Court Opinion

ID: 7805030
Source: CourtListenerOpinion
Date Created: 2022-08-31 00:00:52.894951+00
Date Added: 2024-06-11T16:29:55.969963
License: Public Domain

Case: 21-20089     Document: 00516452808        Page: 1    Date Filed: 08/30/2022

           United States Court of Appeals
                for the Fifth Circuit                             United States Court of Appeals
                                                                           Fifth Circuit

                                                                         FILED
                                                                   August 30, 2022
                                 No. 21-20089
                                                                    Lyle W. Cayce
                                                                         Clerk
   Douglas A. Lopez,

                                                          Plaintiff—Appellant,

                                     versus

   Cintas Corporation,

                                                          Defendant—Appellee.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                           USDC No. 4:20-CV-3490

   Before Smith, Elrod, and Oldham, Circuit Judges.
   Jennifer Walker Elrod, Circuit Judge:
         Douglas Lopez was a local delivery driver for Cintas Corporation.
   That means he picked up items from a Houston warehouse (items shipped
   from out of state) and delivered them to local customers. Lopez does not
   want to arbitrate his claims against Cintas. He says that he is exempt from
   doing so because he belongs to a “class of workers engaged in foreign or
   interstate commerce” under § 1 of the Federal Arbitration Act. Because he
   does not belong to such a class of workers, we partially AFFIRM. But
   because his unconscionability claim should be resolved in arbitration, we
   VACATE and REMAND for that claim to be dismissed.
Case: 21-20089      Document: 00516452808          Page: 2   Date Filed: 08/30/2022

                                    No. 21-20089

                                         I.
          Cintas Corporation processes, distributes, and delivers work uniforms
   and other facility-services products to clients nationwide. Cintas hired
   Douglas Lopez in early 2019. In the hiring process, Lopez checked a box on
   a voluntary self-identification form indicating that he has (or previously had)
   a disability. His job duties included picking up items from a Houston
   warehouse and delivering them to local clients. Those items arrived at the
   warehouse from out of state.
          Lopez signed an employment contract which included an arbitration
   agreement. The agreement covered “all of [Lopez]’s rights or claims arising
   out of or in any way related to [Lopez]’s employment with [Cintas],”
   including claims under the Americans with Disabilities Act. The agreement
   also conspicuously stated (in bold, all-caps typeface) that the agreement was
   governed by the Federal Arbitration Act. And it delegated to the arbitrator
   the “authority to resolve any dispute relating to the interpretation,
   applicability, enforceability or formation of this Agreement including, but not
   limited to, any claim that all or any part of this Agreement is void or
   voidable.”
          Cintas fired Lopez a few months after he started. Lopez then sued in
   state court, arguing that Cintas violated his rights under the ADA. Cintas
   removed the case to federal court and then moved to either stay the claims
   pending arbitration or to dismiss them entirely. Cintas contended that
   Lopez’s employment contract included a binding arbitration agreement, so
   arbitration was the only forum for his claims. Lopez responded with § 1 of
   the FAA, which exempts from the FAA’s coverage “contracts of
   employment of seamen, railroad employees, or any other class of workers
   engaged in foreign or interstate commerce.” 9 U.S.C. § 1. He also argued
   that the arbitration agreement was substantively and procedurally

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   unconscionable because Lopez had an intellectual disability and because the
   agreement was grossly one-sided and unfair.
          The district court held a hearing on the motion and later granted the
   motion to dismiss. The district court held that Lopez did not fall within this
   exemption because his job duties did not require him to “pick up or deliver
   items out of state, [and he did not] cross state lines as part of his
   responsibilities.” Also relevant was the fact that, as a “route skipper,” he
   filled in for sales representatives which had “customer service” qualities
   unlike seamen and railroad employees (who are explicitly covered by the
   exemption in the FAA). Lopez timely appealed.
                                         II.
          We review de novo the grant of a motion to dismiss in favor of
   arbitration. Brittania-U Nigeria, Ltd. v. Chevron USA, Inc., 866 F.3d 709, 712
   (5th Cir. 2017). The question whether Lopez’s contract is exempted from
   the FAA’s coverage is decided by the court before ordering arbitration. See
   New Prime Inc. v. Oliveira, 139 S. Ct. 532, 537–38 (2019).
          Lopez argues that because he is a “transportation worker,” the FAA
   does not apply to his employment agreement. Alternatively, he argues that
   even if he is not a transportation worker, he cannot be compelled to arbitrate
   his claims because the arbitration agreement was procedurally and
   substantively unconscionable.
                                         A.
          In 1925, Congress passed and President Coolidge signed the Federal
   Arbitration Act. U.S. Arbitration Act, Pub. L. No. 68-401, 43 Stat. 883–86
   (1925); 9 U.S.C. § 1, et seq. The FAA was Congress’s way of responding to
   the general “hostility of American courts to the enforcement of arbitration
   agreements.” Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 111 (2001).

