Wage and overtime suit sent to arbitration

Where drivers alleged they were misclassified as independent contractors under Massachusetts law, but their independent contractor agreements delegated any challenge to the interpretation or application of the arbitration provision to the arbitrator, the arbitrator will determine the arbitrability of the choice-of-law for plaintiffs’ substantive wage and overtime claims.

Background

Anderson Buckmire and Justin Nardone filed a complaint seeking class certification and alleging LaserShip Inc. misclassified them as independent contractor, violated Massachusetts pay statutes and was unjustly enriched. The issue before the court is whether to grant defendant’s motion to compel arbitration under the Virginia Uniform Arbitration Act, or VUAA.

Waiver

The independent contractor agreement, or ICA, provides that, if a court finds the class action waiver unenforceable, it is not severable and the arbitration provision is rendered null and void in its entirety. Accordingly, the first question is whether the class action waiver is enforceable.

Plaintiffs argue that under Virginia choice-of-law rules, Massachusetts substantive law applies; thus, because the class action waiver violates Massachusetts law, the class action waiver is unenforceable and renders the arbitration provision null and void. But it is undisputed that the ICA contains a broad choice-of­ law provision naming Virginia law as controlling. Thus, under Virginia choice-of-law rules, Massachusetts law does not oust the parties’ contractual choice of Virginia law and the parties’ class action waiver is enforceable.

Agreement

The court next turns to the question of whether the arbitration provision in the ICA is valid and enforceable under the VUAA. Under the VUAA, “[a] written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable, except upon such grounds as exist at law or in equity for the revocation of any contract.” While the VUAA does not specify what grounds “exist[ing] at law or in equity” would merit the revocation of a contract, under the Federal Arbitration Act, such grounds include “fraud, duress, and unconscionability.”

Plaintiffs do not allege any kind of fraud, duress or unconscionability, and a review of the facts reveals no such problems with the provision itself or the means by which it was adopted. Defendant alleges that workers seeking to sign an ICA could review the ICA on paper or electronically, could ask questions about the ICA and were given time and opportunity to consult other people before signing.

Critically, the ICA gave workers 15 days from the effective date of the ICA to notify defendant in writing that they were opting out and stated that electing to opt out did not affect the execution of the rest of the ICA or result in “any form of penalty, retaliation, or disadvantaging” to the worker. Defendant alleges, and plaintiffs do not contest, that neither Buckmire nor Nardone elected to opt out of the arbitration provision.

Plaintiffs argue that the class action waiver renders the entire arbitration provision “unenforceable as violative of Massachusetts public policy.” That class action waivers are disfavored by Massachusetts public policy is of no effect and does not constitute a ground justifying revocation of the arbitration provision here.

Plaintiffs also invoke the prospective waiver doctrine, arguing that the forum selection and choice-of-law provisions in the ICA “operate[] in tandem as a prospective waiver of a party’s right to pursue statutory remedies,” thus, “depriv[ing] out-of-state workers of the wage protections of [Massachusetts].” However the prospective waiver doctrine applies to attempted waivers of federal substantive statutory rights. In this case, plaintiffs do not argue, nor is there evidence to support the position, that enforcing the arbitration and choice-of-law provisions pursuant to Virginia law would prospectively waive plaintiffs’ rights under federal law.

The fact that Virginia potentially affords its workers narrower overtime and wage rights than Massachusetts does not mean plaintiffs are “wholly” left without federal remedies or other state remedies under Virginia law. Furthermore, plaintiffs cite no authority to support the proposition that a valid arbitration agreement should be revoked because the substantive law that potentially applies is unfavorable to one of the parties.

Applicable law

Plaintiffs contend their dispute over choice-of-law – that Massachusetts substantive law and not Virginia substantive law applies to their wage and overtime claims – is not arbitrable. But the delegation sub-provision relevantly states that the arbitrator “shall decide all issues arising out of or relating to the interpretation or application of this Arbitration Provision, including the enforceability, revocability or validity of this Arbitration Provision or any portion of it[.]”

By requiring that any challenge to the interpretation or application of the arbitration provision be submitted for arbitration, this language “clearly and unmistakably delegates arbitrability issues to an arbitrator.” Thus, this court finds that it is properly for the arbitrator to determine the arbitrability of the choice-of-law for plaintiffs’ substantive wage and overtime claims.

Defendants’ motion to compel arbitration granted.

Buckmire v. LaserShip Inc., Case No. 1:20-cv-01493, Sept. 29, 2022. EDVA at Alexandria (Giles). VLW 022-3-444. 19 pp.