Court Opinion

ID: 4700631
Source: CourtListenerOpinion
Date Created: 2021-07-01 22:03:36.826553+00
Date Added: 2024-06-11T09:16:13.725905
License: Public Domain

Filed 7/1/21 Jones v. UPS Supply Chain Solutions CA1/3
                  NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
ordered published for purposes of rule 8.1115.

          IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                      FIRST APPELLATE DISTRICT

                                                DIVISION THREE

 SUE JONES et al.,
           Plaintiffs and Respondents,
                                                                        A160726
 v.
 UPS SUPPLY CHAIN SOLUTIONS,                                            (City & County of San Francisco
 INC. et al.,                                                           Super. Ct. No. CGC19578596)
           Defendants and Respondents.

         Defendants UPS Supply Chain Solutions, Inc. and United Parcel
Service, Inc. (jointly SCS) appeal from the trial court’s denial of their motion
to compel plaintiffs Sue and Robert Jones to arbitrate their various wage and
hour violation claims. The trial court found the Joneses’ putative class action
fell within a statutory exemption from the Federal Arbitration Act (FAA) for
transportation workers engaged in interstate commerce. Its order is
supported by substantial evidence and legally sound, so we affirm.
                                                  BACKGROUND
         SCS, an affiliated entity of United Parcel Service, Inc., maintains a
supply logistics network that includes some 300 warehouses throughout the
United States and Canada. As described by SCS transportation division
manager Jakline Seguerra, it offers a “service parts logistics solution” that

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allows its customers to store critical high tech and other products and
replacement parts in strategically located warehouses where they can be
quickly sourced. When a customer needs an item, SCS arranges for customer
pick-up or delivery from the warehouse by overnight carrier or local courier
service. For example, Seguerra explained, “a computer manufacturer might
use SCS to manage the distribution of replacement service parts to its end-
users. If a customer of a computer manufacturer needs a replacement part,
SCS locates the part in a warehouse and facilitates delivery from the nearest
local SCS warehouse.”
      Arizona residents Sue and Robert Jones worked as delivery drivers for
SCS individually, as a team, and through Sue’s company, Efficient Delivery
and Freight, LLC.1 SCS provided several vendor identification numbers that
they used to assign the Joneses work and issue payments.2
      In 2014 Sue executed an arbitration agreement that extended to all
claims or controversies between the parties, “includ[ing] contract claims, tort
claims, and claims for violation of any federal, state, or other governmental
law, statute (including anti-discrimination statues), regulation, or ordinance,
except for any claims that are not arbitrable as a matter of law.” The
agreement waived “any right to bring on behalf of persons other than myself,
or to otherwise participate with other persons in, any class, collective, or
representative action with respect to any claim covered by this arbitration
provision.”

      1 Because they share a surname, we will refer to the Joneses by their
first names for clarity. We intend no disrespect by this practice.

