Ninth Circuit Holds That Business Entities Cannot Qualify As Transportation Workers Exempt From The Federal Arbitration Act

On April 10, 2024, the Ninth Circuit held in Fli-Lo Falcon, LLC v. Amazon.com, Case No. 22-35818 (9th Cir. Apr. 10, 2024), that business entities are not covered by the Federal Arbitration Act’s (“FAA”) transportation worker exemption. The Ninth Circuit stated, “[w]hile a natural person such as an independent contractor may be a transportation worker, a non-natural person such as a business entity that employs or contracts with transportation workers, is not.” Id. at 12. The Ninth Circuit’s opinion is a must read for companies seeking to solidify their arbitration programs and manage their litigation risks.

Case Background

The plaintiffs in Fli-Lo Falcon were delivery service partners (“DSPs”) that contracted with Amazon to deliver packages. To join the DSP program, an individual needed to first create a business entity. When plaintiffs filed a putative class action against Amazon, it sought to compel arbitration pursuant to an arbitration clause in the DSP agreements. The district court compelled arbitration and dismissed the case, and the Ninth Circuit affirmed.

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