SCOTUS: Drivers outside transportation industry may be exempt from arbitration

Posted by News Room 12 April 2024

Dive Brief:

  • Transportation workers need not work in the transportation industry to qualify for the Federal Arbitration Act’s exemption of workers engaged in foreign or interstate commerce from contractual agreements that compel arbitration, a unanimous U.S. Supreme Court held Friday.
  • Chief Justice John Roberts wrote in Bissonnette v. LePage Bakeries that the FAA contains no such requirement. The 2nd U.S. Circuit Court of Appeals erred, he said, when it compelled truck drivers delivering baked goods for Flowers Foods to arbitrate their wage-and-hour claims against the company on the basis that the drivers worked in the bakery industry, rather than the transportation industry.
  • The high court vacated and remanded the 2nd Circuit’s decision, but Roberts said the court did not express an opinion on “any alternative grounds in favor of arbitration” raised in lower courts. That includes arguments that the drivers were not engaged in foreign or interstate commerce because they delivered baked goods only in Connecticut.

Dive Insight:

The Supreme Court has issued several opinions related to arbitration in the employment context over the last few years, and its decision in Bissonnette adds to the pile.

In oral arguments less than two months ago, counsel for Flowers Foods argued that the high court’s 2021 Southwest Airlines Co. v. Saxon decision supported its position that the drivers could not be considered transportation workers under the FAA. Saxon dealt with an airline worker whose job involved loading and unloading cargo from airplanes, which the court held was covered by the FAA’s exemption.

But in deciding Saxon, the court construed the FAA’s exemption of workers “engaged” in foreign or interstate commerce to focus on the performance of work, rather than the specific industry in which the work is performed, Roberts said Friday. The FAA’s statute, he continued, “says nothing to direct courts to consider the industry of a worker’s employer. The relevant question was ‘what [Saxon] does at Southwest, not what Southwest does generally.’”

Flowers had argued that interpreting the FAA’s statute without an implied transportation industry requirement would “sweep too broadly,” but the court disagreed. Roberts said that the court’s precedent in Saxon and the 2001 case Circuit City Stores, Inc. v. Adams shows that “any exempt worker ‘must at least play a direct and ‘necessary role in the free flow of goods’ across borders.’”