Pruitt et al v. Act Fast Delivery, Inc. et al

Western District of Texas, txwd-5:2019-cv-00049

Second MOTION to Compel Arbitration by Act Fast Courier of Texas, Inc., Act Fast Delivery of Houston, Inc., Act Fast Delivery of S.A., Inc., Act Fast Delivery of Travis County, Inc., Act Fast Delivery of Tyler, Inc., Act Fast Delivery, Inc., Act Fast of Coastal Bend, Inc.

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1 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION SANDRA PRUITT, JASMINE § HUNTSBERRY, YUVANNDA § WATSON, AYAN NUR, and KAREN § LAWSON, Individually and § On Behalf of All Others Similarly § Situated, § Plaintiffs, § § V. § § C.A. No. 5:19-CV-00049-DAE ACT FAST DELIVERY, INC.; ACT § FAST COURIER OF TEXAS, INC.; § ACT FAST DELIVERY OF § HOUSTON, INC.; ACT FAST OF § COASTAL BEND, INC.; ACT FAST § DELIVERY OF S.A., INC.; ACT § FAST DELIVERY OF TYLER, § INC.; ACT FAST DELIVERY OF § TRAVIS COUNTY, INC.; and § MIKE MILLER; § Defendants § DEFENDANTS' SECOND MOTION TO COMPEL ARBITRATION [RELATES TO DOC. NOS. 1, 22, and 35] TO THE UNITED STATES DISTRICT COURT: COME NOW Defendants Act Fast Delivery, Inc.; Act Fast Courier of Texas, Inc.; Act Fast Delivery of Houston, Inc.; Act Fast of Coastal Bend, Inc.; Act Fast Delivery of S.A., Inc.; Act Fast Delivery of Tyler, Inc.; Act Fast Delivery of Travis County, Inc.; and Mike Miller (collectively "Defendants") and files this Defendants' Second Motion to Compel Arbitration, and in support respectfully state: Defendants' Second Motion to Compel Arbitration Page 1 of 21 1 I. PRELIMINARY STATEMENT 1. On September 12, 2019, the Court denied Defendants' Motion to Compel Arbitration without prejudice to refiling. [Doc. No. 25]. The Court provided Defendants the chance to refile a motion to compel arbitration provided Defendants briefed three issues: (1) whether plaintiffs are "transportation workers" under the Eighth Circuit's Lenz factors and therefore exempt from the Federal Arbitration Act ("FAA"); (2) whether the Texas General Arbitration Act ("TGAA") applies to plaintiffs' arbitration agreements; and (3) whether a merger clause in plaintiffs' independent contractor agreements forecloses arbitration. The Court also ordered the parties to provide copies of each plaintiff's independent contractor agreement. Finally, the Court noted that Defendants' first motion sought to compel arbitration of less than all Plaintiffs. 2. This instant motion addresses the Court's order. Additionally, it moves to compel arbitration of the claims of all Plaintiffs: Sandra Pruitt, Karen Lawson, Ayan Nur, Jasmine Huntsberry, Charmane Nash, Fernando Cabrera, Sheila Chew, Keith Green, Denetria Penfield, and Yuvannda Watson (collectively, the "Plaintiffs") as they each have signed arbitration agreements (Defendants' first motion sought to compel arbitration omitted Yuvannda Watson and the opt-in Plaintiffs as Defendants were still locating those arbitration agreements. They have now been located and produced.). Accordingly, arbitration is properly compelled because (1) Plaintiffs are not exempt under the FAA as "transportation workers;" (2) alternatively, even if the FAA exempts Plaintiffs as "transportation workers," the TGAA would otherwise require arbitration; and (3) the merger clause within the independent contractor agreements does not foreclose arbitration. Defendants' Second Motion to Compel Arbitration Page 2 of 21 1 II. FACTS 3. Defendants rely on the Declaration of John Jackson attached as Exhibit A and the documents attached thereto as Exhibits A-1 through A-10 and B-1 through B-10. A. The Agreements 4. On June 19, 2014, Plaintiff Sandra Pruitt entered into an arbitration agreement with Defendant Act Fast Delivery of Texas, Inc. and/or any of its subsidiaries or affiliations. A true and correct copy of that arbitration agreement is attached hereto as Ex. A-1. On June 19, 2014, Plaintiff Sandra Pruitt entered into an independent contractor agreement with Defendant Act Fast Delivery of Texas, Inc. A true and correct copy of the pages retained from that independent contractor agreement are attached hereto as Ex. B-1. 5. On August 12, 2015, Plaintiff Karen Lawson entered into an arbitration agreement with Defendant Act Fast Delivery of Tyler, Inc. and/or any of its subsidiaries or affiliations. A true and correct copy of that arbitration agreement is attached hereto as Ex. A-2. On February 28, 2012, Plaintiff Karen Lawson entered into an independent contractor agreement with Defendant Act Fast Delivery of Tyler, Inc. A true and correct copy of that independent contractor agreement is attached hereto as Ex. B-2. 