Amazon can’t force arbitration in contractor-employee case

A federal court in Washington has ruled that Amazon can’t compel individual arbitration in a misclassification lawsuit filed by its drivers.

U.S. District Judge John Coughenour denied Amazon’s motion on Tuesday, April 23, in the U.S. District Court for the Western District of Washington, saying that the Federal Arbitration Act was inapplicable and that Washington state law can’t be used to enforce the arbitration provision.

A class action lawsuit was filed in October 2016 claiming that Amazon misclassified its drivers as independent contractors instead of employees. According to court documents, all but 165 of the tens of thousands of putative class members were parties to a contract that contained a provision mandating individual arbitration.

After the Amazon lawsuit was filed, the U.S. Supreme Court ruled in New Prime v. Oliveira that all transportation workers – including independent contractors – are exempt from the Federal Arbitration Act.

The drivers argued that there is no valid agreement to arbitrate “because the Arbitration Provision is unenforceable as plaintiffs fall within the exemption to the (Federal Arbitration Act).”

Whether or not Amazon drivers were part of the exemption because they drive local routes was questioned.

“When deciding whether a particular employee falls within the transportation worker exemption, courts often consider whether a strike by a group of the employees at issue would interrupt interstate commerce,” Judge Coughenour wrote. “The court finds that a strike by a large group of plaintiffs and those similarly situated would interrupt interstate commerce … Therefore, plaintiffs fall within FAA’s transportation worker exemption.”

Amazon contended that “Washington law is clearly applicable in the event that the (Federal Arbitration Act) does not apply.”

The court disagreed.

“Here, if the parties intended Washington law to apply if the (Federal Arbitration Act) was found to be inapplicable, they would have said so or even remained silent on the issue,” Coughenour wrote. “Instead, they did the opposite … The parties explicitly indicated that Washington law is not applicable to the arbitration. Indeed, it appears that it is precisely against the parties’ intent to apply Washington law to the arbitration provision.”

Amazon now must face the proposed class action that claims its drivers were misclassified as independent contractors.