Do Food Distributors Meet Federal Arbitration Act's Transportation Worker Exemption?

As we look toward the new year, a new chapter will be written by the U.S. Supreme Court regarding the scope of the exemption under Section 1 of the Federal Arbitration Act (FAA), for "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1.

This time, a pair of truck drivers – Neal Bissonnette and Tyler Wojnarowski, who distributed baked goods for Flowers Foods (maker of Wonder Bread) – claim their independent contractor misclassification lawsuit against Flowers Foods should not be sent to arbitration because they are part of a "class of workers engaged in commerce" just like "seamen" and "railroad employees" and, therefore, exempt from the FAA. Bissonnette, et al. v. LePage Bakeries Park St., LLC, et al. S. Ct. No. 23-51, Brief of Petitioners, Nov. 13, 2023, at 1. The truck drivers argue the U.S. Court of Appeals for the Second Circuit was wrong to add an additional requirement to the statute – i.e., that workers must not only be part of a class of transportation workers, but must also work in a "transportation industry," which industry "pegs its charges chiefly to the movement of goods or passengers" and "generate[s]" its "predominant source of commercial revenue … by that movement." Id. at 2. This additional requirement, the drivers say, coupled with the court's finding that the drivers are in the bakery industry, not the transportation industry, led to the conclusion that the drivers are not exempt from the FAA and must arbitrate their claims.

On Dec. 13, 2023, respondents Flowers Foods Inc., LePage Bakeries Park St. LLC and C.K. Sales Co. LLC (collectively, Flowers), filed their brief, arguing the Second Circuit correctly held that Section 1 was inapplicable because it applies only to classes of workers in the transportation industry – i.e., workers engaged by companies that sell transportation services – and the petitioners do not work in the transportation industry. Bissonnette, et al. v. LePage Bakeries Park St., LLC, et al. S. Ct. No. 23-51, Brief of Respondents, Dec. 13, 2023, at 12. This reading makes sense, Flowers contends, because "[i]t matches the 'narrow' exemption the problem it was designed to solve: avoiding interference with existing or anticipated regulatory frameworks governing the Nation's critical transportation industries." Id. at 30. "Unless they sell transportation services, businesses and their workers can enter arbitration agreements knowing they are enforceable under the FAA," Flowers says. Id. at 31.

Conclusion

Many food and beverage manufacturers contract with distributors to bring their products to market. How broadly or narrowly the Supreme Court reads the Section 1 exemption in this case will determine whether those manufacturers will be subject to a new wave of misclassification cases in the courts from workers outside the transportation industry, or agreements to arbitrate such claims will be enforced. The petitioners are expected to file a reply brief in January 2024, with oral argument to follow later in the year.