Supreme Court Lowers Interstate Commerce Bar

On April 12 the U.S. Supreme Court ruled on Bissonnette v. LePage Bakeries Park St., holding that a worker doesn’t need to be employed in the transportation industry to fall within the Federal Arbitration Act (FAA) section 1 exemption for transportation workers because of the vital role they play in interstate commerce.

A Reed Smith Client Alert says the decision foreshadows future litigation about companies’ involvement in interstate commerce, and their employees qualifying as transportation workers. The decision emphasizes that due to the vital role transportation workers play in moving goods between states they are exempt from some rules, regardless of their employer’s main industry.

The plaintiffs in Bissonette worked as distributors for a company that produces and markets baked goods. In their contracts, they agreed to resolve disputes by arbitration under the FAA. Instead, when a dispute arose, the plaintiffs opted to recover in court.

The defendant moved to compel arbitration under the FAA, which calls arbitration agreements enforceable unless grounds exist for the revocation of the contract. In practice, arbitration agreements are enforced against parties unless they fall into an exempt class. One exemption is for the contracts of seamen, railroad employees, or any other workers engaged in foreign or interstate commerce. 

The district court and the Second Circuit both held that the plaintiffs did not fall into this exemption because they had more responsibilities than simply driving trucks to deliver baked goods.

The Supreme Court limited its analysis to whether a transportation worker must work in the transportation industry to be exempt under section 1 of the FAA. It reversed the lower courts and noted that the FAA exemption has been limited to transportation workers since the Court’s 2001 decision in Circuit City Stores, Inc. v. Adams.

That decision held that the phrase, “class of workers engaged in…commerce” is “controlled and defined by reference to” the specific categories of “seamen” and “railroad employees” that precede it. Therefore, analysis required the consideration of what linked “seamen” to “railroad employees.” The Court determined that the groups are linked because they are both transportation workers.