OPINION OF THE COURT
MATEY, Circuit Judge.
Robert Harper spends part of his time making deliveries for Amazon as a "flexible"
Robert Harper runs deliveries for Amazon under the "Amazon Flex" program. (App. at 44.) Amazon Flex supplements Amazon's traditional delivery services. Interested drivers use an app to sign up to drive packages from Amazon warehouses, affiliated grocers, and participating restaurants to home shoppers.
Harper signed up as a driver through the Amazon Flex phone app, where he clicked on a brightly colored button stating, "I AGREE AND ACCEPT" (in all caps) following the Terms of Service. (Opening Br. at 7.) The Terms noted, with still more capitalization, that the Amazon Flex driver who accepts:
(App. at 62.) The Terms of Service also included language specifying that the parties "agree[d] that the Federal Arbitration Act and applicable federal law will govern any dispute that may arise between the parties." (App. at 67.) And a choice-of-law provision provided that Washington law controls the rest of the Terms of Service. Harper admits that he agreed, clicking first to accept the full Terms and clicking
Amazon moved to enforce the arbitration clause in the Terms and compel arbitration under the FAA. Harper objected, arguing that New Jersey Amazon Flex drivers fall within the exemption for a "class of workers engaged in foreign or interstate commerce" provided in 9 U.S.C. § 1 because they make some deliveries across state lines. Amazon disagreed with that construction of federal law. But no matter, the company added, because the claim is also arbitrable under state law. Interpreting our prior decisions, the District Court denied Amazon's motion to compel arbitration. Construing the issue as one of fact, the District Court ordered discovery to determine whether Harper falls within the § 1 exception to the FAA by, among other acts, making deliveries from New Jersey to New York. The District Court declined to reach Amazon's alternative argument about state law, and Amazon timely appealed.
Congress limited the scope of the FAA by exempting the employment contracts of certain classes of workers engaged in foreign or interstate commerce. Whether that exemption applies is a question of law that, ordinarily, does not require fact-finding through discovery. Nor does the FAA require courts to ignore state law grounds for enforcing an agreement to arbitrate. Both issues require more consideration by the District Court on remand.
A. Section 1 of the FAA
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." 9 U.S.C. § 1. It is a "very particular qualification" attributed to pre-existing "alternative employment dispute resolution regimes for many transportation workers." New Prime, Inc. v. Oliveira, ___ U.S. ___, 139 S.Ct. 532, 537, 202 L.Ed.2d 536 (2019). Adding to § 1's language, we have applied the exception to cover employees in any transportation industry who "engage in the movement of interstate or foreign commerce or in work so closely related thereto as to be in practical effect part of it." Tenney Eng'g, Inc. v. United Elec. Radio & Mach. Workers of Am., (U.E.) Local 437, 207 F.2d 450, 452 (3d Cir. 1953) (en banc). Since then, the Supreme Court has cautioned courts to "construe the `engaged in commerce' language
Equally important, the "inquiry regarding § 1's residual clause asks a court to look to classes of workers rather than particular workers." Singh v. Uber Techs., Inc., 939 F.3d 210, 227 (3d Cir. 2019); see also Wallace, 970 F.3d at 800 (Section 1 asks "not whether the individual worker actually engaged in interstate commerce, but whether the class of workers to which the complaining worker belonged engaged in interstate commerce." (quotation marks and emphasis omitted)). That limitation flows from the ordinary meaning of § 1, which includes the "other class of workers engaged in ... commerce" as a "residual phrase, following, in the same sentence, explicit reference to `seamen' and `railroad employees.'" Circuit City, 532 U.S. at 114, 121 S.Ct. 1302.
Determining whether § 1's exclusion applies is a threshold inquiry because "a court must first know whether the contract itself falls within or beyond the boundaries of §§ 1 and 2." New Prime, 139 S. Ct. at 537. Doing so requires construing the ordinary meaning of § 1, as interpreted by our decisions,
B. The Co-Equal Role of Arbitration Under State Law
Assume, Amazon argues, that the § 1 exemption applies. If so, the parties might still have an enforceable agreement to arbitrate under state law. And if that is so, then why not answer that question of law before turning to discovery, mindful that fact-finding can always come later if necessary? We agree and hold this question must be resolved before turning to discovery.
1. The Scope of FAA Preemption
Begin with the scope of FAA preemption in § 2 of the Act.
That balance is seen here. If the § 1 exclusion applies, then the FAA does not. But the parties still have an agreement to arbitrate, and if federal law does not govern the arbitrability of their contract, some law must.
