The Respondents:  Why the Supreme Court Should Affirm in Bissonnette

The U.S. Supreme Court will hear oral arguments for Bissonnette v. Le Page Bakeries Park St. LLC, No. 23-51, this Tuesday, Feb. 20. Earlier this month, CPR Speaks posted summaries of the petitioner-original plaintiffs’ ceramics support to overturn the Second US. Circuit Court of Appeals decision. 

This post looks at the case from the opposing respondent side—the affiliated company defendants in the Federal Arbitration Act employment case. See the petitioners’ summary Feb. 7 post at Lee Williams, “Arbitration, Ready to Argue: Islamic Views on Overturning Maisonette at the Supreme Court,” on CPR Speaks here.

The main issue is whether a class of workers that is actively engaged in interstate transportation must also be employed by a company in the transportation industry to be exempt from arbitration under the FAA. Federal Arbitration Act Sec. 1 exempts from 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.

There is a circuit split on the industry requirement. The Second Circuit concluded that the plaintiffs were not exempt because they worked in the bakery industry, not transportation. Because the respondents’ revenue was based on sales of baked goods, the court concluded that the FAA exemption did not apply as the petitioner’s employer was not involved in the transportation industry.

For full details on the case, see Jonathan Baccay, “The Supreme Court Will Address a Circuit Split on a Federal Arbitration Act Exemption,” CPR Speaks (Sep. 29) (available here).

As the oral arguments approach, 11 amicus briefs backing the respondents, Flowers Foods Inc.—one of the nation’s largest bakeries, headquartered in Thomasville, Ga.—and subsidiaries Lepage Bakeries Park St. LLC, and C.K. Sales Co. LLC, a distributor, have been submitted to the Court. The respondents produce and distribute a wide range of food products, including well-known brands of breads and snacks—probably best known as the owners of Wonder Bread. Flowers Foods claims that independent franchise businesses, like the petitioners, purchase the right to market, sell, and distribute Flowers Foods products within defined geographic territories.

Here are summaries of the amicus parties supporting the respondents and their arguments:

The Washington, D.C.-based Independent Baker’s Association is a national trade association of more than 200 family owned bakeries and related companies and trade groups in the baking industry. The IBA says its members “have a significant interest in the proper interpretation of the Federal Arbitration Act.” The IBA brief says it “offer[s] its unique perspective into the business models, practices, and agreements that are typical in the baking industry.”

The IBA’s first argument is that the petitioners are not truck drivers or transportation workers. Focusing on the Flowers Foods’ subsidiaries, the brief claims that the petitioners are “principals of franchise businesses that purchase baked goods from Flowers and resell them to retailers for a profit.” The IBA also claims that the petitioners “do not dispute that they do not work in the transportation industry.”

Because the petitioners are wholesale distributors, the IBA argues that they are not transportation workers and the petitioners’ argument that transportation workers should be exempt from the FAA still would not exempt petitioners from the statute.

The IBA argues second that the Court adopting the petitioner’s position would not be in the best interest of the judicial system and hurt alternative dispute resolution processes: “Petitioners’ position would invite mini-trials on threshold, fact-intensive questions regarding the details of individual distributors’ day-to-day activities and their relationships with product manufacturers—defeating the purpose of arbitration,” the brief states.

If the petitioners prevail, the IBA warns that courts will have to make that specific, case-by-case determination whether parties are exempt from the FAA. Therefore, the IBA wants the Court to “hew closely to the question presented and allow the lower courts to consider other reasons why petitioners—and other wholesale distributors—may yet fall within the scope of the FAA” even if the nation’s top Court disagrees with the Second Circuit analysis.

The IBA brief is available on the U.S. Supreme Court website here.

***

The U.S. Chamber of Commerce, a regular amicus presence in Supreme Court arbitration matters, is the world’s largest business federation. It represents about 300,000 direct members and indirectly represents the interests of more than 3 million companies and professional organizations.

The Chamber joined forces on its amicus brief with the National Retail Federation and the American Bakers Association. The NRF is the world’s largest retail trade association, with member retailers of all sizes, formats, and channels of distribution, as well as restaurants and industry partners from the United States and more than 45 countries abroad. The ABA represents more than 300 companies in the wholesale baking industry. “Since 1897,” the amicus brief notes, the “ABA has worked to increase protection from unduly costly government regulations, build the talent pool of skilled workers with specialized training programs, and forge industry alignment by establishing a more receptive environment to grow the baking industry.”

The three amici are based in Washington. They state that they have an interest in Bissonnette  because many of their members and affiliates regularly rely on arbitration agreements in their contractual relationships. “Arbitration allows them to resolve disputes promptly and efficiently while avoiding the costs associated with litigation in court—because arbitration is speedy, fair, inexpensive, and less adversarial than litigation,” states the brief.

