Decisions of the Supreme Court of the United States are usually on very broad topics that touch on fundamental elements of rights, obligations, and interactions. There are periodic instances in which that court delves into employment issues, but it is fair to say its forays there are somewhat infrequent.
In April 2024, the Court quietly rendered Bissonnette v. LePage Bakeries Park St., LLC, 601 U.S. ___ (2024). At the outset, it sounds like a reasonably innocuous contract case, but it has significant potential implications for employment.
Arbitration clauses are included in many contracts. Arbitration has been discussed here before, Arbitration News in Workers' Compensation (February 2020); Epic New Prime (January 2019); Is There a Spoon or are We Bending (June 2013). There is a great deal to understand about arbitration, but in a general sense, it is a method of deciding disputes.
A fundamental of such clauses is that the resolution occurs outside of the court system, just as most workers' compensation claims do. That means that there is no jury in the determination of liability or damages. Arbitrators, essentially private judges for hire, make decisions in arbitration proceedings.
Arbitration has long been a hallowed contractual agreement. Despite the right to access to courts, parties have generally been free to make contracts regarding a number of topics, including employment, and to include requirements that disputes will be arbitrated. It is very likely that everyone who reads this has so stipulated to arbitration in some contract they have signed. These are very common in such things as auto purchases. They are also common in labor agreements.
Bissonnette emanates from a labor agreement, a contract. The law generally favors contracts. I tell my classes that contracts make the world go around. My students are generally legal novices whose dreams are not about law school but about business ownership. They envision entrepreneurship and make grand plans. I am hopeful for them and envious at times of their ambition and youth.
The plaintiffs in Bissonnette signed contracts of employment through a collective bargaining agreement. There, they each agreed to operate vehicles and to deliver the products of the employer, bread and cakes, to the marketplace. Their negotiated contracts included clauses that say any disputes under the contract will be resolved through the more rapid and less unpredictable (perhaps) arbitration process.
Arbitration is governed by the Federal Arbitration Act (FAA). This is a federal law that impacts the rights people have to contract as they wish. Not different, perhaps, from the right to include a non-compete agreement in a contract. See The Baby and the Bathwater (April 2024). The Federal Arbitration Act does not cover any "class of workers engaged in foreign or interstate commerce." This is a direct tie to the Commerce Clause, Article I, Section 8, Clause 3, U.S. Const.
There has been a general belief that this exclusion is "limited to workers whose employers are in the transportation industry." Thus, the Act would not apply to someone who worked for ABC Trucking, an interstate transportation company or for XYZ Railroad, or for Bob's Airline. But, the question in Bissonnette is not about a transportation company, per se. It is about a bakery that produces carbohydrate products for our consumption and enjoyment (bread, cakes, etc.). A dispute arose about the employment contract and the bakery successfully contended that their litigation should not proceed because of the arbitration clauses.
The Supreme Court reversed the lower court's (2nd Circuit) conclusion that the bakery is not "in the transportation industry." The facts establish that the workers in this instance in fact transport goods and that some of those goods originated in a different state (that is "interstate" commerce). The net effect of the ruling is seemingly innocuous, but the implications are far broader. The Court noted that it might be possible for a court to determine the "predominant source of commercial revenue." Might that help determine if a business is "in the transportation industry?"
Perhaps that is a relevant test. However, the Court noted that "such a test, however, would often turn on arcane riddles about the nature of a company’s services." There is some logic there. The Court seems concerned in that regard less about the law than about the convenience of deciding the outcome. Is convenience or simplicity the legal test or does it reach beyond the law? Intriguingly, the Court then makes some innuendo by posing questions:
- "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?"
Seemingly ignored is the similar hypothetical inquiry into the volume of cellulose fibers a small rodent might carelessly displace at the moment in time when such displacement is apropos. Hint, the answer is "enough," which is both disappointing and uninformative, much like the hypotheticals in Bissonnette. While that can be addressed on a different day, it perhaps has as much relevance to the questions as the pizza example.
Nonetheless, the Court saw in these questions the potential for delay and expense in interpreting contracts. It suggested that such questions might require "extensive discovery" into revenue and operations. It raised the spectre of "Mini-trials on the transportation-industry issue," and a resultant slowing of litigation. The possibility was suggested that "All this 'complexity and uncertainty' would “‘breed[ ] litigation from a statute that seeks to avoid it.’” In other words, such a determination would be hard, so let us instead legislate a simpler test.
The Court, instead, essentially concluded that the "transportation" question is one centric to the worker, not the employer. The bottom line is that "a transportation worker need not work in the transportation industry." The test regarding application of this loophole in the FAA is not the nature of the employer's business, but the nature of the workers' labor. The Court specifically dodged other questions, reversing only on this point.
Thus, there remain issues on remand (for the lower court to consider in light of the Supreme Court analysis). Those include questions such as whether Bissonnette and Wojnarowski (Plaintiffs) are "transportation workers" and whether their work is in fact in "interstate commerce."
While those seem like factual challenges, the reader will remember that there is little, if any, "interstate" left in the commerce clause. A raft of decisions rendered since Wickard v. Fillburn, 317 US 111 (1942) have demonstrated not the least dignity or respect for the qualifying "interstate" language in the constitution.
The effect of Wickard and its progeny is that any commerce conducted by anyone who has ever seen, heard of, or dreamed about another state is "interstate commerce." While those decisions are short on logic and long on hyperbole, they are the law, and the reach of the federal government, affected by the Commerce Clause, is seemingly boundless despite the seemingly reservation language of the Tenth Amendment.
