EXEMPTING “TRANSPORTATION WORKERS”
FROM ARBITRATION:
THE SUPREME COURT AND BISSONNETTE
By
Prof. Anthony Michael Sabino
Not long ago in this space, we distilled the then-newest decisions explicating the boundaries of the statutory exemption from arbitration enjoyed by so-called “transportation workers.” See 9 U.S.C. § 1. The first was Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022) (“Saxon”), wherein a unified Supreme Court decreed that the exception is defined, not by the employer’s business, but rather by “the actual work…typically carr[ied] out” by the employees seeking to avoid the arbitral forum. Id. See also Sabino, “The FAA Keeps on Flying: The Supreme Court and ‘Southwest,’” 268 New York Law Journal p. 4, cl. 4 (July 28, 2022) (Sabino, “The Supreme Court and ‘Southwest.’”).
The second, decided barely one month prior to the issuance of Saxon, was Bissonnette v. LePage Bakeries Park Street, 33 F.4th 650 (2d Cir. 2021). There an appellate panel ruled that the plaintiffs did not qualify for the statutory exemption because they were in the baked goods business, not the transportation industry. Id. See also Sabino, “The FAA Keeps on Trucking: The Second Circuit and ‘Bissonnette,’” 268 New York Law Journal p. 4, cl. 4 (July 13, 2022). At the time, this writer perceived “no conflict” between the earlier holding of the circuit judge and the subsequent edict of the supreme bench, but cautioned that “one never knows.” Sabino, “The Supreme Court and Southwest,’” supra, at p. 8, cl.6. That warning proved to be prophetic.
Most recently, in Bissonnette v. LePage Bakeries Park St., LLC, 601 U.S. ___ (No. 23-51) (April 12, 2024) (“Bissonnette”), the Justices unanimously reversed the Second Circuit, finding that the plaintiffs, while indeed purveyors of bakery products, nevertheless qualified as transportation workers, and were therefore exempt from arbitrating their claims. By virtue of this iteration of Bissonnette, the high Court has forcefully advanced the holding of Saxon, while further instructing the courts below as to how to properly distinguish transportation workers from all other employees. But before analyzing this latest addition to the pantheon of arbitration landmarks, we pause to briefly recap the underlying statute and the parties contesting its meaning.
”Transportation Workers” Are Statutorily Exempt
Since its promulgation in 1925, the Federal Arbitration Act, 9 U.S.C. § 1, et seq. (the “FAA”), has promoted a strong federal policy favoring arbitration, see, inter alia, Viking River Cruises, Inc. v. Moriana, 596 U.S. 639 (2022), primarily via its paramount declaration that agreements to arbitrate “shall be valid, irrevocable, and enforceable,” FAA, supra, at § 2 (emphasis supplied). See, i.e., Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63 (2019). Notwithstanding, the statutory regime does embrace a crucial exception: “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” are exempt from arbitration. FAA, supra, at § 1 (emphasis supplied).
A Baker or a “Transportation Worker”?
Now comes Neal Bissonnette, a franchisee of respondent Flower Foods, Inc., the second-largest producer and marketer of baked goods in America. Bissonnette had contracted to pick up and deliver the bakery giant’s wares (including the iconic Wonder Bread) throughout his assigned territory solely within the state of Connecticut (to be sure, he never crossed state lines).
But the industrious entrepreneur was also bound to maximize sales, stock shelves, advertise, hire assistants, and retain accountants. When a dispute arose over his compensation, Bissonnette sought to overcome an arbitration clause within his franchise agreement, by asserting that he was a “transportation worker” excused by Section 1 from participating in an arbitral proceeding. After due consideration of the scope of his duties, the Second Circuit reasoned that Bissonnette was not a transportation worker; rather, he was employed in the bakery industry, and thus the exception was unavailing.
The Supreme Court Decides
The Supreme Court thought differently. Writing for the august tribunal, Chief Justice Roberts synthesized the matter at hand into a solitary question; “whether a transportation worker must work for a company in the transportation industry” in order to qualify for the arbitration exemption. The answer was equally straightforward: no.
The high bench first invoked ejusdem generis, a “familiar canon” of statutory construction, which provides that, in determining the contours of a general term within an enactment, one must first examine the specific items which precede it. Proclaiming the doctrine conclusive in divining the reach of Section 1, the Justices next listed the tangible reasons why this law enumerates “seamen” and “railroad employees” first.
