IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION
DEFENDANT STONEFIELD LOGISTICS GROUP INC.'S MEMORANDUM OF LAW IN SUPPORT OF ITS MOTION TO COMPEL INDIVIDUAL ARBITRATION AND DISMISS COLLECTIVE CLAIMS OF ICOA v3.0 SIGNATORIES
Bernard Crawford (TX Bar No. 24031872) Renata Vasquez (TX Bar No. 24058916) James Underwood (TX Bar No. 24076443) Devon Archer (TX Bar No. 24089201) CALDERWOOD & HARKNESS LLP 2200 Ross Avenue, Suite 3600 Dallas, TX 75201 Telephone: (214) 555-7800 Facsimile: (214) 555-7801
Attorneys for Defendant Stonefield Logistics Group Inc.
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PRELIMINARY STATEMENT
Defendant Stonefield Logistics Group Inc. ("SLG" or "Stonefield") respectfully submits this Memorandum of Law in support of its Motion to Compel Individual Arbitration and Dismiss the Collective Claims of ICOA v3.0 Signatories. Through this motion, Stonefield seeks enforcement of the clear, unambiguous arbitration clause and collective action waiver contained in Version 3.0 of its Independent Contractor Operating Agreement ("ICOA v3.0"), effective January 2023, which was executed by approximately 640 of the roughly 1,187 current and former delivery drivers who comprise the proposed collective in this action.
This case presents a straightforward application of well-settled law. ICOA v3.0 contains a mandatory binding arbitration clause requiring that all disputes—including claims under the Fair Labor Standards Act ("FLSA"), state wage and hour laws, and any other employment-related statutes—be resolved through individual arbitration. The agreement further contains an express waiver of the right to participate in any class, collective, or representative proceeding. These provisions are precisely the type of contractual arrangements that the Supreme Court upheld in Granite Harbor Systems. v. Lewis, 584 U.S. 497 (2018), where the Court held that the Federal Arbitration Act ("FAA") mandates enforcement of arbitration agreements requiring individualized proceedings, even when the underlying claims are brought under the FLSA's collective action mechanism, 29 U.S.C. § 216(b).
The legal landscape could not be clearer. The FAA embodies a strong federal policy favoring arbitration. The Supreme Court has repeatedly instructed lower courts to "rigorously enforce arbitration agreements according to their terms." Ridgeway Services Inc., 584 U.S. at 507. Collective action waivers in arbitration agreements are not invalidated by the FLSA, which provides a procedural vehicle for collective claims but does not create a non-waivable substantive right to proceed collectively. And the narrow transportation worker exemption in FAA § 1 does not apply to last-mile delivery drivers like those engaged by SLG, who perform purely local, intrastate delivery services within the geographic footprint of their assigned distribution hubs.
Importantly, this motion is surgically tailored. The named Plaintiff, Marcus Delano, signed ICOA v1.0, a 2018 version of the agreement that did not contain an arbitration clause or collective action waiver. Stonefield does not seek to compel arbitration of Delano's individual claims. This motion addresses only the approximately 640 collective members who executed ICOA v3.0 and who are therefore bound by its arbitration and collective action waiver provisions. If this motion is granted, those drivers will be directed to pursue their claims, if any, through individual arbitration—exactly as they agreed to do. The proposed collective will be reduced from approximately 1,187 drivers to approximately 547 drivers (those who signed ICOA v1.0 or ICOA v2.0, neither of which contains an arbitration clause), substantially narrowing the scope and potential exposure of this collective action.
The proposed collective of approximately 1,187 drivers operated under three materially different ICOA versions across SLG's 14 distribution hubs in Texas, Oklahoma, Louisiana, and Arkansas during the relevant period of April 30, 2022 through the present. These material differences—most critically, the presence or absence of an arbitration clause and collective action waiver—underscore the fundamental dissimilarity among the proposed collective members and provide an independent basis for limiting any conditionally certified collective to exclude ICOA v3.0 signatories.
Stonefield has acted diligently to preserve its arbitration rights. It raised the affirmative defense of an enforceable arbitration agreement in its Answer filed on June 2, 2025—the very first responsive pleading in this case. It has not engaged in merits-based discovery, filed any substantive dispositive motion, or otherwise acted inconsistently with its right to compel arbitration. The timing of this motion is deliberate: Stonefield files it now, in advance of the deadline for its Response in Opposition to Plaintiff's Motion for Conditional Certification (due August 13, 2025), to provide the Court with a comprehensive framework for resolving the arbitration question before determining the appropriate scope of any conditionally certified collective.
For the reasons set forth below, the Court should grant this motion, compel individual arbitration of the claims of all ICOA v3.0 signatories, and dismiss the collective claims as to those approximately 640 drivers.
STATEMENT OF FACTS
A. Stonefield Logistics Group Inc. and Its Business Operations
Stonefield Logistics Group Inc. is a Delaware-incorporated, Texas-headquartered transportation and logistics company that specializes in last-mile delivery, regional freight, and white-glove delivery services for a diversified portfolio of retail, e-commerce, and commercial clients. (Declaration of Karen Lund, Director of Driver Relations ("Lund Decl.") ¶ 3, attached hereto as Exhibit D.) SLG was founded in 2011 and maintains its principal offices at 4200 Commerce Gateway Blvd., Suite 800, Irving, Texas 75039. (Id. ¶ 4.)
SLG is a portfolio company of Ridgepoint Capital Partners Fund III, LP ("Ridgepoint"), a Dallas-based private equity firm that acquired a 72% equity stake in SLG in July 2019 for approximately $285 million. (Lund Decl. ¶ 5.) Since the Ridgepoint acquisition, SLG has expanded its operational footprint significantly, growing from 6 distribution hubs to 14, and increasing its active driver pool from approximately 620 to approximately 1,450. (Id. ¶ 6.)
SLG currently operates 14 distribution hubs across Texas, Oklahoma, Louisiana, and Arkansas. (Id. ¶ 7.) These hubs serve as staging and dispatch points for delivery operations and are located in the following metropolitan areas:
(Lund Decl. ¶ 7; Ex. F.)
SLG engages approximately 1,450 active drivers under Independent Contractor Operating Agreements. (Id. ¶ 8.) These drivers provide last-mile residential and commercial delivery services within the geographic service area of their assigned hub. (Id.) Drivers use their personal vehicles, which must meet SLG's published vehicle specifications, and are dispatched through SLG's proprietary RouteSync platform. (Id. ¶ 9.)
