Arbitration
Furniture Delivery Driver Is a Transportation Worker Exempt From the FAA
Updated
In Betanco v. Living Spaces Furniture, LLC, the First District Court of Appeal held that a furniture delivery driver who made intrastate retail deliveries was a “transportation worker” engaged in interstate commerce—and therefore exempt from the Federal Arbitration Act under section 1 of that Act. The court also held that the driver retained standing to litigate his non-individual PAGA claims in court. The order was affirmed, and the opinion was certified for publication.
Background
Living Spaces is a chain furniture store with stores and distribution centers in several states, including California. Its merchandise is manufactured both inside and outside the state, including in Mexico, before being shipped to two California distribution centers. The company contracts with delivery-service providers, including Of Service Transportation, to move products from those centers to customers.
Luis Betanco worked as a delivery driver, carrying furniture from a Living Spaces warehouse to customers. He later signed an independent contractor agreement, between his business and Of Service, that contained an arbitration clause governed by the FAA and a class, collective, and representative action waiver.
Betanco filed two suits in Alameda County Superior Court: a class action alleging wage-and-hour violations and a separate action seeking civil penalties under PAGA. The defendants petitioned to compel arbitration of all claims and to dismiss the non-individual PAGA claims.
The trial court granted the petition in part. It found Betanco was a transportation worker exempt from the FAA, sent certain individual claims to arbitration, and denied the motion to dismiss his representative PAGA claims. The defendants appealed, and the four appeals were consolidated.
What the Court Held on the FAA Exemption
The FAA does not apply to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” The U.S. Supreme Court has read that catchall to reach only transportation workers, and the “engaged in” commerce standard is narrower than the broad “involving commerce” standard that governs the Act’s basic coverage.
Reviewing the question de novo because the facts were undisputed, the Court of Appeal agreed that Betanco qualified. The focus is on whether a worker plays a direct, necessary, and active role in moving goods across borders, which Betanco did by loading and delivering furniture that remained in the stream of interstate commerce.
The court drew on cases such as Nieto, Muller, and Rittmann, and on the U.S. Supreme Court’s recent decision in Flowers Foods, Inc. v. Brock, which confirmed that a worker may be engaged in interstate commerce even without personally crossing state lines. The furniture did not “come to rest” at the warehouse; the deliveries were the final phase of a continuous interstate journey to customers.
The court rejected the argument that retail deliveries, as opposed to wholesale deliveries, fell outside the exemption, and that the timing of a customer’s order was dispositive. What mattered was the driver’s actual role in the unbroken movement of the goods, not how the order was placed.
A driver who delivers goods that were destined from the outset of their interstate journey for the customers he serves is a transportation worker engaged in interstate commerce. The arbitration agreement he signed is therefore exempt from the FAA under section 1, even where his deliveries are intrastate and retail rather than wholesale.
What the Court Held on PAGA Standing
The defendants also challenged the ruling that Betanco’s representative PAGA claims could proceed in court. The court affirmed, holding that Adolph v. Uber Technologies, Inc. controlled. Under Adolph, an order compelling arbitration of a plaintiff’s individual PAGA claims does not strip the plaintiff of standing to litigate non-individual claims in court.
The court explained that a PAGA action is brought on behalf of the state, with the employee acting as the state’s proxy. An employer cannot foreclose a representative PAGA action simply because other employees signed arbitration agreements. Because Betanco was an aggrieved employee under Labor Code section 2699, subdivision (c)(1), he had established standing at this stage of the pleadings.
What This Means for You
This decision holds that a delivery driver moving goods that arrived from out of state can be a transportation worker exempt from the FAA, even when his own deliveries are intrastate and retail. It also confirms, applying Adolph, that compelling arbitration of a plaintiff’s individual PAGA claims does not defeat standing to pursue non-individual PAGA claims in court. The ruling touches arbitration and PAGA disputes involving delivery drivers and other transportation workers.
I write these summaries as general information about developments in California employment law. They are not legal advice and don’t create a mediator–client relationship. For guidance on a specific matter, consult a qualified attorney.