Court Opinion

ID: 9919377
Source: CourtListenerOpinion
Date Created: 2024-01-18 08:14:21.08176+00
Date Added: 2024-06-11T08:04:58.660879
License: Public Domain

COURT OF APPEALS
                                           EIGHTH DISTRICT OF TEXAS
                                                EL PASO, TEXAS

    ARROW FREIGHT MANAGEMENT, INC.,                       §           No. 08-23-00082-CV

                                          Appellant,      §             Appeal from the

    v.                                                    §       384th Judicial District Court

    RUBEN CONTRERAS,                                      §         of El Paso County, Texas

                                          Appellee.       §          (TC# 2022-DCV-0305)

                                             MEMORANDUM OPINION

            In this interlocutory appeal, Appellant Arrow Freight Management, Inc. (Arrow Freight),

appeals the trial court’s denial of its motion to compel arbitration pursuant to an agreement it

entered with Appellee Ruben Contreras, a worker it employed as a truck driver. TEX. CIV. PRAC.

& REM. CODE § 51.016; 9 U.S.C. § 16(a) (allowing for appeals of orders denying arbitration under

the FAA). Finding no abuse of discretion, we affirm.

                                                     BACKGROUND

            Alleging damages for personal injuries, Contreras filed a negligence lawsuit against Arrow

Freight and Foster Electric. 1 He alleged that, on or about February 15, 2021, while working in the

course and scope of his employment with Arrow Freight, he slipped on ice and fell due to a

1
    Foster Electric is not a party to this appeal.
dangerous condition on the premises of Foster Electric. Contreras alleged that Arrow Freight sent

him out in dangerous conditions without proper training or equipment as necessary for the existing

conditions. He also alleged that any arbitration agreement was void and invalid as a matter of law

and void for being against public policy.

       Initially, Arrow Freight responded by filing an original answer including general denials,

affirmative defenses, and a demand for arbitration. After five months, it filed a motion to stay

proceedings and compel arbitration based on an arbitration agreement it claimed Contreras had

signed. To its motion, Arrow Freight attached a purported Arbitration Agreement, effective as of

December 1, 2012 (the 2012 agreement), signed by Contreras on January 15, 2013; an affidavit

from Raquel Urban, a custodian of Arrow Freight’s records; a copy of a sign-in sheet

acknowledging Contreras’s attendance at a meeting on June 26, 2015, where Arrow Freight

distributed copies of its “Occupational Injury Benefit Plan Summary Description, Schedule of

Benefits, and Arbitration agreement;” and a copy of Arrow Freight’s 2015 Arbitration Agreement.

By her affidavit, Urban attested Contreras had read and signed the 2012 agreement. The 2012

agreement stated that Arrow Freight “is engaged in interstate commerce and that the Federal

Arbitration Act (the “FAA”) will govern all aspects of [the] agreement.” It further provided that

the parties had agreed to mandatory arbitration for certain claims, including those arising from

work injuries. The subsequent agreement, which was dated as effective as of December 1, 2015,

further provided that Contreras was deemed to have accepted the arbitration agreement as follows:

               If you are already working for [Arrow Freight] when you receive
               notice of this Arbitration Agreement, and you continue working for
               us for more than three more days, you will be deemed to have
               accepted the terms of this arbitration Agreement on the fourth day,
               and thereafter. In the event, the fourth day is your effective date to
               be governed by this Arbitration Agreement. IF YOU CONTINUE
               TO WORK FOR US AFTER THE EFFECTIVE DATE, YOU AND

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               WE WILL HAVE MUTUALLY AGREED TO ARBITRATE ALL
               COVERED CLAIMS BETWEEN US, APPLYING THE TERMS
               OF THIS ARBITRATION AGREEMENT.”

       Opposing compelled arbitration, Contreras filed a response asserting the claims he asserted

did not fall within the scope of the arbitration provision. Specifically, he urged that his claims, as

an interstate truck driver, were expressly excluded from the company’s arbitration requirements.

       On September 22, 2022, the trial court held a non-evidentiary hearing on Arrow Freight’s

motion to compel arbitration, receiving argument from both sides of the dispute. Subsequently, the

trial court signed a written order denying Arrow Freight’s motion to compel arbitration. Thereafter,

Arrow Freight timely appealed.