2. Choosing the Applicable Law
So what law applies? The agreement between Harper and Amazon answers that question or, at least, it tells us how the question will be answered. Recall how the agreement came to be. Working under the Amazon Flex program starts with a downloaded app and a few clicks. To join, willing drivers must accept the Terms of Service, agreeing to "resolve disputes" with Amazon "through final and binding arbitration." (App. at 62.) The Terms of Service state that "the Federal Arbitration Act and applicable federal law will govern any dispute that may arise between the parties." (App. at 67.) Everything else is governed by Washington law. (See App. at 67.) The Terms of Service are severable, and "[i]f any provision of th[e] Agreement is determined to be unenforceable," the rest of the agreement must "be enforced as if the unenforceable provisions were not present [such] that any partially valid and
In this language, Harper sees a hole that defeats the parties' bargain. He argues that because the agreement selects the FAA to govern arbitration, there is no law to apply if the § 1 exemption takes the FAA out. Two problems arise from that contention. First, state law grounds for arbitration may exist. Generally, a court can only determine whether state law provides grounds for arbitration by deciding what state law applies using the rules of the forum state. Gen. Ceramics Inc. v. Firemen's Fund Ins. Companies, 66 F.3d 647, 652 (3d Cir. 1995) (citing Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)). That is because our federal system "leaves to a state, within the limits permitted by the Constitution, the right to pursue local policies diverging from those of its neighbors." Klaxon, 313 U.S. at 496, 61 S.Ct. 1020. When engaging in substantive contractual interpretation, a federal court must look to the choice-of-law rules of the forum state, even where the contract includes a choice-of-law clause. Collins v. Mary Kay, Inc., 874 F.3d 176, 183 (3d Cir. 2017). That duty remains when the FAA is part of the contract because "[t]here is no language in the FAA that explicitly preempts the enforcement of state arbitration statutes." Palcko, 372 F.3d at 595. Finding the § 1 exemption applies does not mean all state law about arbitration vanishes. "[E]ven if an arbitration agreement is outside the FAA, the agreement still may be enforced." Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465, 1472 (D.C. Cir. 1997).
Second, and specifically, the Terms of Service need not be read to hinge arbitrability on the application of federal law. Equally plausible is a reading that creates an obligation to arbitrate all disputes and a separate, possibly severable, choice of federal law.
Of course, that does not mean Washington law controls, or that Harper and Amazon have an agreement to arbitrate under state law at all. These are questions best considered by the District Court. See Singleton v. Wulff, 428 U.S. 106, 120, 96 S.Ct. 2868, 49 L.Ed.2d 826 (1976) ("It is the general rule, of course, that a federal appellate court does not consider an issue not passed upon below."). A remand to fully consider arbitration under state law grounds is appropriate and, it turns out, agreeable to the parties.
3. State Law Questions of Arbitrability Should Be Resolved First
Finally, state law arbitration questions must be resolved before turning to questions
Recall that Singh adopts the test outlined in Guidotti, requiring courts to resolve a motion to compel arbitration "under a Rule 12(b)(6) standard without discovery's delay" when only facts alleged in the complaint are sufficient for a decision as a matter of law. Guidotti, 716 F.3d at 776 (internal quotation marks omitted). In challenges to arbitrability under § 1, that creates a three-part framework. At step one, using the traditional tools of statutory interpretation to analyze the facts of the complaint, a court must consider whether the agreement applies to a class of transportation workers who "engaged directly in commerce" or "work so closely related thereto as to be in practical effect part of it." Tenney, 207 F.2d at 452. If the class is outside that definition, then § 1 does not apply, and cannot serve as a defense to a motion to compel arbitration. If that analysis leads to murky answers, a court moves to step two and assumes § 1 applies, taking the FAA out of the agreement. But the court then considers whether the contract still requires arbitration under any applicable state law. After all, the parties' primary agreement is to arbitrate their disputes, so courts should explore both contractual routes to effectuate that agreement when one is called into question. If the arbitration clause is also unenforceable under state law, then the court reaches step three, and must return to federal law and decide whether § 1 applies, a determination that may benefit from limited and restricted discovery on whether the class of workers primarily engage in interstate or foreign commerce.
Reasonably, the District Court focused on the facts surrounding the class of workers to which Harper belongs. Our decision today clarifies the steps courts should follow —before discovery about the scope of § 1—when the parties' agreement reveals a clear intent to arbitrate. We reiterate that our decision does not suggest any particular view of the parties' agreement,
MATEY, Circuit Judge, concurring.
