Appeals court orders judge to redo UPS driver’s arbitration ruling

Orr worked as a Seasonal Support Driver for UPS in late 2023, collecting packages from other drivers and delivering them to their final stops. When she applied through an online UPS portal, she signed an “Arbitration Agreement/Seasonal Hiring Agreement.”

She later sued in California state court, raising five state law claims – several on behalf of three proposed classes – including an allegation that UPS failed to pay Seasonal Support Drivers their required “reporting time pay.” She then added a sixth claim under California’s Private Attorneys General Act, or PAGA. UPS moved the case to federal court and asked the judge to compel arbitration.

The judge did exactly that, sending Orr’s individual claims to arbitration while pausing the class claims. But the court refused to decide one threshold question: whether the Federal Arbitration Act or California’s arbitration law governed the agreement. The reasoning was that the “result is the same” under either.

The Ninth Circuit disagreed. Pointing to the Supreme Court’s decision in New Prime Inc. v. Oliveira, the panel held that a court, not an arbitrator, must decide whether the FAA’s “contracts of employment” exclusion under 9 U.S.C. § 1 applies before sending a case to arbitration. That exclusion covers “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”

The panel did not decide whether Orr’s agreement falls within that exclusion – it said the district court has to take that up first. In a footnote, the opinion flagged a recent Supreme Court case, Flowers Foods, Inc. v. Brock, that addresses the same § 1 issue for employees who deliver packages to their final destination.