6. On December 4, 2015, Plaintiff Ayan Nur entered into an arbitration agreement with Defendant Act Fast Delivery of Texas, Inc. and/or any of its subsidiaries or affiliations. A true and correct copy of that arbitration agreement is attached hereto as Ex. A-3. On December 4, 2015, Plaintiff Ayan Nur entered into an independent contractor agreement with Defendant Act Fast Delivery of Texas, Inc. A true and correct copy of that independent contractor agreement is attached hereto as Ex. B-3. Defendants' Second Motion to Compel Arbitration Page 3 of 21 1 7. On March 30, 2017, Plaintiff Jasmine Huntsberry entered into an arbitration agreement with Defendant Act Fast Delivery of Texas, Inc. and/or any of its subsidiaries or affiliations. A true and correct copy of that arbitration agreement is attached hereto as Ex. A-4. On March 30, 2017, Plaintiff Jasmine Huntsberry entered into an independent contractor agreement with Defendant Act Fast Delivery of Texas, Inc. A true and correct copy of that independent contractor agreement is attached hereto as Ex. B-4. 8. On August 29, 2017, Plaintiff Charmane Nash entered into an arbitration agreement with Defendant Act Fast Delivery of Texas, Inc. and/or any of its subsidiaries or affiliations. A true and correct copy of that arbitration agreement is attached hereto as Ex. A-5. On August 29, 2017, Plaintiff Charmane Nash entered into an independent contractor agreement with Defendant Act Fast Delivery of Texas, Inc. A true and correct copy of that independent contractor agreement is attached hereto as Ex. B-5. 9. On June 11, 2014, Plaintiff Fernando Cabrera entered into an arbitration agreement with Defendant Act Fast Delivery of Texas, Inc. and/or any of its subsidiaries or affiliations. A true and correct copy of that arbitration agreement is attached hereto as Ex. A-6. On August 16, 2012, Plaintiff Fernando Cabrera entered into an independent contractor agreement with Defendant Act Fast Delivery of Texas, Inc. A true and correct copy of the pages retained from that independent contractor agreement are attached hereto as Ex. B-6. 10. On November 6, 2017, Plaintiff Sheila Chew entered into an arbitration agreement with Defendant Act Fast Delivery of Texas, Inc. and/or any of its subsidiaries or affiliations. A true and correct copy of that arbitration agreement is attached hereto as Ex. A-7. On November 6, 2017, Plaintiff Sheila Chew entered into an independent contractor agreement Defendants' Second Motion to Compel Arbitration Page 4 of 21 1 with Defendant Act Fast Delivery of Texas, Inc. A true and correct copy of that independent contractor agreement is attached hereto as Ex. B-7. 11. On June 5, 2017, Plaintiff Keith Green entered into an arbitration agreement with Defendant Act Fast Delivery of Texas, Inc. and/or any of its subsidiaries or affiliations. A true and correct copy of that arbitration agreement is attached hereto as Ex. A-8. On June 5, 2017, Plaintiff Keith Green entered into an independent contractor agreement with Defendant Act Fast Delivery of Texas, Inc. A true and correct copy of that independent contractor agreement is attached hereto as Ex. B-8. 12. On October 29, 2018, Plaintiff Denetria Penfield entered into an arbitration agreement with Defendant Act Fast Delivery of Texas, Inc. and/or any of its subsidiaries or affiliations. A true and correct copy of that arbitration agreement is attached hereto as Ex. A-9. On October 29, 2018, Plaintiff Denetria Penfield entered into an independent contractor agreement with Defendant Act Fast Delivery of Texas, Inc. A true and correct copy of that independent contractor agreement is attached hereto as Ex. B-9. 13. On April 3, 2017, Plaintiff Yuvannda Watson entered into an arbitration agreement with Defendant Act Fast Delivery of Texas, Inc. and/or any of its subsidiaries or affiliations. A true and correct copy of that arbitration agreement is attached hereto as Ex. A-10. On April 3, 2017, Plaintiff Yuvannda Watson entered into an independent contractor agreement with Defendant Act Fast Delivery of Texas, Inc. A true and correct copy of that independent contractor agreement is attached hereto as Ex. B-10. 14. All ten of the arbitration agreements are referred to herein collectively as the "Arbitration Agreements." All ten of the independent contractor agreements are referred to herein collectively as the "Independent Contractor Agreements." Defendants' Second Motion to Compel Arbitration Page 5 of 21 1 15. The Arbitration Agreements provide (in pertinent part): Any and all claims or controversies arising out of or relating to my employment, the termination thereof, or otherwise arising between me and[Act Fast Delivery of Texas [in the case of Karen Lawson: Act Fast Delivery of Tyler] and/or any of its subsidiaries or affiliations (collectively the "Company") shall, in lieu of a jury or other civil trial, be settled by final and binding arbitration before a neutral arbitrator (the "Arbitrator"). This agreement to arbitrate includes any claim, dispute, or controversy that either I may have against the Company (or its owners, directors, officers, managers, employees, agents, and parties affiliated with its employee benefit and health plans) or the Company (or its owners, directors, officers, managers, employees, agents, and parties affiliated with its employee benefit and health plans) may have against me, arising from, related to, or having any relationship or connection whatsoever with my independent contractor agreement or relationship with the Company, or any other association or relationship with the Company. See Arbitration Agreements, Ex. A-1 through A-10, ¶ 1. 