Court Opinion

ID: 4563163
Source: CourtListenerOpinion
Date Created: 2020-09-04 17:00:42.30353+00
Date Added: 2024-06-11T12:14:57.772007
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

IN RE WILLIAM GRICE,                     No. 20-70780

                                            D.C. No.
WILLIAM GRICE,                           2:18-cv-02995-
                         Petitioner,        PSG-GJS

                 v.
                                            OPINION
UNITED STATES DISTRICT COURT FOR
THE CENTRAL DISTRICT OF
CALIFORNIA, LOS ANGELES,
                       Respondent,

UBER TECHNOLOGIES, INC.,
            Real Party in Interest.

            Petition for Writ of Mandamus

        Argued and Submitted August 11, 2020
                Pasadena, California

               Filed September 4, 2020
2                           IN RE GRICE

   Before: Diarmuid F. O’Scannlain and Consuelo M.
Callahan, Circuit Judges, and Michael H. Watson, * District
                           Judge.

                   Opinion by Judge Callahan

                          SUMMARY **

                   Mandamus / Arbitration

    The panel denied a petition for a writ of mandamus
seeking to vacate the district court’s order compelling
arbitration in an Uber driver’s putative class action alleging
that the company failed to safeguard his and other drivers’
and riders’ personal information and mishandled a data
security breach.

    The district court concluded that the Uber driver did not
fall within an arbitration exemption set forth in § 1 of the
Federal Arbitration Act for workers engaged in foreign or
interstate commerce. The panel held that, even accepting
that there were some tensions between the district court’s
ruling and recent circuit cases addressing the scope and
application of the exemption, the district court’s decision
was not clearly erroneous as a matter of law, as required for
granting a writ of mandamus.

    *
       The Honorable Michael H. Watson, United States District Judge
for the Southern District of Ohio, sitting by designation.
    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
                        IN RE GRICE                         3

                        COUNSEL

Richard P. Rouco (argued), Quinn Connor Weaver Davies
& Rouco LLP, Birmingham, Alabama; D. Anthony
Mastando, and Eric J. Artrip, Mastando & Artrip LLC,
Huntsville, Alabama; for Petitioner.

Theane Evangelis (argued), Gibson Dunn & Crutcher LLP,
Los Angeles, California; Catherine E. Stetson, Michelle A.
Kisloff, and Kyle M. Druding, Hogan Lovells US LLP,
Washington, D.C.; Vassi Iliadis, Hogan Lovells US LLP,
Los Angeles, California; for Real Party in Interest.

                         OPINION

CALLAHAN, Circuit Judge:

    The Federal Arbitration Act (“FAA” or “the Act”) places
arbitration agreements on an equal footing with other
contracts, requiring courts to enforce them according to their
terms. Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 67–68
(2010) (citations omitted). But the Act exempts from its
coverage “contracts of employment” of three categories of
workers: “seamen,” “railroad employees,” and a residual
category comprising “any other class of workers engaged in
foreign or interstate commerce.” 9 U.S.C. § 1. The district
court held that rideshare drivers who pick up and drop off
passengers at airports do not fall within this residual
category and therefore may be judicially compelled to
arbitrate in accordance with the terms of their contracts. We
are asked to decide whether the district court’s decision is
“clearly erroneous as a matter of law.” Bauman v. U.S. Dist.
Court, 557 F.2d 650, 654–55 (9th Cir. 1977). We conclude
that it is not.
4                            IN RE GRICE

                                    I

    Uber Technologies, Inc. (“Uber”) is a technology
company specializing in rideshare services.           Uber’s
smartphone application (the “Uber App”) connects riders
needing transportation with local drivers available to drive
them to their destinations for a fare. When a driver accepts
a rideshare request through the Uber App, the App provides
them basic rider information, including name and pick-up
location. The rider then communicates a desired drop-off
location, and fares are generated based on distance and time
to the drop-off. Rideshare fares are charged automatically
via the Uber App, with Uber withholding a percentage of
each fare as a “service fee.”

