The Court of Appeals has decided not to rehear a lawsuit that touches upon an interesting issue: when can a plaintiff invoke the so-called transportation exception to mandatory arbitration? This issue may be mundane for non-lawyers, but it highlights a potential issue for the Supreme Court about the scope of the exception.
The case is Bissonette v. LePage Bakeries, Inc. En banc was denied on February 15. Plaintiffs buy baked goods from a company that makes buns, snack cakes, and bread. They sell the baked goods to bakeries and supermarkets. Of course, they drive a truck to perform their work. They have a wage-and-hour dispute with their employer and wanted to bring suit in federal court and avoid arbitration. But they must have signed an arbitration agreement, and management wanted the case out of court and into arbitration, a more favorable forum for employers. Plaintiff opposed arbitration, arguing that the Federal Arbitration Act's transportation exception allows transportation workers like them to litigate their cases in federal court. The Second Circuit last year said that while plaintiffs drive a truck, they cannot invoke the transportation exception because they are not in the transportation industry but the bakery industry.
Under the FAA, employment contracts are not subject to arbitration involving "seamen, railroad employees and any other class of workers engaged in foreign or interstate commerce." The class of workers encompassed by the residual clause is "transportation workers." As the Second Circuit saw it in the 2022 ruling, the two examples in the FAA, seamen and railroad employees "locate the 'transportation worker' in the context of a transportation industry." Shortly thereafter, the Supreme Court issued Southwest Airlines v. Saxon, 142 S. Ct. 1783 (2022), which held that not everyone who works in the transportation industry can invoke the transportation exception, as the courts must consider "the actual work that the members of the class, as a whole, typically carry out," which means in other words, "what the worker 'frequently' does for the employer." The plaintiff in Saxon was able to invoke the transportation exception under the FAA because she worked for an airline.
After Saxon was handed down, the plaintiffs in Bissonette asked the Court of Appeals to reconsider its ruling, arguing that the reasoning in Saxon supported their argument. That effort failed. The Supreme Court in Saxon said that that not everyone who works for the airlines can invoke the exception, and the holding in Saxon is not so far-reaching that it could change the result in Bissonette, the Second Circuit held, because "those who work in the bakery industry are not transportation workers, even those who drive a truck from which they sell and deliver the breads and cakes." That ruling in Bissonette was the Second Circuit's second decision in that case in 2022.
Now we have a third ruling, though this is in the form of individual opinions on the suitability of an en banc hearing for the entire Second Circuit to hear the case. There will be no en banc because only three of the 13 full-time judges on that court want an en banc. The Court of Appeals rarely hears cases en banc, so I assume plaintiffs will seek review from the Supreme Court.
Dissenting from the en banc denial, Judges Nathan, Robinson and Perez write that Saxon brings the Bissonette plaintiffs within the transportation exception. They write:
Maintaining the “transportation industry” requirement is, as Saxon demonstrates and holds, unsupported by the text of the FAA. Saxon tells us that in interpreting the Section 1 exemption, we must attend to the nature of a worker’s duties, not the industry of their employer. Our prior precedent and the amended opinion do not so attend. Because the amended majority opinion is in direct conflict with the textual reasoning and holding of the Supreme Court’s intervening decision in Saxon, I respectfully dissent from the denial of rehearing en banc.Judge Jacobs, who was on the original Bissonette panel submits a separate decision defending that ruling and stating that the three judges who want en banc are reading the transportation exception too broadly. After noting that plaintiffs drive a truck to deliver baked goods, Judge Jacobs writes:
If they could be deemed transportation workers simply by eliding the foundational question of whether they work in a transportation industry, so could the undertaker who drives a hearse, the milkman in the morning, the chef in a food truck, and the person who delivers a pepperoni with extra cheese.
. . .
To be exempt from contractually compelled arbitration, a worker must be one who works in a transportation industry. . . . The prime error that has been rejected in this in banc poll is to skip the question of whether the plaintiffs work in a transportation industry, and to consider only whether they
move things about.
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