drivers were workers engaged in interstate commerce.

April 14, 2022
Carmona v. Domino’s Pizza, LLC, No. 21-55009 (9th Cir. Dec. 23, 2021)
Federal Courts (9th Circuit)