Mass. top court leery of Grubhub drivers' bid to avoid arbitration

"Grubhub" delivery riders congregate between deliveries in midtown Manhattan in New York
Riders for "Grubhub" food delivery service congregate between deliveries in midtown Manhattan in New York City, New York, U.S., July 9, 2020. REUTERS/Mike Segar
  • Drivers say involvement in interstate commerce exempts them from arbitration
  • Lawsuit claims Grubhub drivers are company's employees
  • Ruling against Grubhub was a national outlier

(Reuters) - Judges on Massachusetts' top state court said on Monday Grubhub Inc delivery workers are distinct from the "last-mile" drivers that some courts have said are exempt from arbitrating legal claims, casting doubt on a bid by Grubhub workers to keep a proposed class action in court.

The three judges on the seven-member Massachusetts Supreme Judicial Court who spoke during oral arguments seemed skeptical that Grubhub drivers, who deliver products from restaurants and convenience stores, are "engaged in interstate commerce" and thus exempt from the Federal Arbitration Act.

The plaintiffs claim Grubhub misclassified drivers as independent contractors rather than its employees and deprived them of the minimum wage, and that agreements they signed to bring legal disputes in individual arbitration are invalid under the FAA.

Gig economy companies like Grubhub rely on the use of independent contractors, who are not afforded the same legal protections as employees, to contain costs, but have faced a wave of misclassification lawsuits in recent years.

A state judge last year rejected Grubhub's motion to send the lawsuit to arbitration, saying the drivers represented the last leg of an interstate journey. Grubhub appealed.

The Supreme Judicial Court judges on Monday said the work performed by Grubhub drivers was different from last-mile deliveries made by Inc drivers, whom two appeals courts have said qualify for the FAA exemption.

“These food service people, their primary responsibility is moving [goods] from one local spot to another,” Justice Scott Kafker said. “The goods are not sort of going across the country the way Amazon packages are.”

Grubhub's lawyer, Theane Evangelis said a delivery driver must be part of the continuous flow of goods through interstate commerce to qualify for the FAA exemption. But Grubhub deliveries are completely separate from goods arriving at stores or restaurants, she said.

Eric LeBlanc, who represents the plaintiffs, said the drivers are part of the flow of commerce because the businesses that Grubhub contracts with only order products they expect will be purchased by customers.

Grubhub is backed by Uber Technologies Inc, Lyft Inc and the U.S. Chamber of Commerce, who said in amicus briefs that liberally applying the FAA exemption would nullify millions of arbitration agreements signed by employees and gig workers.

The 7th U.S. Circuit Court of Appeals in a 2020 ruling said Grubhub drivers were not engaged in interstate commerce and had to arbitrate misclassification claims.

The 1st and 9th Circuits last year came to the same conclusion in cases involving Lyft and Uber drivers, after both of those courts had also held that Amazon drivers did qualify for the exemption.

The case is Archer v. Grubhub Inc, Massachusetts Supreme Judicial Court, No. SJC-13228.

For the plaintiffs: Eric LeBlanc of Bennett & Belfort

For Grubhub: Theane Evangelis of Gibson, Dunn & Crutcher

(NOTE: A previous version of this article incorrectly stated that Scott Kafker was the chief justice of the Massachusetts Supreme Judicial Court. Kafker is an associate justice of the court.)

Read more:

Grubhub drivers not exempt from arbitrating wage claims - 7th Circuit

Amazon asks SCOTUS to rethink cert denial in 'last-mile' case

Uber drivers must arbitrate Mass. misclassification claims – 9th Circuit

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Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at