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Doe 1 v. Swift Transportation Co., Inc.

United States District Court, D. Arizona

January 22, 2015

John Doe 1, et al., Plaintiffs,
Swift Transportation Co., Inc., et al., Defendants.

ORDER AND OPINION [Re: Motion at Docket 566]

JOHN W. SEDWICK, Senior District Judge.


At docket 566 defendants filed a motion asking the court to stay the proceedings and determine the appropriate resolution of the Federal Arbitration Act ("FAA") exemption issue. Specifically, they ask the court to set aside the scheduling and planning order at docket 548 and set a briefing schedule where the parties can put forth their arguments as to why the plaintiffs' contractor agreements are not contracts of employment within the meaning of Section 1 of the FAA. Plaintiffs respond at docket 572. Defendants reply at docket 578. Oral argument was requested but would not be of additional assistance to the court.


The background facts in this action are set forth in full at docket 223. Suffice it to say the plaintiffs are truck drivers who entered into contractor operating agreements ("Contractor Agreements") with Defendant Swift Transportation Co. ("Swift"). In 2009, the plaintiffs filed a complaint against Swift and Defendant Interstate Equipment Leasing, Co., Inc. alleging various labor law claims and putting the status of the employment relationship between the plaintiffs and Swift at the heart of the lawsuit. Defendants moved to compel arbitration based on the terms of the Contractor Agreements, but plaintiffs opposed arbitration based in part on Section 1 of the FAA, which exempts "contracts of employment of... workers engaged in foreign or interstate commerce."[1] By order dated September 30, 2010, the court granted defendants' motion to compel arbitration and stay this action pending completion of arbitration. The court concluded that the applicability of the exemption was a question for the arbitrator to decide in the first instance.[2] Plaintiffs filed a motion for reconsideration of the court's order, or alternatively, to certify for immediate appeal pursuant to 28 U.S.C. § 1292(b), "the question of who decides the applicability of the FAA § 1 exemption where... that question raises disputed fact issues going to the merits of the claims."[3] The court denied the plaintiffs' motion.[4]

Plaintiffs subsequently filed a petition for writ of mandamus with the Ninth Circuit Court of Appeals. In their petition, plaintiffs argued that the district court committed clear error by "refusing to resolve their claim of exemption from arbitration under Section 1 of the [FAA] and Section 12-1517 of the Arizona Arbitration Act... before compelling arbitration pursuant to those acts."[5] The Ninth Circuit concluded that a district court must first determine whether the agreement at issue is exempt as a contract of employment pursuant to Section 1 before ruling on a motion to compel arbitration. It nonetheless denied plaintiffs' petition for mandamus relief on the grounds that it was not satisfied that the district court committed clear error because the issue was one of first impression and because of "the law's repeated admonishments that district courts refrain from addressing the merits of an underlying dispute."[6]

After the Ninth Circuit's denial of mandamus, plaintiffs requested that the court again reconsider its order compelling arbitration or, alternatively, to certify an interlocutory appeal under 28 U.S.C. § 1292(b). The court granted the request to certify an interlocutory appeal because, based on the Ninth Circuit's order, there was a substantial ground for difference of opinion on the issue of whether a district court should assess a Section 1 exemption issue where it raises disputed facts going to the merits of the plaintiff's claims and the contracting parties have agreed to arbitrate questions of arbitrability. On appeal, the Ninth Circuit stated that its opinion in Van Dusen was the law of the circuit and remanded the case, instructing the district court to "determine whether the Contractor Agreements between each appellant and Swift are exempt under § 1 of the FAA" before ruling on the motion to compel arbitration.[7]

The court issued an order asking the parties to file a notice outlining what needed to be done to conclude the case. On July 15, 2014, both parties simultaneously filed separate notices. Defendants' notice at docket 542 essentially contended that the only thing to be done was for the court to review the four corners of the Contractor Agreements to determine if they were contracts of employment. Plaintiffs' notice at docket 543 set forth a comprehensive schedule for discovery needed to determine what facts bear on plaintiffs' status as employees or independent contractors. The court, believing plaintiffs' approach was correct given the Ninth Circuit's rulings, set forth a scheduling and planning order in conformity with plaintiffs' suggested schedule.[8]

Defendants then filed the motion at issue. Again, they assert that the court should only look at the terms of the Contractor Agreements to determine whether they are contracts of employment. They argue that the court cannot authorize discovery and a trial on the issue of whether the Contractor Agreements are employment contracts because that would necessarily require the court to decide the merits of the underlying case, which would effectively be the same as denying arbitration.


A. Proper motion

Plaintiffs oppose the motion based in part on the argument that defendants are improperly asking the court for reconsideration of its prior order at docket 546. Defendants correctly point out, however, that the order at docket 546 was not in response to a motion; it was an order related to scheduling. The parties had simultaneously filed notices in response to the court's order at docket 536, which asked for a summary of "those matters which need to be addressed to resolve this litigation." Plaintiffs' notice included legal argument as to why discovery was appropriate, but given the simultaneous nature of the filings, defendants did not have an opportunity to fully brief the issues raised by plaintiffs. The court will consider defendants' motion.

B. Discovery warranted

Defendants argue that discovery on the issue of whether the Contract Agreements were contracts of employment for purposes of Section 1 is not warranted because the court need only consider the four corners of the agreements. Defendants cite the Ninth Circuit's mandate to "determine whether the Contract Agreements between each appellant and Swift are exempt under § 1 of the FAA before it may consider Swift's motion to compel."[9] They argue that the mandate instructs the court to look only at the terms of the agreements and not the working relationship between the parties. In other words, defendants assert ...

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