Enforcing an Individual Arbitration Agreement Despite Federal Arbitration Act’s Section 1 Exemption

We successfully represented a prominent trucking company in its efforts to compel individual arbitration of a putative Fair Labor Standards Act (“FLSA”) collective action alleging purported minimum wage violations.

Our client, a large motor carrier doing business in the state of California, hired the Plaintiff as a driver. Plaintiff alleged that drivers who drove “over-the-road” were gone on trips for days at a time and that while out on the road, they had to be continuously on duty. Because drivers were allegedly compensated on a per mile basis, Plaintiff claimed the Defendant did not pay them for various time supposedly worked, including time spent in the sleeper berth as well as time spent on inspections, refueling, waiting for loading/unloading, and for direction.

FACTUAL BACKGROUND

After entering into a “Driver Tuition Reimbursement and Employment Contract,” our client promised to reimburse the Plaintiff for tuition spent on her commercial driver’s license education in exchange for Plaintiff’s commitment to work as a truck driver for our client for at least 12 months.

Separately, Plaintiff signed a voluntary Mutual Arbitration Agreement (“Arbitration Agreement”), agreeing to individual arbitration of “all claims or disputes, whether or not arising out of the Employee’s employment by the Company.” The Agreement indicated that it would “be governed and construed in accordance with the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1, et seq., and/or the laws of the State of Utah.”

Plaintiff did not have to enter into the Arbitration Agreement. She also could have opted out of it for up to 30 days after she voluntarily signed it.

THE ISSUES

Plaintiff did not dispute that her claims were within the scope of the Arbitration Agreement but instead focused on whether the Arbitration Agreement was enforceable.

Plaintiff argued that the Federal Arbitration Act (FAA) did not apply to her and the putative class because, as truck drivers, they were engaged in interstate commerce and were thus exempt from it under 9 U.S.C. § 1. We argued on behalf of our client that the Arbitration Agreement was enforceable under Utah law even if not valid under the FAA. In turn, Plaintiff responded that the Arbitration Agreement was ambiguous as to whether Utah law applies at all. She also argued that the Arbitration Agreement was unconscionable.

The Court agreed that the Arbitration Agreement was enforceable under Utah law even assuming that the choice-of-law provision was ambiguous. The Court also found that Plaintiff’s focus on the purported ambiguity and disfavor of the term “and/or” was not persuasive, noting that the ambiguity did not concern the central question of whether arbitration should proceed and Utah law interprets ambiguities in favor of arbitration.

Plaintiff’s unconscionability argument, which focused on the Arbitration Agreement’s class action waiver and the circumstances related to the agreement’s formation, was also without merit. With respect to the first argument, the Court found that Utah law allows class action waivers.

As for Plaintiff’s second point, the Court held that the parties had clearly agreed to arbitrate and Plaintiff could not argue otherwise given that she signed a standalone document prominently titled “Mutual Arbitration Agreement.”

OUTCOME

After Plaintiff was ordered to proceed to individual arbitration on all claims, she asked the Court to certify its ruling for an appeal. However, the court denied Plaintiff’s motion. Accordingly, a case that could have involved thousands of drivers was reduced by our office to a single individual arbitration.

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