Nearly a century has passed since Congress codified the ancient practice
Similarly, reconsidering our decision in Tenney Eng'g, Inc. v. United Elec. Radio & Mach. Workers of Am., (U.E.) Local 437, 207 F.2d 450 (3d Cir. 1953) (en banc) presents an opportunity to return the exception in 9 U.S.C. § 1 to its textual parameters. Writing in a different era, and relying on analogy to the different formulation of the Federal Employers' Liability Act ("FELA"), 45 U.S.C. § 51 (1908), Tenney's construction of § 1 sweeps in a broader class of workers from a wider range of industries than the text allows. And with the rise of Internet-based commerce, Tenney's command to examine whether the work at issue is "closely related" to the transportation of interstate commerce could eventually make the exception to arbitration the new rule.
I. DETERMINING THE BEST READING OF 9 U.S.C. § 1
While the challenges presented by the judicially magnified presumptions of § 2 deserve a fresh look, that issue is not before us. The similarly stretched scope of § 1 is. And since our distant decision in Tenney seems to be at the root of more recent expansions of the exception, its reconsideration is warranted.
A. The Ordinary Path of Interpretation
In drafting the FAA, Congress included a specific exception for "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. Normally, we approach the work of statutory construction with a single mission to "interpret the words consistent with their ordinary meaning ... at the time Congress enacted the statute." Wis. Cent. Ltd. v. United States, ___ U.S. ___, 138 S.Ct. 2067, 2070, 201 L.Ed.2d 490 (2018) (alteration in original) (internal quotation marks omitted); see also United States v. Smukler, 991 F.3d 472, 482-83 (3d Cir. 2021). Context aids that mission, as "the meaning of a sentence [is] more than that of the separate words, as a melody is more than the notes." Bostock v. Clayton Cnty., Georgia, ___ U.S. ___, 140 S.Ct. 1731, 1827, 207 L.Ed.2d 218 (2020) (Alito, J., dissenting). As the Supreme Court has repeatedly directed, any matter of statutory interpretation comes with "an important caution in mind" that "if judges could freely invest old statutory terms with new meanings, we would risk amending legislation outside the `single, finely wrought and exhaustively considered, procedure' the Constitution commands." New Prime Inc. v. Oliveira, ___ U.S. ___, 139 S.Ct. 532, 539, 202 L.Ed.2d 536 (2019) (quoting INS v. Chadha, 462 U.S. 919, 951, 103 S.Ct. 2764, 77 L.Ed.2d 317 (1983)).
Tenney 's Analogy
But sometimes a prior judicial decision colors our conclusions. See United States v. Games-Perez, 667 F.3d 1136, 1142-43 (10th Cir. 2012) (Gorsuch, J., concurring in the judgment). That is the case with § 1 and the nearly seven decade-old decision in Tenney, involving a suit by a manufacturer against a labor union for breach of contract. The contract included an arbitration clause, a right invoked by the union. Seeking to avoid arbitration, the employer argued the workers fell under § 1 exemption. 207 F.2d at 452. Tenney answered that question not through textual construction, but by analogy, looking to the definition of "commerce" in FELA. Id. at 453. Tenney concluded Congress "must have had [FELA] in mind" when drafting the residual clause in § 1 of the FAA, given that Congress "incorporat[ed] almost exactly the same phraseology," that is, "engaged in commerce" and "engaged in interstate commerce," respectively. Id. Tenney then applied a test from a single FELA case to expand the inquiry from whether the employee was engaged in interstate transportation to whether the employee was engaged in interstate transportation or in work so closely related to it as to be practically a part of it. Id. (citing Shanks v. Del., Lackawanna & W. R. Co., 239 U.S. 556, 558, 36 S.Ct. 188, 60 L.Ed. 436 (1916)).
As a result, the exception for "seamen, railroad employees, or any other class of workers engaged in foreign or interstate
C. The Text of the FAA
There is, however, a better route drawn only from the text of the FAA. Remembering that "the words of a statute must be read in their context and with a view to their place in the overall statutory scheme," Parker Drilling Mgmt. Servs. v. Newton, ___ U.S. ___, 139 S.Ct. 1881, 1888, 204 L.Ed.2d 165 (2019) (quoting Roberts v. Sea-Land Servs., Inc., 566 U.S. 93, 101, 132 S.Ct. 1350, 182 L.Ed.2d 341 (2012)), I would examine the ordinary meaning of the § 1 exclusion in the context of the FAA.
