Supreme Court Rules that the FAA's Arbitration Exemption is Not Limited to Transportation Industry

Date   Apr 18, 2024

Executive Summary: On April 12, 2024, the United States Supreme Court issued a decision that answers the question of whether the Federal Arbitration Act’s (FAA) exemption from arbitration for any “class of workers engaged in foreign or interstate commerce” is limited to workers whose employers are in the transportation industry. In Bissonnette v. LePage Bakeries Park St., LLC, 601 U.S. ____ (2024), the Supreme Court unanimously held that a transportation worker does not need to work in the transportation industry to be exempt from coverage under Section 1 of the FAA.

Background: Flowers Foods, Inc. (Flowers) is the “second-largest producer and marketer of packaged bakery foods” in the United States. Bissonnette and Wojnarowski (Distributors) were franchisees who owned the rights to distribute Flowers products in certain parts of Connecticut. Flowers baked the bread, and the Distributors picked up the bread and distributed it to local shops. To purchase the rights to their territories, the Distributors signed Distributor Agreements with Flowers that included separate Arbitration Agreements subjecting to them to mandatory arbitration for any claim or dispute arising out of the Distributor Agreement. In 2019, the Distributors brought a putative class action claiming that Flowers had underpaid them in violation of state and federal law. Flowers moved to dismiss or compel arbitration, arguing that the agreements between the parties required the Distributors to arbitrate their claims. In response, the Distributors argued that they are exempt from arbitration pursuant to Section 1 of the FAA which provides that, “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.

The District Court dismissed the case in favor of arbitration, concluding that the Distributors were not “transportation workers” exempt from the FAA. The Second Circuit Court of Appeals affirmed the District Court’s decision on the grounds that the Section 1 exemption was only available to workers in the transportation industry, and the Distributors in this case were in the bakery industry. The Supreme Court agreed to review the case, and in doing so, clarified the standard for determining when a transportation worker is deemed exempt from coverage under the FAA.

The Supreme Court’s Decision: In Bissonnette, the Supreme Court reaffirmed its rationale from a 2022 decision in which it held that a class of workers is properly defined based on what a worker does for an employer, not what the employer does generally. The Supreme Court rejected the Second Circuit’s position that the application of such a test would often “turn on arcane riddles about the nature of a company’s services. Does a pizza delivery company derive its revenue mainly from pizza or delivery?” In doing so, the Court referenced its decision in Circuit City Store, Inc. v. Adams to further explain that in Section 1 of the FAA, the linkage between the terms “seaman” and “railroad employees” is that they are both transportation workers – these classes of workers are linked by what they do, not for whom they do it.

The Supreme Court rejected Flowers’ argument that such a holding would sweep too broadly and ultimately encompass virtually all workers who load and unload goods, stating that “a transportation worker is one who is ‘actively ‘engaged in the transportation’ of . . . goods across borders via the channels of foreign or interstate commerce.’” “[A]ny exempt worker ‘must at least play a direct and’ necessary role in the free flow of goods’ across borders.’”

The Supreme Court ultimately held that a transportation worker need not work in the transportation industry to fall within the exemption from Section 1 of the FAA. The Court expressed no opinion on any alternative grounds in favor of arbitration, including whether the Distributors are transportation workers or engaged in foreign or interstate commerce. The Court vacated the judgment of the Second Circuit and remanded for further proceedings.

The question remains: how extensively does an employee have to be engaged in the “transportation of goods” in order to be exempted from arbitration? Will the Supreme Court’s ruling invite litigation? The Supreme Court found otherwise – reasoning that a decision narrowing Section 1 to only transportation industries would result in extensive discovery that might be necessary to explore the internal structure and revenue models of a company before deciding a motion to compel arbitration.

The Bottom Line

Employers outside of the transportation industry can anticipate increased challenges to their arbitration agreements. In analyzing this issue, employers should promptly evaluate their existing arbitration agreements, closely analyze their employees’ scope of work in conjunction with the Supreme Court’s holding in Bissonnette and consult legal counsel for advice regarding the arbitration agreements they have in place.

If you have any questions regarding the issues addressed in this Alert, please contact the authors, Russell Jackson, partner in our Memphis office at, and Meredith Box, associate in our Nashville office at Of course, you can also contact the FordHarrison attorney with whom you usually work.