20-1681-cv
Bissonnette v. LePage Bakeries
United States Court of Appeals
for the Second Circuit
AUGUST TERM 2021
No. 20-1681
NEAL BISSONNETTE, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED, AND TYLER WOJNAROWSKI, INDIVIDUALLY AND ON BEHALF OF ALL
OTHERS SIMILARLY SITUATED,
Plaintiffs-Appellants,
v.
LEPAGE BAKERIES PARK ST., LLC, C.K. SALES CO., LLC, AND FLOWERS FOODS, INC.,
Defendants-Appellees.
ARGUED: OCTOBER 22, 2021
DECIDED: MAY 5, 2022
AMENDED: SEPTEMBER 26, 2022
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
CONNECTICUT
Before: JACOBS, POOLER, Circuit Judges, GUJARATI, District Judge. *
*Judge Diane Gujarati of the United States District Court for the Eastern District
of New York, sitting by designation.
Plaintiffs, who deliver baked goods in designated territories in
Connecticut, brought this action in the United States District Court for the
District of Connecticut (Dooley, J.) on behalf of a putative class against the
manufacturer of the baked goods that plaintiffs deliver. The plaintiffs allege
unpaid or withheld wages, unpaid overtime wages, and unjust enrichment.
The district court compelled arbitration pursuant to an arbitration
agreement that is governed by the Federal Arbitration Act (“FAA”) and
Connecticut law. Plaintiffs claim that they are not subject to the FAA because
Section 1 of the FAA excludes contracts with “seamen, railroad employees, [and]
any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C.
§ 1. The exclusion is construed to cover “transportation workers.” The district
court held that the plaintiffs did not qualify as transportation workers, ordered
arbitration, and dismissed the case. For the reasons below, we affirm.
Judge Jacobs concurs in a separate opinion, and Judge Pooler dissents in a
separate opinion.
____________________
2
HAROLD L. LICHTEN, Lichten & Liss-Riordan, P.C.,
Boston, MA (Matthew Thomson, Zachary L. Rubin,
Lichten & Liss-Riordan, P.C., Boston, MA, on the brief),
for Plaintiffs-Appellants.
TRACI L. LOVITT, Jones Day, New York, NY (Matthew
W. Lampe, Jones Day, New York, NY; Amanda K. Rice,
Jones Day, Detroit, MI; Margaret Santen Hanrahan,
Ogletree Deakins Nash Smoak & Stewart, P.C.,
Charlotte, NC, on the brief), for Defendants-Appellees.
DENNIS JACOBS, Circuit Judge:
Plaintiffs deliver baked goods by truck to stores and restaurants in
designated territories within Connecticut. They bring this action in the United
States District Court for the District of Connecticut (Dooley, J.) on behalf of a
putative class against Flowers Foods, Inc. and two of its subsidiaries, which
manufacture the baked goods that the plaintiffs deliver. Plaintiffs allege unpaid
or withheld wages, unpaid overtime wages, and unjust enrichment pursuant to
the Fair Labor Standards Act and Connecticut wage laws. The district court
granted the defendants’ motion to compel arbitration and dismissed the case.
The decisive question on appeal is whether the plaintiffs are
“transportation workers” within the meaning of the Federal Arbitration Act
3
(“FAA”). That matters because the FAA, which confers on the federal courts an
expansive obligation to enforce arbitration agreements, has an exclusion for
contracts with “seamen, railroad employees, [and] any other class of workers
engaged in foreign or interstate commerce.” 9 U.S.C. § 1. That exclusion is
construed to cover “transportation workers.” Circuit City Stores, Inc. v. Adams,
532 U.S. 105, 119 (2001).
Of the issues subsumed in that question, some are settled. For example, an
independent contractor can be a transportation worker, a point germane to this
case in which the drivers own their routes and may sell them to others. New
Prime Inc. v. Oliveira, 139 S. Ct. 532, 543-44 (2019).
The district court ruled that the plaintiffs are not “transportation workers”
and “grant[ed] the Defendants’ motion to dismiss in favor of arbitration.”
Special App’x 15. The court undertook a thorough review of the circumstances
that might bear on the question, such as the extent of similarity between the
plaintiffs’ work and the work of those in the maritime and railroad industries.
That analysis is consonant with the prescription in Lenz v. Yellow
Transportation, Inc., 431 F.3d 348 (8th Cir. 2005), which approached the question
4
by considering eight non-exclusive factors. We affirm without rejecting or
adopting the district court’s analysis, which may very well be a way to decide
closer cases. We hold that the plaintiffs are not “transportation workers,” even
though they drive trucks, because they are in the bakery industry, not a
transportation industry.
In arriving at that holding, we first consider an alternative ground for
affirmance that might obviate the federal statutory question by allowing the
arbitration to proceed under Connecticut arbitration law, which has no exclusion
for transportation workers; but vexed questions beset a ruling that affirms on
that alternative basis.
