section 1 exemption in California

2019In Lenz , the Eighth Circuit Court of Appeals attempted to synthesize the factors courts often consider in determining the exemption applies, and it identified eight "non-exclusive" factors for consideration when evaluating whether an employee "is so closely related to interstate commerce that he or she fits within the § 1 exemption of the FAA." ( Lenz, supra , 431 F.3d at p. 352 .) Those factors are: "first, whether the employee works in the transportation industry; second, whether the employee is directly responsible for transporting the goods in interstate commerce; third, whether the emplo

2019Kan. 2004) 316 F.Supp.2d 1093 , 1097 ( Lorntzen ); see Lenz v. Yellow Transp., Inc . (8th Cir. 2005) 431 F.3d 348 , 351 ( Lenz ) [whether an employee who "works for a transportation company but is not a truck driver or transporter of goods" is a transportation worker is a "more difficult question"].) Suffice it to say there is no agreed-upon bright-line rule on who falls within the section 1 exemption.

2026(Betancourt v. Transportation Brokerage Specialists, Inc., supra, 62 Cal.App.5th at p. 554 [package delivery driver]; Nieto v. Fresno Beverage Co., Inc. (2019) 33 Cal.App.5th 274, 281 [delivery truck driver]; Palcko v. Airborne Express, Inc. (3d.

2026(Betancourt, supra, 62 Cal.App.5th at pp. 555-556.) In concluding the driver was exempt, this court relied on Nieto v. Fresno Beverage Co., Inc. (2019) 33 Cal.App.5th 274, 284 (Nieto), which held a beverage delivery driver fell within the section 1 exemption even though he made only intrastate deliveries.

2026(Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105, 109 [ 121 S.Ct. 1302 , 149 L.Ed.2d 234 ].) Vela contends that the section 1 exemption applies, so that enforceability of the parties’ arbitration agreement is ultimately subject to California law instead of the FAA.

2026(Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105, 109 [ 121 S.Ct. 1302 , 149 L.Ed.2d 234 ].) Vela contends that the section 1 exemption applies, so that enforceability of the parties’ arbitration agreement is ultimately subject to California law instead of the FAA.

2026(Garrido v. Air Liquide Industrial U.S. LP (2015) 241 Cal.App.4th 833, 844-845 [“The FAA preempts Lab[.] Code[, §] 229, requiring enforcement of an arbitration agreement”].) 11 The section 1 exemption applies if Vela is either a “railroad employee[]” or a transportation worker.

2026The 7 resolution of disputes such as this “requires a case-by-case factual determination, with the party opposing the motion to compel arbitration bearing the burden to demonstrate that the exemption applies.” (Betancourt, supra, 62 Cal.App.5th at p. 559.) We begin by noting that several courts have interpreted what it means for a worker to be “engaged in . . . interstate commerce” in different contexts, and it is useful (though not dispositive) to view the workers in these cases as falling along various points of a continuum. “ ‘The most obvious case’ ” for applying the section 1 exemption in

2019Philadelphia area would be within the residuary exemption, the plaintiff whose job was to closely manage, oversee and monitor those drivers would also be exempt]; Harden v. Roadway Package Systems, Inc. (9th Cir. 2001) 249 F.3d 1137, 1140 [finding that a delivery driver of interstate packages came within the exemption].) As one federal district court put it: “If there is one area of clear common ground among the federal courts to address this question, it is that truck drivers – that is, drivers actually involved in the interstate transportation of physical goods – have been found to be ‘trans

2018Courts have repeatedly concluded that contracts of employment with drivers whose routes include transporting goods across state lines *791 are "transportation workers" within the meaning of section 1's exemption. ( Garrido , supra , 241 Cal.App.4th at p. 840 , 194 Cal.Rptr.3d 297 ["Garrido was a 'transportation worker' under section 1 of the FAA ... [because he] worked as a truck driver transporting Air Liquide gases, frequently across state lines"]; Performance Team Freight Systems, Inc. v. Aleman (2015) 241 Cal.App.4th 1233 , 1240, 194 Cal.Rptr.3d 530 ["Truck drivers who cross interstate lin

2018It urges us to disagree with Garrido and instead adopt the rationale of Hill v. Rent-A-Center, Inc. (11th Cir. 2005) 398 F.3d 1286 ( Hill ), which concluded that the section 1 exemption applies only to transportation workers who are employed by an employer "within the transportation industry." ( Id . at p. 1290.) We decline the invitation because we question whether Hill's gloss on section 1 and the Circuit City decision are supported by the language of the statute.

2018Section 1 exempts " 'contracts of employment of ... any other class of workers engaged in foreign or interstate commerce' " without mentioning whether (or to what extent) their employers' business must be devoted to the transportation industry . ( Hill, supra, 398 F.3d at p. 1288 .) Similarly, the Circuit City court appeared to focus on the worker and his or her job description-rather than on the employer and whether the employer has other nontransportation profit centers-in assessing whether section 1's exemption was triggered.

