On February 12, 2025, the U.S. District Court for the District of Oregon issued an important decision in Porteous v. Flowers Foods, Inc. regarding the enforceability of class and collective action waivers contained in otherwise unenforceable arbitration agreements.
Plaintiff Clint Porteous, a delivery driver and owner of CPORT Distributing, Inc. (CPORT), entered into a Distributor Agreement to deliver baked goods for a subsidiary of Flowers Foods, Inc. (Flowers). The Distributor Agreement included an arbitration provision mandating that Porteous submit any claim, dispute, or controversy arising out of the Agreement to binding arbitration under the Federal Arbitration Act (FAA). The arbitration provision itself contained a class and collection action waiver, whereby Porteous agreed to bring any claims against Flowers on an individual basis only, and a severability clause providing for the continuation of remaining contractual terms should any other provision be deemed unenforceable.
In 2023, Porteous filed suit against Flowers, alleging that the company improperly misclassified him and other similarly situated delivery drivers as independent contractors in violation of the federal Fair Labor Standards Act (FLSA) and Oregon state law. Porteous sought to pursue the FLSA claim as a collective action and the Oregon state law claims as a Federal Rule of Civil Procedure 23 class action.
Flowers moved to compel arbitration under the FAA and to strike the class and collective allegations pursuant to the Distributor Agreement’s arbitration provision. In response, Porteous asserted that the agreement to arbitrate was unenforceable under the FAA’s transportation worker exception. See 9 U.S.C. § 1. Flowers maintained that the transportation worker exception did not apply to Porteous because (1) he engaged in a distinct intrastate transaction beyond the scope of the exception, and (2) the Distributor Agreement was a commercial contract between business entities and not a “contract of employment.”
The District Court sided with Porteous.
First, the court found that although Porteous performed the roll of “last-mile delivery driver,” he participated in an unbroken stream of interstate commerce that fell under the purview of the FAA’s transportation worker exception. Second, the court found that the Distributor Agreement qualified as a “contract of employment,” which Ninth Circuit precedent broadly defines as a contract with “a qualifying worker as one of the parties.” Because Porteous was personally bound to the terms of the Distributor Agreement by a personal guaranty, the Distributor Agreement was a contract for “work” performed by a “worker” and therefore a “contract of employment” for purposes of the FAA’s transportation worker exception. Accordingly, the court held that Porteous qualified for the FAA exception and declined to compel arbitration.
Next, the court considered the validity of the arbitration provision’s class and collective action waiver in isolation. Relying on Ninth Circuit precedent, the court concluded that the class and collective action waiver and the agreement to arbitrate were distinct contractual terms. And therefore, by operation of the arbitration provision’s severability clause, the class and collective action waiver remained enforceable. Thus, Porteous was precluded from pursuing his claims on a class or collective basis notwithstanding the unenforceable arbitration provision.
The Porteous decision is an important clarification on the validity of class and collective action waivers. Since the U.S. Supreme Court’s decision in Epic Systems Corp. v. Lewis (2018)upholding class and collective action waivers in connection with arbitration agreements, few courts have grappled with the question of whether a class and collective action waiver is enforceable separate and apart from an arbitration agreement. How other courts view this issue, particularly with respect to class and collective actions contained in arbitration agreements that are found to be unenforceable, will be something to keep an eye on in the coming months.
If you have any questions about the topics discussed in this blog, please contact James P. Looby at jlooby@vedderprice.com, Michael D. Considine at mconsidine@vedderprice.com, or any Vedder Price attorney with whom you have worked.