We therefore must come to grips with whether the plaintiffs are
“transportation workers.” Our initial opinion on this appeal, Bissonnette v.
LePage Bakeries Park St., LLC, 33 F.4th 650 (2d Cir. 2022), concluded that they
are not. The Supreme Court subsequently issued Southwest Airlines Co. v.
Saxon, 142 S. Ct. 1783 (2022) (“Saxon”), which provides guidance on the meaning
of “transportation workers,” and the plaintiffs moved for rehearing or rehearing
en banc in light of this intervening authority. We granted the motion for
5
rehearing and withdrew our opinion of May 5, 2022. Now, after considering
Saxon, we again affirm the district court’s order compelling arbitration and
dismissing the case. Additional oral argument is unnecessary. 1
I
Flowers Foods, Inc. is the holding company of subsidiaries that produce
breads (including Wonder Bread), as well as buns, rolls, and snack cakes in 47
bakeries. Other subsidiaries of Flowers Foods sell exclusive distribution rights
for the baked goods within specified geographic areas. (Flowers Foods, Inc. and
its subsidiaries, including defendants LePage Bakeries Park St., LLC and C.K.
Sales Co., LLC, are hereinafter referred to as “Flowers.”) The individuals who
purchase the distribution rights--designated independent distributors--market,
sell, and distribute Flowers baked goods. The relationship between Flowers and
1Defendants’ request to respond to plaintiffs’ petition for rehearing is denied as
moot.
6
each independent distributor is set out in a Distributor Agreement. See Joint
App’x 84-159.
Plaintiffs Neal Bissonnette and Tyler Wojnarowski are two of these
independent distributors, both of whom own distribution rights in Connecticut.
Bissonnette, who previously delivered baked goods as an employee of Flowers,
entered into a Distributor Agreement with Flowers in 2017. Wojnarowski
entered into a Distributor Agreement with Flowers in 2018.
Pursuant to the Distributor Agreement, the plaintiffs pick up the baked
goods from local Connecticut warehouses and deliver the goods to stores and
restaurants within their assigned territories. Subject to certain adjustments, the
plaintiffs earn the difference between the price at which the plaintiffs acquire the
bakery products from Flowers, and the price paid by the stores and restaurants.
In their roles as independent distributors, the plaintiffs undertake to maximize
sales; solicit new locations; stock shelves and rotate products; remove stale
products; acquire delivery vehicles; maintain equipment and insurance; distribute
Flowers’ advertising materials and develop their own (with prior approval by
Flowers); retain legal and accounting services; and hire help. The plaintiffs may
7
also profit from the sale of their distribution rights. 2 Though the plaintiffs are
permitted to sell noncompetitive products alongside Flowers products, the
plaintiffs concede that they do not work for any other company or entity, and that
they typically work at least forty hours per week selling and distributing Flowers
products.
The Distributor Agreement states that the parties may submit disputes
arising from the Distributor Agreement to binding arbitration in accordance with
the conditions set forth in an appended Arbitration Agreement. The Arbitration
Agreement provides that “any claim, dispute, and/or controversy . . . shall be
submitted to and determined exclusively by binding arbitration under the
Federal Arbitration Act (9 U.S.C. §§ 1, et seq.) . . .” Joint App’x 117. Arbitrability
is an issue reserved to the arbitrator except for issues concerning the “prohibition
2The Distributor Agreement defines the plaintiffs as “independent contractor[s]”
for all purposes, and makes clear that the plaintiffs are “independent
business[es].” The plaintiffs dispute that characterization. But this distinction no
longer matters for FAA purposes because the Supreme Court has clarified that
the exclusion for “transportation workers” applies with equal force to employees
and to independent contractors. New Prime Inc. v. Oliveira, 139 S. Ct. 532, 543-
44 (2019).
8
against class, collective, representative or multi-plaintiff action arbitration” and
the “applicability of the FAA.” Id. at 118. The Arbitration Agreement is
“governed by the FAA and Connecticut law to the extent Connecticut law is not
inconsistent with the FAA.” Id. at 119.
II
We have jurisdiction over the district court’s order compelling arbitration
and dismissing the case because it is a “final decision with respect to an
arbitration” pursuant to Section 16(a)(3) of the FAA. See Green Tree Fin. Corp.-
Alabama v. Randolph, 531 U.S. 79, 86-87, 89 (2000).
III
We review de novo the district court’s order compelling arbitration. Atlas
Air, Inc. v. Int’l Bhd. of Teamsters, 943 F.3d 568, 577 (2d Cir. 2019).
