The Supreme Court is back at it again, with another unanimous decision about the scope of what contracts can be compelled into arbitration under the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. (“FAA”). Section 1 of the FAA states that the FAA does not “apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” In other words, the FAA does not require courts to compel arbitration in employment contract disputes involving “workers engaged in foreign or interstate commerce.” In the past four years, the Supreme Court has issued three opinions interpretating that clause, which is also known as the “residual clause.”
In June 2022, the Supreme Court held “any class of workers directly involved in transporting goods across state or international borders,” such as airplane cargo loaders, falls within Section 1’s exemption. Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022). The Court focused on the actual work carried out by the worker, not the company for whom he or she was employed. The Court rejected an interpretation that would expand the scope of Section 1 to “virtually all employees of major transportation providers.”1
However, in April 2024, the Supreme Court expanded the scope of the exemption. In Bissonnette v. LePage Bakeries Park St., LLC, 601 U.S. 246, the Court held that the exemption set forth in Section 1 is not limited to workers whose employers are in the transportation industry. Id. at 252. Rather, it covers transportation workers in the bakery industry. Id. at 256. The Court commented that when using the ejusdem generis cannon, “[i]t is the specific terms ‘seamen’ and ‘railroad employees’ that limit the residual clause, not the residual clause that swallows up these narrower terms.” Id. at 255.
Similarly, in May 2026, the Supreme Court held that “someone can qualify as a worker ‘engaged in . . . interstate commerce’ under §1 if he never crosses state lines and never interacts with vehicles that do.” Flowers Foods, Inc. v. Brock, 146 S. Ct. 1358 (May 28, 2026). Thus, the Court expanded the exemption to any “worker who transports goods on an intrastate leg of an interstate journey . . . without crossing state lines or interacting with vehicles that do.” Id.
Interestingly, in all three cases the Court ultimately found that the exemption applies, and arbitration could not be compelled on the basis asserted. In Saxon, the plaintiffs were ramp supervisors for Southwest Airlines. In Bissonnette, the plaintiffs’ jobs went beyond distributing Flower Foods, Inc.’s products; 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.” 601 U.S. at 250. In Brock, the plaintiff was also a distributor for Flower Foods, Inc., but he picked up the “products from a warehouse in Colorado and delivers them to local stores, all without leaving the State.” 146 S. Ct. 1358, 1362. In sum, these cases presented three different categories of people, who all fell within the confines of the residual clause.
These opinions tell us the following:
- The Supreme Court will interpret a statute according to its ordinary, contemporary, and common meaning. The Court will look to the dictionary to define a term and use the surrounding context to confirm its meaning. In fact, in two of the above cases, the Court applied the ejusdem generis canon. So, when interpreting the FAA’s exemption and determining whether it applies to a given case, it is a good idea to use linguistic canons of statutory interpretation.
- Although arbitration is generally favored, the exemption is strong and may be applied by a court whenever the aggrieved worker could arguably fall within the residual clause.
1For more details on Saxon and two other cases concerning the FAA heard during the October 2021 term, see my prior article “Takeaways From The Supreme Court’s October 2021 Term Decisions Involving The FAA” (Mealey’s Litigation Report: Employment Law, Vol. 19, #2 Sept. 2022).
