ORDER

Honorable G. Murray Snow, United States District Judge.

Pending before the Court is the Motion to Compel Individual Arbitration and Stay Proceedings of Defendants Arizona Logistics LLC, Michigan Logistics Incorporated, and Parts Authority Arizona LLC, (Doc. 28).1 For the following reasons, the Court grants the motion in part and denies the motion in part.

BACKGROUND

Defendants Arizona Logistics LLC ("Arizona Logistics") and Michigan Logistics Incorporated ("Michigan Logistics") both do business under the name of Diligent Delivery Systems ("Diligent"). (Doc. 1 at 6-7, Doc. 28-1 at 1.) They are affiliated companies and the same person, Larry Browne, is the CEO of both. (Doc. 28-1 at 1.) Mr. Browne, in a declaration attached to the pending Motion, characterized Arizona Logistics' business model as follows:

(Doc. 28-1 at 1-2.)

The Plaintiffs in this action are individuals who contracted with Arizona Logistics to serve as delivery drivers. Each signed an Owner Operator Agreement, ("Agreement"), which formed the basis for the contractual relationship between Arizona Logistics and each driver. Each Plaintiff performed deliveries on behalf of Arizona Logistics' customer, Parts Authority Arizona LLC ("Parts Authority"), which runs a chain of automotive parts shops in Arizona. Each Owner Operator Agreement,2 consistent with Mr. Browne's description of Arizona Logistics' business model, emphasized that the delivery drivers were independent "Owner Operators" and not employees of Arizona Logistics. (Doc. 28-2 at 1, Doc. 28-7 at 1.) Plaintiffs allege, however, that Arizona Logistics, Michigan Logistics and Parts Authority "formed a joint employment relationship with respect to Plaintiffs," and that they "constitute a unified operation," "a common enterprise," have "common management," "centralized control of labor relations," "common ownership" and constitute "a single employer" and an "integrated enterprise." (Doc. 1 at 9-10).

Plaintiffs allege that Defendants "knowingly misclassified" them as independent contractors, rather than employees. (Doc. 1 at 2-3.) By doing this, Plaintiffs allege, Defendants were able to avoid paying statutorily mandated minimum and overtime wages, shift business expenses to Plaintiffs, avoid payroll taxes and benefits, and obtain an unfair competitive advantage in the marketplace. (Id.) Plaintiffs bring individual and class claims under the Fair Labor Standards Act ("FLSA") and Arizona's Wage Act, and on a theory of restitution/unjust enrichment.3 (Id. at 12-26.)

Defendants bring this Motion to Compel based on Alternative Dispute Resolution ("ADR") provisions included in the Owner Operator Agreements. The Agreements signed by Plaintiffs Bonner, Ross, Williams and Harris4 included a four-page provision entitled "Dispute Resolution," which provided in part that:

(Doc. 28-2 at 7-9.) The ADR provision in Plaintiff Six's Agreement, by contrast, says only the following:

(Doc. 28-7 at 6.)

Defendants ask the Court to compel arbitration and stay further proceedings based on these contractual provisions.

DISCUSSION

I. Legal Standard

Under the Federal Arbitration Act ("FAA"), "[a] written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, . . . shall be valid, irrevocable, and enforceable. . . ." 9 U.S.C. § 2; see, e.g., Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 113-19, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001) (holding that FAA applies to employment contracts except those of transportation workers) (citing 9 U.S.C. §§ 1-2); Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000); Tracer Research Corp. v. Nat'l Envtl. Servs. Co., 42 F.3d 1292, 1294 (9th Cir. 1994), cert. dismissed, 515 U.S. 1187, 116 S.Ct. 37, 132 L.Ed.2d 917 (1995). "Although [a] contract provides that [state] law will govern the contract's construction, the scope of the arbitration clause is governed by federal law." Tracer Research Corp, 42 F.3d at 1294 (citing Mediterranean Enters., Inc. v. Ssangyong Corp., 708 F.2d 1458, 1463 (9th Cir. 1983)); see Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 892 (9th Cir. 2002) (holding that FAA "not only placed arbitration agreements on equal footing with other contracts, but established. . . a federal common law of arbitrability which preempts state law"); Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719 (9th Cir. 1999) ("Federal substantive law governs the question of arbitrability."); Chiron Corp., 207 F.3d at 1130-31 (holding that "district court correctly found that the federal law of arbitrability under the FAA governs the allocation of authority between courts and arbitrators" despite arbitration agreement's choice-of-law provision).5

"Notwithstanding the federal policy favoring it, `arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.'" Tracer Research Corp., 42 F.3d at 1294 (quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)); see French v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 784 F.2d 902, 908 (9th Cir. 1986). Where the arbitrability of a dispute is in question, a court must look to the terms of the contract. See Chiron Corp., 207 F.3d at 1130. "`Any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.'" Simula, 175 F.3d at 719 (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)); see French, 784 F.2d at 908.