The Arbitration Agreement, which provides for arbitration “under the
Federal Arbitration Act,” elsewhere provides that it “shall be governed by the
FAA and Connecticut law to the extent Connecticut law is not inconsistent with the
9
FAA.” Joint App’x 117, 119 (emphasis added). Since Connecticut arbitration law
has no exclusion for transportation workers, see Conn. Gen. Stat. Ann. § 52-408
(arbitration agreements shall be “valid, irrevocable and enforceable”), Flowers
urges that we compel arbitration pursuant to Connecticut law, regardless of
whether the FAA applies.
The Second Circuit has not ruled on the application of state law to
arbitration agreements under the FAA. One court within this Circuit has
observed that “[m]ultiple courts” have rejected the proposition that “state
arbitration law is preempted” when a plaintiff is excluded from the FAA. Smith
v. Allstate Power Vac, Inc., 482 F. Supp. 3d 40, 47 (E.D.N.Y. 2020) (Gershon, J.);
see also Michel v. Parts Auth., Inc., 15 Civ. 5730 (ARR), 2016 WL 5372797, at *3
(E.D.N.Y. Sept. 26, 2016) (“Even assuming the FAA does not apply, New York
state law governing arbitration does apply.”). Other Circuits lean the same way. 3
3See, e.g., Harper v. Amazon.com Servs., Inc., 12 F.4th 287, 295 (3d Cir. 2021)
(observing that there is no language in the FAA that “explicitly preempts the
enforcement of state arbitration statutes”) (quoting Palcko v. Airborne Express,
Inc., 372 F.3d 588, 595 (3d Cir. 2004)); see also Saxon v. Sw. Airlines Co., 993 F.3d
492, 502 (7th Cir. 2021) (explaining that even though the plaintiff qualified for the
“transportation worker” exclusion to the FAA, she “could still face arbitration
10
Even if state law can compel arbitration when the FAA does not, the
meaning of the phrase “not inconsistent” in the Arbitration Agreement is
unclear. Joint App’x 119. Flowers argues that Connecticut law is “not
inconsistent” with the FAA because the FAA does not preclude the enforcement
of arbitration agreements with transportation workers. The plaintiffs counter
that Connecticut law is inconsistent because the FAA excludes transportation
workers while Connecticut law does not.
Prudence counsels against a remand for arbitration to proceed under
Connecticut law. The availability of Connecticut arbitration entails the construal
of a phrase with a disputed meaning. Ascertaining the intent of the parties
would ordinarily involve a remand for fact finding. Although the Agreement
provides that issues of arbitrability are reserved for the arbitrator, that expedient
under state law”), aff’d, 142 S. Ct. 1783 (2022); Oliveira v. New Prime, Inc., 857
F.3d 7, 24 (1st Cir. 2017), aff’d, 139 S. Ct. 532 (2019) (explaining that exclusion
from the FAA pursuant to Section 1 “has no impact on other avenues (such as
state law) by which a party may compel arbitration”); Cole v. Burns Int’l Sec.
Serv., 105 F.3d 1465, 1472 (D.C. Cir. 1997) (“[W]e have little doubt that, even if an
arbitration agreement is outside the FAA, the agreement still may be enforced.”).
11
may be blocked because the arbitrator’s ambit excludes the applicability of the
FAA, which is implicated here.
True, “a court should decide for itself whether § 1’s ‘contracts of
employment’ exclusion applies before ordering arbitration.” New Prime Inc.,
139 S. Ct. at 537. But that prescription may not bear upon whether the
availability of arbitration under state law can obviate the exclusion. See Harper
v. Amazon.com Servs., Inc., 12 F.4th 287, 296 n.8 (3d Cir. 2021) (observing that
“no binding precedent requires district courts to ignore arbitrability under state
law when the applicability of § 1 is uncertain”); Hamrick v. Partsfleet, LLC, 1
F.4th 1337, 1353 (11th Cir. 2021) (“We would only look to state arbitration law
after we decided the federal issue of whether the transportation worker
exemption applied to the drivers.”) (emphasis in original). Therefore, we
proceed to decide whether the plaintiffs fall within the FAA exclusion.
IV
The FAA, which reflects a “liberal federal policy favoring arbitration
agreements,” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
12
24 (1983), nevertheless excludes the employment contracts of “seamen, railroad
employees, [and] any other class of workers engaged in foreign or interstate
commerce.” 9 U.S.C. § 1. The class of workers encompassed by that residual
clause is “transportation workers.” Circuit City Stores, Inc. v. Adams, 532 U.S.
105, 119 (2001). Since neither Congress nor the Supreme Court has defined
“transportation worker,” we define it by affinity. The two examples that the
FAA gives are “seamen” and “railroad employees.” 9 U.S.C. § 1. These
examples are telling because they locate the “transportation worker” in the
context of a transportation industry. See, e.g., Sw. Airlines Co. v. Saxon, 142 S. Ct.