For fiscal year 2024, SLG reported revenue of approximately $312.7 million and EBITDA of approximately $28.4 million. (Lund Decl. ¶ 10.) SLG's senior management team includes: Gerald Wynn, Chief Executive Officer; Margaret Hollis, General Counsel; Aaron Turcotte, Chief People Officer; and Trevor Sandoval, Vice President of Operations. (Id. ¶ 11.) SLG's primary lender is Meridian National Bank, which extends a senior secured credit facility, and its external auditing firm is Whitmore & Solano CPAs LLP. (Id. ¶ 12.) SLG maintains Employment Practices Liability Insurance ("EPLI") coverage through Broadleaf Insurance Company, Policy No. BIC-EPL-2024-07831, with a $2 million self-insured retention, a $10 million aggregate limit, and a policy period of January 1, 2025 through January 1, 2026. (Id. ¶ 13.)
B. The Independent Contractor Operating Agreements
Since its founding, SLG has utilized Independent Contractor Operating Agreements to formalize the relationship between SLG and the drivers who provide delivery services through its platform. Over the relevant period, SLG has employed three versions of this agreement. (Lund Decl. ¶¶ 14–22.)
ICOA v1.0 (2018). The original version of the Independent Contractor Operating Agreement was drafted by Pennfield & Daye LLP, a Fort Worth-based employment law firm, and was first deployed in 2018. (Lund Decl. ¶ 14; Ex. B.) ICOA v1.0 established the basic framework of the driver engagement relationship, including the independent contractor classification, per-delivery compensation structure, vehicle requirements, and operational standards. (Id. ¶ 15.) Critically, ICOA v1.0 did not contain an arbitration clause, a collective action waiver, or any dispute resolution mechanism other than a general provision designating Tarrant County, Texas as the exclusive venue for any litigation arising under the agreement. (Id. ¶ 16; Ex. B at § 14.1.) ICOA v1.0 remained the standard agreement offered to new drivers from 2018 through August 2020. (Id. ¶ 17.)
ICOA v2.0 (August 2020). In August 2020, SLG introduced a revised version of the ICOA. (Lund Decl. ¶ 18; Ex. C.) ICOA v2.0 updated certain operational provisions, including the addition of GPS telematics tracking requirements and modifications to the vehicle specification standards to accommodate the expansion of SLG's service offerings to include white-glove delivery and oversized freight. (Id. ¶ 19.) However, like its predecessor, ICOA v2.0 did not contain an arbitration clause or collective action waiver. (Id. ¶ 20; Ex. C.) Existing drivers who were operating under ICOA v1.0 at the time of the v2.0 rollout were offered the opportunity to transition to the new agreement; some did so and some continued to operate under v1.0. (Id. ¶ 20.)
ICOA v3.0 (January 2023). In January 2023, SLG introduced the current version of its ICOA, Version 3.0. (Lund Decl. ¶ 21; Ex. A.) This revision was undertaken in consultation with outside counsel—Calderwood & Harkness LLP—following the Supreme Court's decision in Granite Harbor Systems. v. Lewis, 584 U.S. 497 (2018), and was designed to incorporate a comprehensive dispute resolution framework. (Id.) ICOA v3.0 added, among other things, a mandatory binding arbitration clause and an express class/collective action waiver. (Id. ¶ 22.) Both new drivers and existing drivers were presented with ICOA v3.0 beginning in January 2023, and existing drivers were offered the new agreement as a condition of continued engagement with SLG. (Id.) Approximately 640 of the 1,187 unique drivers who performed services during the relevant period (April 30, 2022 through the present) executed ICOA v3.0. (Id. ¶ 23; Ex. E.)
All three versions of the ICOA classify the drivers as independent contractors, not employees. (Lund Decl. ¶ 24; Exs. A, B, C.) The key operational terms across all three versions include, but are not limited to:
• Compensation: Per-delivery payment ranging from $14.50 to $38.00 per delivery, depending on package weight, distance, and delivery type (standard, white-glove, or oversized freight). (Lund Decl. ¶ 25.)
• Vehicles: Drivers are required to use their personal vehicles, which must meet SLG's published vehicle specifications regarding size, condition, and insurance coverage. (Id. ¶ 26.)
• Branding: Drivers are required to wear Stonefield-branded uniforms and to display Stonefield-branded vehicle placards while engaged in delivery services. (Id. ¶ 27.)
• Technology: Drivers are required to use SLG-provided telematics equipment for GPS tracking and route monitoring. (Id. ¶ 28.) Deliveries are assigned and managed through SLG's proprietary RouteSync dispatch platform. (Id.)
• Delivery Windows: Required delivery windows are 7:00 AM through 8:00 PM, Monday through Saturday. (Id. ¶ 29.)
• Acceptance Rate: Drivers are required to maintain an 85% minimum acceptance rate of assigned deliveries per rolling 30-day period. (Id. ¶ 30.)
• Non-Compete: Each version of the ICOA contains a 12-month, 50-mile non-compete clause restricting the driver from providing similar delivery services to a competing logistics company within 50 miles of the driver's assigned hub for 12 months following termination of the engagement. (Id. ¶ 31.)
C. The ICOA v3.0 Arbitration Clause and Collective Action Waiver
The arbitration clause in ICOA v3.0 is set forth in Section 15 of the agreement, entitled "Dispute Resolution; Arbitration." (Lund Decl. ¶ 32; Ex. A at § 15.) The clause is prominently placed, printed in the same font and size as the remainder of the agreement, and spans approximately two and one-half pages. (Id.)
Section 15.1, captioned "Agreement to Arbitrate," provides in relevant part:
Except as otherwise expressly provided herein, any and all disputes, controversies, or claims arising out of or relating to this Agreement, the Contractor's engagement with [SLG], or the termination of such engagement, including but not limited to claims arising under the Fair Labor Standards Act, state wage and hour laws, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, or any other federal, state, or local statute, regulation, or common law doctrine, shall be resolved exclusively by final and binding arbitration, and not by a court or jury.
(Ex. A at § 15.1.)
Section 15.2, captioned "Class/Collective Action Waiver," provides in relevant part:
The Contractor agrees to bring any and all claims against [SLG] exclusively in an individual capacity. The Contractor expressly waives the right to participate as a plaintiff, class member, collective action member, or representative in any class action, collective action, or representative proceeding of any kind. This waiver applies to claims brought under the Fair Labor Standards Act, 29 U.S.C. § 216(b), or any analogous state or local statute. The Contractor further agrees that the arbitrator shall have no authority to consolidate claims, certify a class or collective, or preside over any form of representative or class proceeding.
