United States: First Circuit Affirms Denial Of Motion To Compel Arbitration Of Non-Signatory Employee's Wage And Hour Claims

As a condition of plaintiff Ouadani's employment with defendant TF Final Mile LLC (f/k/a/ Dynamex Operations East, LLC (Dynamex)) as a delivery driver, Ouadani was required to associate with Dynamex's vendor, Birtha Shipping LLC (SBS), from which he received his compensation. Ouadani did not have a written contract with either the Dynamex or SBS. Ouadani ultimately complained to Dynamex that he lacked the independence of a contractor, and that he should be paid as an employee, and he was terminated shortly thereafter.

Later, Ouadani brought various wage and hour claims against Dynamex as a putative class action on his behalf and on behalf of others similarly situated. Dynamex responded by filing a motion to compel arbitration, citing an agreement between it and SBS, which contained a mandatory arbitration clause. The District Court for the District of Massachusetts denied Dynamex's motion to compel, reasoning that Ouadani had never signed the agreement containing the arbitration clause and had no idea that the agreement even existed.

On appeal, Dynamex argued that Ouadani should nonetheless be compelled to arbitrate under federal common law principles of contract and agency. The First Circuit rejected this argument and refused to bind Ouadani, a non-signatory, to the agreement. The Court was not persuaded by Dynamex's arguments that (1) Ouadani was bound to arbitrate inasmuch as he was an "agent" of SBS and (2) Ouadani knowingly sought and obtained benefits from the agreement because he performed the "Contracted Services" pursuant to the agreement for compensation. On the latter issue, the Court held that the benefits of the arbitration clause accrue to the contracting signatories – Dynamex and SBS – not to Ouadani, who could "hardly be said to have 'embraced' the Agreement when he was unaware of its existence." Ouadani v. TF Final Mile LLC, Case No. 17-1583 (1st Cir. Nov. 21, 2017).

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