      2It is unclear whether Robert worked directly for SCS and was issued a
separate identification number. Rather, according to Seguerra, SCS’s records
indicated that he worked exclusively through Sue.
                                        2
      In 2019 the Joneses filed a putative class action against SCS. As later
amended, the complaint alleged violations of California wage and hour laws,
breach of contract, breach of the covenant of good faith and fair dealing, and
unfair business practices on behalf of themselves and current and former
SCS drivers “including but not limited to those misclassified as independent
contractors.”
      SCS responded by moving to compel arbitration. It acknowledged that
the FAA exempts from arbitration employment contracts “ ‘any . . . class of
workers engaged in foreign or interstate commerce’ ” (9 U.S.C. § 1 (hereafter
section 1)), but asserted the Joneses did not qualify for the exemption
because “there is no evidence establishing that they crossed into California to
make deliveries on behalf of SCS, as they allege in the first amended
complaint. Any argument that their intrastate operations qualify as ‘engaged
in interstate commerce,’ will fail. . . .”
      Based on Seguerra’s declaration and supporting records, SCS asserted
it had no records indicating the Joneses made any pickups or deliveries
outside of Arizona during the relevant period and that the absence of
documentation established they made none. It further argued the Joneses
were not “engaged in interstate commerce” for purposes of the section 1
exemption because (1) they were contracted to provide only same-day local
courier service; and (2) SCS customers stored goods for potential sale in SCS
warehouses, which removed them from the flow of interstate commerce. SCS
submitted the Joneses’ electronic records showing only deliveries within
Arizona, albeit including numerous pickups from and deliveries to the
Phoenix Sky Harbor Airport. Seguerra attested that these records
established that all deliveries associated with Sue’s vendor numbers were
solely within Arizona. In a subsequent declaration Seguerra added that SCS
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couriers made only 17 deliveries from Arizona to California during the
relevant period, and that none of those deliveries were undertaken by the
Joneses.
      In opposition, the Joneses asserted they qualified for the section 1
exemption because they made deliveries for SCS across state lines.
Supporting declarations from Sue and Robert stated: “[w]hile working for
Defendants my spouse and I made deliveries to locations in California on a
regular basis, doing so at the specified direction of the Defendants.
Specifically, we made deliveries to Defendants’ own warehouses in San
Francisco California and Downtown Los Angeles, California. Some of these
deliveries in California were also directly to the Defendants’ customers, for
instance the hospital in Redlands, California. These deliveries like all the
work . . . my spouse and I completed for Defendants were on demand, same
day deliveries, not part of a route. We also made deliveries to several other
states including, but not limited to New Mexico and Texas.” The Joneses also
relied on Nieto v. Fresno Beverage Co., Inc. (2019) 33 Cal.App.5th 274 (Nieto)
and similar cases to assert the exemption applied whether or not they crossed
state lines because the goods they delivered in Arizona were within the flow
of interstate commerce.3
      Following a contested hearing, the trial court denied SCS’s motion. Its
written order explains: “The arbitration agreement . . . expressly provides
that the parties’ agreement is subject to the FAA. [Citation.] Section 1 of the
FAA provides that ‘nothing herein contained shall apply to contracts of

