US Supreme Court Rejects Bright Line Rule for Last-Mile Delivery Drivers in FAA Case

On May 28, the U.S. Supreme Court decided Flowers Foods, Inc. v. Brock (24-935). The issue before the Court was whether a “last-mile” driver fell within Section 1 of the Federal Arbitration Act (the FAA) — colloquially known as the transportation worker exemption — and therefore was properly excluded from the FAA’s coverage. The Court unanimously affirmed the Tenth Circuit’s decision finding the driver exempt under Section 1 and rejected a bright line rule urged by Flowers that would have limited the exemption to only two categories of workers: (1) drivers who physically transport goods across state lines and (2) employees who directly load/unload goods from vehicles that cross state lines. At the same time, the Court reaffirmed the Saxon and Bissonnette rule that a worker must play a “direct,” “necessary” and “active” role in moving goods across borders to fall within the transportation worker exemption.

Transportation Worker Exemption: What It Is, Its Scope and Why It Matters

Congress enacted the FAA in 1925 to counteract hostility to arbitration agreements. In simple terms, the FAA requires arbitration agreements to be upheld and enforced the same as any other contract (though as a threshold matter, FAA coverage only applies to contracts evidencing a transaction involving commerce). A narrow exemption exists, however, for “contracts of employment of seamen, railroad employees or any other class of workers engaged in foreign or interstate the commerce.” 9 USC § 1.

If the transportation worker exemption applies, the FAA cannot be invoked, and instead state law will apply to determine the enforceability of the arbitration agreement. In states like California that have shown hostility to arbitration agreements in general and class action waivers (which are otherwise enforceable under the FAA) in particular, the consequences of determining which law applies can be crucial.     

In recent years, there has been an explosion of litigation regarding the scope of the transportation worker act exemption. In fact, Flowers marks the third time in six years that the Supreme Court has taken up this very issue.

• In Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022), the Court held that an airline worker who loaded cargo on and off airplanes traveling interstate fit within the exemption even though she did not fly airplanes or herself cross state lines. The Court reasoned that her work was integral to the interstate movement of goods — indeed, without cargo loaders, the goods could not complete their interstate journey — and therefore fit within the exemption.
• In Bissonnette v. LePage Bakeries Park St., LLC, 601 U.S. 246 (2024), the Court rejected an interpretation of the exemption that would limit it only to employees working for employers in the transportation industry. Instead, the Court explained the test focuses on the work of the employee and asks whether that work is “direct and necessary” to the free flow of goods across borders. At the same time, the Court was clear that the exemption is meant to be narrow and should not apply to any worker who loads or unloads goods that have once travelled interstate.

In the meantime, lower courts have grappled with the outer bounds of who should be considered a transportation worker. For example, courts have expanded the exemption to include delivery drivers who never cross state lines, as well as warehouse workers whose only job is to move goods within a warehouse.

Flowers v. Brock: Punting a Decision

Flowers presented the Court another opportunity to clearly delineate the lines of the exemption. The Court declined to do so.

Angelo Brock worked as a delivery driver distributing baked goods for Flowers in Colorado. Although Brock’s delivery routes were entirely intrastate, the products he delivered originated outside Colorado and moved through an interstate distribution chain before reaching local retailers. The Tenth Circuit denied Flowers’ motion to compel arbitration, finding Brock to be a transportation worker. The Tenth Circuit reasoned that, while Brock did not cross state lines nor interact directly with those who did, his “intrastate route formed a constituent part of the … interstate journey” of Flowers Foods’ inventory to its intended destination. Brock v. Flowers Foods, 121 F.4th 753, 764 (10th Cir. 2024).

The Court affirmed the Tenth Circuit’s decision and rejected the narrow argument offered by Flowers. The Court’s holding must therefore be understood for what it is: a refusal to endorse the bright line test urged by Flowers, but nothing more. Indeed, the Court touched on certain other factors that may have had an impact on Brock’s transportation worker status, but it refused to offer any opinion on them because Flowers “does not ask us to decide their legal significance. Instead, it ventures all upon one cast, asking us to adopt a bright-line rule that an individual can never qualify for §1’s exemption unless he crosses state lines or interacts with vehicles that do.”  

Takeaways for Employers

In Saxon, Bissonnette and Flowers, the Supreme Court was presented with the opportunity to adopt bright lines that would have greatly limited the scope of the transportation worker exemption. Three times, the Court declined. Nuance thus appears to be the name of the game, as the Court hinted at both oral argument and in its decision here.

Should you have questions about pending or anticipated transportation worker challenges, including understanding how to develop the factual record and legal arguments necessary to prevail against such challenges, or should you wish to discuss best practices more broadly regarding drafting, rolling out and enforcing arbitration agreements, do not hesitate to contact us.