U.S. Supreme Court’s Bissonnette Decision Addresses the Federal Arbitration Act’s “Transportation Exemption,” but Leaves Some Questions Unanswered

On April 12, 2024, the Supreme Court decided Bissonnette v. LePage Bakeries Park St., LLC, 144 S. Ct. 905 (2024), once again addressing the “transportation worker” exemption codified in Section 1 of the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq. In its opinion, the Supreme Court unanimously held, on narrow grounds, that a transportation worker “need not work in the transportation industry to fall within the exemption.” 144 S. Ct. at 913. This holding, which the Court largely derived from its previous precedents, does not significantly expand the scope of the transportation worker exemption, and it leaves several other questions regarding Section 1 unaddressed.

Despite its narrow holding, the Bissonnette decision is important for companies with employee arbitration agreements to understand, as plaintiff-employees, trying to sidestep arbitration, have creatively pushed the boundaries of the “transportation worker” exemption. While the Supreme Court did not provide sufficient clarity to shut down this line of argument, understanding the Bissonnette decision will help companies defend against attempts to use the decision to expand the scope of Section 1.

The Bissonnette Opinion

Petitioner-plaintiffs Bissonnette and Wojnarowski were franchisees who owned the rights to distribute defendant bakeries’ products in certain parts of Connecticut. As part of their distribution contracts, Bissonnette and Wojnarowski agreed to arbitrate claims under the FAA. Id. at 909.

After Bissonnette and Wojnarowski brought a putative class action suit in federal court, defendants moved to compel arbitration. Bissonnette and Wojnarowski argued that they fell under the transportation worker exemption of the FAA, which provides that “nothing [in the FAA] shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. But the district court disagreed and granted the motion to compel arbitration. The Second Circuit affirmed on the ground that Bissonnette and Wojnarowski “are in the bakery industry,” and “the FAA exempts only ‘workers involved in the transportation industries.’” 144 S. Ct. at 909-10.

The Supreme Court rejected the Second Circuit’s industry-focused standard, finding it inconsistent with the Court’s prior decision in Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022). The respondent in Saxon urged the Court to hold that she fell within the transportation worker exemption “simply because she worked for an airline and carried out its customary work.” Bissonnette, 144 S. Ct. at 911 (citing Saxon, 596 U.S. at 460). But the Court held in Saxon — and reiterated in Bissonnette — that “§ 1 says nothing to direct courts to consider the industry of a worker’s employer. The relevant question was ‘what [Saxon] does at Southwest, not what Southwest does generally.’” Id. (quoting Saxon, 596 U.S. at 456).

Notably, Bissonnette reemphasized the narrow scope of the transportation worker exemption. The Court rejected defendants’ argument that its holding would exempt “virtually all workers who load or unload goods” from arbitration, noting that it has “never understood § 1 to define the class of exempt workers in such limitless terms.” Id. at 912-13. Instead, the Court reiterated the requirement that an exempt worker “must at least play a direct and necessary role in the free flow of goods across borders.” Id. at 913 (internal quotation marks omitted). This requirement “undermine[s] any attempt to give the provision a sweeping, open-ended construction.” Id.

Impact of Bissonnette and Unresolved Issues

Bissonnette does not significantly change the existing law surrounding the transportation worker exemption. It simply reiterates Saxon’s holding that, in determining whether the exemption applies to a class of employees, courts should focus on “what [the employees] do, not for whom they do it.” Id. at 912. Just as the plaintiff in Saxon did not fall within the exemption simply because she worked for an airline, the plaintiffs in Bissonnette did not fall outside the exemption simply because they worked with baked goods. The Section 1 knife cuts both ways.

Bissonnette is perhaps more notable for the questions it did not resolve. For example, the Court expressed no opinion on the argument that “petitioners are not ‘engaged in foreign or interstate commerce’ within the meaning of § 1 because they deliver baked goods only in Connecticut.” Id. at 913. This argument has become the subject of a circuit split, with courts disagreeing over whether the Section 1 exemption applies to “last leg drivers” — those who move packages that have traveled across state lines between two locations within the same state.¹

The Bissonnette Court also declined to address “whether Bissonnette and Wojnarowski qualify as transportation workers based on the work that they perform,” id. at 910 n.2, though it did note that the petitioners’ jobs “extended beyond carrying [ ] products from Point A to Point B,” id. at 909.

Finally, while Bissonnette clarifies that an employee’s industry is not a dispositive factor in the Section 1 analysis, some case law suggests it may still be a relevant factor.²

Key Takeaways

While the Supreme Court declined to provide the clarity employers desire on the scope of the “transportation workers” exemption in Section 1, there are a number of key takeaways for employers and practitioners.

• Plaintiffs may try to avoid arbitration agreements by arguing that the Bissonnette decision expands the scope of Section 1 and applies to all employees involved in the transportation of goods.
• Bissonnette may not be the last word regarding the transportation worker exemption, and we can expect to see additional judicial refinement as the exemption is further tested in courts across the country.
• Employers should consider reviewing their current arbitration agreements in light of the decision and assess whether revisions or updates should be made to ensure their enforceability.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.