Bissonnette v. LePage Bakeries Park St., LLC

Facts

The Federal Arbitration Act makes written arbitration agreements “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” (9 U.S.C. § 2; quoted at Bissonnette, supra, 601 U.S. at p. 250.) Section 1, however, carves out an exception: “nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” (9 U.S.C. § 1; quoted at Bissonnette, supra, at p. 250.) The question in this case was how far that residual clause — “any other class of workers engaged in foreign or interstate commerce” — reaches.

Flowers Foods, Inc. is “the second-largest producer and marketer of packaged bakery foods” in the United States, whose products — Wonder Bread, tortillas, bagels, Butterscotch Krimpets, and the like — are baked in more than 40 bakeries across 19 States and distributed nationwide. (Bissonnette, supra, 601 U.S. at p. 249.) Flowers does not deliver the goods itself. Some of its subsidiaries use a “direct-store-delivery” system in which franchisees “buy the rights to distribute Flowers products in particular geographic territories,” then “purchase the baked goods from Flowers and … market, sell, and deliver them to retailers.” (Ibid.)

Neal Bissonnette and Tyler Wojnarowski were such franchisees, owning the rights to distribute Flowers products in parts of Connecticut. Flowers baked the bread and buns and shipped them to a warehouse in Waterbury; the two men “picked them up and distributed them to local shops,” allegedly spending “at least forty hours a week delivering Flowers products in their territories.” (Bissonnette, supra, 601 U.S. at pp. 249–250.) Their duties extended beyond hauling: they “also found new retail outlets, advertised, set up promotional displays,” and “maintained their customers’ inventories by ordering baked goods from Flowers, stocking shelves, and replacing expired products.” (Id. at p. 250.)

To acquire their territories, the distributors signed Distributor Agreements that incorporated separate Arbitration Agreements requiring “any claim, dispute, and/or controversy” to be arbitrated under the FAA. (Bissonnette, supra, 601 U.S. at p. 250.) In 2019 they brought a putative class action alleging that Flowers had taken unlawful wage deductions, failed to pay overtime, and unjustly enriched itself by charging them for distribution rights and operating expenses. (Ibid.) Flowers moved to dismiss or compel arbitration; the distributors answered that they fell within the § 1 exemption and therefore could not be forced to arbitrate. (Ibid.)

Procedural history

The District Court dismissed the case in favor of arbitration. Reasoning that to be exempt the distributors “must be ‘transportation workers,’” it concluded that their “much broader scope of responsibility” under the Distributor Agreements “belie[d] the claim that they are only or even principally truck drivers.” (Bissonnette, supra, 601 U.S. at pp. 250–251, quoting Bissonnette v. LePage Bakeries Park St., LLC (D.Conn. 2020) 460 F.Supp.3d 191, 197, 199.)

The Second Circuit affirmed, but on a different ground. Without addressing the District Court’s analysis, the panel held that the distributors “are in the bakery industry,” and that under Circuit law § 1 exempts only “‘workers involved in the transportation industries.’” (Bissonnette, supra, 601 U.S. at p. 251, quoting the panel opinion, 33 F.4th 650, 652, 655.) Judge Pooler dissented, urging that § 1 asks whether a person is a “transportation worker,” not “for whom the worker undertakes her transportation work.” (Id. at p. 251.) After the Supreme Court decided Southwest Airlines Co. v. Saxon (2022) 596 U.S. 450 — holding that a “class of workers” is defined by “what a worker does for an employer, ‘not what [the employer] does generally’” — the Second Circuit granted panel rehearing but adhered to its result, announcing a test under which an entity is in the transportation industry only if it “‘pegs its charges chiefly to the movement of goods or passengers, and the industry’s predominant source of commercial revenue is generated by that movement.’” (Id. at pp. 251–252, quoting 49 F.4th 655, 661.) Applying that test, the court found the distributors’ “commerce is in breads, buns, rolls, and snack cakes — not transportation services.” (Id. at p. 251.) Judge Pooler dissented again, and the court denied rehearing en banc over a further dissent. (Id. at pp. 251–252.)

The decision conflicted with the First Circuit, which had rejected an industry requirement in cases including Canales v. CK Sales Co. (1st Cir. 2023) 67 F.4th 38 (also involving Flowers distributors) and Fraga v. Premium Retail Servs., Inc. (1st Cir. 2023) 61 F.4th 228. The Supreme Court granted certiorari to resolve that conflict. (Bissonnette, supra, 601 U.S. at p. 252.)

