Man: This is SJC-13228, Veronica Archer, the Grubhub Inc.
-: Great.
Okay, Attorney Evangelis.
-: May it please the court.
Theane Evangelis on behalf of Grubhub.
I'm joined by my colleagues,
Blaine Evanson and Joshua Wisneski.
The superior court's decision below on section one
of the FAA is inconsistent with the rulings
of courts in the Commonwealth and across the country.
If this court were to affirm,
it would create a direct conflict with the first, seventh,
ninth, and 11th circuit Courts of Appeals,
all of which have held that local delivery of goods
or passengers that previously traveled
in interstate commerce do not fall
within section one of the FAA.
-: Let me ask you, let's assume that Wallace is right
and the United States District Court
for the District of Massachusetts case isn't right,
as it relates to these prepared meals and that the customer
that we have in mind for the ingredients is the restaurant.
Assume that's right.
What about the prepackaged from the convenience stores?
What about those cases that talk
about the last mile travelers as it relates
to the prepackaged goods?
Just put the restaurants aside for the moment.
-: Thank you Justice Lowy.
So the result is exactly the same
because this is not last mile delivery of goods.
And in Wallace versus Grubhub,
it involved exactly the same class of workers.
And then Judge Amy Coney Barrett explained
that the central job description of Grubhub drivers was not
to move goods across state lines.
That's exactly the situation here.
And the last mile cases are totally different.
They're worlds away from what we have here
because those involve a continuous stream
of interstate commerce, whereby the goods are procured
from out-of-state to the end consumer
in one continuous transaction.
Here, we have goods that may have ended up
at a local restaurant or a store.
They came from out-of-state potentially,
but they reached their intended recipient
when they got to the restaurant or they got to the store.
It doesn't matter if it's a pizza made
from the tomato sauce that came from Italy.
It doesn't matter if it's a package good
from a convenience store.
All of those things are at rest.
And it exactly--
-: Well, I understand and appreciate your argument
about the ingredients and the restaurants.
And also that Walling versus Jackson Paper
is not an FAA case, but nonetheless,
going back to the convenience stores
and the prepackaged goods,
why isn't the end customer there that is contemplated,
the customer who is having that last step of the delivery
to his or her home?
-: Because the intended final recipient...
We have to ask when the good leaves its place,
it's home in out-of-state somewhere,
where is it intended to end up?
What's the end of that transaction?
The end of that transaction is the local store.
So that's the end of that journey.
And then a subsequent separate journey might happen,
and nobody knows what that is at that point.
And the cases involving the FLSA, the other statutes
that the plaintiffs have relied on, like Walling,
actually prove my point because in Walling,
if you recall,
there were two separate fact patterns at issue,
one was a special order that was brought in
from out of state for the local consumer or local customer,
and that was considered to be in interstate commerce,
but goods that were delivered to the distributor
and held in local stock for some later sale
or later transaction, those were not an interstate commerce.
And the Higgins case that was decided the same day
by the Supreme court made that same distinction.
And this is, again, the courts that have found
that last mile delivery does fall within section one,
and I think, there's serious question
about whether that correct, but it doesn't matter
for our purposes because we're so far removed from that.
But those courts have also found that local transportation
that's divorced from an interstate trip does not fall
within section one.
So the first circuit in Waithaka said,
Amazon Flex driver yes falls within section one,
but in Cunningham said that Lyft does not fall
within section one, even though in
that case I think there was an enormous percentage
of passengers who were being picked up at Logan Airport.
They came from out-of-state likely,
and it didn't matter because as the
U.S. Supreme Court said in Yellow Cab,
that is the sort of trip that is local.
It is not in interstate commerce.
And again, the ninth circuit in Rittmann went one way
on last mile delivery, but then in Grice and Capriel,
went the other for local transportation.
And it specifically called out Postmates and DoorDash
who are exactly similar to what we have here.
And in both Capriel and Rittmann the court said,
"Well, of course local delivery is different
"and doesn't fall in nature."