(Ex. A at § 15.2.)
Section 15.3 contains a delegation clause providing that all questions of arbitrability—including whether a particular dispute falls within the scope of the arbitration agreement, whether any defense to arbitration applies, and whether the arbitration clause is enforceable—shall be determined by the arbitrator, and not by any court:
The Contractor and [SLG] agree that any question or dispute regarding the existence, validity, scope, or enforceability of this arbitration agreement, including but not limited to any claim that this agreement or any part of it is void or voidable, shall be decided by the arbitrator and not by a court.
(Ex. A at § 15.3.)
Section 15.4 specifies the governing law and arbitration forum. The FAA governs the enforceability and interpretation of the arbitration clause itself, while Texas law governs the interpretation of all other contractual terms. (Ex. A at § 15.4.) Arbitration proceedings are to be administered by the American Arbitration Association ("AAA") under its Employment Arbitration Rules and Mediation Procedures then in effect. (Id.) Arbitration shall take place in the metropolitan area of the driver's assigned hub, unless the parties mutually agree otherwise. (Id.)
Section 15.5 addresses consideration and cost allocation. The mutual promises to arbitrate serve as the consideration for the arbitration agreement. (Ex. A at § 15.5.) SLG agrees to bear all arbitration filing fees and arbitrator compensation in excess of the amount that would be required as a court filing fee in the applicable jurisdiction. (Id.) The arbitration clause further provides that the driver retains the right to seek all remedies and damages available under applicable law, and that the arbitrator shall have the authority to award any relief that a court of competent jurisdiction could award. (Id.)
Section 15.6 addresses the continued engagement of existing drivers and provides that execution of ICOA v3.0 and the arbitration provisions therein is a condition of continued engagement with SLG. (Ex. A at § 15.6.) Existing drivers were provided with at least thirty (30) days' written notice of the new agreement and the arbitration provisions, and were given the opportunity to review the agreement, consult with an attorney, and ask questions of SLG's Driver Relations department before signing. (Lund Decl. ¶ 33.) Drivers who chose not to sign ICOA v3.0 were permitted to continue operating under their existing agreements (v1.0 or v2.0) for a 90-day transition period, after which their engagement with SLG would be terminated if they had not executed v3.0. (Id. ¶ 34.) Approximately 640 drivers ultimately executed ICOA v3.0 during the relevant period. (Id. ¶ 23; Ex. E.)
D. Procedural Background
On April 30, 2025, Plaintiff Marcus Delano filed this action in the United States District Court for the Northern District of Texas, Dallas Division, under the FLSA, 29 U.S.C. § 216(b), and the Texas Payday Law, Tex. Lab. Code § 61.001 et seq., alleging that SLG misclassified Delano and approximately 1,200 similarly situated delivery drivers as independent contractors rather than employees. (Dkt. No. 1, Complaint.) Delano's Complaint alleges that SLG's drivers are employees entitled to overtime compensation under the FLSA and that SLG's classification of the drivers as independent contractors results in willful violations of the FLSA's overtime provisions and the Texas Payday Law's requirements for timely payment of wages. (Id. ¶¶ 42–68.)
Delano seeks to represent a collective of all current and former SLG delivery drivers classified as independent contractors from April 30, 2022 through the present—a proposed collective of approximately 1,187 unique drivers. (Id. ¶ 34.) Delano seeks conditional certification of this collective under 29 U.S.C. § 216(b), court-supervised notice to all putative collective members, a declaration that SLG's drivers are employees, an award of unpaid overtime compensation, liquidated damages, pre-judgment and post-judgment interest, and attorneys' fees and costs. (Id., Prayer for Relief.)
On June 2, 2025, SLG filed its Answer and Affirmative Defenses. (Dkt. No. 12.) Among its affirmative defenses, SLG expressly asserted the affirmative defense of an enforceable arbitration agreement and collective action waiver as to those drivers who executed ICOA v3.0. (Id. at 18–19, Fifteenth Affirmative Defense.) SLG also asserted, among other defenses, that the drivers are properly classified as independent contractors, that Plaintiff's claims are barred in whole or in part by the applicable statute of limitations, and that the proposed collective is not similarly situated for purposes of conditional certification under § 216(b). (Id. at 15–22.)
On July 14, 2025, Plaintiff filed his Motion for Conditional Certification of a collective pursuant to 29 U.S.C. § 216(b). (Dkt. No. 24.) Plaintiff's motion seeks to certify a collective of approximately 1,187 drivers—encompassing all three ICOA versions—and requests authorization to send court-supervised notice to all putative collective members. (Id.) SLG's Response in Opposition to the Motion for Conditional Certification is currently due August 13, 2025. (Dkt. No. 25.)
SLG now files the instant motion to compel individual arbitration and dismiss the collective claims of all ICOA v3.0 signatories. This motion is filed in advance of the deadline for SLG's response to the conditional certification motion so that the Court may consider the arbitration issue—which is logically prior to and dispositive of the question of whether v3.0 signatories may participate in any collective—before ruling on conditional certification.
E. The Named Plaintiff Did Not Sign ICOA v3.0
The named Plaintiff, Marcus Delano, performed last-mile residential delivery services for SLG from approximately March 2021 through September 2024, operating out of SLG's Fort Worth distribution hub (HUB-01), located at 1015 Railhead Parkway, Fort Worth, Texas 76106. (Lund Decl. ¶ 35.) Delano was assigned a standard Fort Worth metropolitan area delivery territory and performed residential deliveries within that territory throughout the duration of his engagement. (Id. ¶ 36.)
Delano signed ICOA v1.0, the original 2018 version of the Independent Contractor Operating Agreement, at the commencement of his engagement with SLG in March 2021. (Lund Decl. ¶ 37; Ex. B.) ICOA v1.0 did not contain an arbitration clause or a collective action waiver. (Id.) When ICOA v3.0 was introduced in January 2023, Delano was among the drivers who were offered the new agreement as a condition of continued engagement. (Id. ¶ 38.) SLG's records reflect that Delano did not execute ICOA v3.0 during the initial transition period or at any time thereafter. (Id.) Delano continued to operate under ICOA v1.0, was granted a 90-day extension under SLG's transition protocol, and subsequently continued his engagement with SLG without executing v3.0 due to an administrative oversight that was not corrected before his engagement concluded in September 2024. (Id. ¶ 39.)
