California Legal Brief

The Rule of Doss v. Tesla, Inc. is that yard hostlers who move 53-foot trailers containing auto parts shipped from out of state within factory grounds are "transportation workers" engaged in interstate commerce exempt from the Federal Arbitration Act, under circumstances where their movement and positioning of trailers for unloading and receiving is a necessary step in completing the interstate journey of goods.

Appeal from order denying motion to compel arbitration in Superior Court, Alameda County.

Defendant Appellant was Tesla, Inc. — the employer seeking to compel individual arbitration under an employment agreement containing a class action waiver.

Plaintiff Respondent was Kenneth Doss — the former yard hostler who filed a putative class action for wage and hour violations.

The suit sounded in wage and hour violations under the Labor Code and Unfair Competition Law. No cross-claims were identified.

The key substantive facts leading to the suit were Doss worked as a yard hostler at Tesla's Fremont factory from 2017-2021, using tractor trucks to move 53-foot trailers containing auto parts shipped from out-of-state within the factory grounds to facilitate unloading and receiving functions, and alleged Tesla violated wage and hour laws regarding overtime, meal/rest breaks, wage statements, and business expense reimbursements.

The procedural result leading to the Appeal: The trial court denied Tesla's motion to compel arbitration, ruling that (1) yard hostlers are transportation workers engaged in interstate commerce exempt from the FAA under 9 U.S.C. § 1, (2) Labor Code section 229 rendered the arbitration agreement ineffective for most claims, (3) the class waiver was invalid under Gentry factors, and (4) severance was inappropriate due to illegality.

The key question(s) on Appeal: 1. Whether yard hostlers who move interstate-shipped trailers within factory grounds are exempt from the FAA as transportation workers engaged in interstate commerce; 2. Whether Labor Code section 229 applies to various types of wage and hour claims; 3. Whether the class action waiver was properly invalidated under Gentry; 4. Whether severance of the class waiver was appropriate.

The Appellate Court held yard hostlers who move 53-foot trailers containing out-of-state auto parts within factory grounds to facilitate unloading are transportation workers engaged in interstate commerce exempt from the FAA because their work is a necessary step in completing the interstate journey, but Labor Code section 229 only applies to claims seeking collection of due and unpaid wages under Labor Code sections 200-244, not overtime, meal/rest break, or wage statement violations.

The case is inapplicable when workers handle goods that have truly "come to rest" at their final destination and are no longer in the stream of interstate commerce, when workers do not directly handle instrumentalities of interstate commerce (trailers/containers that crossed state lines), or when the work is merely incidental rather than necessary to completing interstate delivery.

The case leaves open the precise point at which interstate commerce ends for different types of deliveries, whether other unconscionability defenses beyond the class waiver might invalidate the entire arbitration agreement, and the application of section 1 exemption to workers who perform purely intrastate activities without direct connection to interstate shipments.