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Friday, May 22, 2015

Garcia v. Superior Court: Court Must Rule on Application of FAA Before Ordering Arbitration of Truck Driver Wage Dispute

In Garcia v. Superior Court (Southern Counties Express, Inc.) (5/15/15) --- Cal.App.4th ---, the petitioners were truck drivers who were engaged by the defendant to haul shipping containers from the ports of Los Angeles and Long Beach to facilities throughout Southern California. The drivers repeatedly signed independent contractor agreements and vehicle leases, both of which included arbitration clauses.

The drivers filed wage claims with the Division of Labor Standards Enforcement (DLSE), alleging that the defendant improperly classified them as independent contractors, rather than employees. The defendant petitioned the Superior Court to stay the DLSE proceedings and compel arbitration. The trial court held evidentiary hearings, found that the arbitration agreements were not procedurally unconscionable, and compelled arbitration. The drivers sought writ relief, and the Court of Appeal reversed and remanded, holding as follows:

The Federal Arbitration Act (FAA) does not 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 et seq.

The drivers argued that they were workers engaged in interstate commerce, and their contracts were exempt from the FAA. They argued that because the FAA did not apply, Labor Code section 229 would allow them to pursue their wage claims "without regard to the existence of any private agreement to arbitrate."

The defendant argued that the independent contractor agreements and vehicle leases were not "contracts of employment," the FAA applied, and the drivers should be compelled into arbitration.

The trial court erred in not deciding whether the independent contractor agreements and vehicle leases were contracts of employment for transportation workers engaged in interstate commerce, within the meaning of the FAA’s section 1 exemption.

The opinion is available here.

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