      3In addition, the Joneses contend the arbitration agreement was
unenforceable under Arizona law and that it was procedurally and
substantively unconscionable. We need not address those claims in light of
our determination that the section 1 exemption applies.
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employment of seamen, railroad employees, or any other class of workers
engaged in foreign or interstate commerce.’ (9 U.S.C. §1; see New Prime, Inc.
v. Oliveira, 139 S.Ct. 532, 538-539 (2019) [truck driver engaged in interstate
commerce and was exempt from arbitration under the FAA].) Courts
generally recognize two ways workers can establish that they engaged in
interstate commerce: (1) showing they actually crossed state lines to deliver
goods; or (2) that they were directly involved in the practical continuity of
movement of goods in interstate commerce. (Muller v. Roy Miller Freight
Lines, LLC (2019) 34 Cal.App.5th 1056, 1068-1069; Nieto v. Fresno Beverage
Co., Inc. (2019) 33 Cal.App.5th 274, 279-284 [even though delivery truck
driver’s deliveries were exclusively to destinations within California, he was
engaged in interstate commerce through his participation in the continuation
of the movement of interstate goods to their destination].) ‘If a truck driver
physically transports goods across state lines, he or she undoubtedly qualifies
as a transportation worker under section 1.’ (Id. at 1065.) In this case,
plaintiffs made deliveries from Arizona to multiple states including
California, Texas, and New Mexico. (Sue Jones Decl. 7; Robert Allen Jones
Decl. 7). This evidence establishes that the transportation worker exemption
applies and plaintiffs are not obliged to arbitrate. Defendants do not
convincingly demonstrate that these declarations are perjurious and
unworthy of credence. In any event, ‘a transportation worker does not
necessarily have to physically cross state lines in order to engage in the
movement of goods in interstate commerce.’ (Nieto, 33 Cal.App.5th at 282.)”
      SCS filed a motion for reconsideration, but when it then appealed the
underlying order before the motion was heard the court ordered it off
calendar because it no longer had jurisdiction over the matter. The court’s
order, which was captioned as a denial, further observed that “there is a
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substantial body of authority holding that delivery workers who transport
packages through to the conclusion of their journeys in interstate and foreign
commerce are exempt from the FAA as transportation workers engaged in
interstate commerce, even if the drivers transport goods wholly within the
boundaries of a single state.”
      This appeal is timely.
                                 DISCUSSION
   I. Legal Framework
      The issue here is whether the Joneses fall within the section 1
exemption for “contracts of employment of seamen, railroad employees, or
any other class of workers engaged in foreign or interstate commerce.”
(section 1, italics added.) “[A]ny other class of workers,” as used in section 1,
refers exclusively to “workers ‘ “actually engaged in the movement of goods in
interstate commerce.” ’ ” (Circuit City Stores, Inc. v. Adams (2001) 532 U.S.
105, 112, 119.)
      A party moving to compel arbitration “bears the burden of proving the
existence of a valid arbitration agreement by the preponderance of the
evidence, and a party opposing the petition bears the burden of proving by a
preponderance of the evidence any fact necessary to its defense. [Citation.]”
(Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972
(Engalla).) Accordingly, a party claiming the section 1 exemption bears the
burden of proving it applies. (Performance Team Freight Systems, Inc. v.
Aleman (2015) 241 Cal.App.4th 1233, 1241 (Performance Team Freight
Systems).) Any doubts concerning the scope of arbitrable issues are to be
resolved in favor of arbitration. (Ibid.)
      On review, an order denying a petition to compel arbitration is
presumed to be correct “and all intendments and presumptions are indulged
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to support the order on matters as to which the record is silent.” (Gutierrez v.
Autowest, Inc. (2003) 114 Cal.App.4th 77, 88.) “ ‘When a trial court’s order
[denying a petition to compel arbitration] is based on a question of law, we
review the denial de novo. [Citation.] Decisions on issues of fact are
reviewed for substantial evidence. [Citation.]’ ” (Muller v. Roy Miller Freight
Lines, LLC (2019) 34 Cal.App.5th 1056, 1061 (Muller); Nieto, supra, 33
Cal.App.5th at p. 279.)
   II. The Trial Court Correctly Found the Exemption Applied
      Here, as expressed in its order, the trial court found the FAA
exemption applied because the Joneses made deliveries across state lines and
were therefore engaged in interstate commerce. Further, although without
basing its ruling on this additional point, the court indicated the Joneses at
least likely fell within the exemption even if they made only intrastate
deliveries because they transported goods that were within the flow of
interstate commerce.
      We start with the court’s factual finding that the Joneses made
deliveries from Arizona to multiple states including California, Texas, and
New Mexico. The order makes plain that the trial court gave credence to the
Joneses’ declaration testimony over Seguerra’s conflicting testimony and
supporting documentation that, in effect, SCS’s records proved the Joneses
made only intrastate deliveries for the company.
      We may not disturb this credibility determination. Applying the
substantial evidence standard, “we must consider all of the evidence in the
light most favorable to the prevailing party, giving it the benefit of every
reasonable inference, and resolving conflicts in support of the judgment.
[Citations.] [¶] It is not our task to weigh conflicts and disputes in the
evidence; that is the province of the trier of fact. Our authority begins and
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ends with a determination as to whether, on the entire record, there
is any substantial evidence, contradicted or uncontradicted, in support of the
judgment. Even in cases where the evidence is undisputed or uncontradicted,
if two or more different inferences can reasonably be drawn from the evidence
this court is without power to substitute its own inferences or deductions for
those of the trier of fact, which must resolve such conflicting inferences in the
absence of a rule of law specifying the inference to be drawn. We must accept
as true all evidence and all reasonable inferences from the evidence tending
to establish the correctness of the trial court’s findings and decision, resolving
every conflict in favor of the judgment. [Citations.]
      “We emphasize that the test is not the presence or absence of a
substantial conflict in the evidence. Rather, it is simply whether there is
substantial evidence in favor of the respondent. If this ‘substantial’ evidence
is present, no matter how slight it may appear in comparison with the
contradictory evidence, the judgment must be upheld. As a general rule,
therefore, we will look only at the evidence and reasonable inferences
supporting the successful party, and disregard the contrary showing.
[Citations.] In short, even if the judgment of the trial court is against the
weight of the evidence, we are bound to uphold it so long as the record is free
from prejudicial error and the judgment is supported by evidence which is
‘substantial,’ that is, of ‘ “ponderable legal significance,” ’ ‘ “reasonable in
nature, credible, and of solid value . . . .” ’ [Citations.]” (Howard v. Owens
Corning (1999) 72 Cal.App.4th 621, 630-631 (Howard); Engalla, supra, 15
Cal.4th at p. 972.)
      Faced with conflicting evidence and the otherwise inescapable
conclusion to be drawn from applying the substantial evidence test to it, SCS
asserts the trial court erred as a matter of law by placing on it the burden to
                                          8
“convincingly” prove the exemption did not apply, rather than requiring the
Joneses to prove that it did. (See Performance Team Freight Systems, supra,
241 Cal.App.4th at p. 1241.) While acknowledging, at least initially, that the
trial court’s order does not show such an error,4 SCS argues the court exposed
the purported misperception of the law during the following colloquy: “The
Court: Well, isn’t it your burden to show on a motion to compel arbitration
that there is an enforceable and valid arbitration agreement subject to the
FAA?” [¶] [SCS’s counsel]: And, in fact, we have. But pursuant to—so,
pursuant to [Performance Team Freight Systems] . . . . ‘The party opposing
arbitration bears the burden of demonstrating that the exemption applies.’ ”
      We reject this argument. Neither the court’s question nor counsel’s
answer gives any indication the court failed to understand the parties’
relative burdens. Nor does anything in the record support SCS’s further
claim that the trial court simply failed to weigh the evidence. Absent
evidence to the contrary, “[i]t is a basic presumption indulged in by reviewing
courts that the trial court is presumed to have known and applied the correct
statutory and case law in the exercise of its official duties.” (People v. Mack
(1986) 178 Cal.App.3d 1026, 1032.) Essentially, SCS’s argument is that the
court’s rejection of its own view of the evidence shows the court misapplied
the burden of proof. That, of course, is not how it works. If a court’s
disagreement with a litigant’s assessment of the evidence were sufficient to