-: Are there any cases by any court
that besides the superior court here
that have found this kind
of restaurant delivery workers covered,
that they are interstate transportation workers?
Are we a total outlier in the country?
-: Yes, your honor, this decision isn't a total outlier,
and actually quotes in the federal district court
in Massachusetts has said
that--
-: No, I saw Justice Felani decided the other way.
So, but again, is there any cases out there
where Grubhub or restaurant people have been found this way?
'cause, I mean, I understand they pick up a mustard
or a ketchup and include it.
I mean, that really can't be
what we're talking about, can it?
I mean, you got a sealed mustard and ketchup.
-: That's exactly right your honor.
There is no other case that I'm aware of.
Every so single case has come out the other way.
This decision is an outlier, and--
-: Do you think your reason for that is
because it focuses on the goods
as opposed to what the employee is doing?
-: I think that is the error in the decision, exactly.
And as Wallace explains,
you have to look at what the worker is doing.
And the text of section one and Hamrick
from the 11th circuit explains this very concisely.
The text of section one focuses on the worker being engaged
in foreign or interstate commerce.
It doesn't talk about where the good has been.
So I think that is where the court--
-: Well, but the Amazon cases...
And that's an overread cause the Amazon cases, those guys,
they deliver within their local community,
but they're part of a sort of a flow
that goes across the country from, that's different.
I mean, but I just see these food service people,
their primary responsibility is moving it
from one local spot to another.
And the goods are not sort of going
across the country the way the Amazon goods are.
But just, yeah.
-: Exactly, exactly.
This is not part of a continuous stream
of interstate commerce.
There's no continuity of movement.
This decision is a total outlier for that reason, because...
And again, this is such an expansive view.
It runs headlong into what the Supreme Court told us
in Circuit City not to do.
It would sweep in all sorts of local delivery,
and the court in Wallace explain that.
And I think the fact that there's a prepackaged mustard
or napkins or forks, or even prepackaged sodas
or other goods...
And there's another case from the Northern District
of Illinois, Young versus Shipp,
which dealt with deliveries from local stores.
It wasn't just food items but it was local stores.
And that's the same as Hamrick from the 11th circuit.
So it doesn't matter really
whether this is a prepackaged good
or whether it's a passenger.
And I think the passenger cases,
Yellow Cab is exactly on point,
and courts across the country have uniformly agreed
that even where the passenger came from is at an airport,
I don't think there's...
That's clearly someone who probably came from out-of-state.
Doesn't matter because this
is a totally separate transaction.
And when the good came into the state,
it wasn't intended for that end customer
who ordered it through the Grubhub app,
it was intended for the store or the restaurant.
-: And again, -: Right.
-: And that--
-: That point council, sorry to interrupt you,
that point is important to your definition
of why the continuity has been interrupted, right?
The person who, or entity that has ordered the good
interstate has received the good.
And we don't know that Justice Wendlandt
is now ordering a bag of potato chips
in her home in Massachusetts from a Massachusetts entity.
At the time it's ordered for its interstate journey,
that journey ends at the 7-Eleven nearby.
-: That's exactly right Justice Wendlandt.
And again, going back to the long line
of Supreme Court cases on similar issues,
Atlantic Coastline Railroad versus Standard Oil,
that was one where oil was delivered into Florida
and there was no particular destination once it got there,
and it was stored.
That was the end of the interstate trip.
And then later when it was delivered to a later customer,
that was not an interstate commerce.
So again, that case, Higgins Knight and McCluskey,
are other cases.
These are all cases from the Supreme Court recognizing
that where there's a break in the chain
of that interstate trip, that's a separate transaction,
and the local component is not part
of that larger interstate journey.
So again, we don't have...
Yes.
-: I'm sorry.
I don't know if this issue is raised before Judge Davis,
I have a feeling it wasn't,
but I'm gonna ask you to respond to, well,
if not section one then not section two.
So obviously section one is we know
from Circuit City narrowly construed,
and we know we're dealing with the residual clause
of section one, but then we get to the argument,
well, if not section one, then not section two.
