Lenz v. Yellow Transp., Inc.

Lenz v. Yellow Transp., Inc.

Opinion

 [*349]  SMITH, Circuit Judge.

Yellow Transportation, Inc., ("Yellow") appeals from the district court's order denying its motion to compel arbitration. Yellow argues that the district court erred in finding that Troy Lenz, a former Customer Service Representative for Yellow, is included in the "transportation worker" exemption of the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1. For the reasons discussed below, we now reverse.

I. Background

Yellow is a transportation company serving primarily as a carrier of general commodities by truck. Employment-related disagreements between Yellow and its employees are governed by a Dispute Resolution Agreement ("DRA") that [**2]  requires the arbitration of all disputes. The DRA applies to "all disputes, claims, or controversies arising out of, or related to [the employee's] employment with Yellow that would otherwise require or allow resort to a court or other governmental tribunal." The DRA provides that employment claims "include, but are not limited to, claims of discrimination, harassment or retaliation or claims for benefits brought  [*350]  against Yellow . . . whether based on local, state, or federal laws or regulations, or on tort, or equitable law or otherwise." The DRA requires that all employment claims "be resolved exclusively by final and binding arbitration before a neutral arbitrator." Specifically, the DRA requires that the FAA controls; and, where the FAA is inapplicable, the DRA states that the Indiana Uniform Arbitration Act controls.

Troy Lenz signed the DRA when he began employment with Yellow as a Customer Service Representative. As a Customer Service Representative, Lenz's duties required him to "provide courteous, efficient, timely and informed service to customers calling a Yellow Freight Customer Service Center. Receiving incoming telephone calls, answer questions and investigate decisions,  [**3]  as necessary, following the philosophy of 'what is the right thing to do.' Refer to others for answers as deemed appropriate." Lenz was also to "deliver personal service to customers via telephone contact in response initiated inquiries. Ensure customer satisfaction by listening and responding to customer needs and requirements. Use CRT mainframe and personal computer programs to review and/or modify customer service information." ¹ 

 [**4]  Yellow fired Lenz two months into his employment, and Lenz filed suit in Iowa state court alleging Yellow violated the Iowa Civil Rights Act. Yellow removed the case to the United States District Court for the Southern District of Iowa and filed a motion to compel arbitration and stay action based on the DRA. The district court denied Yellow's motion to compel arbitration, ruling that despite the strong federal policy favoring arbitration, the FAA's exemption for transportation workers applied to Lenz. Finding that Yellow was in the transportation industry and that Lenz was directly engaged in interstate transportation, the district court ruled that Lenz fell within the FAA's exemption. The court further held that because Lenz fell within the FAA's exclusion, Iowa's law disfavoring arbitration in the employment context was not preempted by the FAA. Accordingly, the district court held that the DRA was unenforceable under Iowa law and that arbitration need not be compelled.

Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.