1. Congress Drafted § 1 to Accommodate Existing Federal Laws
Recall the somewhat unusual phrasing of § 1: "nothing" in the FAA "shall apply" to "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." A precise definition, the exclusion is written to harmonize the "alternative employment dispute resolution regimes for many transportation workers" Congress created before adopting the FAA in 1925. New Prime, 139 S. Ct. at 537 (discussing Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 121, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001)). We know that because "[t]he wording of § 1 calls for the application of the maxim ejusdem generis, the statutory canon that where general words follow specific words in a statutory enumeration, the general words are construed to embrace only objects similar in nature to those objects enumerated by the preceding specific words." Circuit City, 532 U.S. at 114-15, 121 S.Ct. 1302 (cleaned up). Using this "maxim," that residual clause of "any other class of workers engaged in ... commerce" is "controlled and defined by reference to the enumerated categories of workers which are recited just before it." Id. at 115, 121 S.Ct. 1302. Unsurprisingly, the categories of "seamen"
Take "seamen," commonly understood as any "sailor" or "mariner"
And those definitions included procedures for resolving disputes. Congress addressed arbitration of seamen's claims in the Shipping Commissioners Act of 1872, ch. 322, §§ 25-26, 17 Stat. 262, 267, see Circuit City, 532 U.S. at 121, 121 S.Ct. 1302, while the Jones Act of 1920 provided "heightened legal protections (unavailable to other maritime workers) that seamen receive because of their exposure to the perils of the sea," and their "peculiar relationship to the vessel." Chandris, Inc. v. Latsis, 515 U.S. 347, 354-55, 115 S.Ct. 2172, 132 L.Ed.2d 314 (1995) (internal quotations omitted). That excluded "land-based maritime workers" who instead enjoyed protection under the Longshore and Harbor Workers' Compensation Act of 1927. Wilander, 498 U.S. at 347-48, 111 S.Ct. 807; Shade v. Great Lakes Dredge & Dock Co., 154 F.3d 143, 147-48 (3d Cir. 1998). Simply summarized, Congress exempted seamen from the Longshore and Harbor Workers' Compensation Act because they "preferred the remedy for damages under the [Jones Act]." Warner, 293 U.S. at 159-60, 55 S.Ct. 46.
"Railroad employee" disputes were addressed by Congress in the Transportation Act of 1920, Pub. L. No. 152, 41 Stat. 456 et seq., and then, "endeavor[ing] to establish a more practicable plan" to manage railroad labor relations, in the Railway Labor
All this to say that "seamen" and "railroad employees" were not random examples of the industries exempted from the FAA. Rather, they are specific classes of workers already subject to complex dispute-resolution schemes. The common key between both is "workers over whom the commerce power was most apparent." Circuit City, 532 U.S. at 120, 121 S.Ct. 1302. Congress tied the exception in § 1 not to a general notion of commercial conduct, or even transportation in general, but to the kinds of transportation work within "Congress' undoubted authority to govern." Id. at 120, 121 S.Ct. 1302. Having already passed laws to address the disputes of these industries uniquely within the Article I, § 8 commerce power, Congress understandably exempted those same transportation workers from the new FAA "for the simple reason that it did not wish to unsettle established or developing statutory dispute resolution schemes covering specific workers." Id. at 121, 121 S.Ct. 1302. Tenney fights that narrow construction and, in adding those who "work so closely related" to the class of rail and sea workers identified, also runs into the limits on Congress's legislative authority over commerce.
2. The FAA Exemption Focuses on Class
Informed by history, and framed in context of the entire FAA, Tenney's expansive reach is difficult to square with the limits on Congress's commerce power and the "narrow construction" of the § 1 exemption repeatedly, and recently, provided by the Supreme Court. Circuit City, 532 U.S. at 118, 121 S.Ct. 1302; see also Wallace v. Grubhub Holdings, Inc., 970 F.3d 798, 800-02 (7th Cir. 2020); Rittmann v. Amazon.com, Inc., 971 F.3d 904, 931-33 (9th Cir. 2020) (Bress, J., dissenting). So what is the best reading of § 1? The answer appears in the text: whether a "class of workers," not any individual worker, is "engaged in foreign or interstate commerce" as an ordinary and regular part of the class of work. That turns our focus away from the kind of businesses to the class of workers employed by the firm engaged in interstate or foreign commerce. True, tricky questions about some worker classes may persist. But those questions should focus on the class of work performed, rather than the function of individual workers or the scope of a company's operations.
