Bloomberg Law
Free Newsletter Sign Up
Login
BROWSE
Bloomberg Law
Welcome
Login
Advanced Search Go
Free Newsletter Sign Up

Southwest Asks Justices to Draw Bright Line on Arbitration Limit

March 28, 2022, 7:41 PM

The U.S. Supreme Court justices on Monday attempted to parse which workers should fall under a federal arbitration law carve out for transportation workers, asking about specific examples such as an airline accountant working in an office, Amazon last-mile delivery driver, or railroad ticket takers.

The issue arrived before the court in Southwest Airlines Co. v. Saxon, an overtime dispute involving a ramp supervisor for the carrier who oversees the loading and unloading of passenger luggage. The question is whether that position is covered by a Federal Arbitration Act exemption for “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”

Latrice Saxon sued the airline over overtime issues in 2019. The airline contends she is bound by an arbitration agreement and that the dispute doesn’t belong in court.

Questions to the attorneys for each side centered around where to specifically draw that line. Lower court uncertainty over that boundary has in recent years resulted in divergent court opinions involving a range of industries.

Companies, including Amazon.com Inc. and Uber Technologies Inc., argued in friend-of-the-court briefs the outcome of the case would also affect litigation filed against them, and several cases have been paused as the high court considers the issue. A 2001 Supreme Court decision found that the FAA exemption should be read narrowly to apply only to “transportation workers,” but the court hasn’t ruled on what types of jobs fall under that grouping.

A 2019 high court decision sparked a wave of cases in this area by expanding the exemption to encompass independent contractors, and not just employees.

Conflicting Contentions

Justice Neil Gorsuch asked the attorneys about how broadly the exemption should reach, whether the exemption included the back-office accountant, as well as delivery drivers for Uber, Lyft Inc., and last-mile drivers for Amazon. Chief Justice John Roberts asked about ticket agents and the airline’s general counsel. Justice Elena Kagan asked about signal operators of railroads that signal when a train can move forward, while Justice Clarence Thomas mentioned tugboat operators.

“Why wouldn’t we naturally understand someone who is loading and unloading cargo from interstate commerce to be involved in interstate commerce within the meaning of this -- this act?” Gorsuch asked Southwest attorney Shay Dvoretzky.

Dvoretzky said the court shouldn’t adopt a broad test to sweep the entire airline industry under the exemption.

“Cargo loaders don’t work on planes,” just as seamen don’t include the stevedores who load and unload ship cargo, he said. He later argued a test that didn’t include flight “ground crews” would cut down on unnecessary litigation. “The statute doesn’t speak in terms of entire industries, it speaks to classes of workers and what the workers do.”

Yet Saxon’s attorney, Jennifer Bennett, said it was clear that unlike seamen, railroad cargo loaders were considered transportation workers. She acknowledged that executives, such as general counsel for an airline, wouldn’t be part of this exemption, nor would Southwest employees who administer a credit card points system for passengers. But a bookkeeper who schedules crews’ activity would fall under the definition, she said.

The justices asked specifically about the arguments made by the gig companies and Amazon, whether transportation workers who are part of the flow of interstate commerce should fall under the exemption as well. Bennett said the test should be whether the worker is engaged “directly to the transportation function” of the industry. She said the trucking, busing—and in the future, space travel—would be affected by this ruling as well.

“Cargo loaders are at the core of this exemption,” Bennett said. She later added, “Southwest presents the virtue as a bright line rule that will be easily administered. In many cases that’s not true. It’s not just a problem in novel issues like with Lyft and Uber.”

At the Circuit Level

The U.S. Court of Appeals for the Seventh Circuit last year reversed a lower court’s decision in favor of Southwest, ruling that Saxon should fall under the FAA exemption and be allowed to bring her claim in court.

Saxon argued that filling in for ramp agents three days a week qualifies her for the transportation worker exemption because she’s “engaged in foreign or interstate commerce.” The airline countered that the FAA exemption should be construed narrowly, and Saxon wasn’t exempt because she didn’t personally transport baggage.

During Southwest’s argument, Dvoretzky also pointed to an opinion written by Justice Amy Coney Barrett while she was a Seventh Circuit judge, that GrubHub drivers shouldn’t be considered directly engaged in the channels of interstate commerce. That argument was distinct from other appeals court rulings involving Amazon’s last-mile delivery drivers, who courts ruled should fall under the exemption.

Barrett recused herself from the Southwest case at the high court.

Skadden, Arps, Slate, Meagher & Flom LLP represents Southwest. Gupta Wessler PLLC represents Saxon.

The case is Southwest v. Saxon, U.S., No. 21-309, oral argument 3/28/22.

To contact the reporter on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editors responsible for this story: Andrew Harris at aharris@bloomberglaw.com; Laura D. Francis at lfrancis@bloomberglaw.com