Issue

The Court framed the question narrowly: “whether a transportation worker must work for a company in the transportation industry to be exempt under § 1 of the FAA.” (Bissonnette, supra, 601 U.S. at p. 252; see also id. at p. 249 [“whether the exemption … for any ‘class of workers engaged in foreign or interstate commerce’ is limited to workers whose employers are in the transportation industry”].) By its own statement, the Court did not reach whether these particular distributors qualify as transportation workers, or whether they are “engaged in … interstate commerce” given that they deliver only within Connecticut. (Id. at p. 252, fn. 2.)

Holding

Reasoning

Step one: § 1 has always been limited to transportation workers, by way of ejusdem generis. The Court began with Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105, which rejected the claim that § 1 exempts all contracts of employment. (Bissonnette, supra, 601 U.S. at p. 252.) Applying ejusdem generis — the canon that a “‘general or collective term’ at the end of a list of specific items” is read “in light of any ‘common attribute[s]’ shared by the specific items” — Circuit City held that the residual phrase “class of workers engaged in … commerce” is “controlled and defined by reference to” the enumerated categories “seamen” and “railroad employees.” (Id. at pp. 252–253.) The “linkage” between those two categories “is that they are both transportation workers,” so the residual clause was “limited in the same way.” (Id. at p. 253.) That reading, the Court explained, harmonized the FAA with the pre-1925 statutory dispute-resolution regimes already governing seamen and railroad employees — “transportation workers” who played a “necessary role in the free flow of goods.” (Ibid.)

Step two: Saxon already rejected an industry-based reading. In Saxon, the Court “expressly declined to adopt an ‘industrywide’ approach of the sort Flowers advances here.” (Bissonnette, supra, 601 U.S. at p. 253.) Section 1 “refers to ‘“workers”’ who are ‘engaged’ in commerce,” language that “focuses on ‘“the performance of work”’ rather than the industry of the employer.” (Id. at pp. 253–254.) The statute “says nothing to direct courts to consider the industry of a worker’s employer”; the relevant question was “‘what [Saxon] does at Southwest, not what Southwest does generally.’” (Id. at p. 254.) An airline ramp supervisor who loaded and unloaded cargo was exempt not because she worked for an airline, but because of the work she performed.

Step three: the Second Circuit’s industry test was atextual and unworkable. Because the Second Circuit “fashioned its transportation-industry requirement without any guide in the text of § 1 or [the Court’s] precedents,” it “had to figure out for itself what constituted a ‘transportation industry,’” producing a revenue-based test that “would often turn on arcane riddles about the nature of a company’s services.” (Bissonnette, supra, 601 U.S. at p. 254.) The Court illustrated the difficulty with pointed hypotheticals: “Does a pizza delivery company derive its revenue mainly from pizza or delivery? Do companies like Amazon and Walmart — which both sell products of their own and transport products sold by third parties — derive their revenue mainly from retail or shipping?” (Ibid.) Answering such questions could require “[e]xtensive discovery … before deciding a simple motion to compel arbitration,” turning FAA cases into “[m]ini-trials.” (Ibid.) That “‘complexity and uncertainty’” would “‘breed[] litigation from a statute that seeks to avoid it.’” (Ibid., quoting Circuit City, supra, 532 U.S. at p. 123.)

Step four: Flowers’s textual arguments failed. Flowers argued that Saxon “suggests” a transportation industry is a necessary condition, seizing on Saxon’s passing description of “seamen” as “a subset of workers engaged in the maritime shipping industry.” (Bissonnette, supra, 601 U.S. at pp. 254–255.) The Court answered that this misread Saxon, which had “rejected the proposition that there is an industrywide link between ‘seamen’ and ‘railroad employees.’” (Id. at p. 255.) Those classes “are connected by what they do, not for whom they do it.” (Ibid.) Flowers’s appeal to 1925-era industry-specific statutes proved only that “where Congress wanted to regulate seamen or railroad employees in a particular industry, it said so explicitly”; § 1’s “conspicuous absence of similar industry-specific language” pointed the opposite way. (Ibid.) And the Court rejected Flowers’s superfluity argument as getting the canon “exactly backwards”: “It is the specific terms ‘seamen’ and ‘railroad employees’ that limit the residual clause, not the residual clause that swallows up these narrower terms.” (Ibid.)