1783, 1791 (2022) (explaining that “seamen” constitute a “subset of workers
engaged in the maritime shipping industry”).
One explanation advanced for the exclusion is that Congress “did not wish
to unsettle established or developing statutory dispute resolution schemes
covering specific workers.” See Circuit City, 532 U.S. at 121. But that
explanation does not limit or delineate the category. The specification of workers
in a transportation industry is a reliable principle for construing the clause here.
Our cases have dealt with the exclusion, albeit in quite different contexts
13
and largely prior to Circuit City, 532 U.S. at 119, which narrowed the scope to
transportation workers. The cases nevertheless adumbrated the principle that
decides this case. The holding in Erving v. Virginia Squires Basketball, 468 F.2d
1064 (2d Cir. 1972)--that the FAA exclusion is limited to workers involved in the
transportation industry--is still vital. Id. at 1069. For example, Maryland
Casualty Co. v. Realty Advisory Board on Labor Relations, 107 F.3d 979 (2d Cir.
1997), ruled that employees of a commercial cleaner were not covered by the
exclusion, which is “limited to workers involved in the transportation
industries.” Id. at 982. After Circuit City, 532 U.S. at 119, this Court observed
that the exclusion did not apply to sheriffs because the clause is “interpreted . . .
narrowly to encompass only ‘workers involved in the transportation industries.’”
Adams v. Suozzi, 433 F.3d 220, 226 n.5 (2d Cir. 2005) (quoting Md. Cas. Co., 107
F.3d at 982).
Similarly, the Eleventh Circuit has held that an account manager at a
company that rents and delivers furniture across state borders was subject to the
FAA because he was “not a transportation industry worker.” Hill v. Rent-A-Ctr.,
Inc., 398 F.3d 1286, 1288 (11th Cir. 2005). Hill discerned that Congress intended
14
to exclude “a class of workers in the transportation industry, rather than . . .
workers who incidentally transported goods interstate as part of their job in an
industry that would otherwise be unregulated.” Id. at 1289; see also id. at 1290
(“[I]t is apparent Congress was concerned only with giving the arbitration
exemption to ‘classes’ of transportation workers within the transportation
industry.”). The test most recently articulated by the Eleventh Circuit is that the
transportation worker exclusion applies if the employee is part of a class of
workers: “(1) employed in the transportation industry; and (2) [who], in the
main, actually engage[] in foreign or interstate commerce.” Hamrick, 1 F.4th at
1349 (remanding for the district court to consider whether last-mile delivery
workers qualify for the exclusion). 4
Although none of these cases defines “transportation industry,” we
4 The plaintiffs in this case cite Martins v. Flowers Foods, Inc., 463 F. Supp. 3d
1290 (M.D. Fla. 2020), which held that Flowers distributors perform their work in
the transportation industry. Id. at 1298. But the Eleventh Circuit vacated the
judgment by a summary order, directing reconsideration in light of Hamrick v.
Partsfleet, LLC, 1 F.4th 1337 (11th Cir. 2021). See Martins v. Flowers Foods, Inc.,
852 F. App’x 519 (11th Cir. 2021) (summary order). The district court has not yet
issued a ruling on remand.
15
conclude that an individual works in a transportation industry if the industry in
which the individual works pegs its charges chiefly to the movement of goods or
passengers, and the industry’s predominant source of commercial revenue is
generated by that movement.
In Erving and Maryland Casualty, this Court set forth that only a worker
in a transportation industry can be classified as a transportation worker. That
point needed no elaboration in Saxon because there the plaintiff worked for an
airline. An airline, an analog to transport by rail and sea, is in the business of
moving people and freight, and its charges are for activity related to that
movement. (Customers do not fly for the infotainment or the food.)
At the same time, as Saxon teaches, not everyone who works in a
transportation industry is a transportation worker. To determine who is, we
must consider “the actual work that the members of the class, as a whole,
typically carry out,” that is, what the worker “frequently” does for the employer.
See 142 S. Ct. at 1788. It follows that not everybody who works in the airline
industry is a transportation worker--many airline employees are engaged in
accounting, regulatory compliance, advertising, and such. But in our case, the
16
distinctions drawn in Saxon do not come into play; those who work in the bakery
industry are not transportation workers, even those who drive a truck from
which they sell and deliver the breads and cakes.
