On July 21, 2023, the United States Court of Appeals for the Ninth Circuit affirmed a district court order denying Domino Pizza’s motion to compel arbitration in a putative class action brought by plaintiff Dominos truck drivers who alleged that Domino’s had violated California labor law.

The decision in Carmona v. Domino’s Pizza, No. 21-55009 involved an analysis of the Federal Arbitration Act. A Ninth Circuit panel had previously affirmed the denial of the motion to compel, but the United States Supreme Court granted certiorari, vacated the panel’s decision and remanded for reconsideration in light of the Supreme Court’s Southwest Airlines v. Saxon decision.

In Saxon, the Supreme Court held that airport baggage handlers were exempt from mandatory arbitration under the Federal Arbitration Act because they were part of a “class of workers engaged in foreign or interstate commerce.”

The panel held that its past decision was consistent with Saxon, and was based on its reading of Rittmann v. Amazon.com, a Ninth Circuit decision from 2020. Under the Rittmann decision, the question of whether the plaintiff drivers were engaged in interstate commerce turned on whether they transported interstate goods for the last leg to their final destinations.  The court held that the arbitration provision in Amazon’s agreement with its drivers was not enforceable because Amazon’s drivers were engaged in interstate commerce when they made “last mile” deliveries of goods in the stream of interstate commerce.

Here, Domino’s sold ingredients for its pizza to its franchisees, which were purchased from suppliers outside the state and delivered to Domino’s Southern California Supply Chain Center (the “Supply Center”). The plaintiff drivers would then deliver the ingredients from the California Supply Center to fulfill orders from Domino’s California franchisees. Domino’s argued that unlike the Amazon customers in Rittmann, Domino’s franchisees had not ordered specific goods before they were shipped from out-of-state—all orders were placed after the ingredients had arrived in the in-state Supply Center.

The panel held that: “the issue was not how the purchasing order was placed, but rather whether the plaintiff drivers operate in a single, unbroken stream of interstate commerce that renders interstate commerce a central part of their job description.” The panel held that a pause in the journey of the goods at a warehouse did not remove the goods from the stream of interstate commerce because those goods “were inevitably destined from the outset of the interstate journey for Domino’s franchisees.”

The Ninth Circuit’s decision means that companies whose drivers or other transportation workers are part of an interstate stream of commerce may be exempt from mandatory arbitration clauses even if those employees never leave the state for their job duties.

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