The brief focuses on FAA Sec. 1’s residual clause, the key contention in the case.  It asserts that FAA Sec. 1’s plain meaning and the context, using the ejusdem generis canon of interpretation, requires workers to be in the transportation industry in order to be exempt from the statute. “Ejusdem generis” is a statutory construction principle that the brief defines as “where general words follow specific words in a statutory enumeration, the general words are construed to embrace only objects similar in nature to those objects enumerated by the preceding specific words,” citing to two arbitration cases, Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 118, 119 (2001) and Southwest Airlines Co. v. Saxon, 596 U.S. 450, 455 (2022).

The cases illustrate that the Court “instructed that Section 1’s exemption must be given a ‘narrow construction’ and ‘precise reading’” and it must be “interpreted according to its ‘contemporary, common meaning’ at the time the FAA was enacted in 1925.”

With that perspective, the brief analyzed the so-called FAA Sec. 1 residual clause. The amici urge that since the petitioners are in the baked goods industry, the petitioners/original plaintiffs are not exempt under Sec. 1 based on the Court’s previous FAA readings and the plain-meaning reading with historical context.

In other words, the residual clause—"or any other class of workers engaged in foreign or interstate commerce”—includes transportation workers only as modified by the words that precede it, exempting from the FAA “contracts of employment of seamen, railroad employees.”

The associations go even further. They assert that “working in the transportation industry is necessary, but certainly not sufficient, to trigger the Section 1 exemption, because any potential class of workers also has to perform work that qualifies as being ‘engaged in foreign or interstate commerce.’”

The brief then discusses a negative impact of the petitioners’ interpretation, stating that it would “significantly increase litigation over when and whether the FAA applies” and undermine Congress’s purpose when enacting the FAA “to move the parties to an arbitrable dispute out of court and into arbitration as quickly and easily as possible.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 22 (1983). The Supreme Court, the brief suggests, will threaten businesses’ rights to arbitration if it sides with the petitioners.

The amici’s brief is available on the U.S. Supreme Court website here.

***

The Washington Legal Foundation is a nonprofit, public-interest law firm and policy center based in Washington, D.C., that promotes free enterprise, individual rights, limited government, and the rule of law. It often appears as an amicus in Federal Arbitration Act cases.

The WLF’s argument supporting the bakery respondents is centered around the FAA’s legislative intent. The WLF claims that because litigation is expensive for businesses and courts, Congress created the FAA to “save people time, money, and trouble . . . in contracts ‘involving commerce,’ that require streamlined private dispute resolution—arbitration.”

The WLF continues, Sec. 1 “exists because transportation strikes in the wake of World War I threatened to disrupt other national industries dependent on transportation services. Congress made sure certain classes of transportation workers would engage in arbitration governed by other federal laws. When Congress enacted the FAA, seamen and railroad workers were subject to their own federal arbitration regimes.” (Emphasis is in the brief.)

Because the baking industry was not included in the exemption in 1925, WLF argues that regardless of the nature of the work done by the petitioners within the baking industry, they are not in the transportation industry and are not exempt from the FAA. The WLF encourages the Court to limit FAA Sec. 1’s reach, as it states that Congress intended when it created the statute, and to create “a bright-line rule” to avoid future litigation concerning Sec. 1’s scope that would  “continue to burden companies and the courts.”

The WLF brief is available on the U.S. Supreme Court website here.

***

Two professors who have taught and written extensively about the intersection of employment and arbitration law joined to file an amicus brief.

Samuel Estreicher is Dwight D. Opperman Professor of Law, Director of New York University’s Center for Labor and Employment Law, and is director of its Institute of Judicial Administration. Estreicher is a longtime proponent of employment arbitration—"if properly designed, as a means of providing hearings and recourse for working people not earning enough or otherwise able to attract competent counsel.”

David Sherwyn is a law professor and the John and Melissa Ceriale Professor of Hospitality Human Resources at the Cornell School of Hotel Administration, academic director of the Cornell Center for Innovative Hospitality Labor and Employment Relations, and a research fellow at the Center for Labor and Employment Law at New York University School of Law. His scholarship often focuses on the arbitration of discrimination lawsuits and union-management relations.

Profs. Estreicher and Sherwyn first argue that the petitioners interpret FAA Sec. 1 too broadly and that their interpretation is inconsistent with the statute’s purpose. They state that the petitioners’ argument “should be rejected as inconsistent with the history and purpose of the FAA, and because it would result in countless workers losing their federal right under the FAA to enforceable agreements for employment arbitration, which for many employees is the only forum where, as a practical matter, they will receive a merits hearing on their claims.”

When the FAA was enacted, the professors contend, Congress wanted to streamline the dispute-solving process by enabling arbitration between parties in dispute. Certain transportation industries were exempt, however, because federal laws already governed disputes in those areas.

