Planes, trains, and automobiles in the modern arbitration world

Dating back to its inception in 1925 and enactment in 1926, the Federal Arbitration Act (FAA or the Act) has historically excluded two discrete classes of workers from mandatory arbitration: seamen and railroad employees. Perhaps understanding that it could not account for all then-existing industries or the growth and development of new industries thereafter, Congress included a catch-all “residual clause” through which “any other class of workers engaged in foreign or interstate commerce” were also excluded from mandatory arbitration under the Act. Indeed, when the Railway Labor Act was amended in 1936 to include airline workers – then part of a burgeoning air freight industry that did not exist in 1925 – this class was subsumed by the FAA’s enumerated exemption. The common denominator between these industries (maritime, railroad, and airline) is that each is engaged in moving people or goods as its primary service and function, whether by sea, land, or air. In essence, these are all “transportation” industries.

Enter Neil Bissonnette representing a class of fellow commercial truck drivers who contend that they too move goods by land, similar to those workers in the railroad industry. But these drivers did not work for FedEx, UPS or Yellow Freight. Rather, they worked for Flowers Foods (the makers of Wonder Bread) and its distributors, including LePage Bakeries, none of which are in the “transportation” industry.

Thus, the question now before the United States Supreme Court in Bissonnette v. LaPage Bakeries Park St., LLC: whether a class of workers that is actively engaged in interstate transportation must also be employed by a company in the transportation industry. The answer to such a question will have a widespread impact on whether commercial drivers, regardless of the industry or employer, will be excluded from mandatory arbitration under the FAA.

The text of the statute seems easily applied. The residual clause contains no reference to the employer or industry. The only inquiry, Bissonnette and his fellow drivers argue, is whether the class of worker is engaged in foreign or interstate commerce. Surely commercial drivers who deliver goods across state lines fall squarely within the residual clause exemption. But such an analysis ignores the precedent set in the United States Supreme Court case Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001).

In Circuit City, the United States Supreme Court held that the class of workers encompassed by the FAA’s residual clause must be “transportation workers.” (Id. at 119.) For just over 20 years, the question as to what constituted a “transportation worker” remained open until the Court was directly presented with the question in Southwest Airlines Co. v. Saxon, 142 S. Ct. 1783, 1791 (2022). In defining the concept of a “transportation worker,” the Court applied the concept of ejusdem generis – meaning that where general words or phrases follow a number of specific words or phrases, the general words are specifically construed as limited and apply only to persons or things of the same kind or class as those expressly mentioned. In Southwest Airlines, the Court looked at the FAA’s specific references to “seamen” and “railroad employees” and considered whether all airline employees were considered “transportation workers” because they worked in a transportation industry. The Court rejected such an expansive interpretation. Rather it concluded that only those individuals working in the airline industry that are actively engaged in a necessary nexus to interstate commerce are “transportation workers.” The distinction between Southwest Airlines and Bissonnette, however, is that the airline industry has been accepted as a transportation industry since 1936; Flowers, as a manufacturer, and Le Page Bakeries, as a retailer, are not in the transportation industry.

In this context, Bissonnette and the purported class of commercial drivers must convince the Court to accept two arguments: that (1) “transportation workers” need not be employed in a “transportation industry”; and (2) commercial drivers who deliver goods across state lines are “transportation workers.” The latter argument is perhaps more easily decided because during oral argument that took place on Feb. 20, 2024, the Justices took turns challenging each side’s theory of the scope of both the FAA’s residual clause and the application of ejusdem generis. Justice Alito posed perhaps the most incisive questions during the hearing which, to paraphrase, amounted to: how should lower courts apply the ruling in Southwest Airlines where companies may have the majority of their business not devoted to shipping or transportation, but a significant component (30%-40%) of the business is so involved? How much of a company’s business would need to be devoted to shipping or transportation before being deemed part of the “transportation industry?”

Although not advanced by either party during oral argument, a simple answer would be to rely on the company’s primary purpose. If, for example, a company primarily produces Wonder Bread or other baked goods, it would be fair to say that it is not in the transportation industry even though it may have some drivers to deliver its products to retail clients. If, on the other hand, a company primarily acts as a middleman to deliver packages to customers on behalf of third parties, that company is more clearly part of the transportation industry. There will inevitably be cases where the facts will not be so clear-cut, but the inquiry should remain the same: does the business primarily engage in transporting or shipping goods or services? If so, it should be considered to be part of the transportation industry. From there, the Southwest Airlines test would apply: is the worker in the transportation industry actively engaged in a necessary nexus to foreign or interstate commerce? If so, that class of worker would be exempt from mandatory arbitration under the FAA.

If history is any indicator, however, the simple approach may not be the one the Court utilizes. No matter how the Court decides these issues, employers in a wide variety of industries will need to keep an eye on this case, as the result will inevitably be far-reaching.