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April 16, 2024

Navigating the Arbitration Exemption Standard for ‘Transportation Workers’ Under the FAA

Basic Principles Regarding the Federal Arbitration Act’s Residual Clause Excluding “any other class of workers engaged in . . . commerce” From the Requirement of Arbitration

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On April 12, 2024, in Bissonnette v. LePage Bakeries Park St., LLC, the U.S. Supreme Court held that a transportation worker need not work for a company in the transportation industry to fall within the exemption from arbitration located in Section 1 of the Federal Arbitration Act (“FAA”). As a result, companies that manufacture or sell products—but also employ workers to package, load or transport products—may find arbitration agreements with those employees unenforceable as those employees may be exempt from arbitration under the FAA’s Residual Clause. 

The only question before the Supreme Court in Bissonnette v. LePage Bakeries was whether a transportation worker must work for a company in the transportation industry to be exempt under § 1 of the FAA. In holding that the scope of the Residual Clause was not limited to transportation workers engaged in the “transportation industry,” the Supreme Court reinforced the broad scope of the individuals who are not subject to arbitration under the FAA, while providing guidance to the lower courts (or arbitrators) who will address this question.

Among other things, the Supreme Court’s decision in Bissonnette v. LePage Bakeries may negatively impact the mitigation efforts of manufacturers and others seeking to avoid litigating putative class actions by relying on the enforcement of arbitration agreements that permit only individual claims to be arbitrated.


The petitioners, Bissonnette and Wojnarowski, worked as distributors for Flower Foods. Flower Foods is the second-largest producer and marketer of packaged bakery foods in the U.S. Its flagship product is Wonder Bread. Distributors like Bissonnette and Wojnarowski are franchisees who purchased the right to distribute Flower Foods’ products. Petitioners allegedly worked at least forty hours a week delivering those products, but also engaged in other activities such as finding new retail outlets, advertising, setting up promotional displays, stocking shelves and replacing expired products. As a result, their work was not limited to just transporting the bakery products.

Bissonnette and Wojnarowski brought a putative class action against Flower Foods for violating state and federal wage and hour laws. Flower Foods moved to compel arbitration based on an arbitration provisions in the Distributor Agreements arguing that the contracts required the distributors to arbitrate their claims individually and not as part of a class action. 

In response, Bissonnette and Wojnarowski contended they fall within the exception in § 1 of the FAA providing that “nothing herein contained shall apply to contracts of employment of seamen, railroad employees or any other class of workers engaged in foreign or interstate commerce”—known as the FAA’s Residual Clause.

The District Court dismissed the case in favor of arbitration. The Second Circuit affirmed, holding Bissonnette and Wojnarowski “are in the bakery industry” and that § 1 of the FAA exempts only workers engaged in the “transportation industries.” The Second Circuit decided an entity would be considered within the transport industries if it “pegs its charges chiefly to the movement of goods or passengers” and its “predominant source of commercial revenue is generated by that movement.”


More than twenty years ago, in Circuit City Stores, Inc. v. Adams, the Supreme Court recognized that § 1 is limited to transportation workers. The Court reached this conclusion applying the ejusdem generis canon of statutory interpretation under which a general or collective term at the end of a list of specific items is interpreted in light of any common attributes that the general terms have with the specific terms. Accordingly, the Supreme Court found that the general phrase “class of workers engaged in . . . commerce” was “controlled and defined by reference to” the specific categories “seamen” and “railroad employees” that precede it.

Two years ago, in Southwest Airlines Co. v. Saxon, the Supreme Court addressed the scope of the Residual Clause in § 1 of the FAA and expressly declined to adopt an “industrywide” approach. The Court noted that the language in § 1 refers to “workers” who are “engaged” in commerce and focuses on “the performance of work” rather than the industry of the employer.

Notwithstanding the Supreme Court’s prior precedents, the Second Circuit in Bissonnette v. LePage Bakeries based its decision on the petitioners being “in the bakery industry” and not the “transportation industries.”

The Supreme Court rejected this approach, explaining:

The application of such a test, however, would often turn on arcane riddles about the nature of a company’s services. Does a pizza delivery company derive its revenue mainly from pizza or delivery? Do companies like Amazon and Walmart—which both sell products of their own and transport products sold by third parties—derive their revenue mainly from retail or shipping? Extensive discovery might be necessary to explore the internal structure and revenue models of a company before deciding a simple motion to compel arbitration. Mini-trials on the transportation-industry issue could become a regular, slow, and expensive practice in FAA cases. All this “complexity and uncertainty” would “‘breed[ ] litigation from a statute that seeks to avoid it.’”

