Immediato v. Postmates, Inc. ( 2022 )

United States Court of Appeals
For the First Circuit
No. 22-1015
DAMON IMMEDIATO, STEPHEN LEVINE, and ERIC WICKBERG, on behalf
of themselves and all others similarly situated,
Plaintiffs, Appellants,
v.
POSTMATES, INC.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Lynch and Selya, Circuit Judges,
and McElroy,* District Judge.
Shannon Liss-Riordan, with whom Michelle Cassorla and Lichten
& Liss-Riordan, P.C. were on brief, for appellants.
Theane Evangelis, with whom Blaine H. Evanson, Dhananjay S.
Manthripragada, Shaun A. Mathur, Allison L. Mather, and Gibson,
Dunn & Crutcher LLP were on brief, for appellee.
November 29, 2022
* Of the District of Rhode Island, sitting by designation.
SELYA, Circuit Judge. This appeal requires us to
determine whether couriers who deliver goods from local
restaurants and retailers are transportation workers engaged in
interstate commerce such that they are exempt from the Federal
Arbitration Act (FAA or Act). See 9 U.S.C. § 1. The district
court concluded that they were not exempt, compelled arbitration
of the parties' dispute, and dismissed the appellants' suit. The
appellants assign error: they insist that our decision in Waithaka
v. Amazon.com, Inc., in which we held that Amazon delivery drivers
responsible for the final leg of interstate package deliveries
were exempt from the FAA, demands a different outcome. 966 F.3d
10, 13 (1st Cir. 2020).
The appellants are comparing plums with pomegranates.
Unlike the Amazon delivery drivers in Waithaka, the couriers here
are not actively engaged in the interstate transport of goods and,
thus, are not within a class of workers exempted from the Act.
Accordingly, we affirm the judgment below.
I
The genesis of this appeal can be traced back to the
district court's grant of the appellee's motion to compel
arbitration. Because the motion to compel was made in conjunction
with a motion to stay, "we draw the relevant facts from the
operative complaint and the documents submitted to the district
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court in support of the motion to compel arbitration." Cullinane
v. Uber Techs., Inc., 893 F.3d 53, 55 (1st Cir. 2018).
Defendant-appellee Postmates, Inc. operates an online
and mobile platform that enables customers to order take-out meals
from local restaurants as well as comestibles and sundries from
local grocery stores. Once an order is placed, the appellee
arranges — at the customer's behest — for a courier to deliver the
order. As relevant here, nearly all orders placed in Massachusetts
(99.66%) are fulfilled within the state, and the average distance
travelled by a courier during a delivery is about 3.7 miles.
Individuals register as couriers through a mobile
application. As part of that registration, they must accept the
appellee's "Fleet Agreement," which generally sets forth the
rights and obligations of the parties and — in the bargain —
classifies couriers as independent contractors. The agreement
contains a mutual arbitration provision that is "governed
exclusively" by the FAA and applies to "any and all claims" against
the appellee. Such claims include those that arise from disputes
over the terms of the Fleet Agreement itself, as well as those
that sound in federal, state, or local law.
The mutual arbitration provision requires that all such
disputes be resolved through final and binding arbitration in
accordance with rules set forth by the American Arbitration
Association (AAA). The provision also includes a class action
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waiver and forecloses the arbitration of representative actions.
Couriers may opt out of the mutual arbitration provision within
thirty days of accepting the Fleet Agreement but are otherwise
bound by its terms.
Plaintiffs-appellants Damon Immediato, Stephen Levine,
and Eric Wickberg worked as couriers for the appellee, making
deliveries in the greater Boston area. All of them consented to
the Fleet Agreement without opting out of the mutual arbitration
provision.1 Ostensibly aggrieved by the conditions under which
they worked, they filed suit in a Massachusetts state court on
their own behalf and on behalf of a putative class of similarly
situated couriers. They alleged that the appellee had
misclassified them as independent contractors when they were in
fact employees. They further alleged that, as such, they were
entitled to employee benefits and protections afforded under
Massachusetts law, including the reimbursement of necessary
business expenses, the payment of a minimum wage, and paid sick
leave.
