Carlos Alvarado v. Pacific Motor Trucking Company , 672 F. App'x 687 ( 2016 )

FILED
NOT FOR PUBLICATION
DEC 23 2016
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CARLOS ALVARADO; ALAN CHILDS; No. 14-56823
WILLIAM FROGUE; DAVID KEE;
ROSS KERSHNER; RAFAEL D.C. No.
MARROQUIN; JESSE MEDINA; 5:14-cv-00504-DOC-DTB
DAVID MOLINA; FRANK MONTEZ;
CARL MORGAN; JESSE NAPOLES;
ALFONSO REYES; CARLOS ROMERO; MEMORANDUM*
LEOBARDO ZEPEDA,
Plaintiffs-Appellants,
v.
PACIFIC MOTOR TRUCKING
COMPANY, a Missouri corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
David O. Carter, District Judge, Presiding
Argued and Submitted November 10, 2016
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: SCHROEDER and BYBEE, Circuit Judges, and SMITH,** Chief District
Judge.
Carlos Alvarado, Alan Childs and twelve additional Plaintiffs were all
employed as long haul drivers by Defendant, Pacific Motor Trucking Company
(“PMTC”). In 2006 and 2007, PMTC instituted an owner-operator program to
replace existing trucks. Under that program, the drivers would purchase the new
trucks and become parties to an “Operating Agreement and Equipment Lease”
(“the Agreement”). Although Plaintiffs did not see the Agreement until after they
had made substantial financial commitments, the Agreement included a
comprehensive arbitration clause that required Plaintiffs to follow the same
procedures as those contained in the parties’ existing Collective Bargaining
Agreements.
PMTC cancelled the Agreement approximately two years later, pursuant to a
provision authorizing cancellation by either party with thirty days notice. Plaintiffs
now appeal the district court’s judgment dismissing their action for fraud and
breach of contract. The district court ruled that under the Federal Arbitration Act
(“FAA”), 9 U.S.C. § 1, et seq., the arbitration clause was valid and enforceable.
The court also denied Plaintiffs’ motion to alter or amend the judgment.
**
The Honorable William E. Smith, Chief United States Judge for the
District of Rhode Island, sitting by designation.
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Plaintiffs on appeal first contend that the entire contract, and by extension
the arbitration clause, was unconscionable as a result of fraud in the inducement.
Their principle assertion is that the company fraudulently misrepresented the
agreement as one that would continue for the long term, when, in fact, PMTC
terminated the contract after two years, leaving Plaintiffs in substantial debt. To
the extent that fraud in the inducement can indicate unconscionability, however,
there must be knowledge at the time the contract was entered into that a material
representation was false. See Brewer v. Missouri Title Loans, 364 S.W.3d 486,
493 (Mo. 2012); ITT Commercial Fin. Corp. v. Mid-Atlantic Marine Supply Corp.,
854 S.W.2d 371, 386 (Mo. 1993). Here, there is no indication that PMTC knew
that the arrangement would not be long term. The evidence in this record reflects
that the cause of the termination was PMTC losing its largest customer.
The Agreement’s nonexclusivity of remedies creates no ambiguity with
respect to the arbitration provision. This argument is raised for the first time on
appeal and lacks merit.
Plaintiffs also argue that they are exempt from the FAA’s mandatory
enforcement requirement because they are transportation workers engaged in
interstate commerce within the meaning of 9 U.S.C. § l. The FAA exemption
applies to “contracts of employment” of interstate transportation workers. The
3
Agreement was not a contract of employment. The Agreement established the
terms governing PMTC’s use of the trucks, not the terms of Plaintiffs’
employment. The terms and conditions of employment were contained in the
parties’ Collective Bargaining Agreements. The Agreement contains some
provisions, including the arbitration provision, that are consistent with terms in the
Collective Bargaining Agreements. Such terms do not, however, transform the
Agreement into a contract of employment.
PMTC’s motions to strike portions of the excerpts of record and opening
brief are denied.
The district court’s judgment is AFFIRMED.
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