From JDSupra, Richard Reibstein discusses a recent case in Massachusetts in which the court said that local Postmates’ couriers are not interstate transportation workers and therefore are not exempt from arbitration under the Federal Arbitration Act. Richard writes:
The most publicized legal development in the area of independent contractor law last month involved an opinion issued by a federal appellate court in a gig economy case that generated national attention. In a decision discussed below, the United States Court of Appeals for the First Circuit held that local couriers who make deliveries to Postmates’ customers of products they pick up from retail stores are not interstate transportation workers. As a result, the court held that the couriers do not fall into the interstate transportation exemption from arbitration under the Federal Arbitration Act. In reaching this decision, the First Circuit distinguished the couriers from drivers making last-mile deliveries of products for Amazon, whom the court found to be interstate transportation workers under the federal arbitration law. While this Postmates decision provides companies involved in local delivery services with additional legal authority when they seek to compel arbitration of a proposed class action, the decision is not nearly as momentous as many commentators have suggested. Why? Because companies can also compel arbitration under state arbitration laws, almost all of which do not contain an exemption for interstate transportation workers. We pointed that out in a blog post last year involving a case holding that certain ride-sharing drivers were exempt from arbitration under the Federal Arbitration Act but were nonetheless compelled to arbitrate under a state arbitration law. Prudent companies seeking to compel arbitration of proposed class actions based on allegations of independent contractor misclassifications would be also be wise to take the steps we outlined in an earlier blog post where we offered suggestions as to how to draft effective arbitration clauses as part of a process designed to minimize misclassification liability.
In the Courts (3 cases)
POSTMATES COURIERS ARE NOT INTERSTATE TRANSPORTATION WORKERS AND THEREFORE MAY BE COMPELLED TO ARBITRATE THEIR IC MISCLASSIFICATION CLAIMS. The U.S. Court of Appeals for the First Circuit has concluded that couriers who deliver goods from local restaurants and grocery stores to customers through the Postmates app are not engaged in interstate commerce and are not, therefore, exempted from their arbitration agreements under the interstate transportation exemption in the Federal Arbitration Act. The couriers sought damages for allegedly unpaid minimum wage, sick leave, and expense reimbursements, claiming they have been misclassified as independent contractors instead of employees under state wage laws. In opposing the company’s motion to compel arbitration, the couriers relied on the Waithaka v. Amazon decision in the First Circuit involving Amazon’s last-mile delivery drivers. But unlike the couriers in the Amazon case, the First Circuit found the couriers providing services to customers through the Postmates app were not engaged in the interstate transport of goods and therefore were subject to arbitration under the Federal Arbitration Act.
The First Circuit found it significant that nearly all Postmates app orders placed in Massachusetts are fulfilled within the state, and the average distance travelled by a courier during a delivery is about 3.7 miles. In reaching its decision, the First Circuit stated, “the phrase ‘engaged in interstate commerce’ is a term of art that does not encompass the local retail of goods, even if those goods previously have been shipped interstate.” It further noted that although the couriers transport goods, “they do so as part of separate intrastate transactions that are not themselves within interstate commerce.” (Emphasis added.) The court added: “That the delivered items may once have travelled across state borders does not alter the equation. The interstate journey terminates when the goods arrive at the local restaurants and retailers to which they are shipped.” The First Circuit contrasted the facts in Waithaka v. Amazon, stating: “[U]nlike Postmates, customers bought goods directly from Amazon, which orchestrated the interstate movement of those goods and arranged, as part of the purchase, for their delivery directly to the customer. That local delivery was therefore integral to the interstate movement such that the goods remained within the flow of interstate commerce until arriving at the customer’s doorstep.” Immediato v. Postmates, Inc., No. 22-1015 (1st Cir. Nov. 29, 2022).