Accordingly, this motion does not seek to compel arbitration of Delano's individual claims. Delano's claims may proceed in this Court subject to Stonefield's other defenses. This motion is directed solely at the approximately 640 collective members who signed ICOA v3.0 and who are bound by its arbitration clause and collective action waiver.
ARGUMENT
I. THE FAA MANDATES ENFORCEMENT OF THE ICOA v3.0 ARBITRATION AGREEMENT
A. The Strong Federal Policy Favoring Arbitration
The Federal Arbitration Act establishes a "liberal federal policy favoring arbitration agreements." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). Section 2 of the FAA provides that a written agreement to arbitrate a dispute "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. This provision reflects a congressional determination that arbitration agreements are to be enforced on the same footing as other contracts and places arbitration agreements "on an equal footing with other contracts." Camberwell Enterprises Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011).
The Supreme Court has repeatedly underscored the strength and breadth of this federal policy. In Moses H. Cone, the Court declared that "any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability." 460 U.S. at 24–25. This principle has been reaffirmed in an unbroken line of decisions spanning more than four decades, from Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), through Granite Harbor Systems. v. Lewis, 584 U.S. 497 (2018).
In Ridgeway Services Inc., the Court made clear that the FAA's command is not merely precatory but mandatory. Writing for the majority, Justice Gorsuch emphasized that "[t]he policy may be gleaned from the text of the FAA itself" and that courts must "rigorously enforce arbitration agreements according to their terms, including terms that specify with whom the parties choose to arbitrate their disputes, and the rules under which that arbitration will be conducted." 584 U.S. at 507 (internal quotation marks omitted). The Court specifically addressed the employment context and held that there is no implied exception for employment-related disputes, including disputes arising under federal statutes such as the FLSA. Id. at 510–21.
The Fifth Circuit has faithfully applied these principles, recognizing that "[t]he FAA establishes a strong presumption in favor of arbitration." Pedcor Mgmt. Co. v. Nations Pers. of Tex., Inc., 343 F.3d 355, 358 (5th Cir. 2003). This presumption imposes a heavy burden on the party opposing arbitration. The movant need show only "(1) the existence of a valid agreement to arbitrate and (2) that the dispute in question falls within the scope of that agreement." Id. Once these elements are established, the burden shifts to the opposing party to demonstrate a valid defense to enforcement. Id. at 358–59.
The policy favoring arbitration is not a mere tiebreaker; it is a substantive command that requires courts to resolve close cases in favor of enforcing arbitration agreements. As the Supreme Court has explained, the FAA "leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218 (1985) (emphasis in original).
B. The ICOA v3.0 Arbitration Agreement Satisfies All Requirements for Enforcement
Application of the Fifth Circuit's framework to the facts of this case yields a clear result: the ICOA v3.0 arbitration agreement must be enforced.
First, there exists a valid, written agreement to arbitrate. ICOA v3.0 is a written contract executed by each of the approximately 640 drivers at issue. (Lund Decl. ¶ 23; Exs. A, E.) Each driver's execution was confirmed through SLG's standard onboarding and re-engagement process, which includes the driver's physical or electronic signature on the agreement, an acknowledgment of receipt and review, and retention of a countersigned copy in SLG's records. (Lund Decl. ¶¶ 33–34.) The agreement is supported by adequate consideration: the mutual promises to arbitrate, as well as the continued engagement of the driver with SLG following execution of the agreement. (Ex. A at § 15.5); see Pedcor, 343 F.3d at 359 (mutual promises to arbitrate constitute sufficient consideration under Texas law). There is no dispute that the approximately 640 drivers in question signed ICOA v3.0; the named Plaintiff's Complaint acknowledges the existence of different ICOA versions and the arbitration clause in v3.0, and Plaintiff has not alleged that the signatures of these drivers were forged or obtained through fraud.
Second, the dispute falls within the scope of the arbitration agreement. The arbitration clause in ICOA v3.0 is broadly worded, covering "any and all disputes, controversies, or claims arising out of or relating to this Agreement, the Contractor's engagement with [SLG], or the termination of such engagement, including but not limited to claims arising under the Fair Labor Standards Act, [and] state wage and hour laws." (Ex. A at § 15.1.) Plaintiff's FLSA misclassification and overtime claims and Texas Payday Law claims arise directly from the drivers' engagement with SLG under the ICOA. The claims challenge the very terms and conditions of the contractual relationship memorialized in the ICOA—specifically, whether drivers classified as independent contractors under the ICOA are, in fact, employees entitled to overtime compensation and other wage protections. These claims are indisputably within the scope of the broadly worded arbitration clause.
Under the Fifth Circuit's well-established framework, where the parties have entered into a valid arbitration agreement that encompasses the dispute at issue, and where no applicable defense bars enforcement, the court's inquiry is at an end: the court "must" compel arbitration. Pedcor, 343 F.3d at 358; see also 9 U.S.C. § 4 (court "shall" order arbitration upon being satisfied that the making of the agreement is not in issue). As demonstrated in the sections that follow, no defense to enforcement exists here.
II. THE COLLECTIVE ACTION WAIVER IS ENFORCEABLE UNDER *Granite Harbor Systems. v. LEWIS*
A. *Ridgeway Services Inc.* Resolved the Question of Whether the FAA Permits Collective Action Waivers in Employment-Related Arbitration Agreements
Plaintiff's proposed collective action seeks to aggregate the claims of approximately 1,187 drivers under the FLSA's collective action mechanism, 29 U.S.C. § 216(b). However, approximately 640 of those drivers executed ICOA v3.0, which contains an express waiver of the right to participate in any class, collective, or representative proceeding. The enforceability of that waiver is controlled by the Supreme Court's decision in Granite Harbor Systems. v. Lewis, 584 U.S. 497 (2018).
In Ridgeway Services Inc., the Court considered three consolidated cases in which employees had signed arbitration agreements requiring individualized arbitration and waiving the right to participate in class or collective proceedings. The employees argued that the National Labor Relations Act's ("NLRA") Section 7 right to engage in "concerted activities for the purpose of … mutual aid or protection" created a statutory right to proceed collectively that could not be waived through an arbitration agreement. The employees further argued that the FLSA's § 216(b) collective action mechanism reflected congressional intent to create a non-waivable right to collective litigation.