However, a court "cannot expand the parties' agreement to arbitrate in order to achieve greater efficiency [and] the [FAA] `requires piecemeal resolution when necessary to give effect to an arbitration agreement.'" Tracer Research Corp., 42 F.3d at 1294 (quoting Moses H. Cone Mem'l Hosp., 460 U.S. at 24-25, 103 S.Ct. 927) (emphasis in original). "[T]he judicial inquiry . . . must be strictly confined to the question whether the reluctant party did agree to arbitrate[.]" United Steelworkers, 363 U.S. at 582, 80 S.Ct. 1347. "The court's role under the [FAA] is therefore limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue." Chiron Corp., 207 F.3d at 1130 (citing Simula, 175 F.3d at 719-20; Republic of Nicaragua v. Standard Fruit Co., 937 F.2d 469, 477-78 (9th Cir. 1991)); see Simula, 175 F.3d at 720 (stating that "the district court can determine only whether a written arbitration agreement exists, and if it does, enforce it in accordance with its terms") (citing Howard Elec. & Mech. v. Briscoe Co., 754 F.2d 847, 849 (9th Cir. 1985)).

II. Analysis

A. Plaintiffs Bonner, Ross, Williams and Harris agreed to arbitration, while Plaintiff Six only agreed to an unspecified form of ADR.

A court deciding a motion to compel arbitration must first decide whether and to what extent the parties agreed to arbitrate. See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985).

With respect to Plaintiffs Bonner, Ross, Williams and Harris, the Agreements clearly contemplate arbitration, including arbitration of all claims at issue in this case. Plaintiffs do not dispute the content of the agreed-to contract, instead raising numerous reasons why the agreed-to arbitration provision is inapplicable or unenforceable. Those arguments will be considered in subsequent sections. See Mitsubishi Motors Corp., 473 U.S. at 628, 105 S.Ct. 3346 (noting that only upon finding that an agreement to arbitrate is applicable should a court consider "whether legal constraints external to the parties' agreement foreclose[] the arbitration of . . . claims").

Plaintiff Six's case is more complicated. There is a question of whether the ADR provision of Six's Agreement survives the termination of the Agreement, and a related factual question of whether the Agreement has been terminated. But this factual dispute is actually immaterial, because the ADR provision of Six's Agreement survives any termination of the contract.

The Supreme Court has noted that contractual "provisions relating to remedies and dispute resolution—for example, an arbitration provision—may in some cases survive in order to enforce duties arising under the contract." Litton Fin. Printing Div., a Div. of Litton Bus. Sys., Inc. v. NLRB, 501 U.S. 190, 208, 111 S.Ct. 2215, 115 L.Ed.2d 177 (1991) (citing Nolde Bros., Inc. v. Local No. 358, Bakery & Confectionery Workers Union, 430 U.S. 243, 97 S.Ct. 1067, 51 L.Ed.2d 300 (1977)). Litton instructs that:

Id. at 205-06; see also Operating Eng'rs Local Union No. 3 v. Newmont Mining Corp., 476 F.3d 690, 692-93 (9th Cir. 2007). And, courts should "presume as a matter of contract interpretation that the parties did not intend a pivotal dispute resolution provision to terminate for all purposes upon the expiration of the agreement." Litton, 501 U.S. at 208, 111 S.Ct. 2215. This presumption is overcome only when "negated expressly or by clear implication." Id. at 204, 111 S.Ct. 2215 (quoting Nolde Bros., 430 U.S. at 255, 97 S.Ct. 1067). While the contract in Litton dealt with an arbitration provision specifically, the discussion in Litton applies to other forms of alternative dispute resolution as well. See id. at 208, 111 S.Ct. 2215 (addressing "structural provisions relating to remedies and dispute resolution" and "pivotal dispute resolution provision[s]").

