Transportation Industry Alert: Second Circuit Narrowly Interprets FAA Transportation Worker Exemption | FordHarrison
Summary: Which employees qualify as “transportation workers” so they are exempt from the Federal Arbitration Act (FAA)? The Second Circuit set out to answer that question on May 5, 2022, in a case important to employers. Bissonnette c. LePage Park St. Bakeries, LLC (2nd Cir. 2022). Although the ruling includes quite a bit of sayings (discussion is not essential to the ruling), the court ultimately found that bakery deliverers were not eligible for the transport worker exemption and that Plaintiffs’ claims were subject to arbitration under the FAA.
Plaintiffs filed a class action lawsuit in the Connecticut Federal District Court against Flowers Food, Inc. and two of its subsidiaries (collectively Flowers) for wage and hour violations. Flowers is the holding company of subsidiaries that produce breads, including Wonder Bread, and buns, buns and cupcakes in 47 bakeries. Flowers subsidiaries sell exclusive distribution rights for these baked goods in specific geographic areas. Independent distributors who purchase these distribution rights market, sell and deliver Flowers bakery products.
The plaintiffs are two independent distributors of Flowers’ products. Pursuant to a distribution agreement entered into by all independent distributors, plaintiffs picked up the baked goods from various warehouses in Connecticut and then delivered them to stores and restaurants located within their specified geographic territory. The plaintiffs’ role as independent distributors of Flowers’ products was broad: they “are committed to maximizing sales; solicit new locations; stock shelves and rotate products; withdraw expired products; acquire delivery vehicles; maintain equipment and insurance; distribute Flowers’ publicity material and develop its own (with Flowers’ prior approval); retain legal and accounting services; and hire help.
The question arose: does this make these self-employed distributor carriers FAA exempt? The district court ruled “no” and dismissed the case, granting the defendants’ motion to compel arbitration. In a sharply divided 2-1 decision, the Second Circuit upheld.
The court briefly touched on a matter which the trial court had considered but which was not determinative. The Second Circuit declined to follow the District Court’s analysis and ended up asserting on an alternative basis. The court wrote a disquisition on whether Connecticut state law applied even if the FAA also applied. The court reserved on this issue, saying it was easier and cleaner to decide the case strictly on the grounds of the FAA. Although the court analyzed the thorny question of whether the FAA prevails over state arbitration laws, the language analyzing this question was not necessary to the resolution of the case and, therefore, is not restrictive.
So the court decided the case on a simpler basis: were these independent distributors “transportation workers” who were exempt under the FAA? The court, quite decisively, said no. Relying on the analyzes of its sister circuits on this point, namely the Fifth and Eleventh Circuits, the Court held that the exemption for “transportation workers” should be applied narrowly to encompass only workers involved in the transportation industry. The gist of the court’s decision is that “an individual works in a transportation industry if the industry in which the individual works relates primarily to the movement of goods or passengers, and the primary source of commercial income of industry is generated by this movement. ”
And so, the court found that the plaintiffs and the putative class worked in the pastry shop industry. the movement baked goods were only incidental to the trade in question: “in breads, buns, buns and biscuits – not in transportation services“. Thus, the court held that the plaintiffs were not excluded from the FAA and affirmed, on a vigorous dissent, the order compelling the arbitration of their claims.
Conclusion of the employers: The Second Circuit took a narrow view of “transportation workers” under the FAA. It has always done so, but it reaffirmed the narrow principle that workers whose job it is to transport goods do not always – and generally do not – render them “transportation workers” under the FAA. . If the mere movement of goods is incidental to the essential functions of a distributor, like the plaintiffs in this case, the court will only call these workers “transportation workers” if their main function is to deliver goods and not to market and distribute products. This is a useful result for employers, and this issue, which is the subject of much litigation among more traditional “transportation workers”, such as those who work for Amazon and other delivery companies like GrubHub and DoorDash. , could eventually reach the Supreme Court.