Massachusetts Supreme Judicial Court Reverses Denial of Motion to Compel Arbitration, Holds Grubhub Drivers Must Arbitrate Employment Claims

On July 27, 2022, in Archer v. Grubhub, the Massachusetts Supreme Judicial Court docket thought of whether or not Grubhub supply drivers inside the Commonwealth are exempt from arbitration beneath Part 1 of the Federal Arbitration Act (FAA). FAA Part 1 exempts “seamen, railroad workers, or another class of employees engaged in international or interstate commerce.” The SJC joined quite a few different courts in figuring out such drivers aren’t a category of transportation employees exempt from the FAA and that the digital arbitration agreements with class motion waivers among the many drivers and Grubhub are binding. The ruling reversed the Superior Court docket choose’s denial of Grubhub’s movement to compel arbitration.

Part 1 of the FAA Does Not Exempt Grubhub Drivers

On the coronary heart of the case was an digital settlement among the many plaintiff drivers and Grubhub that was executed by an internet portal by which the plaintiffs needed to activate a hyperlink titled “Arbitration Settlement” with an choice to view the textual content of the settlement when navigating to the signature web page. The signature web page required plaintiffs to acknowledge they’d learn, understood, and agreed to be sure by the phrases of the arbitration settlement.  The textual content of the doc contained an settlement to arbitrate all disputes arising out of or referring to employment with Grubhub, together with claims associated to retaliation or wages. The arbitration settlement additionally included a category motion waiver.

When plaintiffs in 2019 filed go well with claiming that Grubhub unlawfully retaliated towards their wage complaints, Grubhub filed a movement to compel arbitration on the premise of the digital settlement. Nevertheless, the Superior Court docket choose discovered the plaintiffs fell inside the exemption contained in Part 1 of the FAA as a result of they transported items manufactured outdoors of Massachusetts and denied the movement.

Offered with the query whether or not Grubhub drivers have been exempt from the FAA, the SJC conclusively answered in a 21-page unanimous opinion that they aren’t. The opinion defined, “Notably, all courts which have thought of the applicability of the residual clause [the Section 1 exemption] to supply drivers much like the plaintiff supply drivers on this case have reached the identical conclusion.” Like these different courts, the SJC reasoned that, given the context and language of the FAA provision in query, “another class of employees engaged in international or interstate commerce” ought to apply solely “to ‘transportation employees’ really engaged within the motion of products in interstate commerce,” moderately than drivers who haven’t moved throughout state or nationwide borders.

Below the Check Set Forth in Kauders, the Digital Arbitration Settlement Was Enforceable

For companies coming into into contracts with Massachusetts workers and prospects, the SJC’s extra evaluation of the validity of the Grubhub digital settlement is of specific curiosity. Below Massachusetts legislation, a buyer is deemed to have assented to an digital settlement provided that the counterparty enterprise fairly communicated its phrases and fairly obtained buyer assent as set forth within the choice Kauders v. Uber Techs., Inc., 486 Mass. 557, 571 (2021). The SJC elaborated on this commonplace, explaining “[r]easonable discover of a contract’s phrases exists even when the celebration didn’t really view the settlement, as long as the celebration had an ample alternative to take action.” As well as, “[s]o lengthy because the celebration is required to make some indication of assent, equivalent to choosing ‘I agree’ or ‘I settle for,’ the truth that the celebration chooses to not learn the settlement doesn’t render it unenforceable.” In Archer, as a result of plaintiffs have been required to offer their digital signatures on a web page that knowledgeable them they have been signing an arbitration settlement, affordable discover was supplied. Lastly, the SJC held that any alleged delay by Grubhub in offering the arbitration settlement to the plaintiffs earlier than the submitting of the go well with didn’t impact a waiver of its enforcement when Grubhub had well timed filed its movement to compel arbitration in response to the grievance. In gentle of those elements, the SJC held Grubhub was entitled to implement the digital arbitration settlement with its class motion waiver.

The Archer choice is necessary affirmation of the enforceability of digital arbitration agreements and sophistication motion waivers beneath Massachusetts legislation, in addition to the applicability of the FAA to drivers and different transportation employees contracting with companies as a part of the gig financial system within the Commonwealth.