Several justices pressed the parties on the text of the Federal Arbitration Act exemption—which applies to certain workers engaged in foreign or interstate commerce—and its nearly 100-year-old history, including how courts understood “seamen” and whether that category was based on which company someone worked for or what type of work they performed.
The high court regularly hears arbitration-related cases and last addressed the FAA’s transportation worker exemption in Southwest Airlines Co. v. Saxon in 2022. The latest dispute gives the justices an opportunity to address and resolve a circuit split on the FAA exemption—which allows certain workers to litigate their claims in court—stemming from two recent wage-and-hour disputes involving Flowers Foods.
The industry-based rule Flowers Foods proposed is “anything but workable,” said Jennifer Bennett, a Gupta Wessler LLP principal who argued the case for the workers.
Justice Clarence Thomas asked why figuring out whether an employer was in the transportation industry would be more complicated than asking whether a worker’s job involved interstate transportation, which courts already have to address for the exemption to apply.
For companies such as Amazon that do a little bit of everything, identifying the employer’s industry would mean “difficult questions that are then layered on top” of the interstate question, Bennett said. Amazon faces its own court fights involving the exemption and filed an amicus brief in support of Flowers Foods here.
The industry test was easy for the US Court of Appeals for the Second Circuit to apply when it ruled on the Flowers Foods case, but “will it be straightforward in other cases?” asked Justice Samuel Alito. “Will it not involve some very difficult line-drawing problems?” he added.
In “95% of these cases, it’s clear,” said Traci L. Lovitt, a Jones Day appellate practice leader arguing the case for Flowers Foods and two subsidiaries. Courts can look at the frequency of a company’s transportation work, which is “no more difficult than the test in Saxon,” she said.
‘Seamen,’ Shipping Industry
Petitioners Neal Bissonnette and Tyler Wojnarowski deliver baked goods such as Wonder Bread and Tastykake under distribution agreements with Flowers Foods and subsidiaries Lepage Bakeries Park Street LLC and CK Sales Co. Their proposed class action alleges Flowers Foods misclassified them as independent contractors when they’re really employees entitled to additional protections under state and federal wage laws.
A split Second Circuit panel in 2022 said the workers don’t qualify for the FAA carveout because Flowers Foods is “in the bakery industry, not a transportation industry.” The full Second Circuit declined to rehear the case in February 2023, setting up a circuit split three months later when the First Circuit—in a similar wage dispute involving another set of Flowers Foods drivers—rejected adding an industry requirement.
The FAA, which congress enacted in 1925, listed seamen and railroad employees as some of the workers who fall under the exemption. Multiple justices questioned Bennett and Lovitt on the meaning of “seamen” and its bearing on the industry question.
Justice Elena Kagan asked which people were considered seamen without working for a company that provides shipping services.
Lumber boats often employed seamen, who worked for the lumber companies, not a transportation company, Bennett said. Coal companies and even Ford Motor Co. had similar arrangements, she said. “All you needed to ship your own goods is a boat,” she added, likening it to modern companies that hire their own truck drivers to transport their products.
Lovitt argued that there are limits on which seamen count as transportation workers for exemption purposes.
“How do you square that with cases where we have actors aboard a ship being counted as seamen?” asked Justice Ketanji Brown Jackson.
Many of those dealt with a different law that was “reaching to the outer limit of seamen,” Lovitt said.
Necessary vs. Sufficient
The Second Circuit looked to price structure and revenue in determining Flowers Foods isn’t in the transportation industry.
That approach imposes “a difficult burden and it would seem to me a lot of different results” in different courts, Chief Justice John Roberts said. He asked if Amazon is “in the transportation business just because it has a fleet of planes” it uses for moving goods.
Amazon ships its own goods as well as products it doesn’t manufacture, so “I think they’re clearly in the transportation industry,” said Lovitt, who explained she was speaking as a consumer and not as Amazon’s counsel. The online retailer has a pending high court petition to overturn an appellate decision where workers successfully invoked the carveout at issue here, although its case doesn’t involve the industry question.
But Amazon, which supported Flowers Foods at the high court, should still be able to compel arbitration “for last-mile reasons,” Lovitt said. The workers currently attempting to fend off Amazon’s Supreme Court petition make local deliveries of out-of-state goods.
“We’re viewing the industry issue as a threshold issue,” Lovitt said. “It’s a necessary condition, not a sufficient one,” she added.
But “you can have transportation workers in a different kind of industry,” Jackson said at a different point in the case. “That’s why I don’t understand where the industry limitation is coming from. That’s not in the statute,” she said.
Lichten & Liss-Riordan PC serves as additional counsel to the workers. Ogletree, Deakins, Nash, Smoak & Stewart PC also represents Flowers Foods.
The case is Bissonnette v. LePage Bakeries Park St. LLC, U.S., No. 23-51, argued 2/20/24.