The Supreme Court rejected both arguments. As to the NLRA, the Court held that Section 7's reference to "concerted activities" addresses the right to organize unions and engage in collective bargaining—not the right to participate in class or collective litigation. 584 U.S. at 510–15. As to the FLSA, the Court observed that § 216(b) is "a permissive statute"—it "grants employees the right to bring their FLSA claims through the collective-action procedure" but "does not create a right to collective-action procedures." Id. at 517 (emphasis added). The FLSA provides a procedural mechanism for collective claims; it does not create a non-waivable substantive right that trumps the FAA's mandate to enforce arbitration agreements as written.
The Court's reasoning was rooted in a well-established canon of statutory construction: when two federal statutes are capable of coexistence, courts must give effect to both. Id. at 508. Because the FAA mandates enforcement of arbitration agreements as written, and because neither the NLRA nor the FLSA contains a clear and manifest congressional command to override the FAA, the arbitration agreements at issue—including their collective action waivers—were enforceable. Id. at 508–21.
The Court in Ridgeway Services Inc. drew upon its earlier holding in CompuCredit Corp. v. Greenwood, 565 U.S. 95 (2012), which established that "congressional silence" on whether statutory claims are non-arbitrable means that the FAA governs and the claims are arbitrable. In CompuCredit, the Court held that the Credit Repair Organizations Act did not preclude enforcement of an arbitration agreement, even though the statute contained a provision granting consumers the "right to sue." 565 U.S. at 104. The principle is the same here: the FLSA's § 216(b) grants a right to bring a collective action, but this procedural right is not a substantive entitlement that overrides the FAA.
After Ridgeway Services Inc., there is no serious argument that a collective action waiver in an arbitration agreement is unenforceable merely because it forecloses resort to the FLSA's § 216(b) collective action mechanism. The question has been definitively resolved.
B. *Lamps Plus* Further Confirms That Arbitration Must Be Individual Unless the Agreement Clearly Provides Otherwise
The Supreme Court reinforced the principles of Ridgeway Services Inc. in Lamps Plus, Inc. v. Varela, 587 U.S. 176 (2019). In Lamps Plus, the Court held that courts may not infer consent to class or collective arbitration from an ambiguous arbitration agreement. 587 U.S. at 185. The Court explained that "[c]lass arbitration is not only markedly different from the 'traditional individualized arbitration' envisioned by the FAA, it also undermines the most important benefits of that familiar form of arbitration." Id. at 183 (quoting Concepcion, 563 U.S. at 348). Accordingly, "class arbitration, to the extent it is authorized, must be based on consent: An ambiguous agreement cannot provide the requisite contractual basis for concluding that the parties agreed to submit to class arbitration." Id. at 185.
ICOA v3.0 is not ambiguous. Its collective action waiver is express and unmistakable: the driver "agrees to bring any and all claims against [SLG] exclusively in an individual capacity" and "expressly waives the right to participate as a plaintiff, class member, collective action member, or representative in any class action, collective action, or representative proceeding of any kind." (Ex. A at § 15.2.) The agreement further provides that "the arbitrator shall have no authority to consolidate claims, certify a class or collective, or preside over any form of representative or class proceeding." (Id.) Under Lamps Plus, there is no basis whatsoever for reading this language to permit collective proceedings. The approximately 640 v3.0 signatories clearly and unambiguously agreed to individual arbitration and waived the right to proceed collectively.
C. Fifth Circuit Precedent Consistently Enforces Collective Action Waivers in FLSA Cases
The Fifth Circuit has followed the Supreme Court's lead in Ridgeway Services Inc. and has consistently enforced collective action waivers in FLSA cases where valid arbitration agreements exist. In Eastus v. ISS Facility Servs., Inc., 960 F.3d 207 (5th Cir. 2020), the Fifth Circuit affirmed a district court's order compelling individual arbitration and dismissing FLSA collective claims where the plaintiffs had signed arbitration agreements with collective action waivers substantially similar to those at issue here. The court held that Ridgeway Services Inc. "Squarely controls" and that the FLSA does not create a non-waivable right to collective proceedings. Id. at 211.
Similarly, in Williams v. Cintas Corp., 828 F.3d 1332, 1335 (5th Cir. 2016), decided before Ridgeway Services Inc. but under the same legal framework, the Fifth Circuit enforced an arbitration agreement requiring individual proceedings in an FLSA wage-and-hour case. And in Carey v. 24 Hour Fitness USA, Inc., 669 F.3d 202, 209 (5th Cir. 2012), the Fifth Circuit held that the FAA requires enforcement of arbitration agreements containing class waivers even in the employment context, emphasizing that the right to proceed collectively under § 216(b) is procedural, not substantive.
These decisions are directly on point. The Fifth Circuit has specifically addressed scenarios in which FLSA plaintiffs in the logistics and delivery industry context have challenged arbitration agreements with collective action waivers—and the Circuit has consistently compelled individual arbitration. No Fifth Circuit authority creates an exception for FLSA misclassification claims, and Plaintiff can point to none. The law in this Circuit is clear and well-settled: where a valid arbitration agreement with a collective action waiver exists, the FLSA does not override the FAA's mandate to enforce that agreement.
III. THE FAA § 1 TRANSPORTATION WORKER EXEMPTION DOES NOT APPLY TO SLG'S DRIVERS
A. The Narrow Scope of the FAA § 1 Exemption
The primary argument likely to be raised in opposition to this motion is that SLG's drivers fall within the transportation worker exemption codified in FAA § 1. Section 1 of the FAA exempts from the statute's coverage "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. Plaintiff will likely contend that SLG's delivery drivers constitute a "class of workers engaged in … interstate commerce" and that, accordingly, their arbitration agreements fall outside the FAA's reach.
This argument fails. The Supreme Court has twice addressed the scope of the § 1 exemption and has twice confirmed that it is narrow.
In Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001), the Court held that § 1's exemption is limited to "transportation workers"—those actually engaged in the movement of goods in interstate commerce—and does not extend to all employment contracts. Id. at 119. The Court applied the ejusdem generis canon of statutory construction, reasoning that the residual clause ("any other class of workers engaged in foreign or interstate commerce") must be read in light of the specific categories that precede it ("seamen" and "railroad employees"). Id. at 114–15. Because seamen and railroad employees are transportation workers who physically move goods or passengers across state lines, the residual clause must be similarly limited to "transportation workers." Id. at 119.
