OFCCP Week in Review: April 2024 #3
In Bissonnette v. LePage Bakeries Park St., LLC, a unanimous United States Supreme Court held that a transportation worker need not work in the transportation industry to fall within the Federal Arbitration Act’s (“FAA”) exemption from otherwise compelled mandatory arbitration for any “class of workers engaged in foreign or interstate commerce.” Therefore, a group of truck drivers could bring their Fair Labor Standards Act (“FLSA”) and related Connecticut state wage law claims against a baked foods company and two of its subsidiaries in court, rather than being forced into arbitration pursuant to the FAA (which states the nation’s policy in favor of arbitration of civil disputes). The drivers alleged claims of unpaid or withheld wages, unpaid overtime wages, and unjust enrichment.
EDITOR’s NOTE: Employers often prefer arbitration to state or federal court venues because they are: (a) confidential (the pleadings and the arbitration trial itself are not accessible to the public), (b) tend to proceed more quickly than the increasingly overburdened courts, and (c) can often eliminate class action claims (form can dictate substance).
Section 1 of the FAA exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” The truck drivers argued that they fit into this exemption because they are transportation workers. However, the employers asserted that the truck drivers were not transportation workers because they worked in the bakery industry.
In Friday’s ruling, Chief Justice John Roberts, writing for the Court, cited its June 6, 2022, unanimous (8-0) ruling in Southwest Airlines v. Saxon. There, the Court held that ramp supervisors for Southwest Airlines – who physically load and unload cargo on and off airplanes that travel nationwide – fell under the FAA’s Section 1 exemption because they belonged to a covered “class of workers engaged in foreign or interstate commerce.” (See our story here.) The Saxon decision was yet another ruling in which the Court based its decision on the “plain meaning” of the statute (i.e., the FAA). In Saxon, the Court “expressly declined to adopt an ‘industrywide’ approach of the sort that [the employers’ argued in the present case],” Justice Roberts pointed out.
Reversing a Second Circuit Court of Appeals ruling of May 5, 2022, the High Court noted that the Second Circuit “fashioned its transportation-industry requirement without any guide in the text of [Section 1 or Supreme Court precedents].” Consequently, the appeals court had to figure out for itself what constituted a “transportation industry.” The Second Circuit decided that an entity would be considered within the transportation industry if it “pegs its charges chiefly to the movement of goods or passengers” and its “predominant source of commercial revenue is generated by that movement.”
But Justice Roberts wrote that the Second Circuit’s approach would lead to excessive litigation:
“The application of such a test, however, 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—which both sell products of their own and transport products sold by third parties—derive their revenue mainly from retail or shipping? Extensive discovery might be necessary to explore the internal structure and revenue models of a company before deciding a simple motion to compel arbitration. Mini-trials on the transportation-industry issue could become a regular, slow, and expensive practice in FAA cases.” [citations omitted]
Finally, the Court rejected the employers’ arguments that its interpretation would “sweep too broadly.” As the Court held in Saxon, a transportation worker is one who is “[actively] ‘engaged in transportation’ of . . . goods across borders via the channels of foreign or interstate commerce.” Thereby, under the Court’s interpretation, a transportation worker must at least play a direct and necessary role in the free flow of goods across borders, appropriately narrowing the scope of this provision.
