Court Opinion

ID: 5140234
Source: CourtListenerOpinion
Date Created: 2021-12-23 18:00:57.442227+00
Date Added: 2024-06-11T08:24:22.219670
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

EDMOND CARMONA,                            No. 21-55009
             Plaintiff-Appellee,
                                              D.C. No.
                  and                      8:20-cv-01905-
                                              JVS-JDE
ABRAHAM MENDOZA; ROGER
NOGUERIA, on behalf of themselves
and all others similarly situated,           OPINION
                             Plaintiffs,

                  v.

DOMINO’S PIZZA, LLC, a Michigan
Corporation,
             Defendant-Appellant.

      Appeal from the United States District Court
         for the Central District of California
       James V. Selna, District Judge, Presiding

       Argued and Submitted November 15, 2021
                 Pasadena, California

                 Filed December 23, 2021
2                 CARMONA V. DOMINO’S PIZZA

    Before: Kim McLane Wardlaw, Barrington D. Parker, *
           and Andrew D. Hurwitz, Circuit Judges.

                    Opinion by Judge Hurwitz

                          SUMMARY **

         Federal Arbitration Act / California Labor Law

    The panel affirmed the district court’s order denying
Domino’s Pizza, LLC’s motion to compel arbitration in a
putative class action brought by Domino’s drivers, asserting
violations of various California labor laws.

    The district court denied the motion based on its finding
that the drivers were a “class of workers engaged in foreign
or interstate commerce,” and were therefore exempt from the
requirements of the Federal Arbitration Act (“FAA”),
notwithstanding their contracts with Domino’s that provided
claims between the parties be submitted to arbitration under
the FAA.

    Section 1 of the FAA exempts from the arbitration
mandate certain employment contracts, including “workers
engaged in foreign and interstate commerce,” referred to as
the “residual clause.” The exemption applies if the class of

     *
      The Honorable Barrington D. Parker, United States Circuit Judge
for the U.S. Court of Appeals for the Second Circuit, 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.
               CARMONA V. DOMINO’S PIZZA                      3

workers is engaged in a “single, unbroken stream of
interstate commerce” that renders interstate commerce a
“central part” of their job description. Capriole v. Uber
Techs., Inc., 7 F.4th 854, 866 (9th Cir. 2021).

     Domino’s contended that the drivers who delivered
goods to individual Domino’s franchisees in California were
not engaged in interstate commerce because the franchisees,
all located in California, placed orders with the supply center
in the state, and the goods delivered were not in the same
form in which they arrived at the supply center. The panel
disagreed. The panel held that Rittman v. Amazon.com, Inc.,
971 F.3d 904 (9th Cir. 2020), which concerned Amazon
package delivery drivers, was instructive. Like Amazon,
Domino’s was directly involved in the procurement and
delivery of interstate goods, was involved in the process
from the beginning to the ultimate delivery of the goods to
their destinations, and its business included not just the
selling of goods, but also the delivery of those goods. The
alteration of the goods at the supply center did not change
the result. The panel concluded that, as with the Amazon
drivers, the transportation of interstate goods on the final leg
of their journey by the Domino’s drivers satisfied the
requirements of the residual clause.

                         COUNSEL

Norman M. Leon (argued), DLA Piper LLP (US), Chicago,
Illinois; Steve L. Hernández, DLA Piper LLP (US), Los
Angeles, California; Taylor Wemmer, DLA Piper (US) LLP,
San Diego, California; for Defendant-Appellant.
4              CARMONA V. DOMINO’S PIZZA

Aashish Y. Desai (argued) and Adrianne De Castro, Desai
Law Firm P.C., Costa Mesa, California, for Plaintiff-
Appellee.

                         OPINION

HURWITZ, Circuit Judge:

    Three delivery drivers sued Domino’s Pizza, LLC, on
behalf of themselves and a putative class, asserting
violations of various California labor laws. Domino’s
moved to compel arbitration pursuant to its contracts with
the drivers. The district court denied the motion, finding that
the drivers are a “class of workers engaged in foreign or
interstate commerce,” and are therefore exempt from the
requirements of the Federal Arbitration Act (“FAA”) under
9 U.S.C. § 1. We affirm.

                               I

    Domino’s sells pizza to the public primarily through
franchisees. Domino’s buys various goods, such as
mushrooms, that are used by its franchisees in making
pizzas, from suppliers outside of California. Those goods
are then delivered by third parties to the Domino’s Southern
California Supply Chain Center (“Supply Center”). At the
Supply Center, Domino’s employees reapportion, weigh,
package, and otherwise prepare the goods to be sent to
franchisees. Domino’s franchisees in Southern California
order the goods either online or by calling the Supply Center,
and the plaintiff drivers (“D&S drivers”), who are
employees of Domino’s, then deliver the goods to the
franchisees.
               CARMONA V. DOMINO’S PIZZA                    5

    Edmond Carmona and two other D&S drivers filed this
putative class action against Domino’s in 2020, alleging
violations of California labor law. The three lead plaintiffs
each had agreements with Domino’s providing that “any
claim, dispute, and/or controversy” between the parties
would “be submitted to and determined exclusively by
binding arbitration under the Federal Arbitration Act.”

    In response to the D&S drivers’ complaint, Domino’s
moved to compel arbitration. The district court denied the
motion, finding the plaintiffs exempt from the FAA under
9 U.S.C. § 1 notwithstanding their contracts with Domino’s
because they are transportation workers “engaged in foreign
or interstate commerce.” Domino’s timely appealed. We
have jurisdiction pursuant to 9 U.S.C. § 16(a)(1)(B) and
review the denial of a motion to compel arbitration de novo.
Wilson v. Huuuge, Inc., 944 F.3d 1212, 1219 (9th Cir. 2019).