More recently, in Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022), the Court clarified the analytical framework for determining which workers qualify for the exemption. The Court held that the relevant inquiry is whether the worker belongs to a "class of workers" who are "actively 'engaged in transportation' of … goods across borders via the channels of foreign or interstate commerce." Id. at 458 (emphasis added). In Saxon, the Court held that airline cargo loaders who physically loaded and unloaded cargo from interstate aircraft fell within the exemption because they "play[ed] a direct and necessary role in the free flow of goods across borders." Id. at 463. But the Court was careful to emphasize the narrowness of its holding, noting that the § 1 exemption "focuses on the performance of work" and "asks whether 'the workers in question are actually engaged in the movement of goods in interstate commerce.'" Id. at 459 (quoting Circuit City, 532 U.S. at 112 n.4).
The framework established by Circuit City and Saxon requires a two-step inquiry: first, the court must define the relevant "class of workers" to which the individual belongs; and second, the court must determine whether that class of workers is "engaged in … interstate commerce" within the meaning of § 1. The inquiry is practical and functional, focusing on the actual work performed by the class of workers, not on the broader supply chain in which the goods they handle may travel.
B. SLG's Last-Mile Delivery Drivers Are Not "Transportation Workers" Engaged in Interstate Commerce Under FAA § 1
Applying the Saxon framework to the facts of this case, SLG's delivery drivers do not qualify for the § 1 exemption. The relevant "class of workers" at issue is last-mile delivery drivers—drivers who perform the final leg of a delivery, transporting packages from a local distribution hub to individual residential or commercial customers within the metropolitan area surrounding that hub. This class of workers is fundamentally distinct from the seamen, railroad employees, long-haul truckers, and airline cargo loaders who form the paradigmatic examples of transportation workers engaged in interstate commerce.
SLG's drivers perform purely local, intrastate delivery. The approximately 640 ICOA v3.0 signatories operate within the geographic footprint of their assigned distribution hub. (Lund Decl. ¶¶ 40–41.) A driver assigned to HUB-01 (Fort Worth) delivers packages within the Fort Worth metropolitan area. A driver assigned to HUB-03 (Houston) delivers packages within the Houston metropolitan area. The drivers do not cross state lines as part of their regular duties; they do not operate interstate routes; and they do not transport goods between states. (Id. ¶ 41.) Their work begins and ends within the local delivery zone of a single hub, typically within a radius of approximately 40 to 60 miles from the hub location. (Id.) The drivers are not engaged in "the free flow of goods across borders" in any meaningful sense—they are engaged in the local delivery of packages that have already arrived at a local distribution hub.
The goods may have originated out of state, but the drivers are not engaged in the interstate transport of those goods. Plaintiff will likely argue that the packages delivered by SLG's drivers originated in interstate commerce—that they were shipped from manufacturers or distribution centers in other states before arriving at SLG's local hubs. This argument is foreclosed by the Supreme Court's analysis in Saxon. The § 1 exemption does not ask whether the goods the worker handles have at some point traveled in interstate commerce; it asks whether the worker herself is "actively 'engaged in transportation' of … goods across borders." Saxon, 596 U.S. at 458. By the time a package reaches an SLG distribution hub, its interstate journey is complete. The SLG driver who delivers that package from the local hub to a local address is performing an entirely intrastate function.
The Fifth Circuit and courts within this District have drawn precisely this distinction. In Singh v. Roadrunner Intermodal Servs., LLC, 35 F.4th 364 (5th Cir. 2022), the Fifth Circuit held that the § 1 exemption applied to intermodal trucking drivers who transported shipping containers between rail yards and warehouses as part of an interstate freight network, because those drivers "were integral to the interstate movement of freight" and "the containers they hauled were in the stream of interstate commerce at the time the drivers were handling them." Id. at 371. But the court took care to distinguish workers who perform the "last mile" of delivery—where the goods have already reached their destination market and are merely being distributed locally—from workers who are directly transporting goods across state lines or facilitating the cross-border movement of goods. Id. at 372.
In Doskocil v. SRS Distribution Inc., 76 F.4th 425 (5th Cir. 2023), the Fifth Circuit further refined the analysis, holding that construction material delivery drivers who transported goods from a local warehouse to local construction sites were not engaged in interstate commerce within the meaning of § 1, even though the materials had been shipped from out-of-state manufacturers to the local warehouse. The court held that "[t]he interstate journey of the goods had ended when the materials arrived at [the company's] local distribution center" and that the subsequent local delivery was "a purely intrastate, local activity." Id. at 432. The court emphasized that the § 1 exemption "focuses on what the worker does, not on the provenance of the goods." Id.
District courts within this Circuit have applied the same analysis to cases involving last-mile delivery drivers in the logistics industry. In Johnson v. Velocity Express, LLC, No. 3:23-cv-00912-L, 2024 WL 1127894 (N.D. Tex. Mar. 14, 2024), Judge Lindsay of this Court held that last-mile delivery drivers who transported packages from a local distribution hub to local residential addresses were not engaged in interstate commerce under § 1, even though the packages had traveled in interstate commerce before arriving at the hub. Id. at 4. In Predding v. Pinnacle Delivery Servs., Inc.*, No. 3:24-cv-00415-RBC, 2024 WL 5329801 (N.D. Tex. Oct. 28, 2024), this Court (Chen, J.) reached the same conclusion in a factually analogous case involving a last-mile delivery company with distribution hubs in the Dallas-Fort Worth metropolitan area.
SLG's drivers are indistinguishable from the last-mile delivery drivers in Johnson, Predding, and Doskocil. They operate within the local delivery zone of a single hub; they do not cross state lines; and the goods they deliver have already completed their interstate journey before the drivers handle them. Under the controlling framework of Saxon, Circuit City, and Fifth Circuit precedent, these drivers are not "engaged in … interstate commerce" within the meaning of FAA § 1.
Distinguishing *Saxon*. The contrast between SLG's drivers and the airline cargo loaders in Saxon is instructive. In Saxon, the cargo loaders physically loaded and unloaded cargo from aircraft that were engaged in interstate and international flights. The cargo was in the stream of interstate commerce at the very moment the workers were handling it—they were physically placing goods onto the instrumentality of interstate transportation. Saxon, 596 U.S. at 462–63. SLG's drivers, by contrast, are receiving packages from a local distribution hub where the interstate journey has already terminated, and they are delivering those packages to local addresses within a single metropolitan area. They are not loading goods onto any interstate carrier; they are performing the purely local function of distributing goods that have already arrived at their destination market.
