Last week, the unanimous Supreme Court held that a worker need not work in the transportation industry to qualify for the Federal Arbitration Act exemption for the “class of workers engaged in foreign or interstate commerce.” Bissonette v. LePage Bakeries Start St. LLC, No. 23-51 (4-12-24). The statutory language providing the exemption focuses on the worker and not the industry. “A transportation worker need not work in the transportation industry to fall within the exemption from the FAA provided by §1 of the Act.”
According to the Court’s opinion, the plaintiffs filed suit
alleging that they had been misclassified as independent contractors by the
defendant baking company and were entitled to minimum and overtime wages. The plaintiffs’ work included delivering and
marketing the defendant’s baked goods within the state of Connecticut. They had signed franchise/distributor
agreements giving them rights to distribute the defendant’s baked goods within
Connecticut. The defendant moved to
compel arbitration pursuant to arbitration clauses in their distributor agreements. The plaintiffs argued that they were exempt
from the FAA as members of “class of workers engaged in foreign or interstate
commerce.” The District Court found that they were not transportation workers
because their duties involved more than merely driving trucks. The Second Circuit affirmed on the grounds
that they were not employed in the transportation industry.
Section 1 of
the FAA contains an exemption for certain employees: “ . . . . nothing
herein contained shall apply to contracts of employment of seamen, railroad
employees, or any other class of workers engaged in foreign or interstate
commerce.” The Court
had previously held that a “class of workers” is properly defined based on what
a worker does for an employer, “not what [the employer] does generally.”
Nor does construing §1 to cover
transportation workers render “seamen” and “railroad employees” superfluous, as
[the employer] contends. . . . That argument gets ejusdem generis exactly
backwards. It is the specific terms “seamen” and “railroad employees” that
limit the residual clause, not the residual clause that swallows up these
narrower terms.
The Court
also rejected the argument that virtually all workers are essentially engaged
in internet commerce, making the exemption swallow the general rule:
a transportation worker is one who
is “actively” “‘engaged in transportation’ of . . . goods across borders via
the channels of foreign or interstate commerce.” . . . . In other words, any exempt worker “must at
least play a direct and ‘necessary role in the free flow of goods’ across
borders.” . . . . These requirements “undermine[] any attempt to give the
provision a sweeping, open-ended construction,” instead limiting §1 to its
appropriately “narrow” scope.
The Court
remanded the matter back to the Court of Appeals. Reversal did not resolve whether the
plaintiffs were covered by the exemption since a question remained whether they
were involved in interstate commerce.
We express no opinion on any alternative
grounds in favor of arbitration raised below, 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.
NOTICE: This summary is designed merely to inform and alert
you of recent legal developments. It does not constitute legal advice and does
not apply to any particular situation because different facts could lead to
different results. Information here can change or be amended without notice.
Readers should not act upon this information without legal advice. If you have
any questions about anything you have read, you should consult with or retain
an employment attorney.