The dissent’s repeated incantation that the plaintiffs are exempt because
they work in the “trucking industry” is erroneous. Although the plaintiffs spend
appreciable parts of their working days moving goods from place to place by
truck, the decisive fact is that the stores and restaurants are not buying the
movement of the baked goods, so long as they arrive. Customers pay for the
baked goods themselves; the movement of those goods is at most a component of
total price. The commerce is in breads, buns, rolls, and snack cakes--not
transportation services. See, e.g., Hill, 398 F.3d at 1288-90 (holding that a Rent-A-
Center manager whose “duties involved making delivery of goods to customers
out of state in his employer’s truck” did not work in the “transportation
industry”). Although contractual parties cannot effectively stipulate to the status
of employees as transportation workers (or not), the Distributor Agreement here
recognizes and identifies the industry: “[m]aintaining a fresh market is a
17
fundamental tenet of the baking industry.” 5 Joint App’x 95 (emphasis added).
Because the plaintiffs do not work in the transportation industry, they are
not excluded from the FAA, and the district court appropriately compelled
arbitration under the Arbitration Agreement.
V
The district court decided this case along the lines of analysis prescribed
by the Eighth Circuit in Lenz v. Yellow Transportation, Inc., 431 F.3d 348 (8th
5Although the plaintiffs never leave the state of Connecticut, we do not consider
whether this case could be decided on the ground that the interstate element of
the exclusion is not satisfied. The issue may not be simple. See, e.g., Sw. Airlines
Co. v. Saxon, 142 S. Ct. 1783, 1789 n.2 (2022) (acknowledging that it can be
difficult to define a class of workers’ involvement in interstate commerce). The
baked goods originate outside of Connecticut; and there are railroads that
operate within a single state, terminus to terminus--the Long Island Railroad
comes to mind.
Notably, on successive days, two courts in the same district reached opposite
conclusions as to whether rideshare drivers are engaged in interstate commerce.
Compare Islam v. Lyft, Inc., 524 F. Supp. 3d 338, 353 (S.D.N.Y. 2021) (Abrams, J.)
(exempt from the FAA because they perform “sufficient numbers of interstate
rides, with sufficient regularity”), with Aleksanian v. Uber Techs. Inc., 524 F.
Supp. 3d 251, 262-63 (S.D.N.Y. 2021) (Carter, J.) (not exempt because “interstate
trip[s]” are “occasional”).
18
Cir. 2005). Lenz adduced eight “non-exclusive” factors for “determining
whether an employee is so closely related to interstate commerce that he or she
fits within the § 1 exemption”:
[F]irst, whether the employee works in the
transportation industry; second, whether the employee
is directly responsible for transporting the goods in
interstate commerce; third, whether the employee
handles goods that travel interstate; fourth, whether the
employee supervises employees who are themselves
transportation workers, such as truck drivers; fifth,
whether, like seamen or railroad employees, the
employee is within a class of employees for which special
arbitration already existed when Congress enacted the
FAA; sixth, whether the vehicle itself is vital to the
commercial enterprise of the employer; seventh, whether
a strike by the employee would disrupt interstate
commerce; and eighth, the nexus that exists between the
employee’s job duties and the vehicle the employee uses
in carrying out his duties (i.e., a truck driver whose only
job is to deliver goods cannot perform his job without a
truck).
Id. at 352. The district court relied upon certain Lenz factors, but not all, and not
explicitly. See Bissonnette v. Lepage Bakeries Park St., LLC, 460 F. Supp. 3d 191,
198-202 (D. Conn. 2020). Although we identify no error in the district court’s
conscientious analysis, we resolve the question before us on the more
19
straightforward ground that the plaintiffs do not work in a transportation
industry.
We acknowledge that our approach is not a universal solvent. We do not
attempt to decide issues that have arisen across the federal court system as to
which of the following workers may be a “transportation worker”:
• Workers who transport goods or passengers within a state, when
those goods or passengers originate out of state. See, e.g., Wallace v.
Grubhub Holdings, Inc., 970 F.3d 798, 802 (7th Cir. 2020) (holding
that food delivery drivers who do not cross state lines are subject to
the FAA); Capriole v. Uber Techs., Inc., 7 F.4th 854, 865-66 (9th Cir.
2021) (holding that Uber drivers are subject to the FAA because most
of their trips are intrastate).
• Workers for major retailers who transport goods intrastate within a
larger transportation network that is interstate. Compare Rittmann
v. Amazon.com, Inc., 971 F.3d 904, 917 (9th Cir. 2020), cert. denied,
141 S. Ct. 1374 (2021) (holding that Amazon contractors are
transportation workers because they “complete the delivery of
goods that Amazon ships across state lines and for which Amazon
hires . . . workers to complete the delivery”); Waithaka v.
Amazon.com, Inc., 966 F.3d 10, 26 (1st Cir. 2020), cert. denied, 141 S.
Ct. 2794 (2021), reh’g denied, 141 S. Ct. 2886 (2021) (holding that
“last-mile delivery workers who haul goods on the final legs of
interstate journeys are transportation workers engaged in . . .
interstate commerce,” even if they do not themselves cross state
lines) (internal quotation marks omitted), with Hamrick, 1 F.4th at
1351 (remanding to consider whether final-mile delivery workers
“are in a class of workers employed in the transportation industry
20
that actually engages in foreign or interstate commerce”).
