The Work, Not the Industry, Determines “Transportation Worker” Arbitration Exemption

In Bissonnette v. LePage Bakeries Park St., LLC, 601 U.S. ___ (No. 23-51) (April 12, 2024), a unanimous U.S. Supreme Court proclaimed that courts must look to the nature of the work performed, not the employer’s industry, when deciding whether or not an employee is a “transportation worker” exempt from arbitration. And while this new landmark’s avowed intent is to reduce litigation over this statutory exception, it might very well turn into a catalyst for a new controversy, one entailing fact-intensive inquiries into the precise contours of an employee’s job responsibilities. 

First, the statute. For nearly a century, the Federal Arbitration Act (FAA), 9 U.S.C. § 1, et seq., has embodied the strong federal policy favoring arbitration. See Viking River Cruises, Inc. v. Moriana, 596 U.S. 639 (2022). The statutory regime’s prime directive is that agreements to arbitrate “shall be valid, irrevocable, and enforceable,” supra, at § 2 (emphasis supplied), a mandate that has been affirmed in a plethora of recent high Court holdings. See, e.g., Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63 (2019).

Notwithstanding its broad reach, in section 1 the FAA internalizes 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. 9 U.S.C. § 1 (emphasis supplied). Now for the inexorable question: Is “transportation worker” status dependent upon the nature of the work performed by the employee or the categorization of the employer’s operations?

Next, consider Bissonnette’s direct antecedent. In Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022), the Justices presented a united front in pronouncing that section 1 “emphasizes the actual work that the members of a class, as a whole, typically carry out,” not what the employer does generally, thereafter decreeing that airline cargo handlers fall within the ambit of the FAA’s statutory exemption. And in a prescient footnote, Justice Thomas cautioned that “the answer will not always be so plain” when the workers in question are “further removed” from the stream of interstate commerce. 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). 

And now for Bissonnette. Neal Bissonnette delivered the respondents’ baked goods (including the iconic Wonder Bread) within parts of Connecticut, but also operated as a franchisee, obligated to maximize sales, stock shelves, advertise, and hire his own employees. 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). Reasoning that the employer was in the bakery industry, and not the transportation business per se, the appellate court held that Bissonnette did not qualify for the “transportation worker” exception.

Overturning the circuit panel, the Supreme Court proclaimed that the statutory exemption from arbitration for “transportation workers” does not require that the employee work for a transportation company. Noting that Saxon had already found that the relevant text of the FAA “says nothing” which indicates that the employer’s industry classification is conclusive, Chief Justice Roberts now added that the “conspicuous absence” of industry-specific language within section 1 confirms that it is the tasks performed by the employee which determine eligibility for the exception, not the employer’s primary line of business.

The high bench furthermore remonstrated that the lower tribunal’s ruling was unmoored to text or precedent and would preoccupy trial courts with “arcane riddles about the nature of a company’s services.” For example, does a pizzeria make money primarily from selling pizza or delivering it? And in a pithy nod to the contemporary economy, Bissonnette posited this modern-day dilemma: Do Amazon or Wal-Mart derive their revenue mainly from retailing goods or shipping them?

For our coda, Bissonnette’s holding that “transportation worker[s] need not work in the transportation industry” in order to be exempted from agreements to arbitrate is to be commended as an unassailable construction of the FAA’s plain text. Defining the employer’s business is now superfluous. But we forecast that the focus of future litigation shall now transition to excruciating dissections of the actual work performed by employees seeking an exception, inquests that will surely engender extensive discovery, and possibly even intermediate proceedings. Additionally, we expect discord over whether such inquiries should be qualitative, quantitative or some admixture of both. For these reasons, we fully expect that the Supreme Court shall be compelled to intervene once again to refine the FAA’s exemption from arbitration for “transportation workers.”