Doe et al v. Swift Transportation Co., Inc. et al

Filing 321

ORDER that plaintiff's motion at 315 is GRANTED insofar as it seeks an order certifying an interlocutory appeal of the court's order at (Doc. 223), and DENIED insofar as it requests this court to reconsider its order at (Doc. 223). Plaintiffs' motion at 277 is DENIED without prejudice. Signed by Judge John W Sedwick on 9/6/11.(DMT)

UNITED STATES DISTRICT COURT
DISTRICT OF ARIZONA

VIRGINIA VAN DUSEN, et al.,

)
)
Plaintiffs,
)
)
vs.
)
)
)
SWIFT TRANSPORTATION CO., INC., )
et al.,
)
)
Defendants.
)
)

2:10-cv-00899 JWS
ORDER AND OPINION
[Re: Motions at Dockets 277 and 315]

I. MOTION PRESENTED
At docket 277, plaintiffs Virginia Van Dusen, et al., move to lift the stay in this
action and vacate the order at docket 223 compelling arbitration. At docket 287,
defendants Swift Transportation Co., Inc., et al., oppose the motion. Plaintiffs reply at
docket 300. Defendants filed a surreply at docket 313. Oral argument was requested,
but it would not assist the court.
At docket 315, plaintiffs move for reconsideration of the court’s order at
docket 223 compelling arbitration and staying this action, or in the alternative, to certify
an interlocutory appeal under 28 U.S.C. § 1292(b). At docket 319, defendants oppose

the motion. Plaintiffs reply at docket 320. Oral argument was requested, but it would
not assist the court.
II. BACKGROUND
The background facts in this action are set forth in full at docket 223 and are not
repeated herein. A brief summary of the relevant procedural background follows. By
order dated September 30, 2010, the court granted defendants’ motion to compel
arbitration and stay this action pending completion of arbitration.1 Plaintiffs timely 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.”2 By order dated October 28, 2010, the court denied plaintiffs’
motion for reconsideration and for certification of an immediate appeal.3
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 Federal Arbitration Act (“FAA”) and Section 12-1517 of the Arizona Arbitration
Act (“AAA”) before compelling arbitration pursuant to those acts.”4 The Ninth Circuit

1

Doc. 223.

2

Doc. 226.

3

Doc. 229.

4

In re: Virginia Van Dusen, et al., No. 10-73780, slip op. 9609, 9612 (9th Cir. July 27,

2011).

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denied plaintiffs’ petition for mandamus relief on the grounds that it was not satisfied
that the district court committed clear error.5
Plaintiffs filed a motion at docket 277 requesting the district court to vacate its
order compelling arbitration pursuant to Section 4 of the FAA on the grounds that
arbitration is prohibitively expensive.6 At docket 315, plaintiffs filed a “renewed motion
for reconsideration” of the court’s order at docket 223, or alternatively, to certify an
interlocutory appeal under 28 U.S.C. § 1292(b).
III. DISCUSSION
In their opposition to defendants’ motion to compel arbitration before the district
court, plaintiffs argued that because they were “employees” of defendants, the
Contractor Agreements at issue in this action were exempt from arbitration under the
AAA and Section 1 of the FAA. The AAA “exempts all employer and employee
employment agreements from the provisions of [the Act].”7 “Section 1 exempts from the
FAA only contracts of employment of transportation workers.”8
In its order at docket 223 granting defendants’ motion to compel, the district court
declined to rule on the applicability of the FAA exemption, stating in pertinent part,
...Deciding whether an employer-employee relationship exists between the
parties falls within the scope of the arbitration agreement, because the arbitration
agreement explicitly includes “any disputes arising out of or relating to the
relationship created by the [Contractor Agreement],” as well as “any disputes as
5

In re: Virginia Van Dusen, et al., No. 10-73780, slip op. 9609 (9th Cir. July 27, 2011).

6

Doc. 277 at p. 5.

7

North Valley Emergency Specialists, LLC v. Santana, 93 P.3d 501, 506 (Ariz. 2004)
(citing A.R.S. § 12-1517).
8

Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001).