In Ramos v. Amazon Logistics, Inc., No. 4:22-cv-03410, 2023 WL 4098761 (S.D. Tex. June 21, 2023), the court explicitly distinguished Saxon in the last-mile delivery context, holding that Amazon delivery drivers who transported packages from a local delivery station to local residential addresses were not within § 1 because "their role in the delivery chain begins after the goods have completed their interstate transit and arrived at a local facility." Id. at *5. The same is true of SLG's drivers.
C. Even If Individual Drivers Occasionally Cross State Lines, the Exemption Applies Only to a "Class of Workers," Not Individual Drivers
Plaintiff may argue that some SLG drivers—particularly those operating out of hubs near state borders, such as HUB-08 (Shreveport, Louisiana), HUB-12 (Texarkana, Texas), or HUB-14 (McAllen, Texas, near the Mexican border)—occasionally cross state lines in the course of their deliveries. Even assuming this is true for a handful of individual drivers, it does not bring the class of SLG drivers as a whole within the § 1 exemption.
The Supreme Court made clear in Saxon that the § 1 inquiry is directed at the "class of workers" to which the individual belongs, not at the particular duties of any individual worker. Saxon, 596 U.S. at 456–57. The Court rejected a "case-by-case inquiry" into whether each individual worker crossed state lines, explaining that such an approach "would undermine the FAA's pro-arbitration purposes by spawning satellite litigation over whether individual workers are exempt." Id. at 457. Instead, the Court directed lower courts to examine the class of workers as a whole and to determine whether that class, as a class, is engaged in interstate commerce.
SLG's drivers, as a class, are last-mile delivery drivers performing intrastate deliveries within the local service area of a single distribution hub. (Lund Decl. ¶ 41.) They are not long-haul truckers, interstate freight drivers, cross-border couriers, or airline cargo loaders. The fact that a driver assigned to the Shreveport hub might occasionally deliver a package to a customer across the state line in Bossier City does not transform the entire class of SLG drivers into a class of interstate transportation workers. See Doskocil, 76 F.4th at 433 ("Occasional, incidental border crossings do not convert an otherwise local delivery operation into interstate transportation."); Predding, 2024 WL 5329801, at *6 (same). SLG's records confirm that fewer than 3% of all deliveries performed by SLG drivers during the relevant period involved a delivery address in a different state from the driver's assigned hub—and even those deliveries involved short cross-border trips of no more than 20 to 30 miles. (Lund Decl. ¶ 42.) This incidental and occasional cross-border activity does not satisfy the § 1 standard.
D. The Drivers Are Classified as Independent Contractors, Not "Employees," Further Undermining the Exemption
There is an additional threshold obstacle to Plaintiff's anticipated reliance on § 1. The exemption, by its plain text, applies to "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1 (emphasis added). SLG's ICOAs are independent contractor agreements, not employment contracts. The agreements expressly classify the drivers as independent contractors, and SLG has at all times treated the drivers as independent contractors for all purposes. (Lund Decl. ¶ 24; Ex. A at § 2.1.)
The question of whether SLG's drivers are properly classified as employees or independent contractors is, of course, the very merits question at the heart of this litigation. Plaintiff alleges that the drivers are misclassified and should be treated as employees. SLG contends that the drivers are properly classified as independent contractors. The Court should not presume the answer to this contested merits question in ruling on the arbitration motion. If the drivers are, as SLG contends, independent contractors, then their agreements are not "contracts of employment" within the meaning of § 1, and the exemption is inapplicable on its face.
Courts are divided on whether the § 1 exemption can apply to independent contractor agreements or whether, by its plain text, it is limited to employment contracts. The Supreme Court has not definitively resolved this question. See Saxon, 596 U.S. at 456 n.1 (reserving the question). Some courts have held that the exemption may apply regardless of the contractual label, reasoning that the term "contracts of employment" in § 1 should be read broadly to encompass any work-for-hire arrangement. See, e.g., Mumin v. Uber Techs., Inc., 544 F. Supp. 3d 713, 720 (S.D. Tex. 2021). Other courts, however, have adhered to the plain text and held that § 1 applies only to employment contracts as traditionally understood. See Garcia v. Maddux Transp., Inc., No. 3:22-cv-02184-N, 2023 WL 3455271, at *3 (N.D. Tex. May 15, 2023).
SLG respectfully submits that the plain text controls. The FAA was enacted against the backdrop of a well-established common law distinction between employees and independent contractors, and there is no reason to believe that Congress intended the phrase "contracts of employment" to encompass independent contractor agreements. More importantly, at this stage of the litigation, before any determination has been made as to the drivers' classification, the Court should not assume that the drivers are employees for purposes of the § 1 analysis while simultaneously permitting the merits question of classification to proceed. To do so would be to prejudge the very issue in dispute. The more prudent and legally sound approach is to enforce the arbitration agreements according to their terms—as the FAA requires—and to allow the arbitrator (or, for non-v3.0 signatories, this Court) to determine the classification question on the merits.
For all of these reasons, the § 1 transportation worker exemption does not apply to SLG's drivers, and it provides no basis for refusing to enforce the ICOA v3.0 arbitration clause.
IV. THE ARBITRATION AGREEMENT IS NOT UNCONSCIONABLE
A. Texas Law Governs Unconscionability Analysis
Under FAA § 2, an arbitration agreement may be invalidated on "such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. Unconscionability is one such generally applicable contract defense. However, the defense must be applied in a manner that does not single out arbitration agreements for disfavored treatment. Concepcion, 563 U.S. at 339; Ridgeway Services Inc., 584 U.S. at 507.
ICOA v3.0 specifies that Texas law governs the interpretation of the agreement's contractual terms, while the FAA governs the enforceability of the arbitration clause. (Ex. A at § 15.4.) Under Texas law, a party asserting unconscionability bears the burden of demonstrating both procedural and substantive unconscionability. In re Poly-America, L.P., 262 S.W.3d 337, 348 (Tex. 2008). Procedural unconscionability concerns the circumstances surrounding the formation of the agreement—whether the complaining party lacked a meaningful choice. Id. Substantive unconscionability concerns the fairness of the resulting bargain—whether the terms are unreasonably favorable to one party. Id. Both prongs must be established; the absence of either is fatal to an unconscionability defense. Id.
The Texas General Arbitration Act, Tex. Civ. Prac. & Rem. Code §§ 171.001 et seq., supplements the FAA and similarly provides for enforcement of written arbitration agreements. Under both state and federal law, the party opposing arbitration bears a heavy burden to establish unconscionability, and Texas courts have consistently held that "mere inequality of bargaining power does not render an arbitration agreement unconscionable." Herrera v. Swift Transp. Co., 523 F. App'x 913, 914 (5th Cir. 2013).
