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Flinn v. Ceva Logistics U.S., Inc.

United States District Court, S.D. California

August 25, 2014

DAVID FLINN, an individual, Plaintiff,
CEVA LOGISTICS U.S., INC., et al., Defendants.


THOMAS J. WHELAN, District Judge.

Pending before the Court is Defendants CEVA Logistic U.S., Inc.'s, CEVA Freight, LLC's, and EGL Eagle Global Logistics, LP's (collectively "Defendants") motion to compel arbitration. Plaintiff David Flinn opposes.

The Court decides the matter on the papers submitted and without oral argument. See S.D. Cal. Civ. L. R. 7.1(d.1). For the reasons discussed below, the Court DENIES Defendants' motion to compel arbitration [Doc. 4].


From 1998 until approximately August 2007, Plaintiff David Flinn worked as a pick-up and delivery driver for Defendant EGL Eagle Global Logistics, LP ("EGL"). ( Flinn Dec. [Doc. 5-1], ¶ 2[1]; Bateman Dec. [Doc. 4-2], ¶ 5.) Flinn worked exclusively out of EGL's San Diego depot facility. ( Flinn Dec., ¶ 5.) In order to apply for the job, Flinn completed an application, a drug test, and he signed a pre-printed truck lease and services contract. ( Id., ¶ 3.) Because Flinn had no prior experience as a delivery driver, EGL provided him with training. ( Id. )

In August 2007, EGL "combined" with TNT Logistics and eventually began operating as Defendant CEVA Freight, LLC ("CEVA"). ( Bateman Dec., ¶¶ 4, 6-8.) Flinn continued to transport freight for CEVA out of its San Diego Depot facility until he was terminated on October 10, 2012. ( Flinn Dec., ¶¶ 5, 30.)

Flinn owned the truck used for deliveries, but CEVA maintained strict requirements regarding the appearance of his truck and maintenance. ( Flinn Dec., ¶ 13.) CEVA required a white truck that was kept clean and free of any damage, and was inspected on a routine basis by a mechanic. ( Id. ) Additionally, CEVA required Flinn's truck to display a large CEVA logo covering an area approximately 26 feet long, as well as other CEVA markings. ( Id., ¶ 12.) From 2005 until October 2012, Flinn's truck was generally left at EGL/CEVA's facility when not in service. ( Id., ¶ 16.) Flinn was also required to wear a CEVA uniform. ( Id., ¶ 14.)

Flinn generally worked as a "floater" for CEVA, making pick-ups and deliveries in whatever geographic area assigned to him in a given day by the CEVA dispatcher. ( Flinn Dec., ¶ 15.) CEVA instructed Flinn when to show up to receive his assignment from the dispatch office. ( Id., ¶ 16.) Throughout the day, CEVA dispatchers and others would contact Flinn about the status of assignments, and to provide him with any additional pick-ups. ( Id., ¶ 20.) Flinn generally returned to CEVA's depot at the end of the day to return any undelivered freight, and C.O.D. monies or freight he picked up. ( Id., ¶ 24.)

In approximately October 2010, Reed Peterson, Flinn's manager, gave him a 51-page document entitled, CEVA Freight, LLC Agreement For Leased Equipment and Independent Contractor Services (the "Agreement").[2] ( Flinn Dec., ¶ 6.) Peterson told Flinn that he needed to sign the Agreement in order to continue working for CEVA. ( Id. ) Flinn asked Reed and others at CEVA questions about the Agreement, but was told that they could not answer questions and there was no negotiating. ( Id., ¶ 7.) CEVA also refused to explain or discuss the document in any detail. ( Id. )

The Agreement also was sent to other San Diego drivers. ( Flinn Dec., ¶ 8.) While Flinn and the other drivers expressed concerns over certain payment provisions, Flinn was unaware that the Agreement included an arbitration and choice-of-law provision. ( Id., ¶ 10.) Nor did anyone from CEVA ever mention or alert Flinn to the provision, which is located on page "20 of 51." ( Id .; Agree., § 6.06.)

