Truckers’ meal/rest break wage lawsuit tossed by federal court

A truck driver for Thyssenkrupp Supply Chain Services has been forced to arbitrate with the company after her class action wage lawsuit was dismissed in a federal court.

On Oct. 23, a U.S. District Court for the Northern District of California dismissed a lawsuit filed by a delivery driver for Thyssenkrupp, a supplier for Tesla. The initial plaintiff argued that the company failed to pay her and other drivers for meal and rest breaks, as required by federal and California law.

Specifically, plaintiffs claimed that Thyssenkrupp failed to:

• Accurately pay all wages due, including minimum and overtime wages
• Provide compliant meal periods or an additional hour of pay in lieu of compliant meal periods
• Provide accurate itemized wage statements
• Pay all wages earned and owed upon separation from employment

However, Thyssenkrupp argued that the dispute should never have reached the courtroom but that, rather, an arbitration agreement should be enforced per the Federal Arbitration Act or the California Arbitration Act.

Federal Arbitration Act

The Federal Arbitration Act provides that arbitration agreements are enforceable in “contracts evidencing a transaction involving commerce.”

However, “contracts of employment of seamen, railroad employees or any other class of workers engaged in foreign or interstate commerce” are exempt. The term “any other class of workers engaged in foreign or interstate commerce” means “transportation workers,” according to court documents. “Transportation workers” are defined as those that “play a direct and necessary role in the free flow of goods across borders.” Transportation workers do not necessarily have to cross state lines.

Plaintiffs argued that, in delivering parts from the warehouse to the plant, they are engaging in interstate commerce. That argument relies on what is referred to as “last leg” cases; i.e. by delivering parts from the warehouse to the plant, drivers are moving the interstate freight on the final leg of its journey in interstate commerce. This applies even if the last leg of that trip is intrastate, as is the case with the Thyssenkrupp drivers.

However, Thyssenkrupp countered that argument by relying on “come to rest” cases.

In those cases, goods ordered from out-of-state are delivered to an in-state warehouse or other facility, at which time their ultimate destination is unknown. Then at some later date, they are delivered to customers by in-state drivers. Specifically, Thyssenkrupp argued that once parts are delivered to the warehouse, the subsequent delivery of those parts to Tesla’s factory is not interstate in nature, for the reason that a “subsequent transaction” is necessary to “get the parts to move again.”

Countering that argument, plaintiffs provided evidence that almost all of the trailers delivered to the warehouse are never unloaded. Furthermore, trailers remain at the warehouse for only a short period before truck drivers deliver them to the factory. This suggests that the decision as to where and when the parts are to be delivered occurs prior to the arrival of those parts to the warehouse, thereby nullifying Thyssenkrupp’s “come to rest” argument.

The court agreed with the plaintiffs, finding that per the Federal Arbitration Act, they are considered transportation workers. Consequently, they are exempt from coverage under the act.

California Arbitration Act

Failing to make its case under the Federal Arbitration Act, Thyssenkrupp then moved to have the arbitration agreement enforced under the California Arbitration Act.

Plaintiffs made three arguments that the arbitration agreement is not enforceable under state law:

1. Wage claims categorically are not subject to arbitration.
2. The agreement is unconscionable.
3. A class action waiver contained in the agreement is unenforceable.

Regarding the first claim, the court pointed out that none of the applicable causes of action in the lawsuit seek to collect unpaid wages. Consequently, exemption from the California Arbitration Act does not apply in this case.

Second, the court was not persuaded by plaintiffs’ argument that the arbitration agreement is unconscionable because it is silent about judicial review of the award. The federal district court cited California Supreme Court precedent in making the determination.

Lastly, the California Supreme Court identified the following four factors a court must consider when addressing an argument that a class action waiver in an arbitration agreement is unenforceable:

1. Modest size of the potential individual recovery
2. Potential for retaliation against members of the class
3. The fact that absent members of the class may be ill informed about their rights
4. Other real-world obstacles to the vindication of class members’ right to wages through individual arbitration

Again, the court found that the plaintiffs failed to submit evidence sufficient to satisfy any of the four factors.

With the court poking holes in all of the plaintiffs’ arguments regarding exemption under the California Arbitration Act, Thyssenkrupp is entitled under the act to an order compelling the lone plaintiff who filed the lawsuit to arbitrate her individual claims. Consequently, the case was dismissed. LL

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