Applying the Litton presumption, as well as the presumption in favor of arbitration embodied by the FAA, the Sixth Circuit recently held that an arbitration provision survived the termination of a contract, even when that arbitration provision was not specifically mentioned in an otherwise specific survival provision. See Huffman v. Hilltop Cos., LLC, 747 F.3d 391, 397-98 (6th Cir. 2014). While the Ninth Circuit has not yet addressed this question, at least one district court in this circuit has adopted Huffman's rationale. See OwnZones Media Network, Inc. v. Sys. In Motion, LLC, No. C14-0994JLR, 2014 WL 4626302, at *7 (W.D. Wash. Sept. 15, 2014). The FAA's presumption in favor of arbitration does not apply where, as here, the parties did not actually agree to arbitrate. See Tracer Research Corp., 42 F.3d at 1294. But the presumption of contract interpretation identified in Litton—that parties are presumed not to intend the termination of pivotal contractual dispute resolution provisions—does.

The Court therefore applies the reasoning of Litton and Huffman to Six's Agreement. That the ADR provision was not enumerated in the Agreement's survival provision does not constitute the express or clearly implied negation of the presumption in favor of survivability. Moreover, the dispute here involves "facts and occurrences that arose before expiration." Litton, 501 U.S. at 206, 111 S.Ct. 2215. Whether or not Six's Agreement has terminated, then, he remains bound by the ADR provision.

However, while Six did agree to an ADR provision that survived any termination of the Agreement, that ADR provision did not specify the form of ADR to which the parties agreed. Arbitration is just "one of several mechanisms of `alternative dispute resolution,' which is `[a] procedure for settling a dispute by means other than litigation, such as arbitration or mediation.'" Greenwood v. CompuCredit Corp., 615 F.3d 1204, 1208 (9th Cir. 2010) (quoting Black's Law Dictionary 86 (8th ed. 2004)), rev'd on other grounds, 565 U.S. 95, 132 S.Ct. 665, 181 L.Ed.2d 586 (2012). There is thus no basis for the Court to compel arbitration specifically. However, the ADR provision in Six's Agreement evinces an agreement between the parties to resolve disagreements through ADR rather than litigation. That the exact ADR procedure was not specified is not a bar to enforcement under Arizona law. See Lancer Realty & Invs., Inc. v. Anderson, 146 Ariz. 76, 78, 703 P.2d 1225, 1227 (Ct. App. 1985) ("A party to a contract cannot be permitted to escape the obligations of an agreement . . . just because a condition of that contract has been left to be ironed out later.").

Barring external reasons to be considered in subsequent paragraphs, the Court will honor the parties' bargained-for agreement to resolve disputes through alternative dispute resolution rather than litigation.

B. The Federal Arbitration Act applies to the Agreements signed by Plaintiffs Bonner, Ross, Williams and Harris.

The FAA provides in relevant part that:

9 U.S.C. § 2. The FAA does not apply to "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1.

The Supreme Court has held that the applicability language of § 2 is to be construed broadly, so as to "provide for the enforcement of arbitration agreements within the full reach of the Commerce Clause." Perry v. Thomas, 482 U.S. 483, 490, 107 S.Ct. 2520, 96 L.Ed.2d 426 (1987). There is no dispute that delivery drivers such as the plaintiffs here are "involved" in commerce within the broad meaning of Congress's power to regulate interstate commerce. See, e.g., Gonzales v. Raich, 545 U.S. 1, 17, 125 S.Ct. 2195, 162 L.Ed.2d 1 (2005) ("Our case law firmly establishes Congress's power to regulate purely local activities that are part of an economic `class of activities' that have a substantial effect on interstate commerce."). Thus the FAA presumptively applies to their contracts.

By contrast, the exception language of § 1 is construed more narrowly. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 117-19, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001). Here, "engaged in foreign or interstate commerce" does not invoke the extent to which Congress may regulate commerce, but rather more closely tracks the plain meaning of the phrase. In essence, it is meant to exclude the contracts of workers who are literally engaged in the process of moving goods across state and national boundaries—workers like seamen and railroad employees. See Levin v. Caviar, Inc., 146 F.Supp.3d 1146, 1152-54 (N.D. Cal. 2015). Thus, the plaintiffs here were not engaged in foreign or interstate commerce, and the Court need not address the dependent argument that the Agreements were contracts of employment within the meaning of § 1. See id. at 1154-55.

As a result, to the extent that the relevant parties are bound, and no other exceptions are called for, the Court must compel arbitration. See 9 U.S.C. § 4 ("[T]he court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.").