The arbitration and choice-of-law requirements are included in the same provision entitled, Arbitration and Governing Law. ( Agree., § 6.06) The provision provides that "any dispute arising out of or relating to this Agreement... or the legal relationship between the parties, or of violations of the requirements of any applicable... local, state, federal or foreign [law]... shall be submitted to final and binding arbitration in accordance with (1) the Commercial Arbitration Rules... of the American Arbitration Association...." ( Agree., § 6.06(c).) The provision also provides that Texas law governs "any disputes about the character and nature of the legal relationship between the parties, and any and all other disputes between Contractor and Company...." ( Id., § 6.06(a).) In order to keep his job, Flinn signed the Agreement on October 7, 2011. ( Flinn Dec., ¶ 11; see Agree. )

Approximately a year after signing the Agreement, on October 10, 2012, Flinn was terminated. ( Flinn Dec., ¶ 30.) Flinn then applied for unemployment benefits, and his application was approved. ( Id., ¶ 31.)

In January 2013, CEVA appealed Flinn's award of unemployment benefits. ( Flinn Dec., ¶ 32.) After a hearing, the California Unemployment Insurance Board's administrative law judge found Flinn was a CEVA employee and affirmed the award. ( Id., ¶ 35, Ex. E.) CEVA appealed again, and the Unemployment Insurance Appeal Board affirmed the administrative law judge's ruling. ( Id., ¶ 37, Ex. F.)

On October 3, 2013, Flinn filed this action alleging: (1) failure to pay wages, including overtime and minimum wages, and failure to timely pay wages due; (2) failure to provide itemized wage statements; (3) failure to provide meal and rest periods; (4) intentional misclassification and unlawful deductions from wages; (5) failure to reimburse employee expenses; (6) PAGA penalties for such violations; and (7) unfair competition. In response, CEVA filed the present motion to compel arbitration.[3]


Flinn does not dispute that his claims fall within the scope of the arbitration agreement. Instead, Flinn contends that the agreement is unconscionable and thus not enforceable. However, before evaluating whether the agreement is unconscionable, the Court first must resolve whether the Federal Arbitration Act applies.

A. The Federal Arbitration Act does not apply to agreements involving workers engaged in interstate commerce.

"[A] contract evidencing a transaction involving commerce, '... is subject to" the Federal Arbitration Act ("FAA"). Chiron Corp. v. Ortho Diagnostic Sys., Inc. , 207 F.3d 1126, 1130 (9th Cir. 2000) (quoting 9 U.S.C. § 2); see also Allied-Bruce Terminix Companies, Inc. v. Dobson , 513 U.S. 265 (1995). The FAA provides that any arbitration agreement within its scope "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. When a contract falls under the FAA, "[c]ourts must apply ordinary state law principles in determining whether to invalidate an agreement to arbitrate." Coleman v. Jenny Craig, Inc., 2012 WL 3140299 at *2 (S.D. Cal., 2012)(quoting Ferguson v. Countrywide Credit Indus. , 298 F.3d 778, 782 (9th Cir.2002).) Thus, arbitration agreements may be invalidated by "contract defenses, such as fraud, duress, or unconscionability, but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue." AT&T Mobility LLC v. Concepcion , 563 U.S. ___, 131 S.Ct. 1740, 1746 (2011) (quoting Doctor's Assocs., Inc. v. Casarotte , 517 U.S. 681, 687 (1996)). "[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp. , 460 U.S. 1, 24-25 (1983).

The FAA also excludes certain contracts from its coverage. Specifically, the FAA provides that "nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. The party seeking to invoke this exemption bears the burden of establishing that it applies. Owner-Operator Indep. Drivers Ass'n, Inc. v. Swift Transp. Co. , 288 F.Supp.2d 1033 (D. Ariz. 2003).

Here, Flinn contends that the FAA does not apply because he is a worker engaged in interstate commerce. ( Opp'n, 24:4-16.) Defendants do not dispute that the Agreement "facilitates interstate commercial transactions, " but instead dispute that Flinn was ...

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