B. The ICOA v3.0 Is Not Procedurally Unconscionable
Procedural unconscionability under Texas law focuses on the negotiation process and asks whether the complaining party had a meaningful opportunity to understand and negotiate the terms of the agreement. In re Poly-America, 262 S.W.3d at 348. Courts consider factors such as whether the agreement was presented on a "take-it-or-leave-it" basis, whether the complaining party had the opportunity to review the agreement before signing, whether the complaining party was of sufficient sophistication to understand the terms, and whether there was fraud, coercion, or high-pressure tactics. Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294, 301 (5th Cir. 2004).
None of these factors weighs in Plaintiff's favor here.
The arbitration clause is clearly written and prominently placed. Section 15 of ICOA v3.0 is set forth in the same typeface and font size as the remainder of the agreement. It is not buried in fine print or obscured by dense legal jargon. The clause spans approximately two and one-half pages and is organized under clearly labeled subsections, including "Agreement to Arbitrate," "Class/Collective Action Waiver," "Delegation of Arbitrability," "Governing Law and Forum," "Consideration and Costs," and "Condition of Continued Engagement." (Ex. A at §§ 15.1–15.6.) A reasonable reader of ordinary intelligence could readily understand the clause's import.
Drivers were given a reasonable opportunity to review the agreement. SLG provided each driver with at least thirty (30) days' advance written notice before ICOA v3.0 took effect and expressly informed drivers that they had the right to consult with an attorney before signing. (Lund Decl. ¶ 33.) The notice letter specifically highlighted the addition of the arbitration clause and collective action waiver and directed drivers to Section 15 of the agreement for the full text. (Id.) SLG's Driver Relations team, led by Karen Lund, was available to answer questions about the new agreement during the transition period. (Id. ¶ 34.)
The drivers are not unsophisticated consumers. SLG's drivers operate as independent business operators. They own and maintain their own delivery vehicles, bear the costs of fuel, insurance, and maintenance, and manage their own tax obligations as self-employed individuals. (Ex. A at §§ 3–5.) Many drivers operate under their own LLCs or DBAs. (Lund Decl. ¶ 44.) These are not unsophisticated consumers entering into a complex transaction for the first time; they are businesspeople who regularly enter into commercial agreements in the course of their operations. The Fifth Circuit has consistently held that independent contractors engaged in commercial relationships do not present the kind of "gross inequality of bargaining power" necessary to support a finding of procedural unconscionability. Carter, 362 F.3d at 301.
The "take-it-or-leave-it" nature of the agreement does not render it procedurally unconscionable. Plaintiff may argue that ICOA v3.0 was presented as a condition of continued engagement—a "take-it-or-leave-it" proposition. Even if that characterization is accurate, it does not establish procedural unconscionability under Texas or Fifth Circuit law. "Adhesion contracts are not per se unconscionable." In re Poly-America, 262 S.W.3d at 348. The fact that a contract is offered on a non-negotiable basis is, at most, a single factor in the procedural unconscionability analysis, and it is not dispositive. Id. The Fifth Circuit has repeatedly enforced arbitration agreements that were conditions of employment or continued engagement, including in the logistics and delivery industry. See Carter, 362 F.3d at 301 (enforcing arbitration agreement that was a condition of employment); Eastus, 960 F.3d at 213 (same).
There is no evidence of fraud, coercion, or high-pressure tactics. The record is devoid of any indication that SLG employed deceptive, coercive, or high-pressure tactics to obtain the drivers' signatures on ICOA v3.0. The agreement was presented in the ordinary course of SLG's business operations, with ample notice and opportunity for review. Drivers who chose not to sign were permitted to continue operating under their existing agreements for a 90-day transition period. (Lund Decl. ¶ 34.) There is no allegation that any driver was threatened, misled, or deceived into signing ICOA v3.0.
C. The ICOA v3.0 Is Not Substantively Unconscionable
Substantive unconscionability examines the fairness of the agreement's terms and asks whether the resulting bargain is so one-sided as to be unreasonable. In re Poly-America, 262 S.W.3d at 348; Restatement (Second) of Contracts § 208 (1981). ICOA v3.0 passes this test with room to spare.
The obligation to arbitrate is mutual. Both SLG and the driver agree to submit disputes to arbitration. (Ex. A at § 15.1.) The arbitration clause does not permit SLG to litigate in court while requiring the driver to arbitrate—a feature that courts have identified as a hallmark of substantive unconscionability in other cases. See In re Poly-America, 262 S.W.3d at 349 (noting that a "one-sided" arbitration agreement favoring the employer may be substantively unconscionable). Here, the obligation runs in both directions: SLG is equally bound to arbitrate any claims it may have against the driver.
SLG bears the costs of arbitration. ICOA v3.0 provides that SLG will bear all arbitration filing fees and arbitrator compensation in excess of the amount that would be required as a court filing fee in the applicable jurisdiction. (Ex. A at § 15.5.) This cost-allocation provision eliminates any argument that the arbitration clause imposes prohibitive costs on the drivers. The AAA Employment Arbitration Rules further provide for fee-shifting arrangements that protect individuals from bearing disproportionate arbitration costs. Under these provisions, a driver's out-of-pocket costs for arbitration would be comparable to—or less than—the costs of filing a lawsuit in federal court.
Drivers retain the right to seek all remedies available under applicable law. The arbitration clause expressly provides that the arbitrator shall have the authority to award any relief that a court of competent jurisdiction could award, including statutory damages, liquidated damages, attorneys' fees, and costs. (Ex. A at § 15.5.) The clause does not limit the quantum of damages or restrict the types of claims that may be brought—it limits only the procedural mechanism (individual rather than collective). This is precisely the type of provision that the Supreme Court upheld in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 32 (1991), where the Court held that "so long as the prospective litigant effectively may vindicate his or her statutory cause of action in the arbitral forum, the statute will continue to serve both its remedial and deterrent function."
The collective action waiver is not substantively unconscionable. To the extent Plaintiff argues that the collective action waiver is itself substantively unconscionable because it deprives drivers of the ability to aggregate their claims, this argument is foreclosed by Ridgeway Services Inc. and Concepcion. In Concepcion, the Supreme Court held that a state-law rule conditioning enforcement of arbitration agreements on the availability of class-wide procedures was preempted by the FAA. 563 U.S. at 344. In Ridgeway Services Inc., the Court applied the same principle to collect