Massachusetts High Court Decides Intrastate Delivery Drivers Are Unable to Ditch Their Arbitration Agreements
Just days ago, the highest court in Massachusetts—the Supreme Judicial Court (“SJC”)— decided whether former food delivery drivers for GrubHub could escape their arbitration agreements and bring a wage and hour class action lawsuit in court. In excellent news for employers operating in the intrastate delivery sector, the SJC held that they could not. Archer v. GrubHub, Inc., SJC-13228. 2022 WL 2964639 (July 27, 2022) (“GrubHub II”).
GrubHub II turned on interpretation of § 1 of the Federal Arbitration Act (“FAA”), which exempts seamen, railroad workers, and “any other class of workers engaged in foreign or interstate commerce” from forced arbitration pursuant to the FAA. Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 112 (2001) (“Circuit City”). Though this latter language could be interpreted broadly, the Supreme Court has held that it is limited to “transportation workers,” defined as “those workers actually engaged in the movement of goods in interstate commerce.” Id.
Despite the Supreme Court’s clarifications in Circuit City, questions quickly arose across the country about whether and when so-called “last-mile delivery drivers” could qualify as “transportation workers.”
By illustration, imagine two drivers working for the same company and carrying goods from a warehouse in Phoenix, Arizona to a customer in Los Angeles, California. Driver 1 routinely carries the goods from Phoenix to a warehouse in San Diego, and Driver 2 routinely picks up the goods from the warehouse in San Diego and transports them to a customer in Los Angeles – all in California. Driver 1’s job is characterized by crossing state lines and is possibly a “transportation worker” exempt from arbitration under § 1 of the FAA, but what about Driver 2?
In Massachusetts, such questions came to a head in the summer and fall of 2019, and have remained hotly disputed since. In August of 2019, the District of Massachusetts concluded in Waithaka v. Amazon.com Inc., 404 F. Supp. 3d 335 (D. Mass. 2019) (“Amazon I”) that both of the Amazon delivery drivers in the situations described above are transportation workers exempt under § 1 of the FAA. Id. (aff’d 966 F.3d 10 (1st Cir. 2020) (“Amazon II”) cert. denied 141 S. Ct. 2794 (2021)). The District Court found that “there is a ‘continuity of movement’ of the goods delivered by Amazon interstate until they reach customers,” and therefore, because the Amazon customers are the final, intended destination of Amazon products, all drivers involved in transporting said goods to Amazon customers are exempt from the FAA. Id. at 341 (citing Walling v. Jacksonville Paper Co., 317 U.S. 564, 568 (1943)).
Now let’s imagine two other situations, this time involving Drivers 3 and 4:
Driver 3 works for a national soda company and Driver 4 works for a restaurant. Driver 3 transports cans of soda from various distribution centers across New England to restaurants and other food service establishments in Massachusetts. However, Driver 4 works for a Massachusetts-based delivery service, and delivers orders containing the same soda from Massachusetts restaurants to Massachusetts customers. Under the Amazon I analysis, Driver 3 may be a “transportation worker”—but what about Driver 4?
In September of 2019, a different Massachusetts District Court judge examined this precise question in the context of DoorDash drivers and determined that drivers operating intra-state (such as Driver 4, discussed above) are not transportation workers exempt from the FAA. Austin v. DoorDash, Inc., C.A. No. 1:17-cv-12498-IT, 2019 WL 4804781 at *4 (D. Mass. Sept. 30, 2019) (“DoorDash”). DoorDash considered Amazon I but distinguished the case on the basis that “the final destinations from the vantage point of the interstate food distributors are the restaurant where Plaintiff picks ups [sic.] orders, and not the customers to whom he makes deliveries.” Id.
In other words, the distributors’ customers are food service establishments, and DoorDash drivers only transport products from food service establishments’ customers—not to the interstate distributors’ customers. Id. For that reason, the DoorDash drivers had to arbitrate their claims pursuant to lawfully signed arbitration agreements. Id.