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   Contrary to that prior practice, the FAA establishes “a liberal federal policy
   favoring arbitration agreements.” Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612,
   1621 (2018) (quotation omitted). To that end, courts must “rigorously
   enforce arbitration agreements according to their terms.” Am. Express Co. v.
   Italian Colors Rest., 570 U.S. 228, 233 (2013) (quotation omitted). The FAA
   applies to contracts “evidencing a transaction involving commerce,” and
   employment contracts fall within that category. Circuit City, 532 U.S. at 113.
   So unless a statute clearly exempts the arbitrability of a plaintiff’s claim, we
   must “respect and enforce” the agreement as written. See Epic Sys., 138 S.
   Ct. at 1621.
             Lopez’s employment contract includes an arbitration agreement, so
   he has to identify an exemption to avoid arbitration. He relies on the residual
   clause found in 9 U.S.C. § 1, where the FAA exempts from its scope
   “contracts of employment of seamen, railroad employees, or any other class
   of workers engaged in foreign or interstate commerce.” The Supreme Court
   has confined this “any other class of workers” language to exempt only
   “contracts of employment of transportation workers.” Circuit City, 532 U.S.
   at 109.
             After we held oral argument in this case, the Supreme Court decided
   Southwest Airlines v. Saxon, 142 S. Ct. 1783 (2022). There, the Court held
   that an airline’s ramp supervisor belonged to a “class of workers engaged in
   foreign or interstate commerce.” See id. at 1788. In reaching that conclusion,
   the Court laid out the proper framework for determining whether a person
   falls within the transportation-worker exemption. Saxon, 142 S. Ct. at 1788–
   90.
             First, we must define the relevant “class of workers” that Lopez
   belongs to. Second, we must determine whether that class of workers is
   “engaged in foreign or interstate commerce.” We address each in turn.

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                                     No. 21-20089

                                          1.
          Because the FAA “speaks of ‘workers,’ not ‘employees’ or
   ‘servants,’” we determine the relevant “class of workers” by the work that
   Lopez actually did at Cintas. Saxon, 142 S. Ct. at 1788 (quoting New Prime,
   139 S. Ct. at 540–41).
          Lopez describes himself as a “last-mile driver.” According to him,
   while working at Cintas, he was “responsible for visiting 20–25 customers
   per day, picking up and dropping off [Cintas’s] products, and other
   responsibilities.” A “Route Service Sales Representative” at Cintas, which
   Lopez was training to become, were tasked with various sales-related tasks
   that entailed “driv[ing] a truck along an established route” and
   “deliver[ing]” certain items to clients, all while being “the face of Cintas to
   [its] customers.” Thus, Lopez belongs to a “class of workers” that picks up
   items from a local warehouse and delivers those items to local customers,
   with an emphasis on sales and customer service. Saxon, 142 S. Ct. at 1788–
   89. For ease of reference, we will refer to this relevant class of workers as
   “local delivery drivers.”
                                          2.
          We must next determine whether that class of local delivery drivers is
   “engaged in foreign or interstate commerce” under § 1 of the FAA. To
   answer that question, the Court in Saxon looked to the ordinary meaning of
   the terms “engaged” (which meant “occupied,” “employed,” or
   “involved” in something) and “commerce” (which included, “among other
   things, ‘the transportation of . . . goods, both by land or by sea’”). 142 S. Ct.
   at 1789 (quoting Webster’s New International Dictionary 725 (1922); Black’s
   Law Dictionary (2d ed. 1910)). It then summed that up as exempting “any
   class of workers directly involved in transporting goods across state or
   international borders.” Id.

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                                         No. 21-20089

           That led the Court to the conclusion that it was “plain that airline
   employees who physically load and unload cargo on and off planes traveling
   in interstate commerce are, as a practical matter, part of the interstate
   transportation of goods.” Id. Notable for our purposes, the Court expressly
   declined to resolve the question whether the exemption applies to those
   classes of employees “further removed from the channels of interstate
   commerce or the actual crossing of borders,” as is the case with local delivery
   drivers like Lopez. See id. at 1789 n.2. Our sister circuits that have addressed
   this issue have come out different ways. Compare Rittmann v. Amazon.com,
   Inc., 971 F.3d 904, 915–19 (9th Cir. 2020) (last-mile drivers fall within the
   “transportation worker[]” exemption in § 1), and Waithaka v. Amazon.com,
   Inc., 966 F.3d 10, 13 (1st Cir. 2020) (same), with Wallace v. Grubhub Holdings,
   Inc., 970 F.3d 798, 801–02 (7th Cir. 2020) (Barrett, J.) (last-mile drivers do
   not fall within the exemption). 1
           We are thus tasked with determining whether, after Saxon, a class of
   workers a step removed from the airline cargo loader in Saxon is “engaged in
   foreign or interstate commerce.” 9 U.S.C. § 1. Specifically, local delivery
   drivers take items from a local warehouse to local customers; these drivers
   enter the scene after the goods have already been delivered across state lines.
           We conclude that local delivery drivers are not so “engaged” in
   “interstate commerce” as § 1 contemplates. That conclusion flows from the
   Court’s elaboration in Saxon and Circuit City on what it means to be
   “engaged in” “interstate commerce.”                First, the phrase “engaged in
   commerce” has “a more limited reach,” and this narrower reading covers

           1
              The Supreme Judicial Court of Massachusetts also recently concluded, after
   Saxon, that local food-delivery drivers were not a “class of workers engaged in foreign or
   interstate commerce.” Archer v. Grubhub, Inc., 190 N.E.3d 1024, 1029–33 (Mass. July 27,
   2022).