                                           DISCUSSION

       In a single issue, Arrow Freight asserts the trial court abused its discretion in denying its

motion to stay and compel arbitration. Arrow Freight contends its arbitration agreement is valid

and enforceable, that Contreras agreed to its terms, and their current dispute falls within the scope

of their agreement. Arguing the trial court correctly denied Arrow Freight’s motion, Contreras

counters he was exempt from mandatory arbitration under an exception in the Federal Arbitration

Act (FAA), which applies to transportation workers. In the alternative, Contreras argues that even

if his claims are not exempt from arbitration under the FAA, they are exempt under the very terms

of the arbitration agreement itself.

       A. Standard of review and applicable law

       “We review a trial court’s decision to grant or deny a motion to compel arbitration for an

abuse of discretion.” ReadyOne Indus., Inc. v. Lopez, 551 S.W.3d 305, 310 (Tex. App.—El Paso

2018, pet. denied); Delfingen US-Texas, L.P. v. Valenzuela, 407 S.W.3d 791, 800 (Tex. App.—El

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Paso 2013, no pet.). In doing so, we defer to factual determinations, if they are supported by the

evidence, and review legal determinations de novo. ReadyOne, 551 S.W.3d at 310; Delfingen, 407

S.W.3d at 798.

        A party seeking to compel arbitration must (1) establish the existence of a valid arbitration

agreement; and (2) show that claims asserted are within the scope of the agreement. See In re

AdvancePCS Health L.P., 172 S.W.3d 603, 605 (Tex. 2005) (per curiam). We apply state contract

principles to determine whether a valid arbitration agreement exists. J.M. Davidson, Inc. v.

Webster, 128 S.W.3d 223, 227 (Tex. 2003); Delfingen, 407 S.W.3d at 800. Once the party seeking

to compel arbitration has proven that a valid arbitration agreement exists, a presumption attaches

in favor of arbitration and the burden of proof then shifts to the party resisting to establish a defense

to enforcement. Delfingen, 407 S.W.3d at 800. Because the trial court here did not enter specific

findings of fact or conclusions of law to explain its denial of the motion to compel arbitration, we

must uphold the trial court’s decision on any appropriate legal theory urged below. Shamrock

Foods Co. v. Munn & Assocs., Ltd., 392 S.W.3d 839, 844 (Tex. App.—Texarkana 2013, no pet.).

        B. Analysis

        The Federal Arbitration Act (FAA or Act) applies to contracts involving interstate

commerce. See 9 U.S.C. §§ 1, 2. As the United States Supreme Court recognized in Southland

Corp. v. Keating, 465 U.S. 1, 10–12 (1984), the FAA, “establishes a national policy favoring

arbitration when parties contract for that mode of dispute resolution.” Preston v. Ferrer, 552 U.S.

346, 349 (2008); see also 9 U.S.C. §§ 1–402. Resting on Congress’s authority under the Commerce

Clause, the U.S. Supreme Court found the Act applied in state courts as well as federal courts.

Preston, 552 U.S. at 349.

        Relevant to this dispute, § 2 of the Act provides, in part, that:

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       A written provision in any maritime transaction or a contract evidencing a
       transaction involving commerce to settle by arbitration a controversy thereafter
       arising out of such contract or transaction, or the refusal to perform the whole or
       any part thereof, or an agreement in writing to submit to arbitration an existing
       controversy arising out of such contract, transaction, or refusal, shall be valid,
       irrevocable, and enforceable, save upon such grounds as exist at law or in equity
       for the revocation of any contract.

9 U.S.C. § 2. Despite this general provision, § 1 limits the enforceability of arbitration agreements

by providing an exemption to mandatory arbitration for “contracts of employment of seamen,

railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9

U.S.C. § 1. Pertaining to this exemption, the U.S. Supreme Court has interpreted the phrase, “other

class of workers,” to be limited to transportation workers. Circuit City Stores, Inc. v. Adams, 532

U.S. 105, 119 (2001). Here, neither party initially disputes the agreement at issue involves a

“transaction involving commerce,” which is covered by the FAA. Instead, the question before us

is narrowed to asking whether Contreras qualifies as a transportation worker engaged in interstate

commerce such that he is exempt from provisions of the FAA under the transportation worker

exemption.

