On July 21, 2023, a unanimous three-judge panel once again affirmed a California federal court’s ruling that the truck drivers who deliver ingredients from Domino’s Southern California Supply Chain Center to Domino’s California franchisees are exempt from the Federal Arbitration Act (“FAA”).
In Edmond Carmona, et al v. Domino’s Pizza, LLC, three truck drivers brought a putative class action asserting various California labor law claims against Domino’s in 2020. Each of the plaintiffs’ employment agreements included an arbitration clause covering “any claim, dispute, and/or controversy” between the parties. The district court denied Domino’s motion to compel arbitration after determining that the drivers fall within the FAA’s exemption for transportation workers “engaged in foreign or interstate commerce.” 9 U.S.C. § 1. The Ninth Circuit initially affirmed on December 23, 2021, concluding that the workers engage in a ‘“single, unbroken stream of interstate commerce’ that renders interstate commerce a ‘central part’ of their job description.”
On October 17, 2022, the Supreme Court of the United States vacated the Ninth Circuit’s ruling and remanded the case for further consideration in light of Southwest Airlines Co. v. Saxon, 142 S. Ct. 1783 (2022). In Saxon, the Court held that section 1 applies to airline workers who load and unload cargo planes, and observed that the critical question when analyzing the applicability of the exemption was whether the workers actively engage in the transportation of goods in interstate commerce and whether they play a “direct and necessary role in the free flow of goods across borders.” The court rejected the airlines’ argument that crossing state lines was a necessary condition for the cargo workers to fall within the exemption.
On remand, the Ninth Circuit once again concluded that the truck drivers engage in interstate commerce, and in doing so, rejected Domino’s argument that because the franchisees do not order the ingredients until after they arrive at the warehouse, the drivers are not part of an “unbroken stream” of interstate commerce. The court observed that neither the timing of the order nor the existence of a “pause in the journey of the goods” is enough to constitute the removal of the drivers from the stream of interstate commerce. The court also determined that Saxon was not inconsistent or irreconcilable with the older decisions that aided both their prior ruling and the current ruling affirming the district court’s denial of the motion to compel arbitration.
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