Lim v. TForce Logistics, LLC, No. 20-55564 (9th Cir. 2021)Annotate this Case
Lim, formerly a TForce California delivery driver, alleged that TForce employs delivery drivers and misclassifies them as independent contractors in violation of California law. The drivers sign an Independent Contractor Operating Agreement, providing that the agreement is governed by the laws of Texas, that “any legal proceedings … shall be filed and/or maintained in Dallas, Texas,” that all disputes “arising under, out of, or relating to this Agreement … including any claims or disputes arising under any state or federal laws, statutes or regulations, … including the arbitrability of disputes … shall be fully resolved by arbitration," that any arbitration will be governed by the Commercial Arbitration Rules of the American Arbitration Association, that class actions are prohibited, and that the parties shall share the costs except in the case of substantial financial hardship--the prevailing party is entitled to recover its attorney’s fees and costs.
The Ninth Circuit affirmed the denial of a motion to compel arbitration, referring to the Agreement as an adhesion contract. Based on the cost-splitting, fee-shifting, and Texas venue provisions, the district court correctly concluded the delegation clause, which requires the arbitrator to determine the gateway issue of arbitrability, the agreement was substantively unconscionable as to Lim.