1 When the appellants began working for the appellee, they
each consented to the 2017 version of the Fleet Agreement. The
appellee thereafter twice revised the Fleet Agreement (in 2018 and
2019), and the appellants consented to those updated terms. With
respect to the parts of the mutual arbitration provision at issue
here, there is no material difference between the various
iterations of the Fleet Agreement.
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The appellee removed the suit to the federal district
court, see 28 U.S.C. §§ 1332(d), 1441, 1453, and moved to compel
arbitration.2 The appellants objected, contending that they
belonged to a class of workers exempt from the FAA under 9 U.S.C.
§ 1. The district court ruled that the exemption did not apply,
granted the appellee's motion, and stayed the court case pending
the completion of arbitration.
In arbitration, the appellee made offers of judgment to
the appellants individually. Those offers were accepted. The
district court then approved the awards and dismissed the case.
This timely appeal followed. In it, the appellants
challenge both the district court's order compelling arbitration
and the resultant order of dismissal.
II
We have jurisdiction to review a district court's "final
decision with respect to an arbitration." Lamps Plus, Inc. v.
Varela, 139 S. Ct. 1407, 1414 (2019) (quoting 9 U.S.C. § 16(a)(3)).
Our review is de novo. See Waithaka, 966 F.3d at 16.
The appellants initially filed a demand for arbitration with
2
the AAA, but the AAA refused to take up the demand because the
appellee had failed to abide by AAA rules in the past. (It had
failed to pay required fees to the AAA when over 10,000 of its
couriers simultaneously filed demands for arbitration in February
of 2020.) But the AAA later agreed to arbitrate specific disputes,
notwithstanding the appellee's previous failure to pay fees, so
long as a court compelled arbitration of such disputes.
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Enacted in 1925, the FAA provides that written
arbitration agreements "shall be valid, irrevocable, and
enforceable." 9 U.S.C. § 2. Thus, courts are required to place
those agreements "on an equal footing with other contracts and
enforce them according to their terms." AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 339 (2011) (internal citations omitted).
The sweep of the Act extends to arbitration clauses in any contract
that "evidenc[es] a transaction involving commerce," 9 U.S.C. § 2,
which is to say that the Act extends to any contract that falls
within Congress's extensive power to regulate activities
"affecting" interstate commerce, Allied-Bruce Terminix Cos. v.
Dobson, 513 U.S. 265, 277 (1995) (holding that term "involving
commerce" reflects "an intent to exercise Congress'[s] commerce
power to the full").
Even so, employment contracts for certain classes of
workers are exempt from the FAA. See Waithaka, 966 F.3d at 16.
In this regard, the Act provides that "nothing herein contained
shall apply to 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 Supreme Court has
interpreted the residual clause of this exemption to apply only to
"transportation workers," meaning workers who play a "necessary
role" in the interstate transport of goods. Sw. Airlines Co. v.
Saxon, 142 S. Ct. 1783, 1789-90 (2022) (quoting Cir. City Stores,
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Inc. v. Adams, 532 U.S. 105, 121 (2001)). Whether workers are
classified as employees or independent contractors, though, is of
no consequence in construing the exemption: the term "contracts
of employment" applies "in a broad sense to capture any contract
for the performance of work by workers." New Prime Inc. v.
Oliveira, 139 S. Ct. 532, 541 (2019) (emphasis omitted).
The appellants contend that they belong to a class of
workers encompassed by the residual clause of section 1 and are
therefore outside the grasp of the FAA. Alternatively, they
contend that if they do not fall within the section 1 exemption
(because they are not workers "engaged in foreign or interstate
commerce"), then their contracts with the appellee must perforce
be outside the coverage of section 2. We address each of these
contentions in turn.3
A
To determine whether the appellants are exempt
transportation workers under section 1, we first must define the
relevant "class of workers" to which the appellants belong, and
then ascertain "whether that class is 'engaged in foreign or
3 The appellants further contend that if the FAA does not
apply, Massachusetts law renders the mandatory arbitration
provision in their agreements unenforceable. Because we conclude
that the FAA does apply, see text infra, we need not address this
contention.
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interstate commerce.'" Sw. Airlines, 142 S. Ct. at 1788 (quoting
9 U.S.C. § 1).
1
A "class of workers" is defined by the "actual work"
that those workers typically do on the job, not necessarily by the
industry in which they work. Id. Here, the appellants belong to
a class of couriers who deliver both meals prepared at local
restaurants and goods sold by local retailers. Those deliveries
are made in response to individual orders placed by local customers
within the state; and in the course of each delivery, the couriers
traverse, on average, only a few miles.