The brief specifies that “Congress plainly did not exclude from the FAA other employees whose work simply involved transportation tasks but did not work in transportation industries subject to federal laws establishing special dispute resolution systems.”

Profs. Estreicher and Sherwyn support their historical reasoning with what they suggest is a pro-employee public policy argument. If the Supreme Court agrees with the petitioners, the professors worry that the benefits of arbitration will escape employees with disputes. “In the context of employee-employer disputes,” their brief states, “arbitration is the only way for most workers to have their disputes heard and adjudicated, given that many of them do not attract the attention of the private bar and many employees cannot afford to litigate in court.” In addition, employees frequently cannot afford effective counsel, so avoiding litigation serves them better than attempting to navigate through the courts.

The professors’ brief is available on the U.S. Supreme Court website here.

***

The California Employment Law Council is a nonprofit consortium of companies that lobby on behalf of California employers. The CELC says its membership includes about 80 private-sector California employers “who collectively employ well in excess of a half-million Californians.” Many members have arbitration agreements with some or all their employees, and therefore have a significant stake in the outcome of this case.

CELC endorses the Second Circuit decision because, according to the Council, the court of appeal’s analysis satisfies “the two principles this Court has identified in construing the FAA: (i) that the Section 1 exclusion be construed narrowly, and (ii) that Congress in the FAA intended to move the parties to an arbitrable dispute out of court and into arbitration quickly, normally without threshold proceedings or discovery.”

CELC argues that the facts indicate that petitioners cannot assert that they are exempt under FAA Sec. 1 because they are not participating in interstate commerce. After the respondent manufactures its goods, there is no assigned delivery to a specific retailer. The brief explains that “Petitioner Bissonnette, who runs a separately incorporated business, picks up, sells and delivers products to retailers such as Walmart, Target, and Safeway, entirely within Connecticut.”

CELC alleges that the petitioners are only participating in intrastate commerce, like  “what the newspaper deliverer does on his or her bike, the furniture deliverer does in the station wagon, and the food-delivery workers do on their motorcycles.” Because intrastate commerce is not covered by Sec. 1, the petitioners are not protected by Sec. 1.

The CELC brief is available on the U.S. Supreme Court website here.

***

Seattle-based Internet commerce giant Amazon.com Inc. filed a brief, noting that one of its subsidiaries, Amazon Logistics Inc., “contracts with independent providers of transportation services, including local delivery services that characteristically take place wholly within a state.”

The brief recounts that in a case last year, the Ninth Circuit held that Amazon Flex delivery drivers’ agreements were exempt from the FAA, and Amazon asked the Supreme Court to grant certiorari to review that determination. See Amazon.com Inc. v. Miller, petition for cert. pending, No. 23-424 (filed Oct. 19, 2023). (The Court scheduled the case for a conference in early January, but hasn’t as of this posting issued a decision on taking the case.) 

Amazon, therefore, has a strong interest in the potential application of the FAA’s exemption to workers “who, much like the petitioners, make local deliveries of goods already located at warehouses or retail or grocery locations within their states.”

Amazon argues that the petitioners cannot be protected under FAA Section 1 because they are not “a class of workers that is actively engaged in interstate transportation.” Instead, Amazon claims that the petitioners, who pick up and deliver goods only in Connecticut, are classified as intrastate workers based on the FAA’s text and Supreme Court precedent.

Amazon highlights that circuit courts have different opinions on whether picking up and delivering in-state goods within a single state satisfies the exemption’s test if the goods were previously shipped across state lines for the same business.

It compares the circuit splits in Lopez v. Cintas Corp., 47 F.4th 428, 432 (5th Cir. 2022), with Carmona v. Domino’s Pizza, LLC, 73 F.4th 1135, 1137 (9th Cir. 2023), petition for cert. pending, No. 23-427 (filed Oct. 19, 2023) (also scheduled for January conference but still undecided), as well as Miller v. Amazon.com Inc., cert petition linked above, to illustrate how “the Fifth and Ninth Circuits openly reject each other’s position.”

Amazon, however, claims that a plain reading of the FAA and the Court’s precedents have demonstrated that picking up and delivering in-state goods within a single state is not classified as interstate commerce. “Under the text of the FAA, and Supreme Court precedent construing that statutory text, picking up goods located in-state and delivering them locally within that same state does not constitute interstate transportation in the relevant sense.  . . . [T]he relevant case law—both today and before the FAA’s enactment—supports the conclusion that a class of workers who pick up goods that have been unloaded by other workers at in-state warehouses (or other in-state locations), and who then deliver them within the state, are not themselves actively engaged in transporting goods across borders.”

Because the categorization of interstate versus intrastate commerce is not the question presented in this case, Amazon suggests that the Supreme Court “should either sidestep this question” or “it should reject the mistaken views of petitioners and their amici.”

