Supreme Court: Arbitration exemption applies to truckers outside of transportation industry

The U.S. Supreme Court has ruled that a truck driver doesn’t have to work in the transportation industry to be exempt from arbitration.

In an opinion issued on Friday, April 12, the Supreme Court ruled unanimously 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.”

Background

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.”

While narrow, the ruling will 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.

Previous arbitration case

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.

The 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.” LL