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to the rights and obligations of the parties, including the arbitrability of disputes
between the parties” under the terms of the arbitration agreement.
In addition, resolving whether an employer-employee relationship exists would
require an analysis of the Contractor Agreement as a whole, as well as the Lease
and evidence of the amount of control exerted over plaintiffs by defendants, to
determine whether an employer/employee relationship existed between the
parties. When the threshold question of arbitrability is before the district court,
the district court considers only the validity and scope of the arbitration clause
itself and not the contract as a whole. Republic of Nicaragua v. Standard Fruit
Co., 937 F.3d 469, 477 (9th Cir. 1991).9
In its opinion dated July 27, 2011, the Ninth Circuit Court of Appeals concluded
that “a district court may not compel arbitration pursuant to Section 4 unless the
‘agreement for arbitration’ is of a kind that Sections 1 and 2 have brought under federal
regulation,” but denied plaintiffs’ petition for writ of mandamus on the grounds that it was
not convinced the district court committed clear error.10 The Court of Appeals’ opinion
stated in pertinent part,
For reasons previously discussed, we believe the best reading of the law
requires the district court to assess whether a Section 1 exemption applies
before ordering arbitration. We acknowledge, however, that the law’s repeated
admonishments that district courts refrain from addressing the merits of an
underlying dispute can be read to favor the District Court’s decision. This factor,
along with the lack of controlling precedent, render the question relatively close.
Whether or not the district court’s interpretation ultimately withstands appeal, we
cannot find it “clearly erroneous” as that term is used in the mandamus
analysis.11
Based on the Ninth Circuit opinion dated July 27, 2011, plaintiffs now request the
district court to certify an interlocutory appeal under 28 U.S.C. § 1292(b) of the order at

9

Doc. 223 at p. 19.

10

In re: Virginia Van Dusen, et al., No. 10-73780, slip op. at 9620.

11

Id. at 9623.

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docket 223. Pursuant to 9 U.S.C. § 16(b)(2), an appeal may not be taken from an
interlocutory order “directing arbitration to proceed under section 4 of this title,” except
as otherwise provided in 28 U.S.C. § 1292(b). Section 1292(b) provides the Court of
Appeals discretion to permit an appeal to be taken from an order not otherwise
appealable when a district judge is of the opinion that the order “involves a controlling
question of law as to which there is substantial ground for difference of opinion and that
an immediate appeal from the order may materially advance the ultimate termination of
the litigation,” and the district judge so states in writing in such an order. The Court of
Appeals may then “in its discretion, permit an appeal to be taken from such order, if
application is made to it within ten days after the entry of the order.”12
This court continues to believe its original opinion and order at docket 223 is
correct, particularly in light of the fact that the parties agreed to arbitrate questions of
arbitrability, as well as “any disputes arising out of or relating to the relationship created
by the [Contractor Agreement.]”13 Although this court respectfully believes the Ninth
Circuit panel erred by concluding that the district court should have determined the
applicability of a Section 1 exemption in this action, there can be no gainsaying that
there is now a substantial ground for difference of opinion on the issue of whether a
district court should assess whether a Section 1 exemption applies where that question
raises disputed facts going to the merits of plaintiffs’ claims and the contracting parties

12

28 U.S.C. § 1292(b).

13

Doc. 223 at p. 8.

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have agreed to arbitrate questions of arbitrability, as well as any disputes arising out of
or relating to the relationship created by the Contractor Agreement at issue.
This court is further convinced that an immediate appeal from the court’s order at
docket 223 may materially advance the ultimate termination of this litigation.
Consequently, the court will grant plaintiffs’ request to certify an interlocutory appeal
pursuant to 28 U.S.C. § 1292(b), and specifically now finds that the order at docket 223
“involves a controlling question of law as to which there is substantial ground for
difference of opinion and that an immediate appeal from the order may materially
advance the ultimate termination of the litigation.” Pursuant to § 1292(b), plaintiffs must
file an application to appeal with the Ninth Circuit Court of Appeals within ten days from
the entry of this order.
In their motion at docket 315, plaintiffs also renew their request that the court
reconsider its order at docket 223 in light of the Ninth Circuit’s opinion dated July 27,
2011. As noted above, this court continues to believe that its original decision was
correct. Consequently, the court will deny plaintiffs’ renewed motion for reconsideration
at docket 315.
Plaintiffs’ motion at docket 277 to vacate the district court’s order compelling
arbitration on the grounds that arbitration is prohibitively expensive is denied without
prejudice. The court declines to address the merits of this motion at the present time,
because it is very likely that the appellate court will permit an interlocutory appeal to
proceed.

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IV. CONCLUSION
For the reasons set out above, plaintiff’s motion at docket 315 is GRANTED
insofar as it seeks an order certifying an interlocutory appeal of the court’s order at
docket 223, and DENIED insofar as it requests this court to reconsider its order at
docket 223. It is FURTHER ORDERED that plaintiffs’ motion at docket 277 is DENIED
without prejudice.
DATED this 6th day of September 2011.

/s/ JOHN W. SEDWICK
UNITED STATES DISTRICT JUDGE

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