Number one, was that raised before Judge Davis?
And number two, what's your response to that argument?
-: Well your honor, first I think the argument was rejected
in Circuit City, so it's a nonstarter.
The Supreme Court very clearly said
that being involved in commerce is very different
from being engaged in interstate commerce.
That was exactly the argument presented there.
The Supreme Court rejected it.
And courts time and time again have said
you can't conflate the two
because that would render the section one exemption,
would just swallow the entire rule
that the FAA applies to transactions involving commerce.
So I think that's really a dead letter.
And also, I do just wanna say very briefly
about the fact that this was not merely a pause.
I know that plaintiffs have made that argument,
that this was somehow the goods just paused
at the local store, that's not what we have here.
I don't think it's the right inquiry.
Again, it arose under a different statute,
the Robinson-Patman Act.
But even looking at Gulf Oil
and all of those cases involving involving that statute,
we don't even have a pause here
because we have two totally divorced transactions.
But I wanna just very briefly address
the additional arguments that plaintiffs have raised.
The superior court correctly rejected them,
thoroughly considered them and rejected them.
There is no basis for holding
that plaintiffs are not bound by arbitration here.
They agreed to arbitrate.
The agreements were reasonably communicated.
They had reasonable notice
and under well established case law,
under Kauders versus Uber and Emmanuel versus Handy
from the first circuit.
It's very clear that this involves
an agreement totally different
from what was at issue in Kauders
where there was a browser app.
This was very clearly communicated.
The plaintiffs signed an agreement.
-: Is there anything to be said though
when you're dealing with the waving class actions
and arbitration that the document at least have to be read?
-: No your honor.
Actually, no court has ever found that.
And it's well established in the--
-: Not as a matter of general contract,
I'm just asking you if there's any argument to be made,
because here we're here we're talking
about Massachusetts law, and we've got a waiver
of a collect class action.
And I'm just asking along those lines,
should this be a circumstance where the document needs
to be read or at least pulled off?
-: No, an opportunity to read it and notice that it's there
and that you're agreeing to a legal document
and arbitration agreement is all that's required.
And the first circuit in Emmanuel versus Handy dealt
with this exact issue, and said that there's no requirement
that you prove that it was read.
And here also, I just want to point out
that there was an opportunity
to opt out of the class waiver.
So the class waiver was optional.
But here you just look at this process and it's very clear.
And also plaintiffs have raised this argument
that somehow Grubhub waved its right to arbitrate.
That argument there's no merit to that whatsoever.
Waiver is for totally different circumstances
where a party in litigation litigates
and engages in litigation conduct.
That's inconsistent with arbitration here.
Grubhub raised the arbitration agreement
and move to compel immediately.
So it's-
-: So, council, is that the same as your argument,
that the plaintiffs waived their opt out class action?
As you're using waiver in the same way in both.
-: No, your honor.
It's a little bit different when we're dealing
with arbitration that establish case law that says
that a party waives the right to arbitrate
through conduct in litigation that's inconsistent.
Here, we have nothing like that.
The provision that plaintiffs are pointing to
in regarding employee records,
there's no private right of action.
It's exclusively enforced by the attorney general.
There is a remedy, it's penalties,
and the attorney general here didn't even mention it
in the amicus brief.
So I think there's no argument to be made for that.
And the superior court was correct.
So we would ask, I see that my time--
-: I'm a little confused by your last point about...
So they could opt out of the class...
They could opt out of the class action in this contract.
Is that what you're saying?
-: Yes, that's correct your honor.
-: But at the same time,
they don't have to read the contract to sign the contract.
So how do they opt out of...
It's a little...
It gets a little dicey whether there's really a chance
to opt out of the class, isn't there?
-: Well--
-: By the way, any case is exactly like that.
Cause this looks like an easy Kauders Emerald case
in terms of they signed a contract.
But when you start getting into the waiver provisions,
then that that's not really...
Is that covered by the first circuit decision?
