El Paso COA Holds Transportation Instructor is Exempt From Arbitration Agreement Based on FAA Exception

The Eighth District of Texas in El Paso has affirmed a district court’s order denying arbitration in a workplace discrimination case.  In OEP Holdings, LLC. v. Mohammad Akhondi, No. 08-17-00159-CV (Tex.App.–El Paso 2018), a man, Akhondi, began working for a staffing company, OEP Holdings, that placed workers with various outside companies.  As part of the hiring process, Akhondi signed an agreement to submit any future disputes with OEP Holdings to arbitration.  After Akhondi was hired, he was placed at a national trucking company where he provided orientation instruction services to transportation workers.

After Akhondi was terminated by OEP Holdings, he filed an age discrimination and retaliation lawsuit against his former employer in the 41st District Court of El Paso County, Texas.  In response to the case, OEP Holdings filed a motion to compel arbitration based on the agreement Akhondi signed when he began his employment with the company.  The district court denied the company’s motion due to the exception for “workers engaged in foreign or interstate commerce” included in the Federal Arbitration Act (“FAA”).  OEP Holdings then filed an interlocutory appeal with Texas’ Eighth District Court of Appeals.

On appeal, the court stated the sole issue was whether Akhondi fell “within the class of transportation workers exempted by the FAA.”  According to the court:

Generally, the FAA provides for the enforceability of “any maritime transaction or a contract evidencing a transaction involving commerce.” 9 U.S.C. § 2 (2009). Congress exempted from the FAA’s coverage, however, “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1 (2009). This exclusion provision “is limited to transportation workers, defined, [. . .], as those workers ‘actually engaged in the movement of goods in interstate commerce.’” Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 112, 121 S.Ct. 1302, 1307, 149 L.Ed.2d 234 (2001), quoting Cole v. Burns Int’l Security Servs., 105 F.3d 1465, 1471 (D.C.Cir. 1997). The exclusion expresses a “concern with transportation workers and their necessary role in the free flow of goods. . . .” Circuit City, 532 U.S. at 121, 121 S.Ct. at 1312. It also evidences a Congressional intent to reserve regulation of those employees for separate legislation more specific to the transportation industry. Id. at 120- 21, 121 S.Ct. at 1312; Hill v. Rent-A-Ctr., Inc., 398 F.3d 1286, 1289 (11th Cir. 2005). Congress’s emphasis, however, “was on a class of workers in the transportation industry, rather than on workers who incidentally transported goods interstate as part of their job in an industry that would otherwise be unregulated.” Hill, 398 F.3d at 1289.

…

In Lenz v. Yellow Transp., Inc., the Eighth Circuit set out a nonexclusive eight-part test for determining whether an employee is a transportation worker for purposes of the 9 U.S.C. § 1 exclusion. 431 F.3d 348, 352 (8th Cir. 2005). This Court recently applied the Lenz test. Vasquez, 457 S.W.3d at 465-67; see also Zamora, 2008 WL 2369769, at *6. Lenz’s eight nonexclusive factors include: (1) whether the employee works in the transportation industry; (2) whether the employee is directly responsible for transporting goods in interstate commerce; (3) whether the employee handles goods that travel interstate; (4) whether the employee supervises employees who are themselves transportation workers, such as truck drivers; (5) whether like seamen or railroad employees, the employee is within a class of employees for which special arbitration already existed when Congress enacted the FAA; (6) whether the vehicle itself is vital to the commercial enterprise of the employer; (7) whether a strike by the employee would disrupt interstate commerce; and (8) the nexus that exists between the employee’s job duties and the vehicle the employee uses in carrying out his duties. Lenz, 431 F.3d at 352. OEP concedes that these factors should guide our decision in this case.

Next, the appellate court examined Akhondi’s job duties and applied the Lenz factors to the case before it.  The Eighth District found “three of the Lenz factors weigh in favor of Akhondi, and do so heavily enough to counterbalance the opposing factors.”

After that, the Court of Appeals dismissed OEP Holdings’ argument that Akhondi was not a transportation worker for the purposes of the FAA because there is no Fair Labor Standards Act overtime pay rule exemption for orientation instructors.  The court said:

Generally, the FLSA requires an employer to pay overtime to any nonexempt employees who work more than forty hours in a seven-day work week. See 29 U.S.C. § 207(a)(1). The overtime pay rules in the FSLA, however, “shall not apply with respect to . . . any employee with respect to whom the Secretary of Transportation has power to establish qualifications and maximum hours of service pursuant to the provisions of section [49 U.S.C. § 31,502].” 29 U.S.C. § 213(b)(1). In turn, the Secretary of Transportation has the power to establish qualifications and maximum hours of service for employees who (1) are employed by carriers whose transportation of passengers or property by motor vehicle is subject to the Secretary’s jurisdiction under the Motor Carrier Act; and (2) engage in activities of a character directly affecting the safety of operation of motor vehicles in the transportation on the public highways of passengers or property in interstate or foreign commerce within the meaning of the Motor Carrier Act. 29 C.F.R. § 782.2(a); Baez v. Wells Fargo Armored Serv. Corp., 938 F.2d 180, 181-82 (11th Cir. 1991). Accordingly, the denial of an FSLA exemption could have as much to do a job lacking the necessary safety component as its relation to the transportation of goods. By contrast, the exemption in Section 1 of the FAA is not determined by the safety aspect of the job, but by whether the class of employees are actually engaged in the movement of goods in interstate commerce. Circuit City, 532 U.S. at 112, 121 S.Ct. at 1307. Accordingly, we fail to see how the lack of an FSLA exemption for orientation instructors determines whether Akhondi is a transportation worker for the purposes of the FAA.

Finally, the Eighth District Court of Appeals in El Paso affirmed the lower court’s judgment “finding Akhondi to be a transportation worker for purposes of 9 U.S.C. § 1 and consequently, that the arbitration agreement is exempted from enforcement under the FAA.”

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