Abdirizaq Ege v. Express Messenger Sys., Inc. ( 2018 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS DEC 7 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
ABDIRIZAQ EGE, individually, and on No. 17-35123
behalf of other members of the general
public similarly situated; et al., D.C. No. 2:16-cv-01167-RSL
Plaintiffs-Appellants,
MEMORANDUM*
v.
EXPRESS MESSENGER SYSTEMS INC.,
DBA OnTrac, a Delaware corporation and
DOES 1 THROUGH 100, inclusive,
Defendants-Appellees.
Appeal from the United States District Court
for the Western District of Washington
Robert S. Lasnik, District Judge, Presiding
Submitted November 6, 2018**
Seattle, Washington
Before: McKEOWN and FRIEDLAND, Circuit Judges, and GAITAN,*** District
Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Fernando J. Gaitan, Jr., United States District Judge
for the Western District of Missouri, sitting by designation.
Appellants appeal the district court’s dismissal of their complaint in favor of
arbitration. We have jurisdiction under 28 U.S.C. § 1291. We review de novo a
dismissal in favor of arbitration. See Rogers v. Royal Caribbean Cruise Line, 547
F.3d 1148, 1151 (9th Cir. 2008), cert. denied, 557 U.S. 920 (2009). The parties are
familiar with the facts, so we do not repeat them here.
On July 29, 2015, appellant Ege filed a class action complaint against
Express Messenger Systems, Inc. d/b/a OnTrac, a transportation broker. Ege
asserted state law claims for failure to pay overtime and minimum wages, failure to
provide rest and meal breaks, failure to timely pay wages upon termination and
willful refusal to pay wages on behalf of a proposed class of current and former
delivery drivers who worked for OnTrac in Washington from July 29, 2012 to
present. The complaint alleged that OnTrac intentionally misclassified appellant
Ege and putative class members as contractors rather than employees, and failed to
provide benefits such as overtime, meal and rest breaks to which certain employees
are entitled under state law. On July 8, 2016, Ege filed an Amended Complaint
adding Farah and Hassan as additional plaintiffs. OnTrac removed the matter to
federal court on July 28, 2016, pursuant to 28 U.S.C. §§ 1332 and 1441.
On August 4, 2016, OnTrac filed a Motion to Dismiss or in the Alternative
to Stay Proceedings and Compel Arbitration. OnTrac asserted that appellants were
required to submit their claims to arbitration pursuant to the Federal Arbitration
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Act, because OnTrac was a third-party beneficiary to the Owner/Operator
agreements between appellants and SCI, a third party administrator, and the
agreements contained arbitration provisions.
On January 10, 2017, the district court granted OnTrac’s Motion to Dismiss.
The district court concluded that OnTrac was a third-party beneficiary to the
Owner/Operator agreements, appellants’ claims were arbitrable and arbitration was
the proper forum in which to adjudicate the claims. Appellants did not challenge
the validity of the Owner/Operator agreements in the district court.
Under Washington law, a third-party beneficiary contract exists when the
contracting parties intend to create one. Lonsdale v. Chesterfield, 99 Wash.2d 353,
360-61, 662 P.2d 385 (1983). The test for determining whether contracting parties
intended to create a third-party beneficiary is whether “performance under the
contract would necessarily and directly benefit” the third party. Id. at 362.
We conclude that appellants’ performance under the agreements necessarily
and directly benefitted OnTrac, and therefore OnTrac was a third-party beneficiary.
As the district court noted, appellants’ work under the agreement--delivering
parcels--was an integral part of OnTrac’s business, and the agreements obligated
appellants to indemnify logistics company customers, grant customers the right to
subrogate claims and notify customers within four hours of any accidents.
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Appellants argue for the first time on appeal that the Owner/Operator
agreements contain multiple substantively unconscionable provisions. We do not
consider the unconscionability arguments because they were not raised in the
district court. In re Mortgage Store, Inc., 773 F.3d 990, 998 (9th Cir. 2014) (citing
Singleton v. Wulff, 428 U.S. 106, 120, 96 S. Ct. 2868, 49 L. Ed. 2d 826 (1976)).
The district court properly dismissed appellants’ complaint in favor of arbitration.
Appellants’ Motion to Stay Appeal pending the Supreme Court’s decision in New
Prime, Inc. v. Oliveira, No. 17-340, is denied.
AFFIRMED.
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