For one, the FAA was promulgated at a time when such workers were already ensconced within discrete dispute resolution schemes, well outside the jurisdiction of any arbitral forum. Second, opined the Chief Justice, those occupations collectively play a vital role in the free flow of commerce, something which Congress was intent upon safeguarding in this statutory regime and elsewhere. The crucial bond between “seamen” and “railroad employees” thus established, ejusdem generis then mandated that the trailing, generic phrase “workers engaged in…commerce” be interpreted in a like manner.
The Bissonnette Court accordingly decreed that Section 1’s exemption from arbitration must be cabined to “transportation workers” who, similar to their maritime and rail colleagues, earn their daily living by moving goods about. By way of contrast, the Justices pointed out the irredeemable flaw in the respondent’s position: its incorrect emphasis upon a supposed industry-wide link between “seamen” and “railroad employees.” In truth, declared the supreme tribunal, the exception binds those workers solely on the basis of “what they do, not for whom they do it.”
Invoking Saxon
The next step was to invoke Saxon. Worthy of note was that the progenitor landmark had already “expressly declined to adopt an ‘industry-wide’ approach” to interpreting the residual clause of Section 1; its fundamental holding was that the statutory exception only “refers to ‘workers’ who are ‘engaged’ in commerce.”
In complete harmony therewith, the high bench underscored the “conspicuous absence” of industry-specific language within Section 1, adding the candid observation that the proviso “says nothing” to indicate that the employer’s market classification merits any overriding consideration. Fidelity to Saxon’s dictum—an employee’s eligibility for the arbitration exemption is determined by the tasks performed by the employee, and not the employer’s primary business—required a reevaluation of the petitioner’s insistence that he was statutorily absolved from arbitrating his claims.
To be sure, the Justices voiced additional concerns, which they expressed most pungently. To uphold the circuit panel here would unduly preoccupy the trial courts with “arcane riddles about the nature of a company’s services.” For instance, does a pizzeria make its money primarily from selling pizza or delivering it? And in a pithy nod to the contemporary economy, Chief Justice Roberts posed this modern conundrum: do firms like Amazon and Wal-Mart derive their revenue mainly from retailing goods or shipping them?
Given all the above, it was now beyond refute that the court below had failed to moor its rationale to either the statutory text or to Saxon’s teachings, thereby necessitating reversal and remand. And to shape those upcoming deliberations, Bissonnette notably provided some subtle guidance.
Questions on Remand
In a brief, yet revealing, footnote, the high bench expounded that it was not deciding whether the petitioner qualified as a “transportation worker” on the basis of the work he performed or whether he was, in fact, engaged in interstate commerce; as subsequently noted, he “deliver[ed] baked goods only in Connecticut.” The significance of that parenthetical is magnified when it is weighted against an equally circumspect footnote in Saxon, wherein Justice Thomas advised that “the answer will not always be so plain” when the employee is “further removed” from the stream of interstate commerce. Saxon, supra. See also Sabino, “The Supreme Court and ‘Southwest,’” supra, 268 New York Law Journal at p. 8, cl. 3.
Bissonnette’s closing was both succinct and unequivocal. “A transportation worker need not work in the transportation industry” in order to be exempt from arbitration. It is the actual work performed by the employee, not the employer’s industry, which determines eligibility for the exception. Combining precedent with plain statutory language, the Supreme Court easily replicated the unanimity which prevailed in Saxon a scant two years before, adding a new pillar to its arbitration jurisprudence, and one that will surely do much to clarify at least certain aspects of the exemption from arbitration for “transportation workers.”
For our own coda, one can only admire Bissonnette; it is firmly rooted in the FAA’s text, and the Saxon landmark. No doubt, this last piece of a new triad shall curtail some controversy. But as the saying goes, “close one door, and another door opens.”
The Next Controversy?
Looking ahead, we foresee that Section 1 litigation shall shift focus to the precise nature of the work performed by any employee seeking to benefit from the arbitration exception. This new landmark may well foment excruciating dissections of the actual work performed by employees, requiring preliminary inquests preceded by exhaustive discovery. Also yet to be resolved is whether the criteria should be qualitative, quantitative or some admixture of both.
In sum, Bissonnette should be lauded for ending much disharmony. Nonetheless, we anticipate that the Supreme Court shall be called upon at some future date to once again elucidate the FAA’s exemption from arbitration for “transportation workers.”
Prof. Anthony Michael Sabino, partner, Sabino & Sabino, P.C., is also a Professor of Law, Tobin College of Business, St. John’s University. Anthony.Sabino@sabinolaw.com.
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