2
Having delineated the relevant class of workers, the
issue reduces to whether that class is "engaged in foreign or
interstate commerce." 9 U.S.C. § 1. Unlike the words "involving
commerce" in section 2, the phrase "engaged in . . . commerce" in
section 1 does not invoke the full extent of Congress's commerce
power but, rather, has "a more limited reach." Cir. City, 532
U.S. at 115; see Wallace v. Grubhub Holdings, Inc., 970 F.3d 798,
800 (7th Cir. 2020) (describing scope of section 1's "engaged in
commerce" language as "narrower" than scope of the phrase
"involving commerce" found in section 2). That limited reach
extends only to workers who are "actively" engaged in moving "goods
across borders via the channels of foreign or interstate commerce."
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Sw. Airlines, 142 S. Ct. at 1790. Put another way, the workers
must play a "necessary role in the free flow of goods" across state
or international borders. Id. (quoting Cir. City, 532 U.S. at
121). It follows, we think, that section 1 plainly applies to
workers who in fact carry cargo across state borders. See New
Prime, 139 S. Ct. at 536, 539. It also applies to those who load
and unload cargo in the course of interstate shipments as that
work is "so closely related to interstate transportation as to be
practically a part of it." Sw. Airlines, 142 S. Ct. at 1789
(quoting Balt. & Ohio Sw. R.R. v. Burtch, 263 U.S. 540, 544
(1924)).
a
The extent of the exemption is not so clear, though,
"when the class of workers carries out duties further removed from
the channels of interstate commerce or the actual crossing of
borders." Id. at n.2. Because this is such a case, we must
carefully plot the contours of the phrase "engaged in foreign or
interstate commerce."
At the outset of this inquiry, we are guided by our
earlier decisions. See Cunningham v. Lyft, Inc., 17 F.4th 244,
249-51 (1st Cir. 2021); Waithaka, 966 F.3d at 16-26. And we hew
to the path set forth by the Supreme Court by looking to the
interpretation of similar terms in other statutory contexts, as
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well as by examining the text of the statute itself. See Cir.
City, 532 U.S. at 114-19.
We start with Waithaka. There, drivers for the
ubiquitous online retailer Amazon posited that they were
transportation workers enveloped by the section 1 exemption. See
Waithaka, 966 F.3d at 13. They were not involved in the shipment
of packages across state lines but, instead, were "last mile"
drivers who delivered packages to Amazon customers — that is, they
were responsible for the final leg of a package's interstate
journey. Id. at 13-14. To determine whether those last-mile
drivers fell within the section 1 exemption, we examined decisions
interpreting the phrase "engaging in commerce between any of the
several States" as used in the Federal Employers Liability Act, 45
U.S.C. § 51. See id. at 19-22. From those decisions we gleaned
that workers who transport goods "entirely within a single state"
may sometimes be workers "engaged in interstate commerce" as long
as they actively contribute to the larger interstate movement of
those goods. Id. at 20; see Phila. & Reading Ry. Co. v. Hancock,
253 U.S. 284, 285-86 (1920); Seaboard Air Line Ry. v. Moore, 228
U.S. 433, 434-35 (1913). Consequently, we held that the last-mile
drivers were workers engaged in "the flow of interstate commerce."
Waithaka, 966 F.3d at 22. In so holding, we noted that at the
time the FAA was enacted, "workers moving goods or people destined
for, or coming from, other states" were sometimes considered to be
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"engaged in interstate commerce," even if the workers were
"responsible only for an intrastate leg of that interstate
journey." Id.
Cunningham reflects the other side of the coin. There,
we held that rideshare drivers transporting passengers to and from
the principal airport serving the greater Boston area were not
workers engaged in interstate commerce. See Cunningham, 17 F.4th
at 253. In reaching that conclusion, we drew from the Supreme
Court's decision in United States v. Yellow Cab Co., 332 U.S. 218(1947), overruled on other grounds by Copperweld Corp. v. Indep.
Tube Corp., 467 U.S. 752, 759-61, 770-71, 777 (1984).