They--
Evangelis: Yes.
-: In a case in which you could opt out of the waiver,
where the contract allowed them to opt out,
was that in a manual or is it
just a classic everything was wave case?
-: Well, your honor, I would argue that
if you have the ability to opt out,
it's even more favorable to the employees.
So I would say our facts are even better
in other cases where you don't have that opportunity.
But in Emmanuel, again, that was a exactly similar situation
to what we have here.
And this case is nothing like the Kauders case.
There, if you recall, the facts were that
when you simply signed up for an account
by entering your payment information,
you were deemed to have agreed to arbitrate.
That's worlds away from what we have here.
So here there was very clearly an arbitration agreement,
an opportunity to view it,
and then an opportunity to download it again,
and an electronic signature.
So that manifestation of ascent was very clear.
And for all of those reasons,
unless there are further questions,
we would ask that the court affirm on those grounds,
but reverse the superior court's decision
on section one of the FAA, which is a total outlier.
So thank you.
-: Okay, thank you.
Attorney LeBlanc.
-: Morning chief justice, may it please the court.
Grubhub's arbitration agreement is unenforceable
for three reasons:
First, Grubhub delivery drivers
are undoubtedly transportation workers engaged
in the flow of interstate commerce,
which exempts them pursuant to section one
of the Federal Arbitration Act.
Second, if this court finds that Grubhub delivery--
-: Before you leave there,
is there any case besides this one by the superior court
where restaurant delivery drivers like this are found
to be interstate transportation workers,
anywhere in the country that you can point us
to a case that does the same thing?
-: Well, your honor, I think the predicate that...
To answer your question directly,
gig economy workers such as this,
there has not been other than this case,
there has not been a case, but there's also not a case--
-: Well that's clearly not true,
cause we know the seventh circuit case.
We know Justice Tolani's decision here,
and there are others, right?
I mean, this is litigated around the country, right?
-: Correct.
And I would say that the--
-: Just to confirm, we're the only case
that's come out the other way, is that right?
-: Other than Waithaka and Rittmann,
which again we can't define--
-: Those are Amazon type cases.
-: That's last mile cases.
-: Yeah, okay.
-: And your honor, I understand.
And we would analogize and I think the closest analogy
for these particular delivery drivers are last mile drivers.
And the reason why is because we're talking about, again,
Circuit City defines section one's exemption.
And the definition is transportation workers engaged
in the flow of interstate commerce.
-: Not just transportation workers,
but even putting aside that you have to look
at the railroad workers and workers that see and try
to define what transportation workers are.
In the last mile cases, the product is going to ordered it
and the driver is connected to that interstate travel.
Here, the driver's not connected in any way
to moving the goods across borders.
The driver is connected to the goods,
to the salt and pepper that got delivered to the restaurant
with the intention that that'd be the end of the delivery
of the salt and pepper that went on the meal.
I just don't see how you fit transportation workers in here.
Even if you put aside residual clause and Circuit City,
telling us to narrowly interpret this exemption.
-: Well, your honor, when we take a look at the
Waithaka in the Rittmann decisions,
this is a situation where when you look
at Amazon delivery drivers, essentially the products
or the goods are transported interstate
by Amazon to arrive at their warehouse.
In a situation such as Amazon,
Amazon also hires independent contractors
to pick up those products from the warehouse
and deliver them as last mile drivers.
That's the analogy to the case here,
and that is referenced in both Rittmann and Waithaka.
And it says that these independent contractor drivers are
just as like to be treated as exempt
as the Amazon drivers themselves.
So in that situation, what we have here is we have goods,
repackaged goods, coming from a distributor
into a 7-Eleven or into a convenience
or into a gas station a soda, paper towels, napkins.
And the purpose behind 7-Eleven obtaining
and receiving those goods is to sell them.
7-Eleven certainly doesn't wanna drink a soda.
So when their purpose is to sell the goods,
they're selling the goods to the end consumer.