The Amazon brief is available on the U.S. Supreme Court website here.

***

A big attorneys’ organization and a conservative nonprofit law firm—two constant participants in national debates over arbitration issues--teamed on an amicus brief supporting Flowers Foods.

The Center for Law and Public Policy is the public policy think tank and advocacy voice of Chicago-based DRI, a nonprofit organization composed of about 16,000 attorneys who represent businesses in civil litigation—defense-side work. DRI’s mission includes enhancing the skills, effectiveness, and professionalism of defense lawyers; promoting appreciation of the role of defense lawyers in the civil justice system; and anticipating and addressing substantive and procedural issues germane to defense lawyers and the fairness of the civil justice system.

Established in 1977, the Atlantic Legal Foundation, based in Harrison, N.Y., is a national nonprofit, public interest law firm focusing on free enterprise and property rights issues, advocating for limited regulation.

The amici and their members and supporters, “and the businesses that they represent, are committed to enforcing the strong and good policies favoring arbitration which underlie the Federal Arbitration Act,” the brief states, and therefore, have an interest in Bissonnette.

The amici’s’ first argument is that FAA Section 1 requires a worker to be within the transportation industry to be exempt from the statute. The brief reasons that “for FAA purposes, a trucker must work for a transportation industry common carrier. A common carrier is a term of art in the law: ‘[A] regularly established business for carrying all or certain articles, and especially if that carrier is a corporation created for the purpose of the carrying trade.’” (Emphasis is in the amicus brief.)

The brief notes that when the FAA was enacted, only employees of common carriers were of the same status as Sec. 1’s railroad workers and merchant seamen.

The amici referenced the FAA’s history to support their argument. When the statute was enacted in 1925, only employees of common carriers were considered to be “in the same league as railroad workers and merchant seamen.”

The brief asks the Court to apply this historical context to Bissonnette:

This case is about interpreting plain language from the perspective of people who lived when the law came about, were affected by it, and who contemporaneously knew about the policy concerns the law was designed to address. This inquires of the contemporaneous social, political, and technological developments, reframing to imagine life in a different era, from 1925’s perspective.

The next argument moves to the individual from the industry context, claiming that the petitioners are not transportation workers at all. Instead, the petitioners transportation is incidental to their business. “Petitioners here own sole proprietorship businesses,” the amicus brief explains, adding,

 “Petitioners truck bread to sell bread. Selling the bread is the real ‘bread and butter.’ That’s their business. Truck driving is incidental. They are not ‘transportation workers’ analogous to ‘seamen’ or ‘railroad employees’ who are exempt under FAA § 1.”

(Emphasis is in the brief.)

The brief summarizes that “[t]he lower court got it right: the lynchpin of the FAA-exemption is directly engaging in transportation industry work as a producer, not consumer, of transportation. Otherwise, no FAA-exemption, no lawsuits. Arbitration only.”

The DRI/ALF brief is available on the U.S. Supreme Court website here.

***

The Restaurant Law Center says that it is the only independent public policy organization created specifically to represent the interests of the food service industry in the courts.

The RLC claims an interest in Bissonnette because it is concerned that overbroad construction of the FAA Sec. 1 residual clause could lead to absurd results in restaurant industry disputes, “causing the purely intrastate sale and delivery of foodstuffs to be improperly classified as interstate commercial transactions.”

The RLC first claims that based on Circuit City--see above, in which the Supreme Court held that FAA Section 1 must be interpreted narrowly--the petitioners’ interpretation of the residual clause is too broad.

According to the RLC, the petitioners would exempt any class of workers “regardless of whether those workers are traditional transportation workers who have any nexus to interstate commerce.”

RLC went on to use an analogy to discredit the petitioners’ arguments. After stating that baked goods derive from multiple interstate areas, but the baked goods themselves are picked up and delivered in the same state by the petitioners, RLC compared the facts to a pizza delivery.

“Imagine a delivery driver, taking a pizza two blocks to a customer,” the amicus brief states. “Petitioner Employees would have the Court view that person in the same light as a seaman or railroad employee whose work is essential to the operation of the traditional channels of interstate commerce. Such a suggestion strains credibility and is far afield from what was envisioned when the Section 1 exemption to the FAA was created.”

The RLC claims that the Second Circuit was correct in its holding because “the goods in question are not in interstate commerce” and “the Petitioner Employees are not ‘transportation workers’ because they are not primarily engaged in the movement of goods through the traditional channels of interstate commerce.”

Because the RLC believes that the Petitioners are only involved in intrastate commerce and their interpretation is too broad, the RLC urges the Court to affirm the Second Circuit.

The RLC brief is available on the U.S. Supreme Court website here.

* * *

The author, a second-year student at the Howard University School of Law in Washington, D.C., is a full-year CPR intern as part of CPR’s consortium program with Howard Law’s ADR program. 

[END]