16. The Arbitration Agreements further provide that they cover "all disputes. . . based on. . . unpaid compensation of any kind. . . including. . . the Fair Labor Standards Act." See Arbitration Agreements, Ex. A-1 through A-10, ¶ 2. 17. The Arbitration Agreements also provide that any such disputes are to be arbitrated in "accordance with the National rules [sic] for the Resolution of Disputes of the American Arbitration Association." See Arbitration Agreements, Ex. A-1 through A-10, ¶ 5. 18. At the time of Plaintiffs' hiring, each of the Plaintiffs signed multiple documents which typically included an application for contract services, an employment eligibility verification, a tax form W-9, a scanner agreement, an independent contractor agreement, an arbitration agreement, and a drug screen testing form (the "Onboarding Package"). See Ex. A - Declaration of John Jackson, ¶ 7. The documents comprising the Onboarding Package were all (a) signed in Texas, (b) negotiated in Texas, (c) performed in Texas, (d) concerned services to be performed in Texas, and (e) involved parties domiciled, incorporated and having their places of business in Texas (as the case may be). Id. Defendants' Second Motion to Compel Arbitration Page 6 of 21 1 19. Occasionally, if an independent contractor has worked for Defendants for a few years one or more of these documents would be updated and Defendants would require the independent contractor to sign a new document. See Ex. A - Declaration of John Jackson, ¶ 8. Plaintiff Karen Lawson and Plaintiff Fernando Cabrera each signed an arbitration agreement a few years after signing their Onboarding Package. Id. B. Defendants' operations and Plaintiffs' duties 20. Defendants are logistics companies which focus primarily on making medical deliveries from pharmacies to senior homes and hospices. See Ex. A - Declaration of John Jackson, ¶ 3. Defendants also deliver other goods including paint and auto parts. Defendants provide these same-day and next-day delivery services to various businesses in Texas. Id. Defendants do make some limited deliveries to Oklahoma. Id. 21. Defendants are all affiliated entities. See Ex. A - Declaration of John Jackson, ¶ 3. Mike Miller is a principal of Defendants. Id. 22. Defendants outsource the actual delivery of the goods to independent contractors under an arrangement whereby the contractors perform their services in exchange for forty percent of the gross revenue for the delivery, less any rental charges. See Ex. A - Declaration of John Jackson, ¶ 3. 23. Plaintiffs were hired as independent contractors to make deliveries on behalf of Defendants. See Ex. A - Declaration of John Jackson, ¶ 4. 24. Defendants directed Plaintiffs, as their independent contractors, to pick up goods from locations within Texas and to deliver the goods to other locations within Texas. See Ex. A - Declaration of John Jackson, ¶ 7. To Defendants' knowledge, in the last three years, all of Defendants' Second Motion to Compel Arbitration Page 7 of 21 1 Plaintiffs' deliveries were in Texas and none of the Plaintiffs crossed state lines while delivering goods for Defendants. Id. 25. Defendants have no control of the goods prior to pick up and do not know whether the goods originate in Texas or if they have travelled in from out of state. See Ex. A - Declaration of John Jackson, ¶ 8. Defendants presume at least some of these goods Plaintiffs delivered crossed state lines before they were placed with Plaintiffs for delivery within Texas. Id. 26. As independent contractors, Plaintiffs used their own tools (in this case their own vehicles) to render delivery services. See Ex. A - Declaration of John Jackson, ¶ 11. The vehicles used by Plaintiffs to perform the delivery service were not the property of Defendants. Id. 27. Plaintiffs Yuvannda Watson and Karen Lawson's primary duty was to supervise or otherwise manage other independent contractors making local deliveries. See Ex. A - Declaration of John Jackson, ¶ 12. 