    William Grice is an Uber driver based in Alabama who
has, since 2016, used the Uber App to provide rideshare
services to and from Huntsville International Airport and
Birmingham-Shuttlesworth International Airport. Uber
entered into agreements with these airports (and many
others) to allow Uber drivers like Grice to pick up arriving
passengers and transport them to their final destinations. In
the course of his work, Grice never crosses state lines. Thus,
Grice’s passengers travel interstate (by virtue of the flights
they take), but Grice does not.

    In November 2017, Grice filed a putative class action
lawsuit against Uber, alleging that the company failed to
safeguard his and other Uber drivers’ and riders’ personal
information and mishandled a data security breach in which
that information was stolen by online hackers. 1 Uber moved

    1
      Grice filed his claim in the District Court for the Northern District
of Alabama. The lawsuit and nine other related cases were consolidated
                             IN RE GRICE                                5

to compel arbitration, citing the Technology Services
Agreement (“TSA”) that Grice and other Uber drivers signed
requiring arbitration of “any disputes . . . arising out of or
related to [the driver’s] relationship” with Uber and
prohibiting arbitration “on a class, collective action, or
representative basis.” Grice responded that he “driv[es]
passengers (who are engaged in interstate travel) and their
luggage to and from airports” and therefore qualifies for the
FAA’s § 1 exemption. The district court disagreed and
compelled arbitration.

    Grice now petitions this court for a writ of mandamus
vacating the district court’s referral to arbitration. 2 Because
mandamus “is a drastic and extraordinary remedy reserved
only for really extraordinary causes,” we may not grant
Grice’s request unless he shows that his right to the writ is
“clear and indisputable.” In re Van Dusen, 654 F.3d 838,
840–41 (9th Cir. 2011) (internal quotation marks and
citations omitted). At a minimum, he must show that the
district court’s interpretation of § 1 amounts to “clear error
as a matter of law.” Id. at 841. This standard of review is
highly deferential, requiring us to “have a definite and firm
conviction that the district court’s interpretation . . . was
incorrect.” Id. (internal quotation marks and citation
omitted). Where no prior Ninth Circuit authority prohibits
the district court’s ruling, or where the issue in question has
not yet been addressed by any circuit court in a published

by the Judicial Panel on Multidistrict Litigation and referred to the
district court below for coordinated pretrial proceedings.
    2
       In granting Uber’s motion to compel arbitration, the district court
also relied on the terms and conditions of Grice’s rider agreement, which
Grice does not address in his petition.
6                             IN RE GRICE

opinion, the ruling cannot be clearly erroneous. 3 In re Swift,
830 F.3d 913, 917 (9th Cir. 2016).

                                     II

    Congress enacted the FAA in 1925 “in response to a
perception that courts were unduly hostile to arbitration.”
Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1621 (2018).
Designed to replace this “widespread judicial hostility” with
a “liberal policy favoring arbitration,” AT&T Mobility LLC
v. Concepcion, 563 U.S. 333, 339 (2011) (citation omitted),
the FAA “requires courts rigorously to enforce arbitration
agreements according to their terms,” Epic Sys., 138 S. Ct.
at 1621 (citation and internal quotation marks omitted).
Section 1 of the FAA, however, exempts from the Act’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 (emphasis added).
This last category is commonly referred to as § 1’s “residual
clause.”

    The Supreme Court has narrowly interpreted the residual
clause as covering “only contracts of employment of
transportation workers”—that is, workers who, as a class,
are “engaged in foreign or interstate commerce.” Circuit
    3
       Our decision whether to grant mandamus relief is also informed by
four other factors: whether the petitioner has other adequate means to
attain relief, such as a direct appeal; whether the petitioner will be
damaged or prejudiced in a way not correctable on appeal; whether the
district court’s error is “oft-repeated” or “manifests a persistent disregard
of the federal rules”; and whether the order raises new and important
problems, or legal issues of first impression. In re Van Dusen, 654 F.3d
at 841 (quoting Bauman, 557 F.2d at 654–55). However, “clear error as
a matter of law” is the dispositive factor; its absence “will defeat a
petition for mandamus.” Id. (citing Hernandez v. Tanninen, 604 F.3d
1095, 1099 (9th Cir. 2010)).
                         IN RE GRICE                          7