C. Michigan Logistics and Parts Authority may invoke the arbitration/ADR provisions of the Agreements.

Michigan Logistics and Parts Authority, Defendants here but non-signatories to the Agreements, seek to enforce the ADR provisions of the Agreements. Under the circumstances of this case, they may do so. Plaintiffs allege that Arizona Logistics, Michigan Logistics and Parts Authority "formed a joint employment relationship with respect to Plaintiffs," and that they "constitute a unified operation," "a common enterprise," have "common management," "centralized control of labor relations," "common ownership" and constitute "a single employer" and an "integrated enterprise." (Doc. 1 at 9-10.)

The Arizona Court of Appeals6 has adopted the "alternative estoppel" theory of non-signatory enforcement of arbitration clauses against signatories. See Sun Valley Ranch 308 Ltd. P'ship ex rel. Englewood Props., Inc. v. Robson, 231 Ariz. 287, 296-97, 294 P.3d 125, 134-35 (Ct. App. 2012). Alternative estoppel "takes into consideration the relationships of persons, wrongs, and issues." Id. at 296, 294 P.3d 125, 134-35 (quoting Merrill Lynch Inv. Managers v. Optibase, Ltd., 337 F.3d 125, 131 (2d Cir. 2003)). Specifically,

Id. at 296-97 (quoting CD Partners, LLC v. Grizzle, 424 F.3d 795, 798 (8th Cir. 2005)).

The relationship between the signatory and nonsignatory defendants here, as alleged in the complaint, is not one of distinct, separate entities. Plaintiffs allege that all the Defendants are together joint employers. According to the Complaint:

(Doc. 1 at 3-4.) Plaintiffs allege that this arrangement constituted a "joint employment relationship," wherein "Defendants Michigan Logistics Inc. and Arizona Logistics LLC hire employees who are supervised by Defendant Parts Authority." (Id. at 9.) They further allege that the Defendants "constitute a unified operation," a "common enterprise," and a "single employer"; have "interrelated operations," "common management," "a centralized control of labor relations," and "common ownership"; and that they "commingled funds" and "share the same physical addresses." (Id. at 9-10.)

Various courts across the country have confronted similar factual allegations and applied alternative estoppel to allow non-signatory defendants to invoke arbitration provisions. Ragone v. Atlantic Video at Manhattan Center, 595 F.3d 115 (2d Cir. 2010), involved a makeup artist suing multiple entities for retaliation and sexual harassment. The plaintiff, Ragone, was employed by Atlantic Video, with whom she had signed an arbitration agreement. 595 F.3d at 118-19. ESPN was a client of Atlantic Video's, and Ragone performed services for ESPN, who was not a signatory to the arbitration agreement. Id. at 119. Ragone sued both Atlantic Video and ESPN (as well as certain individuals); the defendants sought to invoke the arbitration agreement. Id. at 117. In allowing ESPN to invoke the arbitration provision under an estoppel theory, the Second Circuit noted:

Id. at 127-28. The Southern District of New York likewise applied estoppel in allowing a nonsignatory to invoke an arbitration provision, in a lawsuit with nearly identical facts to this one. See Ouedraogo v. A-1 Int'l Courier Serv., Inc., No. 12 Civ. 5651(AJN), 2014 WL 1172581, at *4-5 (S.D.N.Y. Mar. 21, 2014) (allowing nonsignatory defendant to enforce arbitration clause against delivery driver who asserted claims under FLSA). And multiple district courts have emphasized in similar contexts that plaintiffs "cannot be permitted to argue Defendants are joint employers while, at the same time, argue their relationship is not so close that all Defendants cannot compel arbitration." Arnold v. DirecTV, No. 4:10-CV-00352-JAR, 2013 WL 6159456, at *4 (E.D. Mo. Nov. 25, 2013) (quoting Carter v. Affiliated Comput. Servs., Inc., No. 6:10-cv-06074, 2010 WL 5572078, at *4 (W.D. Ark. Dec. 15, 2010)).

Given the allegations Plaintiffs make in this case, this reasoning is persuasive and applicable here. Thus alternative estoppel is appropriate and the nonsignatory Defendants here may invoke the arbitration provisions of the Agreements. Because the Court finds that the non-signatory Defendants may seek to enforce the arbitration provisions of the Agreements as a matter of estoppel, the Court need not reach the alternative argument that they may do so as third-party beneficiaries to the Agreements.