Undeterred by the DoorDash decision, another suit was filed in October 2019 by a putative class of former GrubHub delivery drivers in Massachusetts state court, which is often viewed as a more employee-favorable forum than Massachusetts District Court. Archer v. GrubHub, 1984CV03277BLS1, 2021 WL 832132 (Mass. Super. BLS Jan. 13, 2021) (“GrubHub I”). The GrubHub plaintiffs alleged wage and hour violations of Massachusetts laws including those concerning minimum wage, tips, and retaliation for complaining about wage and hour violations, all of which would be required to be arbitrated under the terms of an arbitration agreement signed by the plaintiffs and putative class members. GrubHub I, at *1. Therefore, GrubHub responded by filing a Motion to Compel arbitration and to dismiss the suit. Id. As with the DoorDash drivers, it was undisputed that the GrubHub drivers picked up goods from Massachusetts locations and delivered them to Massachusetts customers, though some “pre-packaged food items and non-food items came from manufacturers located outside this Commonwealth.” Id.
In July of 2020, after GrubHub’s motion to compel arbitration was filed but before it was decided by the Superior Court, the First Circuit’s Amazon II decision, which affirmed the Amazon I decision, issued. The GrubHub I Superior Court decision was issued in January of 2021 and relied in part on Amazon II’s analysis. First, the Superior Court found that “the ultimate ‘customers for whom … [food items] are intended’ are the GrubHub customers who consumed or used them,” rather than the food service establishments at which the items were initially delivered after travelling in interstate commerce. GrubHub I at *7(citing Walling v. Jacksonville Paper Co., 317 U.S. 564, 568 (1943)). Second, the Superior Court relied upon Amazon II to conclude that the GrubHub drivers need not personally cross state lines in order to qualify as transportation workers. Id. at *8. Though the Superior Court recognized that several cases in other jurisdictions reached contrary conclusions and briefly mentioned DoorDash, it did not deeply examine these cases before deciding not to follow them. Id. at *6, *8.
GrubHub appealed the Superior Court’s decision, and the SJC sua sponte elected to hear the case without it proceeding through the standard appeals process. GrubHub II, at *2.
Like the Superior Court, the SJC reviewed the precedent discussed above. Id. at *5. Agreeing that “the fact that the plaintiffs here did not cross State lines in their work for GrubHub is not dispositive,” the SJC carefully examined “whether the class of workers to which the plaintiffs belonged was engaged in interstate commerce.” Id. at *3. Without questioning the First Circuit’s holding in Amazon II, the SJC determined that this class was not engaged in interstate commerce, and therefore reversed the Superior Court, holding that GrubHub drivers fall outside of the § 1 FAA exemption. Id. at *5.
In doing so, the SJC distinguished FAA-exempt drivers as those that transport goods that “were always ‘destined for’ the customers to whom the last-mile drivers made deliveries.” Id. (citing Amazon II, supra at 966 F.3d at 13, 20). By contrast, the GrubHub drivers were picking up goods that had previously traveled interstate but were “destined for local restaurants, delicatessens, and convenience stores” at that time, and had already reached their respective destinations before being ordered for the first time by GrubHub’s customers. Id. For these reasons, the GrubHub plaintiffs were “dissimilar to the railroad workers, seamen, or the other limited, interstate class of workers contemplated by Congress when enacting § 1 of the FAA” and therefore, they were required to comply with the arbitration agreements that they had knowingly, lawfully signed. Id. at *5-6.
GrubHub II and DoorDash are critical cases for maintaining reasonable limitations on the FAA transportation worker exemption, both in Massachusetts and around the country. If the Superior Court’s reasoning in GrubHub I had been upheld, there would be virtually no limitations on the ability of any Massachusetts-based driver who had ever delivered, for example, a bottle of soda manufactured in another state, to escape from arbitration agreements lawfully signed with their respective employers. Beyond that, it is easy to imagine that restaurant employers, as well as food-delivery services like DoorDash, GrubHub, and Uber Eats, could begin the nigh-impossible task of analyzing the origins of various ingredients (such as Vermont cheddar, California avocados, or Florida oranges) to determine whether the exemption may or may not apply—potentially exempting nearly all delivery drivers.
Though we can expect that arbitration agreements will continue to be hotly contested by would-be class action plaintiffs, the SJC has signaled that, at least for now, Massachusetts remains a safe jurisdiction for many delivery services and restaurants to enforce their arbitration agreements with intrastate delivery drivers.