Do airline cargo shippers engage in interstate commerce? The answer has high stakes for forced arbitration.


An airline employee loads luggage onto an airplane. (Bjoern Wylezich via Shutterstock)

Like many cases involving federal arbitration law, Southwest Airlines Co. vs. Saxon began with a labor dispute: Southwest employee Latrice Saxon thought she had to pay overtime. On behalf of herself and her fellow ramp agent supervisors, Saxon filed a federal wage and hour lawsuit in federal court. Southwest responded that Saxon’s case should be dismissed because it was bound by an arbitration agreement, which was enforceable under the FAA. Similar arguments regularly succeed in employment cases — but Saxon argued his case was different because the FAA does not apply to interstate transportation workers.

The United States Court of Appeals for the 7th Circuit agreed that Saxon’s work falls within the exception, and on Monday the Supreme Court will hear oral arguments in the case. If the judges uphold the 7th Circuit, Saxon will be able to pursue his overtime claim in court. And the eventual decision could have consequences far beyond employees of airlines like Saxon. Companies like Amazon and Uber are watching closely how this will affect other parts of the American workforce engaged in moving goods and people.

Federal arbitration law generally requires courts to enforce arbitration agreements, but section 1 of the law exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce”. Saxon is neither a sailor nor a railroad employee – she works at Chicago’s Midway Airport, where she supervises ramp agents as they load and unload baggage and other cargo onto planes, and load and also unload the goods themselves. Therefore, the question in this case is whether Saxon’s work places her in a “class of workers” who are “engaged in interstate commerce”.

Southwest argues that only workers who are “directly involved in the cross-border transportation of goods or people” qualify for the transportation worker exemption. That definition, the company reasons, excludes ramp supervisors like Saxon, who do not accompany freight on its interstate journey. By contrast, Saxon argues that the transport worker exemption reaches all airline employees, or, alternatively, that it reaches at least those workers who begin the goods on their interstate journey by loading them onto vehicles, or who unload them at their destination.

“[A]any other category of workers engaged in foreign or interstate commerce” – the language sometimes referred to as the residual category – seems broad enough. But in its 2001 decision in Circuit City Stores, Inc. vs. Adamsthe court concluded that the category covers only interstate transportation workers. circuit city was based in part on a canon of statutory interpretation called ejusdem generis, which means that where a statute contains a list of similar terms and then a catch-all or residual term, the latter should be interpreted as including only elements similar to the former. Applying this rule, the court concluded that the residual category only encompassed categories of workers who resembled seamen and railroad workers in that they worked in interstate commerce.

In addition to circuit citythe court interpreted the transport worker exception in another case, New Prime Inc. v. Oliveira. In New Premium, the court unanimously decided that independent contractors who worked in interstate commerce were covered by the exception. Key to the decision was the court’s view that the term “contracts of employment” would have been understood relatively broadly when Congress enacted the FAA in 1925 – to reach all contracts for the performance of work, whether whether or not the contracting parties have an employer – employee relationship.

In agreement with circuit city and New Premiumboth parties advance arguments based on the ordinary meaning of “engaging in interstate commerce” as it would have been understood in 1925, and on ejusdem generis. Southwest begins with dictionaries and case law from the relevant period to argue that the clause meant “employment in the transport of goods or persons from one state to another”; he also argues that people would not commonly use the term “transportation” to refer to the act of loading cargo. Saxon points to the FAA itself: Section 1 refers to “agreements relating to docking…or any other matter relating to foreign trade.” “Dock” is the fee for loading or unloading cargo paid to a dock owner, and Saxon says this means the FAA writers understood the loading of cargo to be “in foreign trade.” It is therefore self-evident, she continues, that a person engaged in the loading of goods was engaged in foreign or interstate commerce. Further, Saxon relies on other sources appropriate to the period to assert that “interstate commerce” encompassed the entire journey of a parcel, from deposit for shipment to delivery at its final destination, including loading onto a ship or wagon.

Both parties pay close attention to the meaning of the first two categories listed in the transport worker exemption: railway workers and seafarers. Southwest argues that the two groups have in common the frequent crossing of borders and that, therefore, the same should be true for workers covered by the formulation “any other category of workers”. In particular, Southwest argues that in 1925, “sailors” referred only to those who worked on board ships and did not include stevedores who worked loading and unloading ships. On the other hand, Southwest concedes that “railway employees” could in theory refer to all persons employed by a railroad, but he insists that a relatively narrow reading of this term makes more sense. in a legislative context.

Saxon disagrees on who counted as sailors or railroad employees in 1925, arguing that turn-of-the-century sources interpreted these terms to reach anyone who facilitated shipping or railroading – including freight shippers. Therefore, she posits the key commonality between seafarers and railway employees differently: they are “necessary for the free movement of goods” by sea and rail, just as airline employees are necessary for the free movement of goods. movement of goods by air. She also points to a reason for the transportation worker exception—that Congress did not want to disrupt other labor dispute resolution systems that covered transportation workers, particularly railroad workers—and notes that the Railway work broadly covers railway and airline employees.

Finally, Southwest makes a policy argument that will sound familiar to many readers: the FAA was enacted to overcome judicial hostility to arbitration, including in the context of labor disputes. But Saxon replies that, in accordance with New PremiumThe court should not artificially narrow the transportation worker exception, relying in part on legislative history that suggests the exception was added to reassure the seafarers’ union that the FAA would not cover stevedores.

What is at stake in this case is clear from the amicus briefs. Southwest’s supporters include Uber, Lyft and Amazon – all companies whose workforces involve the transport of goods or passengers. Rideshare companies typically urge the court to decide the case in a way that would exclude their drivers from the transportation worker exemption, notwithstanding that drivers sometimes cross state lines or carry passengers and baggage at the start or end of interstate travel. Amazon’s concern is with local delivery drivers who transport goods on the final legs of their interstate journeys, and which two appeals courts have found fall within the transport worker exception.

The last time the Supreme Court interpreted the exception for transport workers, New Premium in 2019, it issued a unanimous decision in favor of workers who opposed arbitration – a surprising result considering the tribunal’s recent spate of pro-arbitration rulings. Whether this case yields a similar result will likely depend on how judges read the century-old record to find out whether land workers like stevedores were engaged in interstate commerce.

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