      4 SCS apparently changed its view on this in time for its reply brief,
where it asserts the court’s comment that SCS did not “convincingly
demonstrate” the Jones declarations were “perjurious and unworthy of
credence” shows it placed the burden on SCS to prove the exemption did not
apply. In our view, the comment does nothing more than explain the court’s
credibility assessment; by no means does it indicate any misapprehension as
to the relevant burdens of proof.
                                        9
show a failure to apply the correct burden, substantial evidence review would
be meaningless.
      SCS’s remaining challenge to the dispositive finding that the Joneses
made deliveries to other states merely invites us to reweigh the court’s
credibility assessment as between Seguerra and the Joneses’ “self-serving”
declarations. We must decline. “ ‘With rhythmic regularity it is necessary for
us to say that where the findings are attacked for insufficiency of the
evidence, our power begins and ends with a determination as to whether
there is any substantial evidence to support them; that we have no power to
judge of the effect or value of the evidence, to weigh the evidence, to consider
the credibility of the witnesses, or to resolve conflicts in the evidence or in the
reasonable inferences that may be drawn therefrom. No one seems to listen.’
” (9 Witkin, Cal. Procedure (5th ed. 2020) Appeal, § 365, quoting Overton v.
Vita-Food Corp. (1949) 94 Cal.App.2d 367, 370; Arnesen v. Raymond Lee
Organization, Inc. (1973) 31 Cal.App.3d 991, 995 (Arnesen).) Here, the
Joneses’ declarations were sworn under penalty of perjury and not inherently
unbelievable. That they were uncorroborated does not, as SCS argues,
compel the conclusion that they amounted to “a mere scintilla of evidence”
insufficient to withstand substantial evidence review.
      SCS goes further, asking not only that we re-weigh the evidence, but
that in so doing we take into account “new facts presented through [their
motion for] reconsideration,” which they argue cast doubt on the Joneses’
veracity. As SCS acknowledges, the trial court did not consider this “new
evidence” in ruling because it lost jurisdiction over the matter before the
reconsideration motion came on for hearing. “As a general rule, documents
and facts not before the trial court cannot be included as part of the record on

