Lashan D. Hill v. Rent-A-Center, Inc.

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 03-15608 February 4, 2005
________________________ THOMAS K. KAHN
CLERK

D.C. Docket No. 03-01302-CV-B-E

LASHAN D. HILL,
Plaintiff-Appellant,

versus

RENT-A-CENTER, INC.,
Defendant-Appellee.

________________________

Appeal from the United States District Court
for the Northern District of Alabama
_________________________

(February 4, 2005)

Before ANDERSON, CARNES and RONEY, Circuit Judges.

RONEY, Circuit Judge:

The Federal Arbitration Act (“FAA”) provides that, if a suit is filed in the

district court upon any issue that is subject to a written arbitration agreement, the

court shall stay the trial of such action until arbitration has been had in accordance

with that agreement. See 9 U.S.C. § 3. The Act, however, exempts from coverage
any arbitration agreement contained in “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 LaShan D. Hill, who brought this employment

race discrimination claim, signed an agreement to arbitrate any employment

related claims when he was employed as an account manager for defendant Rent-

A-Center, Inc., a business that rents furniture and appliances to customers on a

“rent-to-own” basis. Because plaintiff’s job duties involved making delivery of

goods to customers out of state in his employer’s truck, he opposed his employer’s

motion to compel arbitration on the ground that he was a worker in interstate

commerce and thus exempt from the mandatory arbitration provisions of the FAA.

In a case of first impression in this Circuit, we hold that since Hill is not a

transportation industry worker, he is not exempt from the mandatory arbitration

provisions of the FAA. The district court’s stay order compelling arbitration of

Hill’s employment discrimination claims is affirmed.

Jurisdiction of Appeal

Contrary to the defendant’s argument that the district court order is not

appealable because it had dismissed Hill’s case without prejudice to reinstatement

if arbitration was not completed successfully, the order was clearly a “final order”

insofar as compelled arbitration is concerned. Under the FAA, a stay pending the

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result of arbitration is considered an interlocutory order and may not be appealed.

9 U.S.C. § 16(b)(1). An appeal may be taken, however, from a “final decision

with respect to an arbitration.” 9 U.S.C. § 16(a)(3). The district court order made

a final decision that arbitration was compelled under the Act. It “plainly disposed

of the entire case” insofar as compelled arbitration was concerned, “and left no

part of it pending before the court.” Green Tree Fin. Corp. v. Randolph, 531 U.S.

79, 86 (2000); see also Employers Ins. of Wausau v. Bright Metal, 251 F.3d 1316,

1321 (11th Cir. 2001) (“because the arbitration order dispose[d] of all the issues

framed by the litigation and le[ft] nothing for the district court to resolve” it was

an appealable final order”); Salim Oleochemicals v. M/V Shropshire, 278 F.3d 90,

93 (2d Cir. 2002) (holding that dismissals with and without prejudice are equally

appealable as final orders); Blair v. Scott Specialty Gases, 283 F.3d 595, 600-02

(3d Cir. 2002) (same); Interactive Flight Tech., Inc. v. Swissair Swiss Air Transp.

Co., 249 F.3d 1177, 1179 (9th Cir. 2001) (same).

Applicability of § 1 Exemption from Compelled Arbitration

The validity of an agreement to arbitrate is generally governed by the Federal

Arbitration Act, 9 U.S.C. § 1, et seq., which was enacted in 1925 to reverse the

longstanding judicial hostility toward arbitration. See Gilmer v. Interstate Johnson

Lane Corp., 500 U.S. 20, 24 (1991). The FAA embodies a “liberal federal policy

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favoring arbitration agreements.” Moses H. Cone Mem’l Hosp. v. Mercury Constr.

Corp., 460 U.S. 1, 24 (1983). Generally, the FAA provides for the enforceability

of “any maritime transaction or a contract evidencing a transaction involving

commerce.” 9 U.S.C. § 2; see also Paladino v. Avnet Computer Techs., Inc., 134

F.3d 1054, 1061 (11th Cir. 1998). The FAA exempts, however, from its coverage

arbitration agreements contained in “contracts of employment of seamen, railroad

employees, or any other class of workers engaged in foreign or interstate

commerce.” 9 U.S.C. § 1.

The question here is whether Hill, an account manager who as part of his job

duties transports merchandise across the Georgia/Alabama border, is a member of a

“class of workers engaged in . . . interstate commerce” within the meaning of the

Act, therefore qualifies for the § 1 exemption from coverage of the FAA.