City Stores, Inc. v. Adams, 532 U.S. 105, 112, 119 (2001).
The Court has also noted that most courts have defined
“transportation workers” to mean those engaged in the actual
movement of goods in interstate commerce. Id. at 119
(citing Cole v. Burns Int’l Sec. Servs., 105 F.3d 1465, 1471
(D.C. Cir. 1997)). But we have described the residual clause
as applying to “the contracts of employees who actually
transport people or goods in interstate commerce.” Craft v.
Campbell Soup Co., 177 F.3d 1083, 1085 (9th Cir. 1999)
(per curiam) (emphasis added), abrogated on other grounds
by Circuit City, 532 U.S. 105.            And this broader
interpretation has been embraced by several courts in recent
decisions addressing the § 1 exemption status of rideshare
drivers and other “gig economy” workers.

    In Singh v. Uber Technologies, Inc., the Third Circuit
held that “the residual clause of § 1 is not limited to
transportation workers who transport goods, but may also
apply to those who transport passengers, so long as they are
engaged in interstate commerce or in work so closely related
thereto as to be in practical effect part of it.” 939 F.3d 210,
219 (3d Cir. 2019). In Waithaka v. Amazon.com, Inc., the
First Circuit held “that the [§ 1] exemption encompasses the
contracts of transportation workers who transport goods or
people within the flow of interstate commerce, not simply
those who physically cross state lines in the course of their
work.” 966 F.3d 10, 13 (1st Cir. 2020) (emphasis added).
And in Rogers v. Lyft, Inc., a district court in our circuit
concluded that “[t]he traditional tools of statutory
interpretation all point in the same direction: Section 1 is not
limited to classes of workers who transport goods in
interstate commerce,” but rather exempts “classes of
workers engaged in transporting goods or people across state
lines.” — F. Supp. 3d —, No. 20-CV-01938-VC, 2020 WL
1684151, at *5 (N.D. Cal. Apr. 7, 2020) (emphasis added).
8                        IN RE GRICE

    In each case, the critical factor was not the nature of the
item transported in interstate commerce (person or good) or
whether the plaintiffs themselves crossed state lines, but
rather “[t]he nature of the business for which a class of
workers perform[ed] their activities.” Waithaka, 966 F.3d
at 10; accord Rittman v. Amazon.com, Inc., — F.3d —, 2020
WL 4814142, at *9 (9th Cir. 2020); see also Rogers, 2020
WL 1684151, at *5 (“[T]he question posed by the exemption
is ‘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.’” (quoting Bacashihua v. U.S. Postal
Serv., 859 F.2d 402, 405 (6th Cir. 1988))). Thus, for
example, a truck driver for an interstate trucking company
may be exempt even if the particular trucker only
occasionally, see Int’l Brotherhood of Teamsters Local
Union No. 50 v. Kienstra Precast, LLC, 702 F.3d 954, 958
(7th Cir. 2012), or never, see Bacashihua, 859 F.2d at 405,
drives across state lines. Likewise, so-called “last mile”
delivery drivers may be engaged in interstate commerce
based on the nature of their employer’s business “regardless
of whether the workers themselves physically cross state
lines.” Waithaka, 966 F.3d at 26 (holding that Amazon Flex
(“AmFlex”) delivery drivers are exempt under § 1); accord
Rittman, 2020 WL 4814142, at *9–10; see Harden v.
Roadway Package Sys., Inc., 249 F.3d 1137, 1140 (9th Cir.
2001) (holding that delivery driver for predecessor company
of FedEx fell within the § 1 exemption even though there
was no indication the driver himself actually crossed state
lines). On the other hand, furniture salespeople or food
delivery drivers generally are not classified as
“transportation workers” within the meaning of § 1 even
when they occasionally travel interstate to deliver their
products to out-of-state customers. Wallace v. Grubhub
Holdings, Inc., — F.3d —, 2020 WL 4463062, at *2 (7th
                         IN RE GRICE                           9

Cir. 2020); Hill v. Rent-A-Center, 398 F.3d 1286, 1289–90
(11th Cir. 2005); see Rittman, 2020 WL 4814142, at *8–9 &
n.8 (distinguishing AmFlex workers from “local food
delivery drivers [who] are not ‘engaged in the interstate
transport of goods’” (citation omitted), and rejecting the
dissent’s focus on whether “the delivery driver . . . actually
crossed state lines”).