                                        10
appeal.” (Foster v. Civil Service Com. (1983) 142 Cal.App.3d 444, 449; In re
Zeth S. (2003) 31 Cal.4th 396, 405; Arnesen, supra, 31 Cal.App.3d at p. 995.)
      In sum, the court’s determination the section 1 exemption applied
because the Joneses made deliveries across state lines is supported by
substantial evidence. This conclusion is required by the relevant standard of
review, so we need not decide whether, on these specific facts, the Joneses are
also exempt from arbitration pursuant to Nieto, supra, 33 Cal.App.5th 274,
282, and other similar cases. However, like the trial court, we find Nieto
worthy of note. The defendant there, VWB, imported beverages from out of
state to its warehouses in California and, shortly after that, to its California
customers. The Nieto court concluded the plaintiff, one of VWB’s local
delivery drivers, was engaged in interstate commerce because his deliveries,
“although intrastate, were essentially the last phase of a continuous journey
of the interstate commerce (i.e., beer and other beverages delivered to VWB’s
warehouse from out-of-state) being transported until reaching its
destination(s) to VWB’s customers.” (Id. at p. 284.) A number of other
courts, including this one, have recently reached the same conclusion on
similar facts. (See Betancourt v. Transportation Brokerage Specialists, Inc.
(2021) 62 Cal.App.5th 552, 558-561; Muller, supra, 34 Cal.App.5th 1056;
Rittman v. Amazon.com, Inc. (9th Cir. 2020) 971 F.3d 904, 915-919 (Rittman);
Waithaka v. Amazon.com, Inc. (1st Cir. 2020) 966 F.3d 10, 26.)
      SCS argues the situation at hand is factually distinct, primarily in that
at least some goods arrive at its warehouse without an intended final
recipient and remain there for an indefinite period. Therefore, it asserts, “the
interstate movement of any goods stored in [its] warehouses ended when such

                                       11
goods reached the warehouse.”5 (See A.L.A. Schechter Poultry Corporation v.
United States (1935) 295 U.S. 495, 542-543 [live poultry shipped from out of
state “[came] to a permanent rest” when they reached slaughterhouse for
slaughter and sale to local retailers; compare Rittman, supra, 971 F.3d at p.
916 and fn. 5 [Amazon’s interstate transactions do not conclude when
packages arrive at Amazon warehouses].) As resolution of this point has no
bearing on the outcome here, examination of the validity and reach of SCS’s
position must remain for another day.
      In light of our conclusion that substantial evidence supports the court’s
finding the Joneses made interstate deliveries for SCS, we also do not
address SCS’s contention that the trial court misconstrued the section 1
exemption to apply simply because SCS engages in interstate commerce. For
the same reason, we need not resolve the parties’ disputes about the
enforceability of the arbitration agreement as against either or both of the
Joneses.
                                  DISPOSITION
      The order denying the motion to compel arbitration is affirmed. Costs
on appeal are awarded to the Joneses.

      5 SCS does not address how this argument would apply to the
numerous deliveries its records indicate the Joneses made to the Phoenix
airport other than to assert there is no evidence any of those goods were
intended for out-of-state air transport, rather than for use at the airport.
While the point is not critical here, we observe that trial courts are entitled to
draw reasonable inferences from the evidence. (Howard, supra, 72
Cal.App.4th at p. 631.)
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                                            _________________________
                                            Wiseman, J.*

   WE CONCUR:

   _________________________
   Petrou, Acting P.J.

   _________________________
   Jackson, J.

   Jones v. UPS Supply Chain Solutions, A160726

      * Retired Associate Justice of the Court of Appeal, Fifth Appellate
District, assigned by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.

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