       (1) Whether the arbitration agreement qualifies as a contract of employment

       We first determine whether the arbitration agreement is a contract of employment because

the transportation worker exemption only applies when the arbitration agreement is a “contract of

employment.” 9 U.S.C. § 1; W. Tex. Exp. v. Guerrero, 511 S.W.3d 106, 112–13 (Tex. App.—El

Paso 2014, no pet.) (holding that the transportation exemption did not apply because there was no

employment contract). Arrow Freight argues the agreement is not a contract of employment

because it includes a provision stating as follows: “Not a Contract of Employment: Although this

Arbitration Agreement alters the terms of your at-will employment with [Arrow Freight], it is not,

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and shall not be construed to create, a contract of continued employment, either express or implied,

for any person.” We disagree.

       First, whether an arbitration agreement is a contract of employment is not decided by

whether it is labeled as such. Otherwise, it would be easy enough for employers to avoid the

transportation worker exemption for every employee by simply including a sentence indicating the

agreement is not a contract of employment. Second, the fact that Contreras was an at-will employee

is also irrelevant. An at-will employee agreement can be considered an employment contract for

the purposes of the transportation worker exemption. In re Swift Transp. Co., Inc., 311 S.W.3d

484, 489 (Tex. App.—El Paso 2009, no pet.) (citing Sterner v. Marathon Oil Company, 767

S.W.2d 686, 689 (Tex. 1989)).

       Instead, the more relevant inquiry is whether Contreras’s agreement to arbitration was a

condition of his employment. In Swift, we considered an arbitration agreement similar to the one

at issue here. There, the agreement provided both, that it did not affect the employee’s “at will”

status, and further, by continuing to work for the employer, the employee agreed to the arbitration

of covered disputes. Id. at 489. We held that the arbitration agreement was an employment contract

because said arbitration was a condition of employment. Id. at 490; Compare with West Texas

Exp., 511 S.W.3d at 112–13 (employer’s occupational benefit plan which included arbitration

provisions was not a contract of employment because it was not mandatory). The same is true here.

The arbitration agreement signed by Contreras specifically provided that, by continuing to work

more than three days after receiving notice of the arbitration policy, Contreras was “deemed to

have accepted the terms of [the] Arbitration Agreement.”

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       Because Contreras did not have the option of both declining the agreement and continuing

to work, we conclude the arbitration agreement was a condition of Contreras’s employment, and

thus, it was a contract of employment under the FAA.

       (2) Was Contreras a transportation worker engaged in interstate commerce?

       In determining whether an employee is a transportation worker for purposes of the FAA

exclusion, this court has followed the U.S. Court of Appeals for the Eighth Circuit in Lenz v. Yellow

Transp., Inc., and applied a “nonexclusive eight-part test.” W. Dairy Transp., LLC v. Vasquez, 457

S.W.3d 458, 465 (Tex. App.—El Paso 2014) (citing Lenz v. Yellow Transp., Inc., 431 F.3d 348,

352 (8th Cir. 2005)). The factors of the Lenz test are (1) “whether the employee works in the

transportation industry”; (2) “whether the employee is directly responsible for transporting the

goods in interstate commerce”; (3) “whether the employee handles goods that travel interstate”;

(4) “whether the employee supervises employees who are themselves transportation workers, such

as truck drivers”; (5) “whether, like seamen or railroad employees, the employee is within a class

of employees for which special arbitration already existed when Congress enacted the FAA”; (6)

“whether the vehicle itself is vital to the commercial enterprise of the employer”; (7) “whether a

strike by the employee would disrupt interstate commerce”; and (8) “the nexus that exists between

the employee’s job duties and the vehicle the employee uses in carrying out his duties.” Lenz, 431

F. 3d 348, 352.

       This multi-factor test has been applied to employees working in the transportation industry

who are not engaged in the actual transportation of goods. See, e.g., Lenz, 431 F.3d at 352–53

(applying test to find that a customer-service representative for a transportation company was not

a transportation worker); W. Dairy Transp., LLC, 457 S.W.3d at 465 (using the Lenz factors to

determine that a mechanic was a transportation worker); OEP Holdings LLC v. Akhondi, 570

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S.W.3d 774, 781–82 (Tex. App.—El Paso 2018) (using the Lenz factors to hold that an orientation

instructor was a transportation worker). But here, on this record, we conclude we do not need to

apply the multi-factor test to determine if Contreras was a transportation worker because, as a truck

driver, he was “indisputably” a transportation worker for purposes of the Act. W. Dairy Transp.,

457 S.W.3d at 466 (noting that truck drivers are “indisputably” transportation workers for purposes

of 9 U.S.C. § 1); see also Lenz, 431 F.3d at 351 (“Indisputably, if Lenz were a truck driver, he

would be considered a transportation worker under § 1 of the FAA.”).