In Yellow Cab, the Court addressed the issue of whether
taxi service from Chicago rail stations implicated "interstate
commerce sufficient to bring the Sherman Antitrust Act into play."4
Cunningham, 17 F.4th at 250. The Court considered two scenarios.
The first involved taxi service arranged by the railroads for
between-station transport. See Yellow Cab, 332 U.S. at 228. At
the time, many interstate rail passengers were forced to disembark
at one Chicago station (then a major railway hub) and transfer to
4 The Sherman Act forbids the restraint or monopolization of
"trade or commerce among the several States." 15 U.S.C. §§ 1, 2.
Although that law does not directly define the narrower "engaged
in commerce" term we seek to exegete here, we found it logical to
presume that activity not covered by the Sherman Act would
necessarily be excluded from the scope of the narrower "engaged in
interstate commerce" phraseology. See Cunningham, 17 F.4th at
251.
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another to continue their interstate journeys. See id. The
between-station service, then, was simply a local leg of a longer
interstate trip, making it "clearly a part of the stream of
interstate commerce." Id. As the Court explained:
When persons or goods move from a point of
origin in one state to a point of destination
in another, the fact that a part of that
journey consists of transportation by an
independent agency solely within the
boundaries of one state does not make that
portion of the trip any less interstate in
character. That portion must be viewed in its
relation to the entire journey rather than in
isolation. So viewed, it is an integral step
in the interstate movement.
Id. at 228-29 (internal citations omitted).
The second scenario concerned local taxi service
procured by individual customers at either the beginning or the
end of their railway journeys. See id. at 230. The Court stressed
that interstate commerce "is an intensely practical concept drawn
from the normal and accepted course of business," id. at 231, and
that although an individual's interstate journey may (in a sense)
begin when one "leaves or enters his room or office and descends
or ascends the building by elevator," id., those incidental aspects
of the journey are not understood to be a "constituent part of the
interstate movement," id. at 232. The Court then held that the
independent local taxi service was not an "integral part of
interstate transportation" and, thus, was not covered by the
Sherman Act. Id. at 233.
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In Cunningham, we followed the Court's lead and
concluded that rideshare drivers who drive passengers to or from
the airport are not engaged in interstate commerce because they
provide local transport service akin to that exemplified in the
second Yellow Cab scenario. See Cunningham, 17 F.4th at 250-51.
Such a result was compatible with Waithaka, we reasoned, because
the last-mile delivery drivers in that case were responsible for
a constituent part of the interstate delivery service that Amazon
agreed to provide to its customers. See id. at 251. So viewed,
the last-mile drivers were analogous to the taxi drivers in the
first Yellow Cab scenario as each driver's delivery was part of a
longer interstate journey. See id.5
It is also clear from other statutory contexts that the
phrase "engaged in interstate commerce" is a term of art that does
not encompass the local retail of goods, even if those goods
previously have been shipped interstate. See, e.g., United States
v. Am. Bldg. Maint. Indus., 422 U.S. 271, 285 (1975) (explaining
that interstate shipment of cleaning supplies did not render
janitorial services companies that purchased them from local
5 The appellants suggest that Yellow Cab and Cunningham are
inapposite because they concern the transport of people as opposed
to goods. For present purposes, that distinction is irrelevant:
we already have held that section 1 applies to transportation
workers within the flow of interstate commerce regardless of
whether they transport goods or people. Waithaka, 966 F.3d at 13,
26.
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distributor "engaged in commerce" within meaning of Clayton Act,
15 U.S.C. § 18, because "flow of commerce had ceased" by time of
purchase). In other words, once an interstate shipment arrives at
a local retailer and is "there held solely for local disposition
and use," the goods are no longer considered to be "in interstate
commerce." A.L.A. Schechter Poultry Corp. v. United States, 295
U.S. 495, 543 (1935) (construing term "in . . . interstate
commerce" in National Industrial Recovery Act, ch. 90, § 3, 48
Stat. 195, 197 (1933)).
History, too, helps guide our inquiry. When Congress
enacted the FAA, the local retail of goods was not understood to
be part of interstate commerce.6 See Indus. Ass'n of S.F. v.
