Khalatian v. Prime Time Shuttle: Under Federal Arbitration Act, Shuttle Driver's Misclassification Claims are Subject to Arbitration

In Khalatian v. Prime Time Shuttle (5/15/15) --- Cal.App.4th ---, the plaintiff brought an individual claim against the defendants, alleging that they misclassified him as an independent contractor, rather than as an employee. The defendants petitioned to compel arbitration, and the trial court denied the petition. The Court of Appeal reversed, holding as follows:

The Federal Arbitration Act (FAA) applied because the plaintiff was a shuttle driver who picked up and dropped off people primarily at LAX, and thus was involved in interstate commerce.

The arbitration agreement covered the plaintiff's allegation that he was misclassified. The agreement provided that "any controversy or claim ... arising out of or relating to" the parties' agreement, including any argument that the agreement was void or voidable, would be subject to arbitration. The plaintiff's claim that the agreement was void or voidable under California wage law arose out of and related to the parties' agreement. The fact that the plaintiff asserted statutory wage claims did not change this analysis.

The defendants did not waive their right to compel arbitration, even though they litigated for 14 months in court before filing their petition to compel. Waivers are not approved lightly, and the party claiming waiver bears a heavy burden of proof. 

Only one defendant served any discovery, and that discovery was limited. The plaintiff produced 177 pages of documents and gave little or no information in response to interrogatories. No depositions were taken and no discovery motions were filed. 

Other motion work also was limited. The defendants demurred to the complaint, but withdrew the demurrer when the parties agreed to allow the plaintiff to amend. 

Even though the defendants litigated for 14 months, the delay caused the plaintiff no prejudice. The defendants did not stretch out the litigation, and the trial date was more than a year away when the defendants filed their petition.

The opinion is available here.