That focus on "class," not individual work, follows from the residual clause, which the Supreme Court told us should be "controlled and defined by reference to the enumerated categories of workers which are recited just before it." Circuit City, 532 U.S. at 115, 121 S.Ct. 1302. We are then instructed to apply ejusdem generis, id. at 114, 121 S.Ct. 1302, to find the sorts of workers who are like "seamen" and "railroad employees": the Court called them "transportation workers." Id. at 119, 121 S.Ct. 1302.
To figure out who is a "transportation worker," we must ask whether a plaintiff is in the class of workers "actually engaged in the movement of goods in interstate commerce." Id. at 112, 121 S.Ct. 1302. Section 1 should apply, then, to employment contracts of a class of workers "actually engaged in the movement of goods in interstate commerce in the same way that seamen and railroad workers are." Asplundh Tree Expert Co. v. Bates, 71 F.3d. 592, 601 (6th Cir. 1995). Is the interstate movement of goods a "central part of the class members' job description"? Wallace, 970 F.3d at 801. Does the class of workers operate "in a cross-boundary capacity" the way seamen and railroad workers do? Rittmann, 971 F.3d at 927 (Bress, J., dissenting).
These are the questions to ask under an ordinary reading of the statute. Questions that Tenney takes out of the equation in favor of an examination of work in general. Respectfully, it is appropriate to reconsider that result before businesses serving wine connoisseurs, pizza lovers, Etsy enthusiasts, and home shoppers all find themselves redefined as sailors. A result avoided by the best reading of § 1.
Returning the FAA to its original meaning will likely displease those hoping to avoid the courtrooms where judges and juries have resolved disputes since the Founding. Nor will it satisfy those looking to exempt ever-more employees from arbitration. Enforcing rather than editing laws does not always please every crowd. See
SHWARTZ, J., dissenting.
Robert Harper delivered packages for Amazon. Delivery drivers like Harper operated under a "Terms of Service" agreement ("TOS"). Section 11 of the TOS was entitled "Arbitration Agreement." It provided, among other things, that the driver and Amazon would resolve disputes through "final and binding arbitration." App. 62 (capitalization omitted). The parties further "agree[d] that the Federal Arbitration Act ["FAA"] and applicable federal law will govern any dispute that may arise between the parties." App. 67. Section 12 had a separate choice of law provision that applied to the remainder of the TOS. It stated that the TOS is "governed by the law of the state of Washington without regard to its conflict of laws principles, except for [the arbitration provision]... which is governed by the [FAA] and applicable federal law." App. 67. Thus, the TOS contemplated that federal law would govern the arbitration provision.
Harper filed a complaint alleging that Amazon violated the New Jersey wage and hour laws. In response, Amazon moved to compel arbitration based on federal and state law. The District Court examined the TOS, observed that the FAA "govern[ed] all disputes related to arbitration," App. 18, and attempted to determine whether Harper is a member of a class of workers that are exempt from the FAA under § 1's residual clause, 9 U.S.C. § 1. Because the pleadings lacked sufficient facts to determine whether the FAA applied, the District Court ordered limited discovery on this issue, consistent with
My colleagues agree that the District Court properly applied
First, the TOS's arbitration provision states that the parties will resolve disputes through arbitration under the FAA and applicable federal law. Importantly, the TOS's choice of law clause disclaims the applicability of Washington law to arbitration issues and repeats that the FAA governs the TOS's arbitration provision. The District Court's decision to first determine whether the FAA applies appropriately sought to effectuate the plain language of the agreement, a core tenet of common law contractual interpretation.
Second, binding precedent supports the sequence that the District Court followed by first seeking to determine whether the parties' chosen law, here, the FAA, applies. Start with
We have applied the same approach even where the parties agree that the FAA and/or a specific state's law governs. In
Third, two circuit courts have evaluated the very agreement at issue in this case and each first examined, albeit without discovery, whether the FAA applies or whether employees holding jobs like Harper belong to a class of workers exempt from the FAA.
The District Court, relying on and acting in accordance with this body of authority, followed suit. It correctly examined the agreement, observed that the agreement exclusively selected the FAA as the law that applied to the arbitration provision, sought to determine whether the FAA governed the class of workers to which Harper belongs, concluded that the factual record was insufficient to make such a conclusion, ordered the parties to engage in limited discovery consistent with