We have no occasion to hazard answers to these questions.
CONCLUSION
For the reasons stated above, we affirm the order compelling arbitration
and dismissing the case.
21
DENNIS JACOBS, Circuit Judge, concurring:
The obligation to consider appellate jurisdiction ordinarily entails a
straightforward analysis. In this case, the straightforward analysis leads to
another and difficult question.
Having issued an order to compel arbitration, the district court dismissed
the case, and assured the parties that “[i]f, after the arbitration, any party seeks
further relief from the Court, the Clerk of Court shall direct assign any such
motion or petition to the undersigned.” Special App’x 15. The dismissal
amounts to a final order, notwithstanding the contemplation of further
initiatives--such as confirmation, vacatur, or modification of the award--that may
be sought in future litigation. So pursuant to Section 16(a)(3) of the Federal
Arbitration Act (“FAA”), we have jurisdiction over this appeal. But the
contemplation of future litigation reflects an intuitive appreciation that the
district court’s role under the FAA may be unfulfilled. The district court, having
power to stay proceedings pending arbitration, should not have dismissed the
case.
1
I
When a district court grants an application to enforce an arbitration clause,
there is a question as to whether Section 3 of the FAA requires that a stay be
entered. Courts across the Circuits are divided on this question; some hold that a
stay is mandatory, and others hold that a district court may dismiss the case. 1 In
2015, our decision in Katz v. Cellco Partnership, 794 F.3d 341 (2d Cir. 2015)
(“Katz”), articulated the rule as follows: a stay is mandatory when “all claims
have been referred to arbitration and a stay requested.” Id. at 345 (emphasis
added). Following Katz, courts in this Circuit are split on whether a stay is
required even if no party requests one. 2
This issue is consequential. When a case is stayed pending arbitration, the
order compelling or directing arbitration is interlocutory, and therefore
1 Compare, e.g., Bender v. A.G. Edwards & Sons, Inc., 971 F.2d 698, 699 (11th Cir.
1992) (per curiam) (“Upon finding that a claim is subject to an arbitration
agreement, the court should order that the action be stayed pending
arbitration.”), with Bercovitch v. Baldwin School, Inc., 133 F.3d 141, 156 & n. 21
(1st Cir. 1998) (“[A] court may dismiss, rather than stay, a case when all of the
issues before the court are arbitrable.”).
2Compare China Media Express Holdings, Inc. by Barth v. Nexus Exec. Risks,
Ltd., 182 F. Supp. 3d 42, 53 (S.D.N.Y. 2016) (staying case “[p]ursuant to the
Second Circuit’s decision in Katz” even though parties seeking arbitration
requested dismissal); Merrick v. UnitedHealth Grp. Inc., 127 F. Supp. 3d 138, 154
2
unappealable; the parties must proceed forthwith to arbitration. But when such
a case is dismissed, the party resisting arbitration can appeal at once, and thereby
delay the arbitration, with associated costs and uncertainties. This appears to be
where we are now.
How did we get here? In this case, Flowers moved to dismiss the
complaint pursuant to Fed. R. Civ. P. 12(b)(1) and the FAA, or in the alternative,
to compel arbitration. For some reason, Flowers explicitly sought a dismissal “in
lieu of a stay,” see Joint App’x 73-74, and the plaintiffs, who resisted arbitration,
did not request a stay. Thus, the district court granted Flowers’ “motion to
dismiss in favor of arbitration,” closed the case, and directed the Clerk of Court
to assign any post-arbitration petitions for relief to the same judge. Special
App’x 15-16. Today, we have affirmed the order compelling arbitration and
dismissing the case.
(S.D.N.Y. 2015) (staying the action even though “no party has requested a stay”),
with Benzemann v. Citibank N.A., 622 F. App’x 16, 18 (2d Cir. 2015) (summary
order) (ruling that because the plaintiff did not request a stay, “Section 3 did not
require the district court to stay the proceedings”); Zambrano v. Strategic
Delivery Sols., LLC, No. 15 Civ. 8410, 2016 WL 5339552, at *10 (S.D.N.Y. Sept. 22,
2016) (observing that “because Defendants seek dismissal rather than a stay . . .
this Court has discretion whether to stay or dismiss Plaintiffs’ action under the
FAA,” and ultimately staying the case).
3
Katz can be read to mean that, when no stay is requested, the district court
retains discretion to stay the case or dismiss it. That reading is invited by Katz
without being compelled by it.
II
Katz construed Section 3 of the FAA to mandate a stay when “all claims
have been referred to arbitration and a stay requested.” 794 F.3d at 345.
However, the FAA mandates a stay whether or not a party requests one. This
construal is consistent with the purpose of the FAA.