Step five: the floodgates argument, and the built-in limits of § 1. Turning from text to policy, Flowers warned that without an industry requirement “virtually all workers who load or unload goods — from pet shop employees to grocery store clerks — will be exempt from arbitration.” (Bissonnette, supra, 601 U.S. at p. 256.) The Court disagreed that § 1 sweeps so far. As Saxon held, a transportation worker is one “‘actively’ ‘“engaged in transportation” of … goods across borders via the channels of foreign or interstate commerce,’” and “any exempt worker ‘must at least play a direct and “necessary role in the free flow of goods” across borders.’” (Ibid.) Those requirements “‘undermine[] any attempt to give the provision a sweeping, open-ended construction,’ instead limiting § 1 to its appropriately ‘narrow’ scope.” (Ibid.) The independent limits on who counts as a transportation worker, in other words, did the work Flowers wanted the industry requirement to do — without the atextual gloss.

Significance

Bissonnette is the fourth decision in the modern Supreme Court line construing the FAA’s § 1 residual clause — after Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105 (the exemption is limited to transportation workers), New Prime Inc. v. Oliveira (2019) 586 U.S. 105 (the exemption reaches independent contractors, and the § 1 question must be resolved before compelling arbitration), and Southwest Airlines Co. v. Saxon (2022) 596 U.S. 450 (the class is defined by the worker’s work). Bissonnette completes the sequence by rejecting the last plausible industry-based limitation: the exemption “follows the work,” so a delivery driver is not disqualified merely because the employer’s business is bread, retail, or something other than transportation. The decision resolved a genuine circuit conflict between the Second Circuit’s industry requirement and the First Circuit’s worker-focused approach.

For employment practice, the decision matters most as a gateway question. An arbitration agreement that would otherwise be enforceable under the FAA does not reach a worker who falls within § 1 — and a § 1-exempt worker therefore cannot be compelled to arbitrate under the FAA, nor can the FAA’s preemptive force be used to override state limits on arbitration as to that worker. That is a consequential toehold for delivery, trucking, warehouse-to-truck, and last-mile logistics workers, a large and growing share of the modern workforce. But Bissonnette’s reach is deliberately bounded. The Court did not hold that Bissonnette and Wojnarowski are exempt; it held only that the bakery-industry rationale could not defeat their claim, and it left the dispositive questions — whether they are transportation workers, and whether local-only delivery is work “engaged in … interstate commerce” — for remand. (Bissonnette, supra, 601 U.S. at pp. 252, fn. 2, 256.) The opinion narrows the ground of the arbitrability fight; it does not end it.

Key quotes

“A transportation worker need not work in the transportation industry to fall within the exemption from the FAA provided by § 1 of the Act.” (Bissonnette, supra, 601 U.S. at p. 256.)

“Does a pizza delivery company derive its revenue mainly from pizza or delivery? … Extensive discovery might be necessary to explore the internal structure and revenue models of a company before deciding a simple motion to compel arbitration.” (Bissonnette, supra, 601 U.S. at p. 254.)

“It is the specific terms ‘seamen’ and ‘railroad employees’ that limit the residual clause, not the residual clause that swallows up these narrower terms.” (Bissonnette, supra, 601 U.S. at p. 255.)

Read the full opinion (CourtListener) →

Practice pointer

Open questions

The Court reserved the two questions that will decide most future § 1 disputes. First, it did not decide “whether Bissonnette and Wojnarowski qualify as transportation workers based on the work that they perform.” (Bissonnette, supra, 601 U.S. at p. 252, fn. 2.) The distributors’ duties extended well “beyond carrying the products from Point A to Point B” — advertising, merchandising, and inventory management (id. at p. 250) — and whether that mixed role still makes them transportation workers is unresolved. Second, and more consequentially, the Court did not decide “whether they are ‘engaged in … interstate commerce’ … even though they do not drive across state lines.” (Id. at p. 252, fn. 2; see id. at p. 256.) That question — whether a worker who moves goods only on the final, intrastate leg of an interstate journey is “engaged in … interstate commerce” — is the recurring battleground for last-mile and local-delivery drivers, and Bissonnette leaves it for another day. The opinion also expresses “no opinion on any alternative grounds in favor of arbitration raised below” (id. at p. 256), so on remand Flowers remains free to press every non-industry theory for compelling arbitration.