And the whole purpose of 7-Eleven obtaining those goods is
to sell them, which in which creates a situation
where the flow of commerce as defined
by Circuit City is not interrupted.
The commerce goes from distributor to intermediary,
to end customer.
And Grubhub cannot because there is no law
that overturns Walling.
Now, they cannot say that that is not binding on this court.
And in the law--
-: So isn't there a difference between the last mile insofar
as when 7-Eleven receives the goods,
7-Eleven is the entity that ordered the goods
in interstate commerce
And at the time it receives the goods,
or even at the time it orders the goods,
it has no idea that the Wendlandt family's gonna want
some potato chips?
-: No, but the 7-Eleven or the convenience store does know
that it is partnered with Grubhub to deliver those goods.
This isn't a situation like the Cunningham,
the Lindsey Cunningham, or the other Rideshare cases,
because in those cases,
and the courts made a big point of this,
the airlines have not contracted or entered
into any arrangement with Lyft or Uber or otherwise.
But in this case, the convenience stores, the restaurants,
all of the other stores that send these goods have partnered
with Grubhub in particular.
So they've made decision,
and 7-Eleven has made that decision to be--
-: When we focus on the primary responsibility
of these drivers, we don't look at incidental.
So they've got some treasured customers
that they'll pick up at CVS for.
That's not what they...
That's sort of a...
That's not their primary job.
Their primary job is to go back and forth
to the restaurants, right?
It's not to do pharmacy pickups, right?
-: No, I would disagree with that your honor.
I would believe that the primary objective
of these drivers is to deliver the products
to their customers and obtain happy customers.
If Grubhub wanted to stop their drivers
from grabbing prescriptions or grabbing paper goods
or grabbing other items, they could certainly do that.
They could put in a policy, they could say--
-: But don't we focus on their core responsibility, their...
I mean--
LeBlanc: No, because--
-: Isn't that in the seventh circuit language primary?
And doesn't that appear in some of the other cases as well?
-: It is referenced in the seventh circuit case, your honor.
But we are stuck with the statute that we have,
and the statute has no dominous requirement
as to what constitutes being engaged--
-: The statute talks about interstate commerce workers,
leads with semen, then it goes to railroad workers,
and then it goes to interstate transportation workers,
which tends to give us a reflection
of what they're talking about.
And we gotta...
The first two terms define the third one,
help define the third one, correct?
-: Well, yes, the first two terms
do help define the third one.
And there are cases, particularly the Birch case
that we've cited in our memo, which was,
it's a railroad case that what came out right at the time,
but the FAA came out,
and that case found even intrastate delivery
on a railroad line is engaged in the flow
of interstate commerce.
There are other cases, your honor,
from the Illinois circuit,
which looks at milk delivery
or milk product delivery companies.
And in that situation, milk was shipped interstate
to a different state distributor.
And then what the distributor did
was they added chocolate to it,
they made cottage cheese out of it,
they made very
(Hon. Scott coughing drowns out Eric)
products, and then those deliveries
were made intrastate only.
And they were considered engaged in the flow
of interstate commerce because there's no interruption
of the intent behind where the product is going,
much like--
Hon. Scott: Actually--
-: we should convenience stores.
-: This court's gotten it sort of head handed to it
a number of times by the U.S. Supreme Court
on sort of interpreting the Arbitration Act
too narrowly, right?
I don't know if you've gone outside your area
where we had sort of a series of them.
Doesn't this invite the same type of the
Massachusetts Court is kind of looking for ways
of avoiding the Arbitration Act.
Again, we've gotten sort of spanked for doing that.
Mm-hmm.
-: I understood your honor.
And in this case, the alternative would be
to look at the Kauders decision,
which was made in 2021, and to look at the language
of the contract itself.
And when we look at that agreement,
we don't think the notice was appropriate.
But we're focusing more on the ascent
that was offered by these workers.
They were asked to sign an agreement
with their execution being,
"By providing your electronic signature and clicking e-sign,
"you are acknowledging that you have read, understand,
"and/or agreed to be bound by the terms of any content
"or documents provided here within."