Properly construed, the text of Section 3 bars a court from enforcing an
arbitration clause sua sponte; but if a party applies for enforcement of the clause,
Section 3 requires a court that enforces it to stay proceedings in the interim:
If any suit or proceeding be brought in any of the courts
of the United States upon any issue referable to
arbitration under an agreement in writing for such
arbitration, the court in which such suit is pending,
upon being satisfied that the issue involved in such suit
or proceeding is referable to arbitration under such an
agreement, shall on application of one of the parties
stay the trial of the action until such arbitration has
been had in accordance with the terms of the agreement,
providing the applicant for the stay is not in default in
proceeding with such arbitration.
4
9 U.S.C. § 3 (emphasis added). Read naturally and in context, the referenced
“application of one of the parties” is the application to enforce the arbitration
clause. The text does not contemplate (let alone require) a separate application to
stay proceedings in district court. See Cont’l Cas. Co. v. Am. Nat’l Ins. Co., 417
F.3d 727, 732 n.7 (7th Cir. 2005) (“[T]he proper course of action when a party
seeks to invoke an arbitration clause is to stay the proceedings pending
arbitration rather than to dismiss outright.”) (emphasis in original).
Reading Section 3 to require a stay pending arbitration regardless of
whether a stay has been requested is consistent with the FAA’s pro-arbitration
posture. 3 Congress intended the FAA to “move the parties to an arbitrable
dispute out of court and into arbitration as quickly and easily as possible.”
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 22 (1983).
That is why the FAA “provides two parallel devices for enforcing an arbitration
3For what it is worth, Katz does not clearly say otherwise. Katz observes that
Section 3’s “plain language specifies that the court ‘shall’ stay proceedings
pending arbitration, provided an application is made and certain conditions are
met.” 794 F.3d at 345. Katz does not specify the type of “application” that must
be made, though (in my view) Katz does (and must be read to) reference the
application to enforce an arbitration clause. Nor does Katz point to anything in
the statute that says that a mandatory stay is dependent upon an explicit request
for a stay.
5
agreement: a stay of litigation in any case raising a dispute referable to
arbitration, 9 U.S.C. § 3”--at issue here--“and an affirmative order to engage in
arbitration, § 4.” Id. It is hard to square congressional intent with the idea that
Section 3’s mandatory stay is conditional upon a party’s explicit request for a
stay alongside its application to compel arbitration.
The FAA provision governing appeals underscores the congressional
policy of “rapid and unobstructed enforcement of arbitration agreements.”
Moses, 460 U.S. at 23. Section 16 forecloses an appeal from an order that directs
the parties to proceed with arbitration, including a stay order under Section 3:
Except as otherwise provided in section 1292(b) of title
28 [interlocutory decisions], an appeal may not be taken
from an interlocutory order--
(1) granting a stay of any action under section 3 of
this title;
(2) directing arbitration to proceed under section 4 of
this title; 4
(3) compelling arbitration under section 206 of this
title [providing for enforcement abroad and
court-appointed arbitrators]; or
49 U.S.C. § 4, which deals with enforcement of arbitration clauses regardless of
whether the contract has become the subject of federal litigation, provides in
part: “The court shall hear the parties, and upon being satisfied that the making
of the agreement for arbitration or the failure to comply therewith is not in issue,
the court shall make an order directing the parties to proceed to arbitration in
accordance with the terms of the agreement.”
6
(4) refusing to enjoin an arbitration that is subject to
this title.
See 9 U.S.C. § 16(b). That provision “is a pro-arbitration statute designed to
prevent the appellate aspect of the litigation process from impeding the
expeditious disposition of an arbitration.” Augustea Impb Et Salvataggi v.
Mitsubishi Corp., 126 F.3d 95, 99 (2d Cir. 1997) (quoting David D. Siegel, Practice
Commentary: Appeals from Arbitrability Determinations, 9 U.S.C.A. § 16, at 352
(West Supp. 1997)). 5 The purpose is defeated if a dismissal is entered instead of a
stay. See Arabian Motors Grp. W.L.L. v. Ford Motor Co., 19 F.4th 938, 942 (6th
Cir. 2021) (“Because a dismissal, unlike a stay, permits an objecting party to file
an immediate appeal, a district court dismissal order undercuts the pro-
arbitration appellate-review provisions of the Act.”).
5 Not to the contrary is the FAA provision that an appeal may be taken from “a
final decision with respect to an arbitration.” 9 U.S.C. § 16(a)(3). The FAA
allows an appeal from a final decision that is entered after the arbitration has run
its course, id., as well as appeals from, inter alia, orders that refuse a stay of an
action or deny a petition to arbitrate, see 9 U.S.C. § 16(a)(1).