United States, 268 U.S. 64, 79 (1925). The delivery of interstate
goods was the "closing incident of the interstate movement" and
subsequent transactions were then the "result of new and
We are mindful that the Supreme Court has rejected a method
6
of interpreting the phrase "engaged in commerce" that considers
"the scope of the Commerce Clause, as then elaborated by the Court,
at the date of the FAA's enactment in order to interpret what the
statute means now." Cir. City, 532 U.S. at 116. Yet, we also
have been directed to interpret the statutory text according to
the meaning of its words as they were understood at the time
Congress enacted the statute. See Sw. Airlines, 142 S. Ct. at
1788-90; New Prime, 139 S. Ct. at 539. For present purposes, it
suffices to say that we look to cases contemporaneous with the
enactment of the FAA to confirm our understanding of "engaged in
foreign or interstate commerce" as a term of art and to provide
useful context as to the statute's meaning when it was enacted.
We do not endeavor to "deconstruct" section 1 based on the state
of Commerce Clause jurisprudence in 1925. Cir. City, 532 U.S. at
118.
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independent arrangements." Id.; see Missouri ex rel. Barrett v.
Kan. Nat. Gas Co., 265 U.S. 298, 308 (1924) ("With the delivery of
the gas to the distributing companies, however, the interstate
movement ends. Its subsequent sale and delivery by these companies
to their customers at retail is intrastate business and subject to
state regulation."); Weigle v. Curtice Bros. Co., 248 U.S. 285,
288 (1919) (holding that state regulation concerning local retail
of interstate food products did not affect "the action of Congress
in interstate commerce" because challenged regulation was "the
exercise of an authority outside of that commerce").
Nor does the term "engaged in interstate commerce"
extend to the intrastate sale of locally manufactured goods. See
Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 198-99 (1974)
(holding that sale of asphalt produced in-state was not a sale "in
commerce" within the meaning of the Clayton and Robinson-Patman
Acts, 15 U.S.C. §§ 13(a), 14, 18). That is the case even if the
intrastate sale might, in a broader sense, affect interstate
commerce. See FTC v. Bunte Bros. 312 U.S. 349, 351 (1941)
(rejecting contention that Federal Trade Commission Act's
proscription against unfair trade practices "in commerce," 15
U.S.C. § 45(a), included practices of intrastate candy
manufacturer and retailer that were potential "handicap to
interstate competitors").
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Refining the matter to bare essence, we proceed upon the
following principles. The term "engaged in foreign or interstate
commerce" in section 1 can apply to workers who are engaged in the
interstate movement of goods, even if they are responsible for
only an intrastate leg of that movement. See Waithaka, 966 F.3d
at 26. Their work, though, must be a constituent part of that
movement, as opposed to a part of an independent and contingent
intrastate transaction. See Cunningham, 17 F.4th at 251; see also
Yellow Cab, 332 U.S. at 231. And the interstate movement
necessarily terminates when those goods arrive at the local
manufacturer or retailer (as local manufacturing and retailing
have not been understood to be "in" interstate commerce). See,
e.g., Bunte Bros., 312 U.S. at 351; A.L.A. Schechter Poultry Corp.,
295 U.S. at 543.
This interpretation is consistent with the Court's
construction of section 1's residual clause in Circuit City.
Invoking the ejusdem generis canon of statutory construction, the
Court instructed that "the residual clause should be read to give
effect to the terms 'seamen' and 'railroad employees,' and should
itself be controlled and defined by reference to the enumerated
categories of workers which are recited just before it." Cir.
City, 532 U.S. at 115; see Wallace, 970 F.3d at 800-01 (explaining
that "presence of specific exemptions for 'seamen' and 'railroad
[employees]'" helps define "the scope of the residual clause,"
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which is "narrower" than the coverage provision of section 2); see
also Me. Forest Prods. Council v. Cormier, 51 F.4th 1, 10-11 (1st
Cir. 2022) (applying ejusdem generis canon). It follows that the
workers included in section 1's residual clause should be necessary
to the interstate transport of goods in the same way as seamen and
railway workers. Excluding those who locally transport goods —
not as part of an interstate movement but, instead, as a contingent
consequence of it — is in keeping with a faithful reading of the
statute.
