Supreme Court favors truck drivers in arbitration case

In another case involving a company’s ability to force arbitration, the U.S. Supreme Court has sided with the truck driver.

In an opinion issued on April 12, the Supreme Court Supreme Court ruled unanimously that that the industry of the employer doesn’t affect a truck driver’s – or any transportation worker’s – exemption status from the Federal Arbitration Act.

“A transportation worker need not work in the transportation industry to fall within the exemption from the FAA provided by the Act,” Supreme Court Chief Justice John Roberts wrote in the opinion. “The Second Circuit accordingly erred in compelling arbitration on the basis that petitioners work in the baking industry … The judgment of the Second Circuit is vacated, and the case is remanded for further proceedings consistent with this opinion.”

Now that the ruling is in, the focus has turned to determining how much of an impact it will have on millions of truck drivers operating for private fleets, such as Amazon and Walmart.

The case

Bissonnette v. LePage Bakeries Parks St. involves a distributor agreement between Neal Bissonnette, Tyler Wojnarowski and Flower Foods, which makes Wonder Bread and several other bread products. In 2019, Bissonnette and Wojnarowski filed a lawsuit over alleged violations of federal and state wage laws.

The company wished to compel arbitration, but the plaintiffs contended that as transportation workers, they were exempt.

According to the act, courts are prohibited from applying the statute to “contracts of employment of seamen, railroad employees or any other class of workers engaged in foreign or interstate commerce.”

The district court granted the baking company’s motion to compel arbitration and dismissed the case, concluding that the truck drivers worked in the baking industry and that the arbitration exemption did not apply. The Second Circuit affirmed the district court’s ruling, contending that the exemption was available only to those who worked in the transportation industry.

Plaintiffs then petitioned the case to the Supreme Court.

Supreme Court ruling

During oral arguments on Feb. 20, Jennifer Bennett – an attorney representing the truck drivers – told the court that the drivers should be considered transportation workers even though the baking company created an in-house fleet.

“Less than two years ago, in Southwest versus Saxon, this court carefully examined the text and history of the Federal Arbitration Act’s worker exemption, and it held that the exemption applies to ‘any class of workers directly involved in transporting goods across state or international borders,’” Bennett said. “Flowers now asks this court to add an additional unwritten requirement that the worker’s employer must sell transportation.”

Flowers warned that granting the exemption would mean that it would apply to all workers who load or unload goods, from pet shop employees to grocery store clerks.

The court disagreed, issuing a unanimous opinion just a little more than a month after oral arguments.

“We have never understood (the act) to define the class of exempt workers in such limitless terms,” Roberts wrote. “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 (the act) to its appropriately narrow scope.”

What does it all mean?

While narrow, the ruling could affect companies outside of the trucking industry that have private fleets. A recent report from the Congressional Research Service estimated that about 2 million truck drivers in the United States work for private truck fleets rather than for traditional trucking companies.

Just days after the ruling, a report from Bloomberg Law suggested that the decision “sets the stage for more judicial showdowns over which classes of workers are subject to mandatory arbitration agreements.”

Bloomberg Law described the ruling as “a blow to retail giants like Amazon.com Inc. and Walmart Inc.”

In fact, Amazon wrote an amicus brief to the Supreme Court in support of Flower Foods.

“Such cases cannot establish that local delivery drivers, who perform exclusively in-state transportation, are somehow actively and directly engaged in transportation across state lines,” Amazon wrote in its amicus brief. “Local delivery drivers do not meet that description. They are therefore not exempt from the FAA, despite petitioners’ … arguments and a few misguided rulings from certain circuit courts.”

While the Supreme Court ruling answered the industry question, no determination was made about what it means to be engaged in interstate commerce.

Previous arbitration case

This isn’t the first time in recent years that the high court has tackled the connection between trucking and arbitration.

In 2019, the Supreme Court upheld a First Circuit decision that ruled against New Prime, saying that the trucking company couldn’t compel arbitration in a lawsuit brought against it by truck driver Dominic Oliveira.

In 2015, Oliveira filed a class-action lawsuit against New Prime, alleging that the company violated wage laws and misclassified him, as well as others, as independent contractors. According to Oliveira, New Prime paid him less than minimum wage. After deductions for fuel and lease payments on the truck, Oliveira said he was occasionally left owing the company money at the end of the pay period.

New Prime moved to force arbitration, citing an arbitration contract that all of its drivers are required to sign.

The Supreme Court had to determine whether the term “contracts of employment” in the act meant that the exemption applied only to employee drivers.

“When Congress enacted the Arbitration Act in 1925, the term ‘contracts of employment’ referred to agreements to perform work,” Justice Neil Gorsuch wrote. “No less than those who came before him, Mr. Oliveira is entitled to the benefit of that same understanding today. Accordingly, his agreement with New Prime falls within (the) exception. The court of appeals was correct that it lacked authority under the Act to order arbitration.”

After the Supreme Court ruling, Oliveira’s case against Prime was kicked back to the lower courts. The class later agreed to a $28 million settlement. LL