Mejia v. RXO Last Mile, Inc.

Background

Maynor Mejia brought a proposed class action alleging that RXO Last Mile, Inc. violated the California Labor Code and other state laws by classifying delivery drivers as independent contractors rather than employees. The alleged violations include failure to pay minimum wage and overtime, failure to reimburse employment expenses, unlawful wage deductions, and violations of California’s Unfair Competition Act.

According to the complaint, RXO used delivery drivers for last-mile delivery and allegedly controlled their work through delivery service agreements and work-related directives. Mejia alleged that RXO required contract carriers to form corporations or limited liability companies and that he was required to form ABC Logistics to obtain work from RXO. RXO characterized ABC Logistics as an independent motor carrier that agreed to complete deliveries arranged by RXO.

The delivery service agreement between ABC Logistics and XPO Last Mile, Inc. included an indemnification provision. It required the contract carrier to defend and reimburse XPO Last Mile for losses, costs, attorneys’ fees, and other expenses arising from claims asserted by the contract carrier or its agents or employees.

Motion and Arguments

RXO moved under Federal Rule of Civil Procedure 14(a) for permission to serve a third-party complaint against ABC Logistics for indemnity. Rule 14(a) allows a defendant, with the court’s permission when required, to bring in a nonparty that may be liable for all or part of the plaintiff’s claim.

Mejia argued that RXO’s motion was untimely and that adding ABC Logistics would complicate the case, delay class-certification and trial proceedings, and prejudice him. RXO argued that the motion was filed less than two months after its answer, that the indemnity claim was relatively simple, and that it would rely primarily on discovery from the existing case.

Court’s Analysis

The court found the motion timely. Although RXO knew facts supporting impleader when the original complaint was filed, the court concluded that RXO reasonably could have waited for resolution of its motion to compel arbitration. The motion was filed less than two months after RXO answered the amended complaint.

The court determined that adding ABC Logistics might create some procedural complications, but not major complications that would make impleader inappropriate. The court noted that bifurcation or other trial procedures could address additional complications if necessary.

The court also found that adding ABC Logistics would not unduly delay the case. Discovery was still ongoing, the class-certification hearing was scheduled for October 2024, and no trial date had been set. The court concluded that the case schedule could accommodate any additional discovery.

Finally, the court found that the motion would not unfairly prejudice Mejia. It emphasized that allowing the third-party complaint did not mean RXO would prevail on its indemnity claim. The court stated that the merits of that claim remained unresolved and that those issues were better addressed through a fully briefed motion.

Disposition

Judge Susan Illston granted RXO’s motion for leave to file the third-party complaint. The court relied on Rule 14(a)’s liberal approach to impleader and concluded that resolving related disputes in one lawsuit would promote judicial efficiency. The order did not decide whether ABC Logistics must indemnify RXO or whether RXO is liable on Mejia’s underlying claims.