From what we have said, it is conspicuously clear that
the appellants do not belong to a class of workers "engaged in
foreign or interstate commerce." 9 U.S.C. § 1. Although the
appellants transport goods, qua couriers, they do so as part of
separate intrastate transactions that are not themselves within
interstate commerce. That the delivered items may have once
travelled across state borders does not alter the equation. The
interstate journey terminates when the goods arrive at the local
restaurants and retailers to which they are shipped. Customers
then purchase those meals and goods from local businesses. Thus,
when the couriers set out to deliver customer orders, they do so
as part of entirely new and separate transactions. And the record
is luminously clear that those new and separate transactions are
intrastate in nature as almost all deliveries made by the couriers
as a class are completed within the state in which the order is
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placed. In a nutshell, couriers making deliveries from local
businesses are transporting goods as part of local intrastate
commerce.
b
The appellants resist this conclusion, arguing that our
decision in Waithaka demands a different result. They argue that
the couriers deliver goods that remain in interstate commerce until
those goods are received by retail consumers. The couriers
therefore are responsible — their thesis runs — for an intrastate
leg of what is a longer interstate shipment such that the couriers,
like the last-mile drivers in Waithaka, are within a class of
workers exempted from the FAA. According to the appellants'
thesis, the arrival of the goods at local restaurants and
convenience stores does not mark an end to the interstate journey;
rather, that delivery is no more than a momentary halt in the flow
of commerce — much like the temporary storage of Amazon products
in warehouses before drivers deliver them to customers.
We reject the appellants' thesis because it ignores the
fundamental difference in the relevant transactions. In Waithaka,
customers bought goods directly from Amazon, which orchestrated
the interstate movement of those goods and arranged, as part of
the purchase, for their delivery directly to the customer. That
local delivery was therefore integral to the interstate movement
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such that the goods remained within the flow of interstate commerce
until arriving at the customer's doorstep.
The case at hand is a horse of a distinctly different
hue. Nothing in the record suggests (nor have the appellants
argued) that customers summoning couriers for local deliveries are
buying goods as part of an interstate transaction. To the
contrary, the goods are purchased from local vendors — and at that
point, the goods have already exited the flow of interstate
commerce. See Am. Bldg. Maint. Indus., 422 U.S. at 285. Here, it
is nose-on-the-face plain that the interstate movement terminated
when the goods arrived at local restaurants and grocery stores.
It makes little sense, then, to suggest that when those goods are
again transported contingent to an intrastate purchase — the raw
ingredients now commingled with others and prepared into a meal;
the packaged good proceeding singly, bereft of its interstate
brethren — they somehow resurface into the flow of interstate
commerce.
Let us be perfectly clear. To be "engaged in interstate
commerce" is a "practical concept" that excludes intrastate
transactions that bear only a "casual" or "incidental"
relationship to the interstate movement of goods or people. Yellow
Cab, 332 U.S. at 231. Purchases from local restaurants and
businesses are emblematic of such intrastate transactions. The
deliveries that are thereafter made in fulfillment of those
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purchases bear only a tenuous relationship to the interstate
movement of goods and therefore cannot bring the couriers within
the protective carapace of the Act's section 1 exemption.
The appellants press a related argument. They insist
that courier deliveries are not incidental to interstate shipments
but rather are so integral to them that the couriers are akin to
workers who load and unload cargo during its interstate transport.
See Balt. & Ohio Sw. R.R., 263 U.S. at 544. That analogy is
fatally flawed: although those who load interstate cargo are "part
of the interstate transportation of goods," Sw. Airlines, 142 S.
Ct. at 1789, the same cannot be said of the couriers (who play no
role in the interstate movement of goods). It is by happenstance,
and not a result of any contribution of theirs to the interstate
journey, that the goods they carry have crossed a state border at
some point in time. In other words, the interstate journeys of
the goods that the couriers carry have already been completed by
the time the couriers enter the picture, and, thus, the couriers'
trips are distinct intrastate journeys.
The appellants also argue that the fact that the goods
come to rest at local restaurants and convenience stores is of no
account because multiple entities may be responsible for different
portions of an item's interstate transport without interrupting
the flow of the interstate movement. There may be a kernel of
truth in the appellants' suggestion: we do not hold here that the
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interstate movement must consist of a single transaction. It may
be possible that goods can change hands several times during
transport without exiting the flow of interstate commerce. See
Stafford v. Wallace, 258 U.S. 495, 515-16 (1922) (holding that
selling and buying of livestock at stockyard were transactions in
interstate commerce because "[s]uch transactions can not be
separated from the [interstate] movement to which they contribute
and necessarily take on its character"). And we made clear in
Waithaka that our holding did not depend upon a class of workers
being employed by a company of any particular size or geographic
scope. See Waithaka, 966 F.3d at 23.