2026Nor does New Prime support the proposition that Vela qualified as a “railroad employee.”6 6 The plaintiff in New Prime contended the section 1 exemption applied because he “qualifie[d] as a ‘worker[] engaged in . . . interstate commerce,’ ” not because he was a “railroad employee.” (New Prime Inc. v. Oliveira, supra, 586 U.S. at p. 113 .) Although the high court suggested that the term “ ‘railroad employee[]’ ” could encompass an individual working 13 Vela also relies on the definition of an “ ‘employee’ ” of a “ ‘carrier,’ ” i.e., a railroad, used in the Railway Labor Act of 1926 ( 45 U.S.C.

2024(New Prime Inc. v. Oliveira (2019) 586 U.S. 105, 108, 121 .) In determining whether a worker falls within the catchall category of section 1’s exemption—“any other class of workers engaged in foreign or interstate commerce”—we use a two-step analysis.

2018Courts have repeatedly concluded that contracts of employment with drivers whose routes include transporting goods across state lines *791 are "transportation workers" within the meaning of section 1's exemption. ( Garrido , supra , 241 Cal.App.4th at p. 840 , 194 Cal.Rptr.3d 297 ["Garrido was a 'transportation worker' under section 1 of the FAA ... [because he] worked as a truck driver transporting Air Liquide gases, frequently across state lines"]; Performance Team Freight Systems, Inc. v. Aleman (2015) 241 Cal.App.4th 1233 , 1240, 194 Cal.Rptr.3d 530 ["Truck drivers who cross interstate lin

2018Courts have repeatedly concluded that contracts of employment with drivers whose routes include transporting goods across state lines *791 are "transportation workers" within the meaning of section 1's exemption. ( Garrido , supra , 241 Cal.App.4th at p. 840 , 194 Cal.Rptr.3d 297 ["Garrido was a 'transportation worker' under section 1 of the FAA ... [because he] worked as a truck driver transporting Air Liquide gases, frequently across state lines"]; Performance Team Freight Systems, Inc. v. Aleman (2015) 241 Cal.App.4th 1233 , 1240, 194 Cal.Rptr.3d 530 ["Truck drivers who cross interstate lin

2017At issue in Van Dusen was whether arbitration agreements entered into by the defendant employers and the plaintiff interstate truck drivers came within an exemption under section 1 of the FAA for " 'contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.' " ( Van Dusen, supra , 654 F.3d at p. 840 .) The federal district court declined to rule on the applicability of the exemption, concluding that the question of whether the drivers were employees of the defendants was a question for the arbitrator to decide. ( Ibid. ) The

2017At issue in Van Dusen was whether arbitration agreements entered into by the defendant employers and the plaintiff interstate truck drivers came within an exemption under section 1 of the FAA for " 'contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.' " ( Van Dusen, supra , 654 F.3d at p. 840 .) The federal district court declined to rule on the applicability of the exemption, concluding that the question of whether the drivers were employees of the defendants was a question for the arbitrator to decide. ( Ibid. ) The

2026“The beverages, including some manufactured out-of-state, were sent first to an in-state warehouse and held for a short period of time, and then picked up by the driver and delivered to customers.” (Betancourt, at p. 559, citing Nieto, at p. 284.) These deliveries “were essentially the last phase of a continuous journey of the interstate commerce.” (Nieto, at p. 284; see also Rittman, supra, 971 F.3d at p. 916 [holding “Amazon packages do not ‘come to rest’ at Amazon warehouses, and thus the interstate transactions do not conclude at those warehouses”]; Carmona v. Domino’s Pizza, LLC (9th Cir.

2024We, however, are persuaded that there is “no clear conflict between Rittmann and Saxon.” (Carmona v. Domino’s Pizza, LLC (9th Cir. 2023) 73 F.4th 1135, 1137 (Carmona).)1 Saxon did not address whether last leg drivers could qualify for the FAA’s Section 1 exemption.

2019Philadelphia area would be within the residuary exemption, the plaintiff whose job was to closely manage, oversee and monitor those drivers would also be exempt]; Harden v. Roadway Package Systems, Inc. (9th Cir. 2001) 249 F.3d 1137, 1140 [finding that a delivery driver of interstate packages came within the exemption].) As one federal district court put it: “If there is one area of clear common ground among the federal courts to address this question, it is that truck drivers – that is, drivers actually involved in the interstate transportation of physical goods – have been found to be ‘trans

2019(See, e.g., Lenz v. Yellow Transp., Inc. (8th Cir. 2005) 431 F.3d 348 , 351 ["Indisputably, if Lenz were a truck driver, he would be considered a transportation worker under § 1 of the FAA"]; Palcko v. Airborne Express, Inc. (3d Cir. 2004) 372 F.3d 588 , 590, 593-594 ( Palcko ) [analysis of issue assumed that since truck drivers delivering interstate packages to customers in Philadelphia area would be within the residuary exemption, the plaintiff whose job was to closely manage, oversee and monitor those drivers would also be exempt]; Harden v. Roadway Package Systems, Inc. (9th Cir. 2001) 249

