After the Supreme Court’s Bissonnette Decision: Applying the Transportation Worker Exclusion Under the Federal Arbitration Act, Part I

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Section 2 of the Federal Arbitration Act (FAA), enacted in 1925, authorizes courts to enforce “written agreements for arbitration.” An exception is made in Section 1 of the FAA, “for contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Bissonnette v. LePage Bakeries, decided unanimously in April by the U.S. Supreme Court, dealt with what is meant by the exception, but left much unanswered. The purpose of this column is to suggest a solution to the muddle that remains of the Court’s Section 1 jurisprudence.

The Court in Bissonnette held that plaintiffs who distribute bakery products need not work in the transportation industry as a precondition to being exempt transportation workers under Section 1. The Court established the transportation worker exemption in Circuit City v. Adams in 2001, and it potentially affects millions of U.S. workers in a wide variety of occupations and industries.

The plaintiffs in Bissonnette worked for the company that makes Wonder Bread and other baked goods. The workers, who picked up and delivered the goods from a warehouse in Connecticut, filed a class action alleging wage and hour violations under the Fair Labor Standards Act (FLSA) and other laws. The company petitioned to compel arbitration of the plaintiffs’ individual claims, relying on class action waivers in their arbitration agreements.

This column builds upon an amicus brief filed in Bissonnette by the National Academy of Arbitrators, on which this author was counsel of record. Notwithstanding the Court’s unanimity in Bissonnette, courts, employers, and workers all would benefit from improved guidance in applying the transportation worker exclusion.

This prospect is important because there is a risk that, absent a change in direction, the FAA, a procedural statute intended to facilitate enforcement of commercial arbitration agreements, will become a substantive employment law. This risk is evident in an increasing number of courts serving as de facto personnel officials by analyzing in great detail hundreds or even thousands of jobs in order to decide whether the Section 1 exemption applies.

A transformation of the judicial role is leading to time-consuming inefficiency and a deepening morass in Section 1 cases. It also displaces and poses potential conflicts with other federal and state forums that, for decades, have resolved statutory disputes over the jobs that workers perform. It is not too late for the Court to offer guidance to assist lower courts and parties by restoring the FAA to its procedural mission.

In Circuit City, a 5-4 majority concluded that the Section 1 exclusion is limited to transportation workers. To determine Congress’s intent in adopting Section 1’s residual clause—“for any other class of workers engaged in foreign or interstate commerce”—the Court applied the ejusdem generis canon of construction. Relying on this canon, Justice Anthony Kennedy, writing for the majority, construed the clause as limited to those sharing the characteristics of seamen and railroad employees in the preceding text in Section 1; namely, transportation workers and not other workers.

To support this reading of the residual clause, the majority in Circuit City drew upon the language and structure of the FAA, and its reasoning in previous cases. The Court found that the term “engaged in commerce” in Section 1 was narrower than a reference to “involving commerce” in Section 2 of the FAA, the statute’s enforcement provision. Section 2 extends coverage of the FAA to the full reach of the Constitution’s Commerce Clause. The Court’s analysis of the FAA rejected a broader and literal reading of Section 1, one favored by the dissent for historical and textual reasons, that would have excluded all workers from coverage by treating Sections 1 and 2 as coterminous. Circuit City will be reexamined below, but without disturbing its transportation worker conclusion.

The FAA has been the subject of a number of employment disputes since the 1980s; the Section 1 exclusion being but one area of contention. Beginning with Perry v. Thomas in 1987 and Gilmer v. Johnson/Interstate Lane in 1991, the Court has applied the FAA to compel arbitration of employment claims despite objections that arbitration often is forced upon workers as a condition for getting a job. For the Court, such agreements are matters of consent, not coercion.