28. A strike by Plaintiffs would be an inconvenience for Defendants and for Defendants' customers. See Ex. A - Declaration of John Jackson, ¶ 13. However, a strike would not disrupt interstate commerce as Plaintiffs only make local deliveries for Defendants. Id. Further, Defendants use many other independent contractors and are not reliant on any one group of independent contractors. Id. As a logistics company, having to find replacement couriers or subcontracting work to another delivery company is a regular and common part of Defendants' business. Id. 29. On March 28, 2019, Plaintiffs filed the present lawsuit to assert claims to recover overtime compensation allegedly owed them under the Fair Labor Standards Act ("FLSA"). Defendants' Second Motion to Compel Arbitration Page 8 of 21 1 III. ARGUMENT AND AUTHORITIES A. Arbitration should be compelled.6 30. Federal and state law strongly favor arbitration. Howsan v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002); see 9 U.S.C. §§ 4, 208, 307. State and federal policies so strongly favor arbitration that a "presumption exists favoring agreements to arbitrate under the FAA." In re First Merit Bank, N.A., 52 S.W.3d 749, 753 (Tex. 2001). Courts must resolve any doubts about an agreement to arbitrate in favor of arbitration. Tittle v. Enron Corp., 463 F.3d 410, 418 (5th Cir. 2006). The FAA mandates that courts direct parties to proceed to arbitration on issues subject to an arbitration agreement. Bhatia v. Johnston, 818 F.2d 418, 421 (5th Cir. 1987). 31. There is no question that the Arbitration Agreements include a valid agreement to arbitrate. See Arbitration Agreements, Ex. A-1 through A-10, ¶ 1. 32. If an arbitration agreement exists "the court shall make an order summarily directing the parties to proceed with the arbitration in accordance with the terms thereof." See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 627 (1985). 33. This lawsuit concerns allegedly unpaid compensation under the FLSA. The Arbitration Agreements' apply to "all disputes. . . based on. . . unpaid compensation of any kind. . . including. . . the [FLSA]." See Arbitration Agreements, Ex. A-1 through A-10, ¶ 2. 34. The Arbitration Agreements extend their effect to the "subsidiaries and affiliations" of Defendants. Since each Defendant is "subsidiaries" or "affiliations" of each other such that each Defendant is entitled to the rely on the Arbitration Agreements. See Ex. A - Declaration of John Jackson, ¶ 3. While Defendant Act Fast Delivery of Texas, Inc. is the party to the arbitration agreements with Plaintiffs Sandra Pruitt, Ayan Nur, Jasmine Huntsberry, Defendants' Second Motion to Compel Arbitration Page 9 of 21 1 Charmane Nash, Fernando Cabrera, Sheila Chew, Keith Green, Denetria Penfield and Yuvannda Watson, and Defendant Act Fast Delivery of Tyler, Inc. is the party to the arbitration agreement with Plaintiff Karen Lawson, all Defendants are entitled to have the claims against them compelled to arbitration as well as they are "subsidiaries or affiliations" of Defendants Act Fast Delivery of Texas, Inc. and Act Fast Delivery of Tyler, Inc. See Arbitration Agreements, Ex. A- 1 through A-10, ¶ 1. B. Plaintiffs are not "transportation workers" under the Lenz factors and are therefore exempt from the FAA. 35. In response to the previous motion to compel arbitration, Plaintiffs argued they were exempt from the FAA, because the FAA does not apply "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. The Supreme Court has construed this section as exempting "from the FAA only contracts of employment of transportation workers." Circuit City Stores v. Adams, 532 U.S. 105, 111 (2001). Because of the liberal federal policy favoring arbitration agreements, the "exclusion [should] be afforded a narrow construction." Veliz v. Cintas Corp., C 03-1180 SBA, 2004 WL 2452851, at *3 (N.D. Cal. Apr. 5, 2004), modified on reconsideration, 03- 01180(SBA), 2005 WL 1048699 (N.D. Cal. May 4, 2005). As such, merely being employed in the transportation industry is not enough to put a potential litigant into the category of a transportation worker. Lenz v. Yellow Transp., Inc., 431 F.3d 348, 351 (8th Cir. 2005). While, as this Court noted, the Fifth Circuit has no binding precedent to assist us in determining who is and who is not a "transportation worker," the Eighth Circuit has set out an eight-factor test to determine whether a transportation industry employee is a "transportation worker" under the FAA. Id. Defendants' Second Motion to Compel Arbitration Page 10 of 21 1 36. The Lenz court's non-exclusive 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; 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. Id. Factor 1 - Whether the employee works in the transportation industry 37. Defendants provide next day and same day delivery services to various businesses in their local communities in Texas. See Ex. A – Declaration of John Jackson, ¶ 1. Defendants admit generally that Plaintiffs work in the transportation industry. This factor favors Plaintiffs. Factor 2 - Whether the employee is directly responsible for transporting goods in interstate commerce 38. In the last three years, to Defendants' knowledge, none of the Plaintiffs in this matter were directly responsible for transporting goods in interstate commerce. See Ex. A – Declaration of John Jackson, ¶ 9. All of Plaintiffs' deliveries took place in local communities within Texas. Id. Commerce is only considered "interstate," for purposes of FAA § 1 when the plaintiff driver claims to have personally, physically crossed state lines. See Magana v. DoorDash, Inc., 343 F. Supp 3d 891, 899 (N.D. Cal. 2018) (holding delivery driver was not engaged in interstate commerce under § 1 because he never alleged that "he ever crossed state lines as part of his work") accord, Levin v. Caviar, Inc., 146 F.Supp. 3d 1146, 1152–54 (N.D. Cal. 2015); Vargas v. Delivery Outsourcing, LLC, 2016 WL 946112, slip op. at 3–5 (N.D. Cal. Defendants' Second Motion to Compel Arbitration Page 11 of 21 1 2016). Plaintiffs have not alleged they crossed state lines as part of their work. See [Doc. No. 1]. This factor favors Defendants. Factor 3 - Whether the employee handles goods that travel interstate 39. Defendants directed Plaintiffs, as their independent contractors, to pick up goods from locations within Texas and to deliver the goods to other locations within Texas. See Ex. A – Declaration of John Jackson, ¶ 9. However, Defendants admit that some of those goods may themselves have originated from outside of Texas. Id. at ¶ 10. This factor favors Plaintiffs. Factor 4 - Whether the employee supervises employees who are themselves transportation workers 40. Two of the Plaintiffs (Yuvannda Watson and Karen Lawson) did supervise couriers who made deliveries. Id. at ¶ 12. To the extent applicable to those two plaintiffs, this factor favors them. Factor 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 41. This factor harkens back to the enactment of the FAA in 1925. At that time Congress had power over the activities of "seamen" and "railroad employees" both of which defined under the Jones Act and Transportation Act respectively. Veliz v. Cintas Corp., 2004 WL 2452851, at *4. Congress was particularly concerned about these workers as they essentially constituted all interstate commerce. Congress crafted this exemption from the FAA because each of these classes of workers already had developed statutory dispute resolution schemes. The Supreme Court noted, "[i]t is reasonable to assume that Congress excluded "seamen" and "railroad employees" from the FAA for the simple reason that it did not wish to unsettle established or developing statutory dispute resolution schemes covering specific workers." Circuit City Stores, Inc. v. Adams, 532 U.S. at 121. The exemption therefore was not a statement Defendants' Second Motion to Compel Arbitration Page 12 of 21 1 that these claims were inarbitrable, but rather a statement that those claims would continue to be governed by the bodies of law already governing them. In this case, Plaintiffs are neither "seamen" nor "railroad employee" and do not belong to a class of employees for which special arbitration already existed when Congress enacted the FAA. This factor favors Defendants. Factor 6 - Whether the vehicle itself is vital to the commercial enterprise of the employer 42. In the Lenz case, this factor asks, "whether the vehicle is vital to the commercial enterprise of the employer," however in Lenz's application the court noted that Lenz "did not operate any vehicle in interstate commerce." Lenz, 431 F.3d at 353. So too in this case. While Plaintiffs used vehicles in performing their delivery services, they did not use them in interstate commerce. See Ex. A – Declaration of John Jackson at ¶ 9. Further, as Plaintiffs were independent contractors, they used their own vehicles to complete deliveries. Id. at ¶ 11. The Plaintiffs' vehicles were not property of Defendants and not vital to the commercial enterprise of Defendants. Id. at ¶ 11. This factor favors Defendants. Factor 7 - Whether a strike by the employee would disrupt interstate commerce 43. This factor also comes from the early days of the enactment of the FAA and the previous Transportation Act. At that time Congress considered it to be "of the highest public interest to prevent the interruption of interstate commerce by labor disputes and strikes." Texas & N.O.R. Co. v. Bhd. of Ry. & S.S. Clerks, 281 U.S. 548, 561, 50 S. Ct. 427, 430, 74 L. Ed. 1034 (1930). As such, the Transportation Act provided for conference between the parties, if that was unsuccessful, then an adjustment board of the parties' own choosing, and it that was unsuccessful, finally a full hearing before a national board. Id. All in the name of avoiding a strike. Unlike a strike by railroad employees, a strike by Defendants' courier employees would be momentarily inconvenient for Defendants (and certainly for those persons awaiting Defendants' Second Motion to Compel Arbitration Page 13 of 21 1 deliveries). However, Defendants are not reliant on any particular group of independent contractors and having to find replacement couriers or subcontracting