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U.S. Supreme Court justices on Tuesday questioned how they should determine whether truck drivers delivering baked goods for Georgia-based Flowers Foods are exempt from the Federal Arbitration Act in a case that could have broad implications for employers in national level.
In oral arguments on Feb. 20, Jennifer D. Bennett, counsel for the drivers, said the 2022 Supreme Court decision to Southwest Airlines vs. Saxon — in which it held that a Southwest operating ramp supervisor was engaged in foreign or interstate commerce and therefore exempt under the FAA — to argue that drivers should be similarly exempt.
However, the 2nd US Circuit Court of Appeals decided the case in favor of Flowers Foods, arguing that drivers are not exempt from the FAA because they “are in the baking industry, not a transportation industry.” That’s an “additional unwritten requirement” under the law, Bennett said.
“According to Flowers, if the thousands of truck drivers who work full-time hauling its goods were only employed by a trucking company hired by Flowers to do so, then they would be exempt transportation workers,” he added. “But because Flowers essentially created its own in-house trucking company, it says those same truck drivers are no longer transportation workers. This distinction has no basis in the text of the statute.”
Circuit breaker
Federal courts have diverged on its meaning FAA exemption of “contracts of employment of seamen, railway servants or any other class of workers engaged in foreign or interstate commerce”.
While the 1st and 7th Circuits have held that the exception applies to any employee engaged in foreign or interstate commerce similar to seamen and railroad employees, the 2nd and 11th Circuits have held that such employees must be employed in the transport industryFlowers Foods wrote in its filing to the Supreme Court in the case, Bissonnette v. LePage Bakeries.
Traci L. Lovitt, counsel for Flowers Foods and subsidiary LePage Bakeries, said the justices should look at the historical context of the FAA’s passage, which occurred in 1925, and why Congress specifically designated seamen and railroad employees under the law .
“By 1925, Congress knew that labor disputes involving transportation workers were different,” Lovitt said. “They were unique. They could cause famines in Chicago. And in response, Congress passed two and only two federal arbitration statutes, one governing railroad employees in the railroad industry and one governing seamen, which, under the Shipping Commissioners Act, were limited to those in the shipping industry.”
Lovitt also argued that the Supreme Court’s 2001 decision in Circuit City Stores, Inc. v. Adams supports the company’s position. In Circuit Citythe court held that the FAA’s exemption is “limited to transportation workers,” defined as those workers “actually engaged in the movement of goods in interstate commerce.”
Where the court is Saxon the decision fits
Bennett, meanwhile, said that the court Saxon The decision “sets out a fairly clear test” by which a court can distinguish workers in the transportation industry from other workers, “who are workers directly involved in the transportation of goods across foreign or state borders.” He faced questions from members of the court, including Justice Brett Kavanaugh, however, about how Saxon applies specifically to the case of truck drivers.
“In Saxon, in oral argument, we were repeatedly told, if we’re talking about a company shipping its own goods, those people probably wouldn’t have been railroad workers or sailors at the time,” Cavanaugh said. “It was reassuring […] that the holding in favor of Saxon would be narrow and would not extend to industries other than the transport industry’.
Lovitt reiterated this point, stating that “you must read these holdings in Saxony in the light of historical fact that Ms. Saxon was employed in the airline industry.”
Bennett conceded that while the question of whether the FAA exempts a particular class of workers was not presented in the Saxona textual analysis of the statute would show that seaman, as defined in the FAA, “did not mean someone employed by a company that sold transportation” but “clearly meant everyone who worked on a ship.”
But even if the court reached an interpretation of the FAA exemption that is closer to the one favored by Flowers Foods, “Flowers” [truck] Drivers meet their own definition,” Bennett continued. “And so, even if we were to accept each of Flowers’ arguments for seafarers, they have yet to show that this employer-based industry requirement bears any relation to the words of the statute.”
Potential implications for other employers
Some justices appeared concerned about the potential impact of a ruling in favor of the truck drivers in the Bissonnettesince many companies employ personnel to transport goods across state lines.
“I think the number of workers who are going to be exempted and [the] The number of companies that will have to deal with this is huge if you lose,” Kavanaugh said, speaking to Lovitt. Lovitt provided some additional context on this point, detailing some concerns from industry groups that have sided with the truckers’ cause.
“Over the last five years, you’ve had cases against Domino’s franchisees, so you’re bringing in every franchise restaurant, which is why the restaurant industry group filed on our behalf,” Lovitt said. “You bring in the medical industry [which] ships like this because they need to move their products very quickly from one place to another. You’re essentially importing the entire food industry.”
Beyond those case studies, the judges asked about companies that ship goods across state lines on behalf of other entities, such as FedEx, as well as e-commerce companies that, while not directly categorized as transportation companies, operate airlines and trucks that move similarly goods, such as Amazon.
“We now have all these companies that own transportation, but their workers are doing things, as you say, with goods that cross state lines that are potentially critical to commerce and national security,” said Judge Ketanji Brown Jackson. . “So why is the line between large companies with in-house transportation versus those using FedEx?”
Lovitt responded by calling attention to Congress’ intent to pass the FAA. In particular, he noted the magnitude of labor disputes in the transport sector in international and transnational trade. This particular scope differentiates such disputes from those involving companies such as Flowers Foods.
“In 1925, the railroad labor industry, there were all kinds of industrial disputes, but it was only the railroad industry dispute that brought Chicago to the point of starvation, and that’s when Congress had to step in,” he said. “Where you start to involve the whole of the national economy is when you’re talking about international and interstate shipping of goods and this industry.”
Bennett argued that the question of how workers who transport goods for companies like Amazon fit under FAA provisions is “a tough question,” but any such inquiry would be extraneous to the case at hand.