Arbitration Exemption Battle Could Come Down to Meaning of ‘Of’

As Schmidt Baking squared off with workers who say their wage claims belong in court instead of arbitration Tuesday, the Second Circuit honed in on a single word: “of.”

Two drivers who delivered baked goods for Baltimore-based Schmidt Baking Co. and Schmidt Baking Distribution LLC allege the company misclassified them as independent contractors, depriving them of greater legal protections for employees. The parties dispute whether the drivers, who formed their own corporate entities to deliver Schmidt products, qualify for the Federal Arbitration Act’s transportation worker carveout.

“Most of the fussing” in fights over the extent of the exemption—which says the ...