work to another delivery company is a regular and common part of the business. Further, because the deliveries remain local, it would not disrupt interstate commerce or halt deliveries. See Ex. A – Declaration of John Jackson at ¶ 13. Defendants are a logistics company and would retain other independent contractors to complete these deliveries. Id. This factor favors Defendants. Factor 8 - The nexus that exists between the employee's job duties and the vehicle the employee uses in carrying out his duties 44. While this factor asks about "the nexus between the employee's job duties and the vehicle the employee uses in carrying out those duties," in Lenz's application the court noted that Lenz did not "supervise packages moving in interstate commerce." Lenz, 431 F.3d at 353. So too in this case, while Plaintiffs while acting as couriers did use vehicles, they did not use them to deliver "packages moving in interstate commerce." Id. This factor favors Defendants. 45. Under the Lenz factors, while Plaintiffs work in the "transportation industry" or oversee those persons making deliveries, and some of the goods themselves may have originated from interstate commerce, Plaintiffs do not meet any of the other Lenz factors. As such, Plaintiffs are not "transportation workers" who are exempt pursuant to FAA § 1. C. The TGAA applies to the Arbitration Agreements. 46. In the alternative, even assuming, arguendo, Plaintiffs' claims fall under the FAA exception for "workers engaged in foreign or interstate commerce," the TGAA nevertheless requires arbitration. Under the TGAA, a written agreement to arbitrate is generally valid and enforceable with respect to controversies that exist at the time of the agreement or arise thereafter. See TEX. CIV. PRAC. & REM. CODE ANN. § 171.001. Unlike the FAA, the TGAA does not exclude a specific class of employees from its coverage. See Id. § 171.002. Thus, even if Davis were an employee of EGL, he would still be subject to arbitration under the TGAA. We therefore hold that the Defendants' Second Motion to Compel Arbitration Page 14 of 21 1 Agreement's arbitration provision is valid and enforceable under the TGAA, even if the Agreement is excepted from application of the FAA. Davis v. EGL Eagle Glob. Logistics L.P., 243 F. App'x 39, 44 (5th Cir. 2007) (holding TGAA applies to require arbitration of claims of truck driver who otherwise fell under FAA exclusion for workers in interstate commerce). 47. The FAA and the TGAA are not mutually exclusive. See In re D. Wilson Construction Company, 196 S.W.3d 774, 779 (Tex.2006). The FAA does not preempt consonant state law, only contrary state law. In re Chevron U.S.A., Inc., 419 S.W.3d 329, 335 (Tex. App.— El Paso 2010, no pet.). For the FAA to preempt the TGAA, state law must refuse to enforce an arbitration agreement that the FAA would enforce, either because "(1) the T[G]AA has expressly exempted the agreement from coverage ... or (2) the T[G]AA has imposed an enforceability requirement not found in the FAA." In re Devon Energy Corp., 332 S.W.3d 543, 547 (Tex. App.—Houston [1st Dist.] 2009, no pet.). As the Court noted in its order, "the T[G]AA and the FAA may both be applicable to an agreement, absent the parties' choice of one or the other." [Doc. No. 25, p.10]; citing Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 98 n.64 (Tex. 2011) citing In re L&L Kempwood Assocs., L.P., 9 S.W.3d 125, 127–28 (Tex. 1999) (per curiam); see also Davis v. EGL Eagle Global Logistics L.P., 243 F. App'x 39, 44 (5th Cir. 2007); and Freudensprung v. Offshore Technical Servs. Inc., 379 F.3d 327, 338 n.7 (5th Cir. 2004). 48. The Arbitration Agreements do not contain a choice of law clause. When parties do not choose which law applies to a contract, Texas follows the Restatement (Second) of Conflict of Laws in determining what law to apply. Sonat Expl. Co. v. Cudd Pressure Control, Inc., 271 S.W.3d 228, 233 (Tex. 2008). The Restatement lists five factors to be considered in determining the law governing a contract: (a) the place of contracting, (b) the place of Defendants' Second Motion to Compel Arbitration Page 15 of 21 1 negotiation, (c) the place of performance, (d) the location of the subject matter, and (e) the domicile, place of incorporation, and place of business of the parties. 49. Here, all the Arbitration Agreements were (a) signed in Texas, (b) negotiated in Texas, (c) performed in Texas, (d) concerned services to be performed in Texas, and (e) involved parties domiciled, incorporated and having their places of business in Texas. See Ex. A – Declaration of John Jackson. As such, Texas law applies. 50. Further, while the Arbitration Agreements do not contain a choice of law clause, the Independent Contractor Agreements do contain a Texas choice of law clause as discussed infra at ¶ 57. If then, the Arbitration Agreements are construed together with the Independent Contractor Agreements then the choice of law clause controls and Texas law applies. 