Supreme Court Hears Challenge Over Who Counts as a 'Transportation' Worker Under the Federal Arbitration Act

The Supreme Court on argument Tuesday wrestled with whether Section 1 of the Federal Arbitration Act (FAA) exempts only workers employed by businesses that are themselves in the transportation industry, or whether it covers any class of workers directly involved in transporting goods across state or international borders.

Miss Bennett, counsel for the side urging a broader reading of Section 1, told the Court that Flowers Foods’ proposed employer-based industry test is “atextual and unworkable.” She argued the statute’s ordinary meaning and the historical record show the term “seamen” and related language in 1925 encompassed people who worked aboard vessels regardless of who employed them, and that adding an employer-based limitation would have no basis in the statutory text.

“Flowers’ only attempt at a textual argument is its invocation of a ejusdem generis, but that argument fails from the start because Flowers can’t identify a single example of the word seamen ever being defined based on whether a worker’s employer sold transportation,” Miss Bennett said during argument.

Opposing counsel, Miss Levitt, urged a narrower reading informed by context and history, citing the Court’s Circuit City precedent and Congress’s contemporaneous arbitration statutes for railroad employees and seamen. She argued the statute’s enumeration reflects an implied limit that Section 1 was meant to cover transportation-industry workers rather than any worker whose tasks might touch interstate commerce.

“As counsel has made clear, petitioners view the section 1 exemption as encompassing any worker directly involved in a goods interstate journey, from the plant worker who loads goods for shipment to the store clerk who unloads them and shelves them,” Miss Levitt said, pressing that Circuit City, context, and history support an industry-based limitation.

The justices pressed both sides on practical consequences. Several asked whether an industry test would either resolve or exacerbate so-called “last-mile” cases — the modern disputes over whether workers who perform final-mile delivery or mixed duties fall inside the exemption. Miss Bennett said Saxon and related precedent supply a worker-focused, fact-based inquiry (for example, the Court in Saxon treated three days a week doing loading work as sufficient), and that an employer-based test would layer difficult new questions about corporate structure, revenue sources, and whether a company “sells transportation.”

Justices repeatedly returned to historical evidence: the shipping commissioners’ arbitration regime, cases on seamen and railroad employees, and whether those regimes were employer-based. Both sides cited the same authorities — including Saxon, Circuit City, the Jones Act, and earlier decisions discussing seamen and rail workers — but drew different inferences from them about whether the statute implies an industry limitation.

Counsel also disputed the administrability of the employer-based test. Miss Bennett emphasized that Flowers’ drivers here contract with a subsidiary that handles transportation for related baking companies, raising the question whether an employer-based test would require courts to parse corporate structures and revenue streams to determine coverage.

The justices flagged potential consequences on a wide range of industries: retailers and manufacturers that operate in-house shipping arms, franchise restaurants, and national supply chains. Miss Levitt warned that a rule rejecting an industry requirement could “sweep in” large sectors of the economy and generate a cascade of new FAA coverage disputes; Miss Bennett countered that longstanding practice and the statute’s ordinary meaning do not support adding an employer-based limitation.

Miss Bennett used her rebuttal time to summarize three points: the text contains no employer-based limitation, historical practice (including strikes and the employment of seamen by manufacturers) supplies evidence against Flowers’ test, and the employer-based rule is administratively unworkable even in cases the respondent says are straightforward.

The Court heard further questions from multiple justices about how to reconcile the parties’ readings with prior decisions and how to apply any rule in modern logistics; argument concluded and the case was submitted. The justices did not indicate a vote or timetable for a decision.

What happens next: the Court will take the matter under advisement and issue an opinion at a later date that will resolve whether Section 1 requires an employer to be in the transportation industry for its workers to be exempt from the FAA’s coverage.