All of that is true as far as it goes — but it does not
take the appellants very far. The appellants conflate the
necessary intrastate logistics or transactions that are integral
to the interstate transport of goods (and that are, therefore,
"in" interstate commerce) with purely local economic activity that
may depend on interstate commerce but is — "[f]rom the standpoints
of time and continuity" — nonetheless "distinct" and "separate."
Yellow Cab, 332 U.S. at 232.
That is not to say that local economic activity cannot,
under any circumstance, be integral to the interstate movement of
goods or people. The "flow of interstate commerce" is a concept
that looks to the "economic continuity in the generation of goods
and services for interstate markets and their transport and
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distribution to the customer." Gulf Oil, 419 U.S. at 195. But it
is precisely that "economic continuity" that is lacking here: the
appellants do not identify any record evidence that suggests that
customers used the appellee's platform to arrange for the
interstate delivery of their ordered goods (as was the case in
Waithaka). Nor do the appellants contest the fact that couriers
routinely deliver goods as part of local purchases from local
restaurants and retailers.
Rather, the appellants' asseverational array rests on
the notion that because couriers deliver goods that previously had
moved across state borders, they are therefore transportation
workers engaged in interstate commerce. That argument fails
because the fact that the goods have moved across state borders is
not alone sufficient to bring the workers within the purview of
section 1. Instead, the workers must be actively engaged in the
interstate transport. See Sw. Airlines, 142 S. Ct. at 1790.
In Waithaka, the last-mile drivers played an active role
in completing interstate package deliveries. In this case, by
contrast, the couriers deliver goods that have already exited the
flow of interstate commerce. They are therefore not exempt from
the FAA by reason of section 1.
Arriving at this conclusion in no way requires us to
blaze a new trail. Courts that have addressed this issue under
the same circumstances have reached the same conclusion. See,
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e.g., Wallace, 970 F.3d at 803; Archer v. Grubhub Inc., 190 N.E.3d
1024, 1031-33 (Mass. 2022). The appellants contend that Walling
v. Jacksonville Paper Co., 317 U.S. 564 (1943), is to the contrary.
We do not agree.
In Walling, the Supreme Court held that a paper
wholesaler that made intrastate deliveries was "in commerce" as
understood by the Fair Labor Standards Act, 29 U.S.C. §§ 206(a),
207(a). Id. at 568-69. The Court stated that so long as there
was a "practical continuity of movement" of goods from the out-
of-state paper manufacturers, through the wholesaler's warehouse,
and afterwards on to the customer, the interstate journey was not
"ended by reason of a temporary holding of the goods at the
warehouse." Id. at 569.
Our conclusion here — and the holdings in Wallace and
Archer — are not to the contrary. The couriers in this case do
not make deliveries on behalf of wholesalers or distributors that
transport goods to local retail establishments. Instead, they
make deliveries to fulfill local retail sales.7 Walling makes
7 For the same reason, this case is distinguishable from Nieto
v. Fresno Beverage Co., in which the court held that drivers making
intrastate deliveries for a beverage distributor (that had
admitted that the beverage shipments were "part of a continuous
stream of interstate travel") were workers exempt from the FAA
under section 1. 245 Cal. Rptr. 3d 69, 71, 76 (Cal. Ct. App.
2019). Nothing in that decision suggests that deliveries in
fulfillment of local retail transactions should be considered to
come within the flow of interstate commerce.
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clear that such sales should not be considered "in commerce." Id.
at 571.
The short of it is that couriers who deliver meals and
goods as the result of local purchases from local vendors are not
within a class of workers "engaged in foreign or interstate
commerce" who are exempt from the FAA under section 1. The FAA
therefore applies to their agreements with the appellee unless
those agreements fall outside the coverage of section 2. It is to
that question that we now turn.