We cited--
-: I thought that was interesting
because it seems like they're making it perfectly clear
that you either you've read it or you agree to it,
meaning, warning them to read it
or otherwise you've agreed to it.
Is that a fair reading of that or?
'Cause it's not like Kauders,
which I'm unfortunately very familiar with,
where you could skip the whole agreement process, right?
-: Well, but your honor, the local division 589 case,
which was cited in our brief indicates
the use of and/or creates an ambiguity.
And when we look at the...
And if we read this document in the other way,
you are acknowledging that you have read or understand
or agree to be bound, and that your honor is the structure
of the English language
and the structure that Grubhub chose.
And what we know--
-: 'Cause you just...
But you just changed it.
-: Yeah, you just changed it. (laughs)
-: Hold on, it doesn't say that.
"Read, understand and/or agree to be bound
"by the terms of any content or document provided herein."
So if you take out the "and," it says,
"Read, understand, or agree to be bound."
-: Right.
And your honor, the grammatical construct of and/or
as cited in our briefs creates an ambiguity,
because it could be read as,
"Read and understand and be bound,"
or it could be read as, "Read, understand or agree."
And your honor, again, that's why I referenced Kauders.
Kauders requires a manifestation of explicit ascent,
and in this case, that's not here.
What we're looking at is a document
which gives these drivers an option.
Yes, I read it, I understand it, but I don't agree to it.
And the or word is what gets them out of that ascent.
So again, I would urge the court to look
at the local division 589 case,
as well as the other citations in our brief.
And then your honors,
we also wanna point out the section two issue,
which we have dealt with a little bit.
The Circuit City Court, yes, they made a proclamation
that section one and section two are not coterminous.
However, the most recent decision,
and it's the most recent decision relating
to this very issue, is the New Prime case.
New Prime versus Oliveira was decided in 2019,
years after Circuit City.
And in the New Prime case,
the Supreme Court of the United States said
that section one and section two must be read
in relation for another.
This is not a situation where they need to be coterminous,
but it is a situation where we need to look at the language
and understand Grubhub is making the claim
that the drivers are not engaged
in the flow of interstate commerce.
Section two does not just say involving interstate commerce.
Section two says the FAA only applies to contracts
where the contract evidences a transaction
involving commerce.
Grubhub has taken the position in this case,
and in cases around the United States,
that these transactions do not implicate
interstate commerce.
And insofar as we want to have a broader definition
of involving commerce than we do with engaging in commerce,
we can do that, and we can still see
that the related to the involving language
and the New Prime's related language,
we need to look at the entirety
of the phrase evidencing a transaction.
And we don't have, based upon Grubhub's own arguments,
we do not have any transactions
that involve interstate commerce.
(paper crackling)
In fact, how can Grubhub take the position they disavow
the notion that these drivers are in any way engaged
in interstate commerce may have to disavow
that all of these transactions are also not engaged
in interstate commerce.
And your honors I do wanna follow up on the one point
that that was brought up at the beginning of the argument.
The court has asked many questions about cases
that are applicable outside of our state,
whether or not outstates the outlier.
The thing that that has occurred here,
Grubhub continually is focusing on seventh circuit,
first circuit, ninth circuit.
The problem is Grubhub still cannot get past the
Walling decision relied upon by the lower court.
The Walling decision made a finding
that the engaging in interstate commerce language
was very clear, and it made the finding
that until any goods get to their final destination,
their final customer, they are still
in the flow of interstate commerce.
We can look at all of these other cases,
none of them are binding on this court
in the way that Walling is.
Likewise, we look at the Waithaka
and the Rittmann decisions, and again,
we would analogize these to last mile Amazon drivers,
particularly in light of the fact
that this is a very similar situation.
Amazon has partnered with independent contractor drivers,
just like Grubhub has contracted with other contractors
or vendors to sell the goods,
and they end up in the hands of the end user customer.
Unless there's any questions, I would rest
and ask the court uphold the lower court's decision.