                               III

    Applying these principles to the rideshare industry, the
district court in Rogers concluded that “Lyft drivers, as a
class, are not engaged in interstate commerce.” 4 2020 WL
1684151, at *6. Instead, “[t]heir work predominantly entails
intrastate trips, an activity that undoubtedly affects interstate
commerce but is not interstate commerce itself.” Id. Even
though “some drivers (especially those who live near state
borders) regularly transport passengers across state lines, the
company is in the general business of giving people rides,
not the particular business of offering interstate
transportation to passengers.” Id. “Nor does the fact that
Lyft drivers frequently pick up and drop off people at
airports and train stations mean that they are, as a class,
‘engaged in’ interstate commerce.” Id. This is because Lyft
is not focused on “the service of transporting people to and
from airports,” but rather “is, in essence, a technologically
advanced taxicab company, allowing people to ‘hail’ rides
from its drivers from pretty much anywhere to pretty much
anywhere.” Id.

   Similarly, the district court here contrasted the nature of
Uber’s business with that of Amazon and various shipping

    4
      Lyft, like Uber, is a technology company specializing in
smartphone-application-based rideshare services.
10                       IN RE GRICE

and package delivery companies that are engaged in
delivering products “concededly in the stream of interstate
commerce.” The district court agreed that these companies’
employees, unlike Grice, are exempt under the residual
clause even if they “do not themselves deliver items across
state lines,” and it concluded that because Grice “was not
part of a group engaged in foreign or interstate commerce,
he does not fall within the [§ 1] exemption.” The district
court also specifically noted that Grice “has not pointed to
other [Uber] drivers’ engagement in interstate commerce to
argue that he is nevertheless a part of a class of workers
engaged in interstate commerce.”

    Grice notes that the district court also found it significant
that he transported passengers, as opposed to goods, and that
he never personally crossed state lines. But to the extent
these findings are in tension with cases such as Singh,
Waithaka, Rittman, and Rogers, which emphasized the
interstate nature of an employer’s business as the critical
factor for determining whether a worker qualifies for the § 1
exemption, Grice has still not shown that he is entitled to
mandamus relief. He does not allege that he provides rides
only, or even primarily, to individuals coming from out-of-
state. Moreover, he cites no circuit precedent holding that
rideshare drivers, as a class, are “engaged in foreign or
interstate commerce.”

    The closest he comes is Singh. There, the Third Circuit
remanded to the district court for discovery based on Singh’s
claim that he frequently drove passengers from the Newark
airport “across state lines” to New York. 939 F.3d at 226,
232. But the court did not conclude that Singh, by virtue of
this claim, “belongs to a class of transportation workers
engaged in interstate commerce or in work so closely related
thereto as to be in practical effect part of it.” Id. at 227.
                            IN RE GRICE                             11

Instead, it remanded to the district court to decide that
question, noting the inquiry should be informed by a variety
of factors such as the contents of Singh’s agreements with
Uber, information regarding the rideshare industry, and
information regarding the work performed by rideshare
drivers. Id. at 227–28. Thus, Singh does not suggest that the
district court’s ruling is “clearly erroneous as a matter of
law.”

    Nor is Waithaka particularly helpful to Grice. That case
held that “last-mile delivery workers who haul goods on the
final legs of interstate journeys are transportation workers
‘engaged in . . . interstate commerce,’ regardless of whether
the workers themselves physically cross state lines.” 966
F.3d at 26. But Waithaka’s holding was limited to the § 1
exemption status of AmFlex drivers, not gig-economy
drivers in general. 5 Unlike Uber, Amazon conceded that its
business is focused on the “transport [of] goods or people
within the flow of interstate commerce.” Id. at 13, 26 n.11.
Here, Grice provides neither evidence nor caselaw to support
his claim that “Uber is clearly in the business of providing
transportation services and is engaged in interstate
commerce.”

