Transportation Workers and the FAA

The Supreme Court has granted cert in Bissonnette v. LePage Bakeries Park St. and will once again revisit Section 1 of the Federal Arbitration Act (FAA). Section 1 exempts “seamen, railroad employees, and any other class of workers engaged in foreign or interstate commerce” from the FAA and, in turn, from forced arbitration. LePage’s central question is whether a class of workers engaged in interstate commerce must also be employed by a company in the transportation industry (an “industry-requirement”). The answer will have far-reaching consequences for millions of workers, but its most anticipated impact is in the trucking industry. These individuals work under a variety of employment regimes: some are self-employed, some work for large trucking companies, and others are employed directly by retailers like Wal-Mart. Historically, courts have labeled all three categories as transportation workers, but as companies like Amazon increasingly rely on independent drivers to fulfill orders, that consistency has come under pressure. Sacrificing the trucker exclusion, however, in favor of an industry-requirement, will embroil courts in fact-finding about who qualifies as a “transportation company” and jeopardize court access for countless delivery workers.

Background

In Circuit City Stores the Court held that §1 applies only to “transportation workers,” and that transportation workers are not defined categorically; instead, courts use a fact-specific inquiry to determine if the worker plays a “direct and necessary role in the free flow of goods across barriers.”

Circuit City’s ad hoc analysis left federal precedent in a state of disarray. No neat division arose between the circuits, but two primary questions came to fracture the decisions: (1) whether the individual worker must themselves cross state lines to be “engaged in interstate commerce” and (2) whether the individual must, like “railroad employees and seamen,” be employed by a transportation company.

In 2022, Saxon addressed the first portion of the circuits’ disagreement and affirmed that § 1 can exempt workers who never physically cross state lines. Plaintiff Latrice Saxon, a ramp supervisor at Midway Airport, brought a class action against Southwest for failure to pay overtime wages. Southwest moved to enforce its arbitration agreement. Saxon, however, argued that the FAA did not apply to her because she was a transportation worker. Southwest countered that § 1 only applied to workers who “physically transport goods or people across foreign boundaries.”

In the 8-0 decision, Justice Thomas laid out a two-part test for § 1 plaintiffs. First, courts must define the class of workers a plaintiff belongs to. A plaintiff’s class depends on “what [the plaintiff] does at a company, not what the company does generally.” Second, courts decide if individuals’ work activities are part of interstate commerce. The Court concluded that because loading cargo is “so closely related to interstate transportation as to practically be a part of it,” ramp workers like Saxon are transportation workers.

Saxon had also contended that all airline workers are categorically exempt from the FAA, just like seamen and railroad employees. The opinion rejected this proposition. It noted that at the time the FAA was written, “seamen” did not cover all employees of maritime shipping companies; the term was limited to people whose “occupation was to assist in the management of ships at sea, like mariners and sailors.” Even if “railroad employees” could be construed more broadly, the statute lacked a consistent adherence to industry-wide exclusions.

Notably, Saxon remained silent on the validity of an industry-requirement as a preliminary step to § 1. The Eleventh and Second Circuits had adopted this demand, while the First and Ninth Circuits considered the “nature of the business for which [an employee] works,” but did not consider it to be outcome determinative. Whether working in the transportation industry is just icing on the cake, or the essential ingredient that determines who qualifies as a transportation worker under § 1, is what LePage Bakeries may reveal.

The Second Circuit Applies Saxon

LePage Bakeries concerns two independent distributors, Plaintiffs Neal Bissonnette and Tyler Wojnarowski, who work for Flowers Foods, a multibillion-dollar holding company that owns various bakery subsidiaries including Wonder Bread. The Plaintiffs have a relatively straightforward job; they pick up baked goods from warehouses in Connecticut and deliver them to restaurants and stores throughout the state. In 2019, the Plaintiffs sued Flowers and alleged that the company had misclassified them as independent contractors. Flowers moved to compel arbitration and the district court ruled in their favor. The Plaintiffs appealed.

The Second Circuit found that § 1 does not cover Bissonnette and Wojnarowski. The majority held that § 1’s use of “seamen and railroad employees” dictates that the exemption applies exclusively to workers in the transportation industry. Saxon has no impact on this requirement; its two-part test is only relevant after a worker has been “located” within the transportation industry. A transportation business is one that “pegs its charges” and generates its “predominant source of commercial revenue” by the movement of passengers or goods. As a result, the fact that the Plaintiffs “spend appreciable parts of their working days moving goods from place to place by truck” (what some might call trucking) is irrelevant. The Plaintiffs’ industry is the same as Flowers, “breads, buns, rolls, and snack cakes – not transportation services.”

Judge Pooler vehemently disagreed. In dissent, she accused the majority of ignoring Saxon’s command that courts look to the plaintiff’s work rather than the company’s and reaching a “textually baseless” conclusion. Using Justice Thomas’s test, Judge Pooler found that the Plaintiffs’ daily work of delivering the Defendants’ baked goods defined their class as commercial truck drivers. The Plaintiffs then easily meet the second part of Saxon’s test, engaging in interstate commerce, because, like Saxon, they are one leg of an “interstate network” even if their deliveries are solely intrastate.

The Parties’ Briefs

Before the Supreme Court, the Plaintiffs assert that § 1’s text and Saxon preclude an industry-requirement. Section 1’s use of “seamen” refers to workers who were aboard vessels, whether commercial fishing enterprises or freight companies employed those ships was immaterial. Saxon affirmed this approach and demarcated workers based on their “actual work.” Accordingly, the Second Circuit’s “price-structure-and-revenue requirement” is illegitimate and unworkable. Plaintiffs warn that an industry requirement grounded in what the company “pegs” its charges on will embroil courts in onerous, time-intensive evidentiary hearings.

The Defendants’ reply brief catalogs the history of how railroad employees and seamen became essential to the “national economy and security” during the industrial revolution. This prominence, combined with those workers being “the subject of constant imposition and deception,” garnered them special treatment when the FAA passed in 1925. Petitioners lack this special role and ejusdem generis dictates that any other exempted worker must be in the transportation industry. Moving to precedent, the brief argues that Saxon affirms that working in the transportation industry is necessary; its insistence on looking at what the employee does only shows that “working in a transportation industry is not sufficient for § 1.” Lastly, the brief warns that an alternate reading will “open the floodgates” to countless workers claiming they are transportation workers for the flimsy reason that they physically move goods.