The principal Supreme Court case addressing the § 1 exemption is Circuit

City v. Adams, 532 U.S. 105 (2001). Circuit City involved a challenge to the

application of the FAA to employment contracts in general in which the Ninth

Circuit had held that the § 1 exception for the “other class of workers engaged in

foreign or interstate commerce” exempted all employment contracts from FAA

required arbitration. 532 U.S. at 112. The Supreme Court reversed, primarily

relying on a general rule of statutory interpretation, ejusdem generis, which

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provides that general words following specific words in statutes should be

interpreted to be similar in nature to the specific words they follow. 532 U.S. at

114-15. Applying that rule, the Supreme Court determined that Congress intended

the term “other class of workers” to be limited in scope by the terms “seamen” and

“railroad employees.” 532 U.S. at 115. The Court concluded that the FAA’s

“engaged in commerce” exception should be narrowly construed to apply only to

“transportation workers” and not to employment contracts in general. 532 U.S. at

119. It held that the mandatory arbitration provisions of the FAA was applicable to

all contracts of employment except those involving “transportation workers.” 532

U.S. at 119; see also Weeks v. Harden, Mfg. Co., 291 F.3d 1307, 1313 (11th Cir.

2002) (discussing Circuit City).

The Court made the “permissible inference” that Congress’ intent when it

created the exception was to reserve regulation of such employees for separate

legislation more specific to the transportation industry. 532 U.S. at 120-21. The

Court cited the Seventh Circuit’s opinion in Pryner v. Tractor Supply Co.,

109 F.3d 354, 358 (7th Cir. 1997) for proposition that:

As for the residual exclusions of any other class of
workers engaged in foreign or interstate commerce,
Congress’ demonstrated concern with transportation
workers and their necessary role in the free flow of goods
explains the linkage to the two specific enumerated types

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of workers identified in the preceding portion of the
sentence. It would be rational for Congress to ensure that
workers in general would be covered by the provisions of
the FAA, while reserving for itself more specific
legislation for those engaged in transportation.

Circuit City, 532 U.S. at 121. The Court then noted, “Indeed, such legislation was

soon to follow with the amendment of the Railway Labor Act in 1936 to include air

carriers and their employees.” 532 U.S. at 121.

The emphasis, therefore, 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. There is no

indication that Congress would be any more concerned about the regulation of the

interstate transportation activity incidental to Hill’s employment as an account

manager, than it would in regulating the interstate “transportation” activities of an

interstate traveling pharmaceutical salesman who incidentally delivered products in

his travels, or a pizza delivery person who delivered pizza across a state line to a

customer in a neighboring town.

Thus, it is apparent Congress was concerned only with giving the arbitration

exemption to “classes” of transportation workers within the transportation industry.

Hill is clearly not a member of such a class. This decision is consistent with the

overarching principle of a liberal federal policy favoring arbitration agreements.

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Moses H. Cone Mem’l Hosp., 460 U.S. at 24. To broaden the scope of § 1’s

arbitration exemption to encompass any employment disputes of a worker

employed by a company whose business dealings happen to cross state lines, would

allow § 1’s exception to swallow the general policy requiring the enforcement of

arbitration agreements as pronounced in § 2 of the FAA.

Other circuits have held that the § 1 exclusion to mandatory arbitration only

applies to those workers in the transportation industry. See, e.g. Maryland Cas.

Co. v. Realty Advisory Bd. on Labor Relations, 107 F.3d 979, 982 (2d Cir. 1997)

(noting that “our Circuit’s § 1 exclusion is limited to workers in the transportation

industries,” and citing Erving v. Virginia Squires Basketball Club, 468 F.2d 1064,

1069 (2d Cir. 1972)); Pietro Scalzitti Co. v. Int’l Union of Operating Eng’rs, Local

No. 150, 351 F.2d 576, 579-80 (7th Cir. 1965) (same).

Hill contends that such a position is contrary to our decision in Paladino v.

Avnet Computer Techs., Inc., 134 F.3d 1054 (11th Cir. 1998). In that case we

accepted the majority view among the circuits that “9 U.S.C. § 1 [] includes only

employees actually engaged in transportation of goods in commerce.” 134 F.3d at

1060-61. Hill argues that because he did transport goods across state lines,

Paladino means that the § 1 exemption should apply to him.

Although we applied in Paladino the requirement that the employee must

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“actually engage” in the transportation of goods in interstate commerce for the § 1

exemption to apply, we did not hold that the existence of that one factor alone

would trigger the § 1 exemption. In other words, Paladino held that the interstate

transportation factor is a necessary but not sufficient showing for the purposes of

the exemption. By the same token we hold that in addition to the interstate

transportation of goods requirement set forth in Paladino, the employee seeking

application of § 1’s exemption must also be employed in the transportation

industry. Moreover, because Paladino was decided prior to the Supreme Court’s

decision in Circuit City, to the extent of any conflict between these two decisions,

Paladino must yield.

Because Hill was not within a class of workers within the transportation

industry, his employment contract is not exempted from the FAA’s mandatory

arbitration provisions. The district court’s judgment that Hill must go to arbitration

for his discrimination claims is

AFFIRMED.