U.S. Supreme Court Clarifies Transportation Exemption Of Federal Arbitration Act

Volume: 23 | Issue: 16
May 2, 2024

On April 12, 2024, the U.S. Supreme Court issued its decision in Bissonnette v. LePage Bakeries Park St., LLC, ruling that a transportation worker need not work in the transportation industry to be exempt from the Federal Arbitration Act (FAA). 

In this case which we discussed in October 2023, two distributors filed a class action lawsuit against a large, nationwide bakery company alleging violations of state and federal wage laws. The company argued that the case must be arbitrated pursuant to its Distributor Agreements which included a mandatory arbitration agreement. The distributors contended that they were exempt from forced arbitration under Section 1 of the FAA which excludes transportation workers engaged in interstate commerce. 

The issue for the Supreme Court was whether the distributors were covered by the exemption even though they worked in the bakery industry, not the transportation industry. The Court determined that a transportation worker need not work in the transportation industry to fall within the FAA’s exemption. The Court explained that the focus of the exemption is on the work the worker performs, not on the company’s work. 

The Court further clarified that the FAA’s transportation exemption does not apply to workers who simply load or unload a good that has crossed state lines, but instead applies only to a worker who is “actively engaged in transportation of goods across borders via the channels of foreign or interstate commerce” and who is “playing a direct and necessary role in the free flow of goods across borders.” The Court sent the case back to the trial court to determine whether the distributors met this definition. 

If you have questions about this case, the Federal Arbitration Act, or arbitration agreements, please contact a KZA attorney.

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.

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