Food delivery driver misclassification lawsuit could be exempt from arbitration | Knowledge

The United States Supreme Court decided Bissonnette, et al. v. LePage Bakeries Park St., LLC, et al. on April 12, 2024. In a unanimous decision written by Chief Justice John Roberts, the Court held that a transportation worker need not work in the transportation industry to be exempt from arbitration under of Section 1 of the Federal Arbitration Act (FAA) governing “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 USC § 1.

Brief context

In recent Holland & Knight blog posts “Are Food Distributors Abiding by Transportation Worker Exemption from Federal Arbitration Act?” ” and “U.S. Supreme Court Hears Argument on Arbitration Exemption for Food Delivery Drivers,” we discussed briefs filed by petitioners Neal Bissonnette and Tyler Wojnarowski and respondents Flowers Foods Inc ., LePage Bakeries Park St. LLC and CK Sales Co. LLC (collectively, Flowers) and oral argument before the Supreme Court in Bissonnette, et al. v. LePage Bakeries Park St., LLC, et al. S.Ct. No. 23-51. Bissonnette and Wojnarowski were franchisees who held the rights to distribute Flowers products in certain Connecticut territories pursuant to distribution agreements that included arbitration agreements. Bissonnette and Wojnarowski claimed that their misclassification lawsuit against Flowers should not be sent to arbitration because they are part of a “class of workers engaged in commerce” along with “seafarers” and “railroad employees” and, therefore, are exempt from the FAA. . The U.S. District Court for the District of Connecticut and the U.S. Court of Appeals for the Second Circuit disagreed, holding that they were not exempt from arbitration, with the Second Circuit stating that the exemption from Article 1 was only available to workers in the transport sector. , and Bissonnette and Wojnarowski worked in the baking industry, not the transportation industry.

Supreme Court decision

The Supreme Court has ruled that it is not necessary for a transportation worker to work in the transportation industry to qualify for the FAA exemption provided by section 1 of the Act. As discussed during oral argument on February 20, 2024, the justices noted that applying a requirement relating to the transportation industry “would often result in obscure conundrums about the nature of a company's services,” and that a thorough investigation and mini-trials may be necessary. to determine whether a putative employer is in the transportation sector. Instead, the focus should be on “the performance of the work” rather than the employer's industry, as the Court determined in its 2022 decision in the case Southwest Airlines Co. v. Saxon. As a result, the Court held that the Second Circuit erred in requiring arbitration on the basis that Bissonnette and Wojnarowski worked in the baking industry.

Take away

Although it rejected an industry-based test, the Court expressed no opinion on Flowers' alternative arguments in favor of arbitration, including that Bissonnette and Wojnarowski are not transportation workers and are not not engaged in foreign or interstate commerce because they deliver baked goods only within Connecticut. . Companies can still use these types of arguments, as well as arguments based on state arbitration laws, to seek to compel arbitration. But without requiring an employer to be in the transportation sector, workers in the medical, food and retail industries, among others, where goods are frequently shipped across state lines, will argue that they belong to a “class of workers engaged in activities abroad”. or interstate commerce” and, therefore, cannot be forced to arbitrate their claims, even if they have signed contracts agreeing to arbitrate their disputes. Companies must remain vigilant in defining their contractual relationships with contractors independent contractors, franchisees and employees, paying particular attention to the role of workers in the cross-border transportation of goods, to ensure that their arbitration agreements are enforceable.