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   only “active employment” in interstate commerce. Circuit City, 532 U.S. at
   115–16. Second, the Court has applied the ejusdem generis canon to § 1 and
   interpreted “class of workers engaged in” “commerce” to be “controlled
   and defined by reference” to the specific classes of “seamen” and “railroad
   employees” expressly mentioned in § 1. Id. at 115; see Antonin Scalia &
   Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 199–200
   (2012) (the Ejusdem Generis Canon: “Where general words follow an
   enumeration of two or more things, they apply only to persons or things of
   the same general kind or class specifically mentioned.”). The Court in Saxon
   further clarified that, as a result of that interpretation, “transportation
   workers must be actively ‘engaged in transportation’ of those goods across
   borders via the channels of foreign or interstate commerce.” 142 S. Ct. at
   1790 (quoting Circuit City, 532 U.S. at 121). It further elaborated that “any
   such worker must at least play a direct and ‘necessary role in the free flow of
   goods’ across borders.” Id. (quoting Circuit City, 532 U.S. at 121).
          The relevant class of workers here do not have such a “direct and
   necessary role” in the transportation of goods across borders. Giving § 1
   “more limited reach” means limiting its applicability to those “actively
   engaged in transportation of those goods across borders,” which is something
   the class of local delivery drivers here simply does not do. Id. (quotation
   omitted). Once the goods arrived at the Houston warehouse and were
   unloaded, anyone interacting with those goods was no longer engaged in
   interstate commerce. And unlike either seamen or railroad employees, the
   local delivery drivers here have a more customer-facing role, which further
   underscores that this class does not fall within § 1’s ambit. See Saxon, 142 S.
   Ct. at 1791. As a result, the transportation-worker exemption does not apply
   to this class of local delivery drivers.

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                                        No. 21-20089

                                              B.
           Lopez next contends that the arbitration clause in his employment
   agreement is unconscionable, both procedurally and substantively. But
   because his claims go to the enforceability of the entire contract, not just the
   specific arbitration agreement, that question is for the arbitrator to decide.
           To compel arbitration based on a contract, there must first be a
   contract. Kubala v. Supreme Prod. Servs., 830 F.3d 199, 201–02 (5th Cir.
   2016). But who decides whether there is a contract? It depends. If a party
   opposing arbitration contests the validity of the contract, that goes to the
   arbitrator; if the party contests the existence of a contract, it stays with us.
   Arnold v. HomeAway, Inc., 890 F.3d 546, 550 (5th Cir. 2018). We look to state
   law to determine whether a challenge is about contract validity vs. contract
   existence. Edwards v. DoorDash, Inc., 888 F.3d 738, 745 (5th Cir. 2018).
           Under Texas law, unconscionability goes to validity rather than
   formation. See In re Poly-America, L.P., 262 S.W.3d 337, 348 (Tex. 2008)
   (“Unconscionable contracts, however—whether relating to arbitration or
   not—are unenforceable under Texas law.” (emphasis added)); see also In re
   Olshan Found. Repair Co., LLC, 328 S.W.3d 883, 892 (Tex. 2010) (“Texas
   law renders unconscionable contracts unenforceable.”).                   Lopez’s sole
   argument goes to unconscionability. 2 So if his unconscionability challenge
   goes to the contract as a whole, the issue of unconscionability is for the
   arbitrator—not a court—to decide. See Rent-A-Center, W., Inc. v. Jackson,
   561 U.S. 63, 70 n.2, 71 76 (2010).

           2
            At one point, Lopez says the consideration underlying the contract was illusory.
   Even viewed as a separate argument of its own, that changes nothing: An illusoriness
   challenge under Texas law “is properly considered a validity challenge rather than a
   formation challenge.” Arnold, 890 F.3d at 551.

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          Lopez argues that he disclosed his disability, and thus Cintas violated
   its alleged duty to make sure he could actually read his employment
   agreement before he signed it. This, he says, is what renders his arbitration
   agreement procedurally and substantively unconscionable. Though Lopez
   frames his argument as being solely about the arbitration provision, he offers
   no explanation for why his challenge—if successful—would not render the
   entire contract unconscionable. Thus, Lopez challenges the validity of the
   contract, not just the arbitration agreement.
          Because unconscionability under Texas law is a challenge to the
   validity, not the existence, of a contract, that challenge must be resolved by
   an arbitrator. See Rent-A-Center, 561 U.S. at 71–72. As a result, the district
   court erred in resolving the merits of Lopez’s unconscionability claim.
                                  *        *         *
          Because Lopez is not a “transportation worker” under § 1 of the
   FAA, we AFFIRM that portion of the district court’s judgment. But
   because Lopez’s unconscionability challenge to his employment agreement
   must be decided in arbitration, we VACATE and REMAND for that claim
   to be dismissed without prejudice to be considered in arbitration in the first
   instance.

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