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Director, Center for Supreme Court AdvocacyNational Association of Attorneys General
May 6, 2024 | Volume 31, Issue 10
This Report summarizes opinions issued on April 12, 16, and 17, 2024 (Part I).
Opinion
Bissonnette v. LePage Bakeries Park St., LLC, 23-51.
The Court unanimously held that a transportation employee does not need to work in the transportation industry to fall within the exemption set forth in §1 of the Federal Arbitration Act (FAA). “The FAA provides generally that arbitration agreements are ‘valid, irrevocable, and enforceable’” except where grounds “exist at law or in equity for the revocation of any contract”’ 9 U.S.C. §2. Section 1 of the Act provides an exception to that rule, however, specifying that nothing contained within the Act applies to the employment contracts of seamen, railroad employees or “‘any other class of workers engaged in foreign or interstate commerce.’” In prior jurisprudence, the Court had interpreted this residual clause to apply only to transportation workers.
Petitioners are franchisees for respondent Flower Foods, Inc., distributing the company’s baked goods in Connecticut. As part of their distribution contract with respondent, petitioners consented to arbitrate under the FAA “‘any claim, dispute, and/or controversy.’” Petitioners brought a class action suit against respondent, claiming that the company had violated state and federal wage laws. Respondent “moved to dismiss [the case] or to compel arbitration under the FAA,” consistent with the parties’ distribution agreement. Petitioners objected, arguing that they fell within the “transportation worker” exception in §1 of the FAA. “The District Court dismissed the case in favor of arbitration,” concluding that petitioners’ job responsibilities set forth in the distribution agreement contradicted the claim that they were “‘only or even principally truck drivers.’” A divided panel of the Second Circuit affirmed on the alternate ground that because petitioners worked in the bakery industry, rather than a transportation industry, §1 of the FAA did not apply. Thereafter, the Supreme Court decided Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022), in which the Court “held that a ‘class of workers’ is properly defined based on what a worker does for an employer, ‘not what [the employer] does generally.’” “The Second Circuit granted panel rehearing in light of Saxon but adhered to its prior decision,” articulating the test “that an individual works in a transportation industry and may therefore be exempt under §1 only ‘if the industry . . . pegs its charges chiefly to the movement of goods or passengers, and the industry’s predominant source of commercial revenue is generated by that movement.’” In an opinion by Chief Justice Roberts, the Court vacated and remanded.
The Court first discussed its decades-old jurisprudence in which it had concluded that because “the general phrase ‘class of workers engaged in . . . commerce’ is controlled and defined by reference to the specific categories ‘seamen’ and ‘railroad employees’ that precede it,” “§1 is limited to transportation workers.” This interpretation “of §1 harmonized the FAA with other statutes designed to protect the movement of goods in commerce.” Next, the Court noted that in Saxon it had “expressly declined to adopt an ‘industry-wide’ approach of the sort [respondent] advance[d]” in the present case, because §1’s “language focuses on the performance of work rather than the industry of the employer.” (Internal quotation marks omitted.)
The Court then explained that the Second Circuit’s test was unworkable because “it would often turn on arcane riddles about the nature of a company’s services” (“Does a pizza delivery company derive its revenue mainly from pizza or delivery?” “Do companies like Amazon and Walmart . . . derive their revenue mainly from retail or shipping” third-party products?), requiring “[e]xtensive discovery” and slow, expensive “[m]ini-trials on the transportation-industry issue . . . .” Finally, the Court rejected respondent’s argument that because some early twentieth century statutes regulated “certain seamen and railroad employees” then those “terms were limited to transportation-industry workers in 1925.” The Court explained that “those statutes only prove that where Congress wanted to regulate seamen or railroad employees in a particular industry, it said so explicitly.” “Unlike those industry-specific statutes, §1 refers to ‘seamen’ and ‘railroad employees’ without specifying any industry to which they must belong.” As a result, “[i]t would be strange to read the conspicuous absence of similar industry-specific language in §1 as a sign that Congress defined the exemption on an industrywide basis.” The Court therefore vacated the Second Circuit’s judgment and remanded it for further proceedings. The Court did not express an opinion “on any alternative grounds in favor of arbitration . . ., including that petitioners are not transportation workers and that petitioners are not ‘engaged in foreign or interstate commerce’ within the meaning of §1 because they deliver baked goods only in Connecticut.”
NAAG Center for Supreme Court Advocacy Staff
- Dan Schweitzer, Director and Chief Counsel
- Melissa Patterson, Supreme Court Fellow
- Amanda Schwartz, Supreme Court Fellow
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