Earlier this month, the United States Supreme Court unanimously held that the Federal Arbitration Act’s exemption for transportation workers is not exclusive to workers in the transportation industry. Writing for the Court, Chief Justice Roberts explained instead that the exemption turns on whether a worker is a transportation worker, regardless of the company’s industry.
Federal Arbitration Act
Dating back to 1925, the FAA generally requires arbitration agreements to be enforced according to their terms. Nevertheless, it explicitly exempts employment contracts “of seaman, railroad employees, and any other class or workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1.
The United States Supreme Court previously interpreted this exemption to apply only to transportation workers. Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001).
In the Court’s most recent FAA case, it was tasked with interpreting who qualifies as a “transportation worker.”
Background
Petitioners Neal Bissonnette and Tyler Wojnarowkski were distributors for Flower Foods, Inc. Their responsibilities included picking up baked goods from local warehouses and distributing them to other stores and restaurants. Their distribution agreements contained an arbitration clause mandating all disputes be resolved under the FAA. When the petitioners sued Flower Foods for violating wage laws, Flower Foods moved to compel arbitration pursuant to the agreements.
In the lower court, the petitioners argued they were exempt from the FAA because they were “workers engaged in foreign or interstate commerce.” Disagreeing, the district court compelled arbitration due to the petitioners’ broad responsibilities unrelated to transportation. The Second Circuit affirmed, but for a different reason. It held that the petitioners did not fit the exemption because they worked in the bakery industry, not the transportation industry.
Bissonnette v. LePage Bakeries Park St., LLC
The Supreme Court vacated the Second Circuit’s judgment. In its 9-0 decision, the Court broadly interpreted “transportation worker.” Specifically, the Court held “[a] transportation worker need not work in the transportation industry to fall within the exemption from the FAA provided by § 1 of the Act.” Instead, regardless of industry, “a transportation worker is one who is actively engaged in transportation of goods across borders via the channels of foreign or interstate commerce.” (cleaned up).
Impact
The Court’s decision may result in more lawsuits against large companies. This is especially true for manufacturing or retail companies that employ many drivers, including giants like Amazon and Walmart. Now even more limited in their ability to compel arbitration, companies in all industries will likely face more costly employment-related litigation.
If your company employs transportation drivers that cross state lines and you would like guidance on how this decision impacts your company, please reach out and let us know how we can help.
Business is in Olivia Landrum’s DNA, but law was always in her future. Growing up in a family business and concentrating her undergraduate studies in finance was just the beginning. From an early age, Olivia also knew she wanted to study law. Today, as a Litigation Associate, Olivia’s background empowers her with the ability to understand both the business and the legal side of a matter.
A graduate of the University of Georgia School of Law, Olivia was a member of a winning Moot Court Competition team, served as Executive Notes Editor for the Georgia Journal of International and Comparative Law and was selected for the Clarke-Carley (formerly Lumpkin) Inn of Court. She received her Bachelor of Science in Finance from Auburn University. Olivia is also a proud alumni of Berman Fink Van Horn’s Summer Associate program.
Outside of the office, Olivia enjoys going for walks and exploring all that Atlanta has to offer, especially its neighborhoods, parks and local restaurants.