     5
       Our recent decision in Rittman confirms this conclusion. There,
we joined the First Circuit in holding that AmFlex workers are exempt
under § 1 because they “form a part of the channels of interstate
commerce[] and are thus engaged in interstate commerce.” Rittman,
2020 WL 4814142, at *8. Our holding was rooted both in the interstate
nature of Amazon’s business, id. at *9–10, and in the fact that “AmFlex
workers complete the delivery of goods that Amazon ships across state
lines and for which Amazon hires [them] to complete the delivery,” id.
at *8. On this record, we cannot say that Uber drivers perform, or are
hired to perform, a similar function to AmFlex workers.
12                       IN RE GRICE

    Grice also points to United States v. Yellow Cab, an
antitrust case that held the transportation of interstate rail
passengers and their luggage between rail stations in
Chicago to facilitate their travel is part of “the stream of
interstate commerce.” 332 U.S. 218, 228–29 (1947),
overruled on other grounds by Copperweld Corp. v. Indep.
Tube Corp., 467 U.S. 752 (1984). But there, passengers
contracted directly with the railroads for this “between-
station transportation” service, which was exclusively
provided by a single cab company subcontracted by the
railroads. Id. The Court also held that “when local taxicabs
merely convey interstate train passengers between their
homes and the railroad station in the normal course of their
independent local service, that service is not an integral part
of interstate transportation.” Id. at 228, 233.

    Grice’s employment is more like the local taxicab
service that the Supreme Court held to be “not an integral
part of interstate transportation” in Yellow Cab. Although
Uber entered into agreements with the Huntsville and
Birmingham airports to allow Uber drivers like Grice to pick
up arriving passengers, Grice does not contend that his
passengers contracted with the airlines to hire him. Nor is
there any evidence that Grice provided “between-airport
transportation” in Huntsville and Birmingham to facilitate
his passengers’ interstate travel. Thus, Yellow Cab, like
Singh, supports rather than undermines the district court’s
rationale for denying Grice’s § 1 argument.

    Nonetheless, Grice offers an alternative interpretation of
the residual clause which, he claims, “follows well settled
understandings of the phrase ‘engaged in foreign or
interstate commerce.’” Under Grice’s construction, the
clause would apply to workers who, like him, “provid[e]
transportation services to persons or goods traveling across
                         IN RE GRICE                        13

state lines (i.e., in the flow of foreign or interstate
commerce).” But as the Seventh Circuit noted in Wallace,
this “interpretation would sweep in numerous categories of
workers whose occupations have nothing to do with
interstate transport—for example, dry cleaners who deliver
pressed shirts manufactured in Taiwan and ice cream truck
drivers selling treats made with milk from an out-of-state
dairy.” 2020 WL 4463062, at *3. Contrary to Grice’s
understanding, “the residual exemption is . . . about what the
worker does,” not just “where the goods [or people] have
been.” Id. Today almost every object we buy has some
component that comes from out-of-state. Grice’s proposed
reading of § 1, which would allow the exception to swallow
the rule, goes beyond our precedent. The district court’s
decision not to adopt it cannot, therefore, be regarded as
clearly erroneous.

                              IV

    In sum, even accepting that there are some tensions
between the district court’s ruling and recent circuit cases
addressing the scope and application of the FAA’s § 1
exemption clause, that tension is not enough to render the
district court’s decision “clear error as a matter of law,” the
“necessary condition for granting a writ of mandamus.” In
re Van Dusen, 654 F.3d at 841. Given the lack of controlling
precedent forbidding the result, we are not firmly convinced
that the district court erred. Accordingly, we need not
consider the remaining Bauman factors. Because Grice has
not met his burden of showing a clear and indisputable right
to issuance of the writ, his petition is

   DENIED.