If truckers haul bread and cakes, is their business baking or trucking?
The never-ending question of defining the employment status of a truck driver, key to battles over California’s AB5 and the U.S. Department of Labor’s recent independent contractor status regulation, was on display this week at the U.S Supreme Court.
The issue at hand wasn’t specifically whether a driver should be considered an employee or an independent contractor, but the question of the reach of the Federal Arbitration Act and its treatment of transportation workers came very close to that contentious subject.
The court on Tuesday heard arguments in the case of Bissonnette et al. vs. LePage Bakeries et al. The “et al” with Neal Bissonnette is Tyler Wojnarowski. Both were truck drivers who had purchased distribution rights for Flowers Foods.
The three defendants are Flowers Foods (NYSE: FLO), its subsidiary LePage Bakeries and CK Sales, a subsidiary of LePage.
Bissonnette and Wojnarowski distributed products made by Flowers, such as Wonder Bread. Court documents describe the men as “franchisees that each entered into a ‘Distribution Agreement’ with CK Sales, through which they acquired certain distribution rights in exchange for monetary consideration.”
The initial lawsuit filed by Bissonnette and Wojnarowski, according to a document in the appeal of the lower court ruling, was over a claim against Flowers of “unpaid or withheld wages, unpaid overtime wages and unjust enrichment pursuant to the Fair Labor Standards Act and Connecticut wage laws.”
A key issue: Arbitration agreements were signed
There is no dispute over one fact in the case: Bissonnette and Wojnarowski did sign arbitration agreements with Flowers. But the argument of the two men is that the agreements are unenforceable under a loophole in the Federal Arbitration Act, which was adopted in 1925. Flowers argued at the lower court level that arbitration should be pursued given the agreements signed by the two drivers.
The loophole is a provision in the act given to “seamen, railroad employees or any other class of workers engaged in foreign or interstate commerce.” That definition over the years has come to be defined as including other transportation workers.
Those workers could take their disputes to court because of the loophole, whereas other workers who had signed arbitration agreements would need to settle disputes through that process.
In the request for Supreme Court review, attorneys for Bissonnette and Wojnarowski summed up the initial dispute, which touches on the question of defining an independent contractor.
“Having characterized its truck drivers as independent contractors, Flowers decided it could withdraw its own operating expenses from its drivers’ paychecks, charge them for the privilege of working for the company, and decline to pay them overtime — none of which, the plaintiffs allege, is legal,” the request states.
The plaintiffs’ arguments also were that the interstate commerce workers’ inclusion in the language meant that they should be able to take advantage of the loophole given that at the very least some of the products they were delivering originated outside Connecticut, hence they were interstate workers.
In May 2020, the U.S. District Court for the District of Connecticut came down on the side of Flowers and its subsidiaries.
In a decision that turned partly on the definition of worker status, the court concluded that Bissonnette and Wojnarowski were not employees. The two men had “a much broader scope of responsibility that belies the claim that they are only or even principally truck drivers,” Judge Kari Dooley wrote. “Rather, because the Plaintiffs purchase and own the territories comprising their routes, their distribution efforts are the means by which they realize and increase sales and profits for their franchise businesses.”
Since they were not transportation workers — and in fact not “workers” at all but owners of a business — “they accordingly must be compelled to arbitrate their claims pursuant to the Arbitration Agreement incorporated in their Distributor Agreements,” Dooley wrote.
Bakery workers, not truck drivers
In an appeal to the U.S. 2nd Circuit Court of Appeals, Flowers and the subsidiaries won again. But the basis for the decision handed down in May 2022 was different from that of the lower court: The workers were bakery workers, not transportation workers, so they could not invoke the loophole in the Federal Arbitration Act, which applies only to transportation workers.
The Supreme Court accepts less than 2% of all requests for review. It often looks not just for key issues but areas where circuit court cases are in conflict with each other. (But that doesn’t always matter either).
Circuit cases still in disagreement
In the request for review from Bissonnette and Wojnarowski, several cases are cited as being in conflict with the 2nd Circuit’s decision in the Flowers case. Even in that decision, the circuit was split; Judge Rosemary Pooler, who died in August, said the “movement of goods through interstate commerce is a central part of the plaintiffs’ occupation as truckers,” and that she would have held that they were engaged in interstate commerce and could use the loophole.
The 2nd Circuit rejected a request for a full en banc hearing. But there were dissents on that decision, too, and the judges favoring a full hearing said they “expressly reject the notion … that the industry in which an employer operates, rather than the work that the employee does, determines whether the employee belongs to a ‘class of workers engaged in foreign or interstate commerce.’” In the case of Bissonnette, the question is whether the two plaintiffs were in the transportation business, and could avoid arbitration, or whether they were in the bakery business.
Among the complicating factors is a case known as Southwest Airlines vs. Saxon. In June 2022, after the 2nd Circuit decision, the Supreme Court ruled in favor of a ramp worker at the airline, holding that she was a transportation worker and could invoke the Arbitration Act. That’s what Bissonnette and Wojnarowski want decided in their case.
In an email sent out after the arguments at the high court, Scopelitis attorneys Braden Core and Prasad Shama noted one aspect of the arguments that is particularly important to the trucking industry.
“The Court’s ruling could have an impact on private motor carriers whose principal business is something other than transportation (i.e., retailers),” they wrote.
They noted another aspect to the case as well, though it isn’t being heard at the Supreme Court: Do final-mile deliveries constitute interstate commerce that would trigger the Arbitration Act exemption?
If the case goes back to the lower courts, counsel for the drivers made it clear that “while that would be an issue in the case on remand, determining what it means to be engaged in interstate commerce is not presently before the Court,” the Scopelitis attorneys wrote.
A Reuters report from the Supreme Court said statements made by the justices suggested sympathy with the plaintiffs’ arguments.
The Reuters report said Justice Samuel Alito indicated that “focusing on what an employer does, rather than a worker’s job duties, would create confusion.”
“It really imposes a difficult burden and it would seem to me … you’d have a conflict among the lower courts in considering how this applies,” Alito said, according to the Reuters report. He raised the issue of Amazon, saying it would be difficult to determine if a dispute in its transportation operations would define those activities as being involved in transportation — where the Arbitration Act loophole could come into play — or retailing.
More articles by John Kingston
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