Some scholars who oppose mandatory arbitration of civil rights and of other statutes protecting workers urge that the public interest is better served if individual claims and class actions can proceed in court, thus avoiding the exculpatory result that benefits employers when individual claims are too small to pursue in arbitration. Responding to objections about the misuse of forced arbitration by employers, Congress enacted a law in 2022 prohibiting forced arbitration of sexual assault and sexual harassment cases. Currently, legislation with bipartisan sponsorship would ban forced arbitration of age discrimination claims. The larger criticisms of arbitration as developed by the Court under the FAA are not explored in this essay. However, this background to Section 1 litigation provides context for the debate over remedies for transportation workers in the U.S. economy.

The Bissonnette Decision

The Bissonnette decision, written by Chief Justice John Roberts, was in keeping with an emphasis on statutory text in two recent Section 1 cases. In both, employers sought to narrow the number of workers excluded by Section 1’s residual clause.

First, in 2018 in New Prime v. Oliveira, a unanimous Court focused on the words “contracts of employment” in Section 1 to hold that truckers characterized as independent contractors should be excluded under Section 1, and that the residual clause was not limited to “employees” but extended to “workers,” as those terms were understood in 1925 when the FAA was enacted. Justice Neil Gorsuch, writing for the Court, stated that whether the exclusion applied was an antecedent question to be decided by a court, and that federal statutory policy favoring enforcement of arbitration was not controlling.

Then, in 2022 in Southwest Airlines v. Saxon, again relying on the text, the Court concluded that ramp agent supervisors who frequently handle baggage on passenger planes but do not themselves cross state lines, nevertheless are excluded from FAA coverage under Section 1. In Saxon, Justice Clarence Thomas wrote for eight Justices. Justice Amy Coney Barrett did not participate. Saxon placed analytical emphasis on the work performed by ramp agents, not the industry in which they worked, and on the work being involved in interstate commerce.

The Court’s ruling this year in Bissonnette, the third decision in the recent Section 1 series, also rejected a narrowing interpretation of the transportation worker exception. Previously, the U.S. Court of Appeals for the Second Circuit in 2021 sought to distinguish Saxon by fashioning an industry test as a precondition for applying the Section 1 exclusion; that is, requiring a worker to be in an industry that derived its income from transportation service. The U.S. Court of Appeals for the First Circuit in 2023 reached the opposite conclusion in a case involving the same company. The Supreme Court granted certiorari in Bissonnette to resolve the issue.

Writing for the Court in Bissonnette, Chief Justice Roberts reasoned that the text of the FAA does not support an industry precondition as a Section 1 requirement. Applying Saxon, he confirmed that the appropriate focus should be on the work performed by those who do the work, and whether the workers are engaged in interstate commerce, and not on the industry or business involved.

As the Chief Justice explained, an industry-based test geared to how a business makes money, “would often turn on arcane riddles about the nature of a company’s services. Does a pizza delivery company derive its revenue mainly from pizza or delivery? Do companies like Amazon and Walmart—which both sell products of their own and transport products sold by third parties—derive their revenue mainly from retail or shipping?” In the Court’s view, answers to these questions would require substantial pretrial discovery and mini-trials and would “breed litigation from a statute that seeks to avoid it.”

As a result of the Court’s decision, the Bissonnette case, originally filed in 2019, returns to a lower court to resolve other questions. The Court wrote that these questions include whether the plaintiffs qualify as transportation workers if they undertake marketing activity in addition to deliveries, and whether they are engaged in interstate commerce if they deliver products exclusively in Connecticut. A possibility exists as well that state arbitration law might apply in the event the FAA does not.

In Bissonnette, the Court offered an assurance to those who might fear the Court was opening the door to “limitless” litigation over the Section 1 exclusion. Referring to dicta from Circuit City and Saxon, Bissonnette cautions that the exclusion applies only if a transportation worker is “actively” “‘engaged in transportation’ of…goods across borders via the channels of foreign or interstate commerce,” adding that an exempt worker under Section 1, “must at least play a direct and ‘necessary role in the free flow of goods’ across borders.”