51. Thus, even if § 1 of the FAA did not apply, the TGAA nevertheless would. As such, this Court should compel arbitration. D. The merger clause in the Independent Contractor Agreements does not bar enforcement of the Arbitration Agreements. 52. At the time of Plaintiffs' hiring, in addition to signing the Arbitration Agreements, Plaintiffs also executed several other documents including an application for contract services, employment eligibility verification, tax form W-9, scan agreement, independent contractor agreement, and drug screen testing form. See Ex. A – Declaration of John Jackson. 53. Each of the Independent Contract Agreements (subject to the exception noted below)1 contains a merger clause at paragraph 14 which provides: A. This Agreement, including all exhibits, constitutes the entire agreement and understanding between the parties. 1 Defendants only retained the signature pages for Sandra Pruitt and Fernando Cabrera's Independent Contractor Agreement, but do not dispute that those agreements contained a merger clause identical to the one in other Independent Contract Agreements. Defendants' Second Motion to Compel Arbitration Page 16 of 21 1 B. This Agreement shall not be modified, altered, changed, or amended in any respect unless in writing and signed by both parties. C. This Agreement supersedes any other agreement [sic] between the parties in force on the date of execution of this Agreement. 54. The merger clause does not foreclose enforcement of the Arbitration Agreements for at least four reasons since: (1) the Independent Contractor Agreements are not fully integrated therefore because they do not address arbitration, they do not preclude arbitration; (2) even if the Independent Contractor Agreements are fully integrated, the Arbitration Agreements are not superseded because they are "collateral agreements;" (3) the Arbitration Agreements were signed at the same time or after the Independent Contractor Agreements and are therefore to be construed together; and (4) the Independent Contractor Agreements do not constitute a signed writing specifically stating intent to revoke the Arbitration Agreements which themselves contain a clause that provides they can only be modified by an express written intent to revoke or modify the Arbitration Agreements. Reason 1 – The Independent Contractor Agreements are not fully integrated 55. The inclusion of a "merger or integration clause does not conclusively establish that the written contract is fully integrated." Morgan Bldgs. & Spas, Inc. v. Humane Soc'y of Se. Texas, 249 S.W.3d 480, 486 (Tex. App.—Beaumont 2008, no pet.). A fully integrated written agreement is a "final and complete expression of all the terms agreed upon by the parties." Id. Whereas, a partially integrated agreement is a final and complete expression of all the terms addressed in that written agreement it is not a "final and complete expression of all the terms the parties have agreed upon." Id. Court consider the surrounding circumstances in determining whether, and to what degree, an agreement is integrated. Id. In this case the Independent Contractor Agreements do not contain any clause concerning alternative dispute resolution. Rather, Plaintiffs signed the Arbitration Agreements. As mentioned above, Plaintiffs Defendants' Second Motion to Compel Arbitration Page 17 of 21 1 signed the Onboarding Packages which included an application for contract services, employment eligibility verification, tax form W-9, scan agreement, independent contractor agreement, and drug screen testing form. See Ex. A – Declaration of John Jackson, ¶ 7. As such, considering the circumstances it is clear the Independent Contractor Agreements did not constitute a "final and complete expression of all the terms the parties have agreed upon" as they did not address dispute resolution. Morgan Bldgs. & Spas, Inc., 249 S.W.3d at 486. Reason 2 – The Arbitration Agreements are "collateral agreements" 56. Alternatively, even if the Independent Contractor Agreements are fully integrated, they do not preclude "collateral agreements" that do not contradict the terms of the fully integrated agreement. Garner v. Fid. Bank, N. A., 244 S.W.3d 855, 859 (Tex. App.—Dallas 2008, no pet.). A "collateral agreement" is "one the parties might naturally make separately, i.e., one not ordinarily expected to be embodied in, or integrated with the written agreement and not so clearly connected with the principal transaction as to be part and parcel of it." Id. Such collateral agreements are admissible so long as they do not contradict either the terms of a written agreement. Id. The Arbitration Agreements do not contradict the Independent Contract Agreements, rather they address a subject matter not addressed by the Independent Contract Agreements, that is, dispute resolution procedures. As such, the Arbitration Agreements are "collateral agreements" and enforceable. Reason 3 – The Independent Contractor Agreements and the Arbitration Agreement should be construed together 57. Separate documents "executed at the same time, for the same purpose, and in the course of the same transaction are construed together" and form a single contract. Lake v. Cravens, 488 S.W.3d 867, 889 (Tex. App.