NOT FOR PUBLICATION FILED

UNITED STATES COURT OF APPEALS DEC 7 2018

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

ABDIRIZAQ EGE, individually, and on No. 17-35123 behalf of other members of the general public similarly situated; et al., D.C. No. 2:16-cv-01167-RSL

Plaintiffs-Appellants,

MEMORANDUM*

v.

EXPRESS MESSENGER SYSTEMS INC.,

DBA OnTrac, a Delaware corporation and DOES 1 THROUGH 100, inclusive,

Defendants-Appellees.

Appeal from the United States District Court for the Western District of Washington Robert S. Lasnik, District Judge, Presiding

Submitted November 6, 2018** Seattle, Washington

Before: McKEOWN and FRIEDLAND, Circuit Judges, and GAITAN,*** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). *** The Honorable Fernando J. Gaitan, Jr., United States District Judge for the Western District of Missouri, sitting by designation. Appellants appeal the district court’s dismissal of their complaint in favor of

arbitration. We have jurisdiction under 28 U.S.C. § 1291. We review de novo a

dismissal in favor of arbitration. See Rogers v. Royal Caribbean Cruise Line, 547

F.3d 1148, 1151 (9th Cir. 2008), cert. denied, 557 U.S. 920 (2009). The parties are

familiar with the facts, so we do not repeat them here.

On July 29, 2015, appellant Ege filed a class action complaint against

Express Messenger Systems, Inc. d/b/a OnTrac, a transportation broker. Ege

asserted state law claims for failure to pay overtime and minimum wages, failure to

provide rest and meal breaks, failure to timely pay wages upon termination and

willful refusal to pay wages on behalf of a proposed class of current and former

delivery drivers who worked for OnTrac in Washington from July 29, 2012 to

present. The complaint alleged that OnTrac intentionally misclassified appellant

Ege and putative class members as contractors rather than employees, and failed to

provide benefits such as overtime, meal and rest breaks to which certain employees

are entitled under state law. On July 8, 2016, Ege filed an Amended Complaint

adding Farah and Hassan as additional plaintiffs. OnTrac removed the matter to

federal court on July 28, 2016, pursuant to 28 U.S.C. §§ 1332 and 1441.

On August 4, 2016, OnTrac filed a Motion to Dismiss or in the Alternative

to Stay Proceedings and Compel Arbitration. OnTrac asserted that appellants were

required to submit their claims to arbitration pursuant to the Federal Arbitration

2 Act, because OnTrac was a third-party beneficiary to the Owner/Operator

agreements between appellants and SCI, a third party administrator, and the

agreements contained arbitration provisions.

On January 10, 2017, the district court granted OnTrac’s Motion to Dismiss.

The district court concluded that OnTrac was a third-party beneficiary to the

Owner/Operator agreements, appellants’ claims were arbitrable and arbitration was

the proper forum in which to adjudicate the claims. Appellants did not challenge

the validity of the Owner/Operator agreements in the district court.

Under Washington law, a third-party beneficiary contract exists when the

contracting parties intend to create one. Lonsdale v. Chesterfield, 99 Wash.2d 353,

360-61, 662 P.2d 385 (1983). The test for determining whether contracting parties

intended to create a third-party beneficiary is whether “performance under the

contract would necessarily and directly benefit” the third party. Id. at 362.

We conclude that appellants’ performance under the agreements necessarily

and directly benefitted OnTrac, and therefore OnTrac was a third-party beneficiary.

As the district court noted, appellants’ work under the agreement--delivering

parcels--was an integral part of OnTrac’s business, and the agreements obligated

appellants to indemnify logistics company customers, grant customers the right to

subrogate claims and notify customers within four hours of any accidents.

3 Appellants argue for the first time on appeal that the Owner/Operator

agreements contain multiple substantively unconscionable provisions. We do not

consider the unconscionability arguments because they were not raised in the

district court. In re Mortgage Store, Inc., 773 F.3d 990, 998 (9th Cir. 2014) (citing

Singleton v. Wulff, 428 U.S. 106, 120, 96 S. Ct. 2868, 49 L. Ed. 2d 826 (1976)).

The district court properly dismissed appellants’ complaint in favor of arbitration.

Appellants’ Motion to Stay Appeal pending the Supreme Court’s decision in New

Prime, Inc. v. Oliveira, No. 17-340, is denied.

AFFIRMED.

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