(Footnote and citations omitted.) 

The Supreme Court clarified that “seamen” and “railroad employees” are “connected by what they do, not for whom they do it.” (Emphasis added.) They “share the employment characteristic of being transportation workers.” And the meaning of those terms (“seamen” and “railroad employees”) limits the meaning of “any other class of workers engaged in . . . commerce” under principles of the ejusdem generis canon of statutory interpretation.

The Supreme Court also rejected Flower Foods’ policy argument that a transportation-industry requirement was necessary to prevent § 1’s exemption from sweeping too broadly because the flow of commerce requires the loading and unloading of goods across a broad array of businesses ranging from pet stores to grocery stores. 

Limitations were placed on how broadly the exemption to transportation workers applied. Specifically, transportation workers must be “actively” “engaged in transportation of . . . goods across borders via the channels of foreign or interstate commerce.” (Emphasis added, quotations and citations omitted.) And, notably, the Supreme Court further refined the definition of an exempt “transportation worker” to indicate that “any such worker must at least play a direct role in the free flow of goods across borders.” (Emphasis added, quotations and citations omitted.) The Court concluded: “These requirements undermine[ ] any attempt to give the provision a sweeping, open-ended construction, instead limiting § 1 to its appropriately narrow scope.” (Quotations and citations omitted.) 


The Supreme Court’s decision in Bissonnette v. LePage Bakeries is significant in at least four practical respects.

First, despite trying to place boundaries on “any other class of workers engaged in . . . commerce” who are exempt from the requirements of arbitration under the FAA, there will be litigation testing those boundaries. In part, this is because the Supreme Court remanded the cases for further proceeding consistent with its opinion—despite petitioners alleging they spent at least forty hours a week delivering Flower Foods’ bakery products. The Court’s decision provides no guidance on how many hours must be worked or what tasks qualify for being “actively” “engaged in transportation of . . . goods across borders via the channels of foreign or interstate commerce.” Do dispatchers and logistical personnel qualify under this exemption? The Supreme Court’s earlier decision in Saxon demonstrates that an airline’s “ramp supervisor” who frequently loaded and unloaded baggage, airmail and commercial cargo on and off airplanes was a “transportation worker” qualifying for § 1 exemption, although her job did not require her to travel with the cargo. The legal standard set forth in Bissonnette will only become more clear through case decisions applying this standard. 

Second, companies (including manufacturers) who seek to limit their exposure to class actions by including arbitration clauses in their contracts requiring claimants to arbitrate their claims individually, rather than collectively, may now be exposed to class action liability if § 1’s exemptions are applied to prevent mandatory arbitration of claims.

Third, to the extent employers and others are relying on arbitration clauses to avoid litigation, the Supreme Court’s decision arguably broadens the class of individuals who may be exempt from arbitration under the FAA. To avoid § 1’s exemption, those seeking to draft enforceable arbitration provisions may consider including representations in their contracts that the other party is not an employee—as § 1’s Residual Clause only applies to “contracts of employment.” Similarly, including representations in the contract that the other party’s contractual duties will not require it to “actively engaged in transportation of . . . goods across borders via the channels of foreign or interstate commerce,” may provide a level of insulation from application of § 1’s exemption provisions. Additionally, disclaiming the applicability of the FAA in favor of a state arbitration act may also assist in providing an arbitral forum and avoiding §1’s exemption.

Fourth, the Bissonnette decision arguably increases the importance of a broad and specific delegation clause in an arbitration agreement. Delegation clauses direct the initial arbitrability determination to an arbitrator and deprives a court from deciding the issue of arbitrability even in circumstances where the asserted claims are wholly groundless. This is important because arbitrators are historically more likely to find a dispute arbitrable than courts. Moreover, the factual findings of arbitrators are entitled to a high level of deference from courts. Accordingly, by explicitly delegating the determination of facts concerning the application of Section 1’s Residual Clause to an arbitrator, a party preferring an arbitral forum may increases the likelihood of an arbitration clause being enforced initially and being upheld if subsequently challenged through the narrow grounds provided for challenging an arbitration award.




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