                              II

    The FAA provides that arbitration agreements
“evidencing a transaction involving commerce . . . 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. Section 1 of the FAA, however,
exempts from the arbitration mandate “contracts of
employment of seamen, railroad employees, or any other
class of workers engaged in foreign or interstate commerce.”
9 U.S.C. § 1. The clause setting out that last category, the
one relevant here, is sometimes referred to as the “residual
clause.” See, e.g., In re Grice, 974 F.3d 950, 955 (9th Cir.
2020).      The residual clause is afforded a “narrow
construction” to further the FAA’s purpose of overcoming
“judicial hostility to arbitration agreements.” Circuit City
Stores, Inc. v. Adams, 532 U.S. 105, 118 (2001) (cleaned up).
“The burden is on the party opposing arbitration . . . to show
6              CARMONA V. DOMINO’S PIZZA

that Congress intended to preclude a waiver of judicial
remedies for the statutory rights at issue.” Rogers v. Royal
Caribbean Cruise Line, 547 F.3d 1148, 1151 (9th Cir. 2008)
(quoting Shearson/Am. Express, Inc. v. McMahon, 482 U.S.
220, 227 (1987)).

    The “critical factor” in determining whether the residual
clause exemption applies is not the “nature of the item
transported in interstate commerce (person or good) or
whether the plaintiffs themselves crossed state lines, but
rather the nature of the business for which a class of workers
performed their activities.” Grice, 974 F.3d at 956 (cleaned
up). The exemption applies if the class of workers is
engaged in a “single, unbroken stream of interstate
commerce” that renders interstate commerce a “central part”
of their job description. Capriole v. Uber Techs., Inc.,
7 F.4th 854, 866 (9th Cir. 2021).

    Domino’s does not dispute that the third parties who
delivered goods to the Supply Center are engaged in
interstate commerce. But it contends that the D&S drivers
who deliver goods to individual Domino’s franchisees in
California are not so engaged because the franchisees, all
located in California, place orders with the Supply Center in
the state, and the goods delivered are not in the same form in
which they arrived at the Supply Center. We disagree.

    Our recent opinion addressing the residual clause,
Rittmann v. Amazon.com, Inc., 971 F.3d 904 (9th Cir. 2020),
is instructive. In Rittmann, we held that Amazon package
delivery drivers were engaged in “a continuous interstate
transportation” of goods because they picked up packages
that had come across state lines to Amazon warehouses and
then transported them “for the last leg” to their eventual
destinations. Id. at 915–16. Amazon coordinated the
deliveries from origin to destination, and the packages were
               CARMONA V. DOMINO’S PIZZA                     7

not transformed at the warehouses. Id. at 907, 915–17. We
emphasized that “Amazon’s business includes not just the
selling of goods, but also the delivery of those goods.” Id.
at 918.

     Like Amazon, Domino’s is directly involved in the
procurement and delivery of interstate goods; the D&S
drivers, like the Amazon package delivery drivers, transport
those goods “for the last leg” to their final destinations. See
id. at 915–16. Like Amazon, Domino’s is involved in the
process from beginning to the ultimate delivery of the goods
to their destinations and its “business includes not just the
selling of goods, but also the delivery of those goods.” See
id. at 918.

    To be sure, there are some factual differences between
this case and Rittmann. The customers to whom the Amazon
drivers delivered the interstate goods in Rittmann initiated
the purchases online with Amazon, id. at 907, while the
Domino’s franchisees order the goods from the Supply
Center in California only after Domino’s has already
purchased them. But this is a distinction without a
difference. The issue is not how the purchasing order is
placed, but rather whether the D&S drivers operate in a
“single, unbroken stream of interstate commerce” that
renders interstate commerce a “central part” of their job
description. See Capriole, 7 F.4th at 866. As with the
Amazon drivers, the transportation of interstate goods on the
final leg of their journey by the D&S drivers satisfies this
requirement. Although some of the goods delivered to the
Supply Center are from California suppliers, that does not
change the outcome. See Rittmann, 971 F.3d at 917 n.7
(explaining that Amazon package delivery drivers are
engaged in interstate commerce “even if that engagement
also involves intrastate activities”).
8                 CARMONA V. DOMINO’S PIZZA

    Nor does the alleged “alteration” of the goods at the
Supply Center change the result. Although some of the
goods are transformed into pizza dough at the Supply Center,
items such as mushrooms are simply reapportioned,
weighed, packaged, and stored before being delivered to
franchisees by the D&S drivers. This case is thus different
than A.L.A. Schechter Poultry Corp. v. United States,
295 U.S. 495 (1935), upon which Domino’s relies.
Schechter Poultry held that live poultry was no longer in the
stream of interstate commerce after being processed at
slaughterhouses and then sold locally to retail dealers and
butchers who in turn sold directly to consumers. Id. at 543.
Here, the relevant goods are not transformed into a different
form and were procured out-of-state by Domino’s to be sold
to a Domino’s franchisee, not to an unrelated third party. 1
Cf. Levin v. Caviar, Inc., 146 F. Supp. 3d 1146, 1154 (N.D.
Cal. 2015) (“Ingredients contained in the food that Plaintiff
ultimately delivered from restaurants ended their interstate
journey when they arrived at the restaurant where they were
used to prepare meals.”).

    AFFIRMED.

    1
      The other cases Domino’s relies on involve companies that engage
with goods only after they arrive in state. See Lee v. Postmates Inc., No.
18-cv-03421-JCS, 2018 WL 6605659, at *7 (N.D. Cal. Dec. 17, 2018);
Bean v. ES Partners, Inc., 533 F. Supp. 3d 1226, 1236 (S.D. Fla. 2021).