These qualifying terms address the content of the Section 1 exclusion in order to identify who is a transportation worker; that is, what a worker does on the job, and the worker’s relationship to commerce. These qualifying terms, however, are not in the text of the FAA, but rather provide a subjective judicial elaboration of the residual clause. If the issue of a worker’s exclusion under Section 1 arose in a vacuum, the Court’s addition of vague phrases for the existing text might be understandable. But a vacuum in the statute does not exist as the residual clause is broadly stated. There resides the risk of the Court supplementing the plain text and steering the law into a deepening morass.

The Post-Bissonnette Landscape

Instead of making Section 1 easier to apply, the qualifiers used in Bissonnette and previous cases invite substantial disagreement about the content of work for those who should be excluded from FAA enforcement. Circuit City answered the fundamental dispute over the scope of the Section 1 residual clause—that is, all workers or only transportation workers—but conflict has stubbornly persisted and deepened over application of the provision to actual workplaces.

In part, the conflict stems from statutory language that is debatable, as evident in the dueling opinions of the Justices in Circuit City about what Congress meant 1925. In part, the conflict stems from high-stakes litigation, with those representing workers in legal battle with those representing employers. The unanimity of the Court in New Prime, Saxon, and Bissonnette has not settled these disputes.

While Bissonnette was pending, the Court contributed to Section 1 uncertainty by denying review in Singh v. Uber, a Third Circuit decision compelling arbitration for ride-hailing drivers, including many who regularly cross state lines and provide airport trips. After Bissonnette, the Court denied review in two other FAA disputes; one involving so-called “last mile” delivery drivers for Amazon, and the other regarding drivers for Domino’s Pizza who transport out-of-state ingredients from an in-state warehouse to local stores.

Other pending cases raise similar questions about the content of the Section 1 exclusion. To cite just a few examples, does Section 1 apply to airport employees pumping fuel for planes, or to warehouse employees stocking shelves after goods are shipped from another state, or to drivers working for a contractor delivering goods for Amazon, or to workers who form a business to provide delivery service much like the bakery workers in Bissonnette?

The continuing uncertainty about the Section 1 exclusion, prompting three Supreme Court decisions in five years, is important because there are transportation workers throughout the U.S., particularly drivers, whether or not they are subject to arbitration agreements. Stark differences also remain in how workers are treated at competing companies, even though they appear to be doing the same type of work; for example, United Parcel Service and Federal Express. Additionally, should the exemption apply to third-party delivery drivers who work for companies under contract to Amazon or other enterprises, whether or not they are deemed joint employers?

As Bissonnette observes, the Court understandably is wary of mini-trials and substantial discovery forcing courts and litigants to spend time and resources to resolve Section 1 disputes case-by-case. While this practical aspect of FAA enforcement was part of the Court’s reasoning, rejecting a transportation industry test in Bissonnette did not put this problem to rest. The potential remains under Section 4 of the FAA for extensive discovery and a jury trial, “If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue….”

Based on New Prime, a dispute over a transportation worker exclusion under Section 1 is an antecedent factual issue to determine whether FAA enforcement is barred because the statute does not apply. In this setting, requests will mount for judges to consider job descriptions, assignment schedules, equipment logs, freight manifests, location tracking data, cell phone records, and other transportation evidence, to decide whether a “class of workers” is subject to the FAA. Doing so results in federal and state courts serving as de facto personnel officials when drawing lines under Section 1.

The potential for hyper-technical and protracted review leads to judicial delay and increases the prospect of inconsistencies in federal or state courts. An example of this complication was Singh v. Uber, mentioned above, at an earlier stage of the litigation. At the time, the Third Circuit directed discovery to determine whether Uber drivers qualified as transportation employees engaged in interstate commerce. After substantial discovery, and more than the six years after litigation began, the Third Circuit held that the drivers did not cross state lines frequently enough to justify exclusion from the FAA.

The second part of this column will reexamine Circuit City as providing a basis for a workable solution to resolve continuing disputes over who qualifies for the transportation worker exclusion under Section 1 of the Federal Arbitration Act.