D. The concerted action waiver does not bar enforcement of the arbitration/ADR provisions.

Courts may not enforce arbitration agreements that are unenforceable "upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The Ninth Circuit recently held that the National Labor Relations Act ("NLRA") precludes enforcement of an arbitration provision that included a concerted action waiver. See Morris v. Ernst & Young, LLP, 834 F.3d 975, 983-84 (9th Cir. 2016). However, this holding does not apply when the employee had a right to opt out of the concerted action waiver. Id. at 982 n.4; see also Johnmohammadi v. Bloomingdale's, Inc., 755 F.3d 1072, 1076 (9th Cir. 2014).7

Here, the Agreements signed by Plaintiffs Bonner, Ross, Williams and Harris had such an opt-out provision:

(Doc. 28-2 at 10.) Other courts have found that Morris does not bar concerted action waivers when such a 30-day opt out period is provided. See, e.g., Galvan v. Michael Kors USA Holdings, Inc., No. CV 16-07379-BRO (AFMx), 2017 WL 253985, at *9 (C.D. Cal. Jan. 19, 2017). Therefore, even assuming that Plaintiffs are employees within the meaning of the NLRA, the Court is not barred from enforcing the Arbitration Provision against Plaintiffs Bonner, Ross, Williams and Harris.8

Plaintiff Six's Agreement, however, did not include an opt-out. Under the Morris analysis, the concerted action waiver in Six's Agreement would thus be unenforceable under the NLRA. The Court must therefore determine whether the concerted action waiver is severable, such that the remainder of the ADR provision may still be enforced. See Morris, 834 F.3d at 990.

In Arizona, "[g]enerally, courts do not rewrite contracts for parties." Olliver/Pilcher Ins., Inc. v. Daniels, 148 Ariz. 530, 533, 715 P.2d 1218, 1221 (1986). However, "[i]f it is clear from its terms that a contract was intended to be severable, the court can enforce the lawful part and ignore the unlawful part." Id. This intent need not be made explicit in certain cases. "The Arizona Supreme Court has recognized that in the context of contract creating restrictive covenants but not containing a severability clause, Arizona courts will eliminate `grammatically severable, unreasonable provisions.'" Cooper v. QC Fin. Servs., Inc., 503 F.Supp.2d 1266, 1291 (D. Ariz. 2007) (quoting Fearnow v. Ridenour, Swenson, Cleere & Evans, P.C., 213 Ariz. 24, 32, 138 P.3d 723, 731 (2006)).

Citing these principles of Arizona law, the court in Cooper severed, as unconscionable, a concerted action waiver from an otherwise enforceable arbitration provision. 503 F.Supp.2d at 1291. In so doing, the court noted that "[p]reserving the arbitration provision sans [the unconscionable concerted action waiver] is . . . consistent with the Federal Arbitration Act and Arizona public policy favoring both arbitration and class actions." Id. at 1292.

Under the same principles of federal and Arizona law, the concerted action waiver in Six's Agreement is severable. Therefore, even assuming that the NLRA applies to Six as an employee, and a concerted action waiver without an opt-out would be unenforceable, that concerted action waiver may be severed and the Court may still enforce the ADR provision against Six.

CONCLUSION

The ADR provisions of the Agreements are therefore enforceable against each Plaintiff. Plaintiffs Bonner, Ross, Williams and Harris agreed to a specific form of arbitration and the Court therefore compels arbitration as to these Plaintiffs as described in each Agreement. Further proceedings in this Court are stayed. With respect to Plaintiff Six, the Court orders that Six initiate an ADR proceeding as contemplated in the Agreement if he wishes to pursue a remedy. Further proceedings in this Court as to Plaintiff Six are also stayed.

IT IS THEREFORE ORDERED that the Motion to Compel Individual Arbitration and Stay Proceedings of Defendants Arizona Logistics LLC, Michigan Logistics Incorporated, and Parts Authority Arizona LLC, (Doc. 28), is GRANTED IN PART AND DENIED IN PART.

IT IS FURTHER ORDERED that Plaintiffs Bonner, Ross, Williams and Harris must individually arbitrate their claims against Defendants as contemplated in each Plaintiff's Owner Operator Agreement; and that further proceedings in this Court as to these claims are stayed.

IT IS FURTHER ORDERED that proceedings as to Plaintiff Six are stayed to allow him to pursue his claims against Defendants through a form of ADR, as contemplated in his Owner Operator Agreement. Should any dispute arise out of the parties' contractual obligation to agree upon a specific ADR procedure and/or the form of ADR initiated by Six, the Court will hear such dispute and/or lift the stay in this matter.

IT IS FURTHER ORDERED directing the Clerk of Court to continue the stay of this action until further Order of the Court. The parties are directed to file a status report on or before July 19, 2017 and every ninety (90) days thereafter until the stay has been lifted.