       The more pertinent question applicable here is whether he was engaged in interstate

commerce. Arrow Freight characterizes Contreras’s interstate dispatches as “rare and infrequent,”

contending, for this reason, he was not engaged in interstate commerce. It points out that his

interstate trips accounted for only between .7% and 20.51% of his yearly dispatches after 2018.

       Besides seamen and railroad workers, the FAA exempts from mandatory arbitration “any

other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. To determine if

this exemption applies, we ask “not whether the individual worker actually engaged in interstate

commerce, but whether the class of workers to which the complaining worker belonged engaged

in interstate commerce.” Bacashihua v. U.S. Postal Serv., 859 F.2d 402, 405 (6th Cir. 1988)

(emphasis added); see also Sw. Airlines Co. v. Saxon, 596 U.S. 450 (2022) (determining if a worker

is engaged in interstate commerce based on “the actual work that the members of the class, as a

whole, typically carry out”); Wallace v. Grubhub Holdings, Inc., 970 F.3d 798, 801 (7th Cir. 2020)

(“To determine whether a class of workers meets that definition [of a transportation worker

engaged in interstate commerce], we consider whether the interstate movement of goods is a

central part of the class members’ job description.”). If the class is engaged in interstate commerce,

then all members of the class are so engaged even if they do not themselves personally transport

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goods interstate. See Capriole v. Uber Techs., Inc., 7 F.4th 854, 861 (9th Cir. 2021) (in analyzing

whether the transportation worker exemption applies, it does not matter if the worker himself

crosses state lines); Waithaka v. Amazon.com, Inc., 966 F.3d 10, 22 (1st Cir. 2020) (if a class of

workers is engaged in the interstate moving of goods, they are engaged in interstate commerce

“even if the workers were responsible only for an intrastate leg of that interstate journey”); Palcko

v. Airborne Express, Inc., 372 F.3d 588, 593 (3d Cir. 2004) (supervisor of interstate drivers was

engaged in interstate commerce for the purposes of the transportation worker exemption even

though she did not personally transport the goods).

       Here, the record establishes that Arrow Freight was operating as a freight transportation

company during the relevant time of the dispute. It was responsible for transporting goods to and

from as many as 24 states. Even though Contreras himself and one other driver were primarily

responsible for Texas routes only, this limitation does not change the fact that, as a whole, the class

of truck drivers to which he belonged who all worked for Arrow Freight, were in fact engaged in

interstate commerce.

       We conclude that the cases Arrow Freight cites to in support of its argument are factually

dissimilar and in any event their reasoning supports a finding that Contreras engaged in interstate

commerce. In three of the cases cited, the courts’ holdings that the transportation exemption did

not apply were all made because the employees did not work in the transportation industry and the

fact that they may have crossed state lines in the course of their work was incidental or

happenstance. In Mason v. Big Star Transit, the court held that a rideshare driver was not engaged

in interstate commerce because “interstate travel was not intrinsic to her job as a rideshare worker,

and is not intrinsic to rideshare drivers as a class.” Mason v. Big Star Transit LLC, No. 3:20-CV-

03566-M, 2021 WL 4948214, at *5 (N.D. Tex. Sept. 28, 2021). In Rogers v. Lyft, the court held

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that rideshare drivers’ “relationship to interstate transit is only casual and incidental.” Rogers v.