2026(Saxon, supra, 596 U.S. at p. 453 .) In holding the section 1 exemption applied, Saxon found it “plain that airline employees who physically load and unload cargo on and off planes traveling in interstate commerce are, as a practical matter, part of the interstate transportation of goods.” (Id. at p. 457.) Such workers are “intimately involved with the commerce (e.g., transportation) of that cargo. ‘[T]here could be no doubt that [interstate] transportation [is] still in progress,’ and that a worker is engaged in that transportation, when she is ‘doing the work of unloading’ or loading cargo f

2026(Betancourt, at p. 559; Nieto, at p. 279.) In Southwest Airlines Co. v. Saxon (2022) 596 U.S. 450 (Saxon), the United States Supreme Court instructed that courts must conduct a two-step analysis in deciding whether a worker falls within the FAA section 1 exemption.

2026As Saxon and other decisions instruct, the proper focus of our inquiry must be on the actual work being performed. ( Saxon, supra, 596 U.S. at pp. 455-456.) When such work plays a “direct and ‘necessary’ role” in the interstate commerce of goods (Saxon, at p. 451; Oritz, supra, 95 F.4th at p. 1162) and is part of a “continuous interstate transportation” (Rittmann, supra, 971 F.3d at p. 916 ), section 1 extends to that worker.

2026“The beverages, including some manufactured out-of-state, were sent first to an in-state warehouse and held for a short period of time, and then picked up by the driver and delivered to customers.” (Betancourt, at p. 559, citing Nieto, at p. 284.) These deliveries “were essentially the last phase of a continuous journey of the interstate commerce.” (Nieto, at p. 284; see also Rittman, supra, 971 F.3d at p. 916 [holding “Amazon packages do not ‘come to rest’ at Amazon warehouses, and thus the interstate transactions do not conclude at those warehouses”]; Carmona v. Domino’s Pizza, LLC (9th Cir.

2019(See, e.g., Lenz v. Yellow Transp., Inc. (8th Cir. 2005) 431 F.3d 348, 351 [“Indisputably, if Lenz were a truck driver, he would be considered a transportation worker under § 1 of the FAA”]; Palcko v. Airborne Express, Inc. (3d Cir. 2004) 372 F.3d 588, 590, 593-594 (Palcko) [analysis of issue assumed that since truck drivers delivering interstate packages to customers in 8.

2019(See, e.g., Lenz v. Yellow Transp., Inc. (8th Cir. 2005) 431 F.3d 348 , 351 ["Indisputably, if Lenz were a truck driver, he would be considered a transportation worker under § 1 of the FAA"]; Palcko v. Airborne Express, Inc. (3d Cir. 2004) 372 F.3d 588 , 590, 593-594 ( Palcko ) [analysis of issue assumed that since truck drivers delivering interstate packages to customers in Philadelphia area would be within the residuary exemption, the plaintiff whose job was to closely manage, oversee and monitor those drivers would also be exempt]; Harden v. Roadway Package Systems, Inc. (9th Cir. 2001) 249

2019Kan. 2004) 316 F.Supp.2d 1093, 1097 (Lorntzen); see Lenz v. Yellow Transp., Inc. (8th Cir. 2005) 431 F.3d 348, 351 (Lenz) [whether an employee who “works for a transportation company but is not a truck driver or transporter of goods” is a transportation worker is a “more difficult question”].) Suffice it to say there is no agreed-upon bright-line rule on who falls within the section 1 exemption.

2019Kan. 2004) 316 F.Supp.2d 1093 , 1097 ( Lorntzen ); see Lenz v. Yellow Transp., Inc . (8th Cir. 2005) 431 F.3d 348 , 351 ( Lenz ) [whether an employee who "works for a transportation company but is not a truck driver or transporter of goods" is a transportation worker is a "more difficult question"].) Suffice it to say there is no agreed-upon bright-line rule on who falls within the section 1 exemption.

2026(Fli-Lo Falcon, LLC v. Amazon.com, Inc. (9th Cir. 2024) 97 F.4th 1190, 1196-1197 [“for a contract to be a contract of employment covered by § 1, it must have a qualifying worker as one of the 4 The parties also dispute whether Vela established that the parties’ arbitration agreement was part of a “contract of employment.” We need not address this issue because Vela’s failure to establish he is either a “railroad employee” or transportation worker is dispositive. 5 As the United States Supreme Court has explained, “When the FAA was adopted, . . . grievance procedures existed for railroad employ

2026(Betancourt v. Transportation Brokerage Specialists, Inc. (2021) 62 Cal.App.5th 552 , 559; see Shearson/American Express v. McMahon (1987) 482 U.S. 220, 227 .) We review the trial court’s factual findings for substantial evidence and its conclusions of law de novo.