The Ninth Circuit Court of Appeals recently concluded that the Federal Arbitration Act’s exemption for “workers engaged in foreign or interstate commerce” applied to drivers and precluded their employer from compelling arbitration because, even though the drivers only drove within a single state, they were “the last leg” of a chain of interstate commerce.

Third parties ship supplies for pizzas, including supplies from outside California, to Domino’s Southern California supply chain center. At the supply center, Domino’s employees prepare the supplies for distribution to Domino’s franchisees in Southern California, and “D&S drivers,” who are Domino’s employees, then deliver the supplies.

Three D&S drivers sued Domino’s alleging violations of California labor laws on behalf of a putative class. Domino’s moved to compel arbitration pursuant to an arbitration clause that provided that “any claim, dispute, and/or controversy” between Domino’s and the D&S drivers would “be submitted to and determined exclusively by binding arbitration under the” FAA.

The district court declined to compel arbitration, concluding that the D&S drivers fell within the FAA’s exemption for “workers engaged in foreign or interstate commerce.”

The Ninth Circuit affirmed. It rejected Domino’s arguments that the D&S drivers were not engaged in interstate commerce and instead held that the D&S drivers were part of “the last leg” of a chain of interstate commerce that moved supplies from out of state to franchisees. The fact that the D&S drivers only delivered products within California did not matter.

Carmona v. Domino’s Pizza, LLC, No. 21-55009 (9th Cir. Dec. 23, 2021).