February 6, 2023

Volume XIII, Number 37

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February 03, 2023

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FAA’s Transportation Worker Exception Covers Airline Ramp Agents, U.S. Supreme Court Holds

Individuals employed as ramp workers who frequently handle cargo for an airline are “transportation workers” exempt from the Federal Arbitration Act (FAA), the U.S. Supreme Court has held. Southwest Airlines Co. v. Saxon, No. 21-309 (June 6, 2022). Therefore, the employees are not required to arbitrate their wage-hour claims under the FAA, but may still be subject to arbitration under state law.

The FAA’s transportation worker exception excludes from FAA coverage “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. In recent years, the scope of the exception — particularly its “any other class of workers” catchall provision — has emerged as a significant issue in class action litigation. In this case, the narrow question the Supreme Court addressed to resolve a circuit split was “[w]hether workers who load or unload goods from vehicles that travel in interstate commerce, but do not physically transport such goods themselves, are interstate ‘transportation workers’ exempt from the Federal Arbitration Act.”

In the decision below, the U.S. Court of Appeals for the Seventh Circuit held that, even though the employee did not personally transport goods or people in interstate commerce, she was an essential link in the interstate commerce chain and, therefore, exempt from the FAA. The U.S. Court of Appeals for the Fifth Circuit reached the opposite conclusion in Eastus v. ISS Facility Servs., Inc., a 2020 case involving similar facts.

The Suit

Latrice Saxon, a Southwest Airlines cargo ramp supervisor at Chicago’s Midway airport, brought a putative collective action wage suit against her employer. Despite her supervisory role, she alleged that she frequently performed the work of physically loading and unloading cargo on and off airplanes (which Southwest disputed). She filed a putative collective action under the Fair Labor Standards Act alleging she and her fellow ramp supervisors were entitled to overtime pay. When the airline sought to compel arbitration of her claims under the parties’ arbitration agreement, Saxon contended she cannot be forced to arbitrate because she is a “transportation worker” exempt from FAA coverage and, therefore, the arbitration agreement was not enforceable.

The district court found the transportation worker exception did not apply and compelled arbitration. The Seventh Circuit reversed, finding the transportation worker exception applied.

The Court’s Reasoning

The Supreme Court, in a unanimous 8-0 opinion authored by Justice Clarence Thomas, affirmed the judgment of the court of appeals. (Justice Amy Coney Barrett was recused from this case and did not participate.)

First, the Court held that, in deciding whether a “class of workers” is engaged in interstate commerce for purposes of the transportation worker exception, the analysis turns on the duties of the workers in question and not the company or industry in which the workers are engaged. The justices rejected an industrywide or companywide approach urged by the plaintiffs, which would broadly exempt “virtually all employees of major transportation providers.” Instead, the Court said the key inquiry is the “actual work that the members of the class, as a whole, typically carry out.”

Second, the Court examined what it means to be “engaged in foreign or interstate commerce.” It held that the workers must be “directly involved in transporting goods across state or international borders falls within §1’s exception.” The Court determined that airplane cargo loaders are engaged in foreign or interstate commerce because “one who loads cargo on a plane bound for interstate transit is intimately involved with the commerce (e.g., transportation) of that cargo.” The Court rejected the airline’s argument that the exception applied only to employees who physically move goods across states while on board a plane or other vehicle.

Takeaway

The Supreme Court’s decision makes clear that, when determining whether workers qualify for the FAA’s transportation worker exception, what the employer (or contracting entity) does has no bearing on the analysis. Rather, the analysis turns on the specific duties those workers perform and whether those duties directly involve interstate commerce.

In this case, the ramp supervisor who claimed to frequently load and unload cargo qualified for the exception. The Court, however, said airline employees whose duties are more removed from the interstate flow of transit (such as an airline’s shift schedulers and website designers) likely would not qualify for the exception. In a footnote, the Court likewise suggested that last-mile delivery drivers and food delivery drivers are “further removed” from the channels of interstate commerce and the answer would not be as clear in such case.

Similarly, the Court clarified that its opinion did not apply to employees who only perform supervision of transportation workers and are not themselves directly involved in transportation of the goods; it reserved that question for another day. Therefore, the contours of the transportation worker exception will continue to be litigated.

Yet, the opinion suggests that many workers in the transportation industry, and workers in other industries that generally engage in interstate commerce, likely will be unable to invoke the exception to evade arbitration under the FAA if their role is merely tangential to the interstate flow of goods.

Notwithstanding the Court’s decision, while the transportation worker exception may mean an arbitration agreement is not enforceable under the FAA, an arbitration agreement with transportation workers nonetheless may be enforceable under an applicable state law.

Jackson Lewis P.C. © 2023National Law Review, Volume XII, Number 159
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Mia Farber Employment Litigation Attorney Jackson Lewis Los Angeles, CA
Principal

Mia Farber is a principal in the Los Angeles, California, office of Jackson Lewis P.C. and a former member of the firm's Board of Directors. She currently leads the firm’s California Class and Private Attorneys General Act (PAGA) resource group. She has extensive experience in all facets of employment litigation.

Mia has represented employers in all types of employment litigation, including sexual harassment, discrimination, retaliation, and wrongful termination. She also has vast experience in the area of wage and hour class actions. Mia has defended a...

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William Robert Gignilliat IV, Jackson Lewis, ERISA Benefits Litigation Lawyer, Employment Discrimination Attorney
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Wm. Robert Gignilliat, IV, is an Associate in the Greenville, South Carolina, office of Jackson Lewis P.C. He practices employment law, defending management in litigation involving discrimination, retaliation, wages, ERISA benefits, and other issues.

While attending law school, Mr. Gignilliat was a member of the Georgia Law Review. After law school, he clerked for two years for the Honorable J. Randal Hall in the U.S. District Court for the Southern District of Georgia. He then clerked for the Honorable G. Ross...

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David Golder, Jackson Lewis, wage hour dispute attorney, Fair Labor Standard Act Lawyer
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David R. Golder is a Principal in the Hartford, Connecticut, office of Jackson Lewis P.C. Mr. Golder has extensive experience handling class and complex litigation, including nationwide, high-stakes wage and hour disputes. Mr. Golder defends employers in class-based, multi-plaintiff, and multi-district wage and hour class and collective actions involving claims for employee misclassification, improper payment of wages, off-the-clock work, and meal and rest break violations. Mr. Golder also provides preventive advice and counsel to employers wishing to limit their...

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Scott P. Jang, Jackson Lewis, wrongful termination lawyer, unfair competition attorney
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Scott P. Jang is an Associate in the San Francisco, California, office of Jackson Lewis P.C. He represents management in all areas of employment law litigation.

Mr. Jang’s practice includes defending management in matters involving claims for breach of contract, discrimination, harassment, retaliation, wrongful termination, and unfair competition. He represents clients in both class action and single plaintiff cases.

Mr. Jang is particularly well-versed in federal litigation. Prior to...

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Adam Lounsbury Employment lawyer Jackson Lewis
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Adam L. Lounsbury is Of Counsel in the Richmond, Virginia, office of Jackson Lewis P.C. He defends employers in class and collective actions against alleged wage and hour violations resulting from misclassification and other workplace-related claims. Over the course of his career, he has represented financial institutions, automobile and consumer product manufacturers, and companies in the transportation, insurance, tech, travel, healthcare and hospitality industries.

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