Domino’s sells ingredients used to make pizzas to its franchisees. As relevant to this case, Domino’s buys those ingredients from suppliers outside of California, and they are then delivered to Domino’s Southern California Supply Chain Center. At the Supply Center, Domino’s employees reapportion, weigh, and package the relevant ingredients for delivery to local franchisees but do not otherwise alter them.

The plaintiff drivers (“D&S drivers”), employees of Domino’s, then deliver the ingredients in response to orders from Domino’s California franchisees.

Edmond Carmona and two other “D&S drivers filed a putative class action against their employer, Domino’s Pizza in 2020, alleging various violations of California labor law. Each plaintiff’s agreement with Domino’s requires arbitration of “any claim, dispute, and/or controversy” between them.

But the federal district court denied Domino’s motion to compel arbitration. The 9th Circuit Court of Appeals previously affirmed the district court’s denial of Domino’s motion to compel arbitration, holding that because the drivers were a “class of workers engaged in foreign or interstate commerce,” their claims were exempt from the Federal Arbitration Act by 9 U.S.C. § 1.

But the U.S. Supreme Court granted Domino’s Petition for Certiorari, vacated the 9th Circuit decision, and remanded the case for reconsideration in light of Southwest Airlines Co. v. Saxon, 142 S. Ct. 1783 (2022).

After remand from the Supreme Court, the 9th Circuit Court of Appeals again reaffirmed the trial court’s denial of Domino’s arbitration petition, and distinguished the application of the Southwest decision from the Domino case in its published decision of Carmona v Domino’s Pizza – 21-55009 (July 2023).

In Saxon the Supreme Court used a fact-specific test to determine if a worker is exempt from the FAA under 9 U.S.C. § 1. This test should be focused on “the actual work that the members of the class . . . typically carry out” in that business rather than simply the employer’s business.

In Saxon the Supreme Court held that an employee who “frequently loads and unloads cargo on and off airplanes that travel in interstate commerce” was engaged in interstate commerce. Id. at 1793. The critical question is whether the workers are actively “engaged in transportation” of goods in interstate commerce and play a “direct and necessary role in the free flow of goods across borders.”

In finding that the cargo workers met this description, the Court specifically rejected Southwest’s argument that the cargo workers must themselves cross state lines to be engaged in interstate commerce.

However the 9th Circuit pointed out that the Saxon decision did not address the question in the Domino’s case. Rather, the Saxon Court expressly pretermitted whether “last leg” drivers like the D&S drivers in this case qualified for the exemption.

The decision after remand in the Domino’s case squarely rested upon the 9th Circuit reading of Rittmann v. Amazon.com, Inc., 971 F.3d 904 (9th Cir. 2020), “a case whose continued validity Saxon expressly declined to address.”

Rittmann confronted whether delivery drivers who transported goods from Amazon warehouses to in-state consumers were exempt from the FAA under § 1, and concluded that, because the Amazon goods shipped in interstate commerce were not transformed or altered at the warehouses, the entire journey represented one continuous stream of commerce.

Here in the Domino’s case the issue is whether the D&S drivers operate in a single, unbroken stream of interstate commerce that renders interstate commerce a central part of their job description. The pause in the journey of the goods at the warehouse alone does not remove them from the stream of interstate commerce.

“Because the goods in this case were inevitably destined from the outset of the interstate journey for Domino’s franchisees, it matters not that they briefly paused that journey at the Supply Center.”

After SCOTUS Remand, 9th Circuit Reaffirms its Denial of Employer’s Arbitration