Lyft, Inc., 452 F. Supp. 3d 904, 917 (N.D. Cal. 2020), aff’d, No. 20-15689, 2022 WL 474166 (9th

Cir. Feb. 16, 2022) (quoting United States v. Yellow Cab Co., 332 U.S. 218, 231 (1947), overruled

on other grounds by Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752 (1984)). And, in Hill

v. Rent-A-Ctr, the court held that an account manager for a rent-to-own business was not a

transportation worker because the emphasis in the exemption “was on a class of workers in the

transportation industry, rather than on workers who incidentally transported goods interstate as

part of their job.” Hill v. Rent-A-Ctr., Inc., 398 F.3d 1286, 1289 (11th Cir. 2005). Here, in contrast,

the fact that Arrow Freight’s truck drivers moved goods interstate was not “incidental” to their

work. That type of activity encompassed the very purpose of their business. Lastly, in the fourth

case cited by Arrow Freight, Wallace v. Grubhub, the court held that workers who delivered food

that itself may have moved across state lines to get to its final destination were not engaged in

interstate commerce because they had no part in the last part of the transportation. Wallace v.

Grubhub Holdings, Inc., 970 F.3d at 802. But that is not the case here. Arrow Freight’s truck

drivers, as a class, were responsible for moving goods to and from other states, and not only

moving goods after they arrived in state.

       These same cases recognize that a truck driver like Contreras—who works in the

transportation industry but whose routes are primarily intrastate—are still considered to be

engaged in interstate commerce. “If a class of workers (say, truckers) transports goods or people

between states, a trucker who only occasionally drives across state lines is still exempt from the

FAA.” Rogers, 452 F. Supp. 3d at 915; see also Mason, 2021 WL 4948214 at *5 (same); Wallace,

970 F.3d at 800 (recognizing that if a class of workers engages in interstate commerce, “a member

of the class qualifies for the exemption even if she does not personally ‘engage in commerce’”).

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         Further, even if we define the class of workers narrowly, as Arrow Freight would have us

do, so the class only includes Arrow Freight’s two “local drivers,” Contreras would still qualify as

a transportation worker engaged in interstate commerce. For truck drivers in the transportation

industry, the transportation exemption applies if any amount of their deliveries are interstate. For

example, in Kienstra Precast, the truck drivers who were based in Illinois made between “1500 to

1750 deliveries each year, of which only a few dozen were to Missouri.” Int’l Brotherhood of

Teamsters Local Union No. 50 v. Kienstra Precast LLC, 702 F.3d 954, 958 (7th Cir. 2012). The

Seventh Circuit Court held “there is no basis in the text of § 1 for drawing a line between workers

who do a lot of interstate transportation work and those who cross state lines only rarely; both sorts

of worker are ‘engaged in foreign or interstate commerce.’” Id. (citing Cent. States, Se. & Sw.

Areas Pension Fund v. Cent. Cartage Co., 84 F.3d 988, 993 (7th Cir. 1996)).

         Finally, Arrow Freight contends that Contreras was not engaged in interstate commerce

because the bulk of his interstate destinations after 2018 were close to the Texas border. 2 The

company, however, cites no support, and we find none, for the proposition that a certain distance

across a state line is required for transportation to be considered interstate. Transportation of goods

to another state is interstate transportation, regardless of whether the delivery is right across the

border or many states away. See, e.g. Kienstra Precast, 702 F.3d at 956 (noting that if employees

who typically delivered goods in Illinois occasionally delivered goods directly across the river to

St. Louis, Missouri, the § 1 exemption would apply, and the court would not have jurisdiction).

2
  Specifically, Arrow Freight asserts that the farthest trip Contreras made once he became a local driver was a delivery
to Santa Theresa, New Mexico, a town on the border with Texas. Arrow Freight’s records, however, show, in the
month before Contreras was allegedly injured, he travelled from Texas to Nogales and Douglas, Arizona.

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       Accordingly, we conclude that Contreras meets the two requirements of the exemption to

mandatory arbitration under the FAA: he had a contract of employment with Arrow Freight that

conditioned his continued employment on acceptance of the agreement, and he was a member of

a class of workers engaged in interstate commerce. Because we hold that Contreras was exempt

from mandatory arbitration under the transportation worker exemption of 9 U.S.C. § 1, we need

not address whether the arbitration agreement itself excludes Contreras’s claims. See TEX. R. APP.

P. 47.1.

       We overrule Arrow Freight’s sole issue.

                                         CONCLUSION

       We affirm the trial court’s denial of Arrow Freight’s motion to compel arbitration.

                                             GINA M. PALAFOX, Justice

January 12, 2024

Before Alley, C.J., Palafox, and Soto, JJ.

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