Patrick LaCross et al v. Knight Transportation Incorporated et al
Filing
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ORDER: IT IS ORDERED denying Plaintiffs' Motion for Reconsideration of this Court's September 22, 2016 Order (Doc. #149 ). (See attached Order for complete details). Signed by Judge John J Tuchi on 10/18/16.(JAMA) Modified on 10/18/2016 to add Opinion (WO)(JAMA).
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WO
NOT FOR PUBLICATION
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IN THE UNITED STATES DISTRICT COURT
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FOR THE DISTRICT OF ARIZONA
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Patrick LaCross, et al.,
Plaintiffs,
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ORDER
v.
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No. CV-15-00990-PHX-JJT
Knight Transportation Incorporated, et al.,
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Defendants.
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At issue is Plaintiffs’ Motion for Reconsideration of this Court’s September 22,
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2016 Order (Doc. 149), in which Plaintiffs ask the Court to reconsider its ruling
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(Doc. 148) on Defendants’ Motion to Compel Arbitration and Stay Action (Doc. 111).
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Motions for reconsideration should be granted only in rare circumstances.
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Defenders of Wildlife v. Browner, 909 F. Supp. 1342, 1351 (D. Ariz. 1995). A motion for
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reconsideration is appropriate where the district court “(1) is presented with newly
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discovered evidence, (2) committed clear error or the initial decision was manifestly
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unjust, or (3) if there is an intervening change in controlling law.” School Dist. No. 1J,
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Multnomah County v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993). Here, Plaintiffs
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argue that the Court committed clear error when it did not decide whether Plaintiffs are
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exempt from arbitration under Section 1 of the Federal Arbitration Act (“FAA”),
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9 U.S.C. § 1, which provides that the FAA does not apply to “contracts of employment”
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of any “workers engaged in foreign or interstate commerce.” (Doc. 149 at 3.) Plaintiffs
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thus ask the Court to make that determination now. See Van Dusen v. Swift Transp. Co.
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Inc., 654 F.3d 838, 843-44 (9th Cir. 2011) (stating that, before a district court enforces an
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arbitration agreement between the parties and compels arbitration, it must “consider
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whether the agreement at issue is of the kind covered by the FAA”).
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Plaintiffs have the burden to show that the agreements they entered into are
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“contracts of employment” under Section 1 of the FAA. See Circuit City Stores, Inc. v.
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Adams, 532 U.S. 105, 119 (2001). The plain language of the Section 1 exemption
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provides that it applies to employment contracts of transportation workers, and the
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exemption is to be construed narrowly. Id. at 118; see also In re Swift Transp. Co. Inc.,
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830 F.3d 913, 919-20 (9th Cir. 2016) (Ikuta, J. dissenting) (noting “the only issue before
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the district court is a legal one” and the term “contracts of employment” is not to be read
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expansively “to mean any contract between parties in an employment relationship”);
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Terrebonne v. K-Sea Transp. Corp., 477 F.3d 271, 278-80 (5th Cir. 2007) (concluding
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that the Section 1 exemption applies to employment contracts, not any contracts made by
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parties in an employment relationship).
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An employment contract is “an agreement setting forth ‘terms and conditions’ of
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employment.” Modzelewski v. Resolution Trust Corp., 14 F.3d 1374, 1376 (9th Cir.
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1994). As one can surmise from the very title of the agreement between Plaintiffs and
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Defendant Knight Transportation Inc. (“Knight”)—“Independent Contractor Operating
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Agreement” (“ICOA”)—the agreement is not, on its face, a “contract of employment” as
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contemplated by Section 1 of the FAA. The ICOA expressly provides that each Plaintiff,
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as a “Contractor,” agrees “to provide services as an independent Contractor and
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acknowledges that it is an independent Contractor,” and that the ICOA does not create an
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“employer/employee,” “master/servant,” or “principal/agent” relationship. (Doc. 111-2,
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ICOA ¶ 1.) Plaintiffs do not point the Court to any specific provision of the ICOA that
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would indicate that it is an employment contract. The Court need not go beyond the plain,
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unambiguous characterization of the relationship between the parties in the ICOA to
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conclude that it was the intent of Plaintiffs to enter into an independent Contractor
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agreement with Knight, not an employment contract. See Alvarado v. Pac. Motor
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Trucking Co., No. EDCV 14-0504-DOC(DTBx), 2014 WL 3888184, at *4-5 (C.D. Cal.
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Aug. 7, 2014) (finding that the court did not need to go beyond the express
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characterization of the relationship between the parties in their agreement).
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As Defendants point out (Doc. 138 at 10), the ICOA also contains all the terms
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required to create the presumption of an independent contractor relationship under
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Arizona law, A.R.S. § 23-1601(B). Specifically, in the ICOA, Plaintiffs agreed that
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(1) they will provide services as an independent Contractor (ICOA ¶ 1); (2) they will not
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be employees (ICOA ¶ 1); (3) they will handle tax liability and maintain any required
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registration, license or other authorization (ICOA ¶¶ 1, 2.1(j)); and (4) they will not be
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insured under workers’ compensation (ICOA ¶ 1), may accept or decline requests for
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services (ICOA ¶ 2.2), may determine in which periods they work (ICOA ¶ 2.1(d)), will
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not be paid a regular salary (ICOA ¶ 10), will provide and maintain tools and equipment
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(ICOA ¶¶ 2.1(h), (j)), will be responsible for expenses (ICOA ¶ 2.1(j)), and that the same
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terms apply to the Contractor’s employees, if any (ICOA ¶¶ 1, 5). See A.R.S. § 23-
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1601(B). Plaintiffs have not met their burden to demonstrate that the ICOAs are
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employment contracts under Section 1 of the FAA, and thus the Section 1 exemption
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does not apply to prevent enforcement of the Arbitration Agreement Plaintiffs entered
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into with Knight in the ICOAs.
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The Court declines Plaintiffs’ further invitation to decide whether certain
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provisions of the ICOAs are unlawful under the National Labor Relations Act. As the
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Court concluded in its prior Order (Doc. 148), Plaintiffs entered into a valid Arbitration
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Agreement with Knight that included a delegation provision, and the arbitrator will have
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the authority to determine the arbitrability of Plaintiffs’ claims and resolve the claims that
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are properly subject to arbitration.
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IT IS THEREFORE ORDERED denying Plaintiffs’ Motion for Reconsideration
of this Court’s September 22, 2016 Order (Doc. 149).
Dated this 18th day of October, 2016.
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Honorable John J. Tuchi
United States District Judge
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