—Fort Worth 2016, no pet.) citing Jim Walter Homes, Inc. v. Schuenemann, 668 S.W.2d 324, 327 (Tex. 1984). Since all but two of the Independent Defendants' Second Motion to Compel Arbitration Page 18 of 21 1 Contractor Agreements and Arbitration Agreements were signed when Plaintiffs applied to be independent contractors for Defendants, the Independent Contractor Agreements and the Arbitration Agreements should be construed together. Plaintiffs Karen Lawson and Fernando Cabrera's Arbitration Agreements were not executed at the same time as their Independent Contractor Agreements. Rather, their Arbitration Agreements were executed some years later. Even so, as they were executed subsequently, the Independent Contractor Agreements would not supersede them. Finally, Defendants note that if construed together the Independent Contractor Agreements do contain a choice of law clause stating that the "Agreement shall be governed by the laws of the State of Texas." See e.g. B-2, p. 5. Reason 4 – The merger clause in the Independent Contractor Agreement does not constitute a signed writing specifically stating intent to revoke the Arbitration Agreements 58. The Arbitration Agreements, "can only be revoked or modified in writing signed by both parties that specifically states intent to revoke or modify [them]." Ex. A-1 through A-10, ¶ 9. The Independent Contractor Agreements do not contain such language. As such, the Arbitration Agreements, by their own terms, are not superseded by the Independent Contractor Agreements. The Independent Contractor Agreements specifically allow for the applicability of other agreements "signed by both parties." See e.g. B-2, p. 5. The Arbitration Agreements are therefore not superseded by the Independent Contractor Agreements. IV. CONCLUSION 59. Plaintiffs signed valid binding Arbitration Agreements which by their own terms cover the claims in this lawsuit. Plaintiffs cannot demonstrate any reason that they should be exempted from arbitration. Plaintiffs are not exempt under the FAA as "transportation workers" under the Lenz factors. And even if the Plaintiffs were exempt from the FAA, the Arbitration Defendants' Second Motion to Compel Arbitration Page 19 of 21 1 Agreements are also governed by Texas law and the TGAA would require arbitration. Finally, Plaintiffs' argument that the merger clause in the Independent Contractor Agreement forecloses arbitration fails because: (1) the Independent Contractor Agreements were not fully integrated and the Arbitration Agreements addressed other matters, (2) the Arbitration Agreements were "collateral agreements" that did not contradict the Independent Contractor Agreements, (3) the Independent Contractor Agreements and the Arbitration Agreements were executed at the same time and should be construed together, and (4) the Independent Contractor Agreements do not specifically state the intent to revoke or modify the Arbitration Agreements. WHEREFORE, Defendants Act Fast Delivery, Inc.; Act Fast Courier of Texas, Inc.; Act Fast Delivery of Houston, Inc.; Act Fast of Coastal Bend, Inc.; Act Fast Delivery of S.A., Inc.; Act Fast Delivery of Tyler, Inc.; Act Fast Delivery of Travis County, Inc.; and Mike Miller respectfully request that the Court grant this Motion, dismiss the pending litigation, compel Plaintiffs Sandra Pruitt, Karen Lawson, Ayan Nur, Jasmine Huntsberry, Charmane Nash, Fernando Cabrera, Sheila Chew, Keith Green, Denetria Penfield, and Yuvannda Watson's claims to arbitration, and award Defendants any further relief to which they are justly entitled. Respectfully submitted, By: /s/ Joseph F. Colvin, Jr. Joseph F. Colvin, Jr. TBN: 24072777 Hughes Watters Askanase, L.L.P. Total Plaza 1201 Louisiana, 28th Floor Houston, Texas 77002 Phone:(713) 759-0818 Fax: (713) 759-6834 jcolvin@hwa.com ATTORNEY-IN-CHARGE FOR DEFENDANTS Defendants' Second Motion to Compel Arbitration Page 20 of 21 1 CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of Defendants' Second Motion to Compel Arbitration was served on the following counsel of record via the Court's ECF Filing System on the 3rd day of October 2019: Melissa Moore melissa@mooreandassociates.net Curt Christopher Hesse curt@mooreandassociates.net Bridget Dale Davidson bridget@mooreandassociates.net Moore & Associates Lyric Center 440 Louisiana, Ste. 675 Houston, Texas 77002 By: /s/ Joseph F. Colvin, Jr. Joseph F. Colvin, Jr. Defendants' Second Motion to Compel Arbitration Page 21 of 21