B
As a fallback, the appellants argue that if they are not
deemed to be workers "engaged in" interstate commerce for the
purpose of section 1, the FAA cannot apply to them at all because
their work would then fall outside the coverage provision of
section 2, which extends the FAA's reach to all contracts
"involving" interstate commerce. 9 U.S.C. §§ 1, 2. They reason
that if they are not workers "engaged in" interstate commerce,
then their contracts cannot conceivably "involv[e]" commerce under
the Act. Id.That argument cannot withstand scrutiny. The terms
"engaged in commerce" and "involving commerce" are not
coextensive. Cir. City, 532 U.S. at 115. In particular, the term
"involving commerce" has been construed to extend the FAA's reach
to the limits of Congress's commerce power. Allied-Bruce Terminix
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Cos., 513 U.S. at 277. Thus, it is entirely possible that an
employment contract for a worker who is not "engaged in interstate
commerce" within the purview of section 1 may nonetheless be a
contract "involving commerce" within the purview of section 2.
See Wallace, 970 F.3d at 803.
The appellants argue that the Supreme Court's statement
in New Prime that "[section] 1 helps define [section] 2's terms,"
139 S. Ct. at 537, altered the Court's prior decisions in Allied-
Bruce and Circuit City, recasting the respective scopes of the
exemption and coverage provisions such that they are now
coextensive with one another. That argument misreads New Prime.
There, the Court simply stated that a court's power to stay
litigation and compel arbitration under sections 3 and 4 of the
FAA are limited to cases that arise from contracts covered by
section 2. Id. But section 2's scope does not capture contracts
that are exempt under section 1. See id. The section 1 exemption,
therefore, "helps define [section] 2's terms." Id. Because a
court's power to compel arbitration depends on whether a contract
is excluded by section 1 or encompassed by section 2, a court must
consider those provisions in relation to each other when
determining if it has the power to compel arbitration. See id.
Thus, the New Prime Court's instruction to consider the two
provisions of the FAA in relation to each other in no way calls
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into question the Court's earlier decisions in Allied-Bruce and
Circuit City.
We add, moreover, that the Court reconsiders its prior
decisions with the "utmost caution," State Oil Co. v. Khan, 522
U.S. 3, 20 (1997), and the overturning of its own precedent is
"never a small matter," Kimble v. Marvel Ent., LLC, 576 U.S. 446,
455 (2015). It would therefore be unreasonable to assume that the
Court reversed course in New Prime as dramatically as the
appellants contend it did without any comment or discussion. It
is apparent to us that Allied-Bruce and Circuit City reflect the
law as it currently stands, and we are duty bound to apply that
law here.
That ends this aspect of the matter. The contracts the
appellants signed with the appellee are subject to the FAA as long
as they fall within the limits of Congress's power to regulate
activities "affecting" interstate commerce. Allied-Bruce Terminix
Cos., 513 U.S. at 274. And it is difficult to fathom how they
could not here: the contracts at issue concerned the delivery of
goods in local retail, a commercial activity that — although
distinct from the interstate shipment of goods — has a substantial
effect on interstate commerce. See United States v. Lopez, 514
U.S. 549, 565-66 (1995) ("We do not doubt that Congress has
authority under the Commerce Clause to regulate numerous
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commercial activities that substantially affect interstate
commerce . . . .").
The appellants do not argue to the contrary, except to
repeat the refrain that, "[a]s a logical matter," if they are not
workers "engaged in commerce," then their contracts cannot be
"involved" in commerce.8 But that argument only holds if "engaged
in" and "involving" mean the same thing — and in this context,
they do not. See Cir. City, 532 U.S. at 115, 121; see also Wallace,
970 F.3d at 803.
In sum, the appellants' employment contracts are covered
under section 2 of the Act because couriers who make local retail
deliveries affect interstate commerce, but those contracts are not
exempt under section 1 because the appellants are not part of a
class of workers actively engaged in the interstate transport of
goods. The district court was therefore required to compel
arbitration according to the terms agreed to by the parties.
8 The sole authority that the appellants cite in support of
this argument concerned postal workers engaged in the interstate
shipment of packages, who neither party to that case contested
were workers "engaged in commerce." Am. Postal Workers Union v.
U.S. Postal Serv., 823 F.2d 466, 473 (11th Cir. 1987). That case
is factually distinguishable from the case at hand as the couriers
— unlike postal workers — are simply not engaged in the interstate
shipment or delivery of packages.
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III
We need go no further. For the reasons elucidated above,
the judgment of the district court is
Affirmed.
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