7
III
Our opinion in Katz is regrettable, particularly as the Supreme Court has
now given guidance that reinforces my view of Section 3. See Badgerow v.
Walters, 142 S. Ct. 1310 (2022) (“Badgerow”). Badgerow conducted a thorough
analysis of the FAA’s text, and held that the “look through” approach for finding
federal jurisdiction in petitions under Section 4 does not apply to petitions under
Sections 9 and 10 of the FAA. This holding has ramifications when a district
court dismisses a case after compelling arbitration because a dismissal will
certainly require a district court to find an independent jurisdictional basis
whenever a new FAA petition arises from the same case. A stay, however, may
enable the court and the parties to sidestep these consequences.
It is settled that a federal court deciding whether to enforce an arbitration
agreement under Section 4 must find an independent jurisdictional basis, either
on the face of the petition (for diversity jurisdiction) or by looking through to the
petition to see if the underlying controversy arises under federal law (for federal
question jurisdiction). See Vaden v. Discover Bank, 556 U.S. 49, 62 (2009);
Hermes of Paris, Inc. v. Swain, 867 F.3d 321, 324 (2d Cir. 2017). But, under
Badgerow, a district court lacks jurisdiction over a petition to confirm or vacate
8
an arbitral award under Sections 9 and 10, respectively, unless the jurisdictional
basis appears on the “face of the application itself.” Badgerow, 142 S. Ct. at 1317-
18. This means that there must either be diversity jurisdiction, or a federal
question with respect to the award’s confirmation or vacatur (no examples of the
latter are supplied in Badgerow itself). Id. Unlike with Section 4 petitions, courts
may not locate federal question jurisdiction by looking through to the underlying
controversy. Id. As a result of this ruling, many more Section 9 and 10 petitions
will be adjudicated in state courts. Id. at 1321-22. This will raise an impediment
to parties seeking federal court assistance to facilitate their arbitrations when
there is no jurisdictional basis on the face of their petitions.
It is too early to say whether issuance of a stay pursuant to Section 3 may
allow parties to seek enforcement, vacatur, or modification of an award, 9 U.S.C.
§§ 9-11, or seek other assistance under the FAA, see id. §§ 5 (appointment of
arbitrators), 7 (summoning witnesses), without need for an independent basis for
federal jurisdiction--though Justice Breyer’s dissent in Badgerow suggests as
much. 6 As this Court has observed, “practitioners who wish to preserve access
6Indeed, foreseeing the chaos post-Badgerow, Justice Breyer suggested that a
stay is the solution: “[i]f a party to an arbitration agreement files a lawsuit in
federal court but then is ordered to resolve the claims in arbitration, the federal
court may stay the suit and possibly retain jurisdiction over related FAA
9
to federal courts for later disputes over arbitrators, subpoenas, or final awards
[may] attempt to ‘lock in’ jurisdiction by filing a federal suit first, followed by
motions to compel and a stay of proceedings.” Doscher v. Sea Port Grp. Sec.,
LLC, 832 F.3d 372, 387 (2d Cir. 2016), abrogated on other grounds by Badgerow
v. Walters, 142 S. Ct. 1310 (2022); see also Ian R. MacNeil et al., Federal
Arbitration Law: Agreements, Awards, and Remedies under the Federal
Arbitration Act § 9.2.3.1 (Supp. 1999) (explaining that when a district court stays
proceedings pending arbitration, “[a]fter an award, parties desiring to confirm,
vacate, or modify the award, can return to the federal court in which the stayed
litigation is pending for determination of those issues,” as “[t]he court had
federal question subject matter jurisdiction and has never lost it.”).
In short, the stay of a suit pending arbitration is (in my view) arguably
compelled and certainly prudent.
motions.” Badgerow, 142 S. Ct. at 1326 (Breyer, J., dissenting) (citing § 3, Vaden
v. Discover Bank, 556 U.S. 49, 65 (2009)). For its part, the Badgerow majority did
not address the effect of a stay on a district court’s jurisdiction to resolve later-
filed FAA petitions; it explicitly declined to consider whether a district court
would have jurisdiction to resolve a Section 5 petition that is made “in tandem
with” a Section 4 petition. Id. at 1320 n.6.
10
1 POOLER, Circuit Judge, dissenting:
2 The plaintiffs are commercial truck drivers who deliver the defendants’
3 packaged baked goods to supermarkets and other retail outlets in Connecticut.
4 They allege that the defendants deprived them of the legal protections owed to
5 employees, including the right to overtime premiums, by misclassifying them as
6 independent contractors. On appeal now is whether this serious charge should be
7 litigated, as the drivers want, or arbitrated, as their employer prefers. The parties
8 have an arbitration agreement. But the Federal Arbitration Act, which empowers
9 federal courts to enforce those agreements, does not apply to employment
10 contracts of “any . . . class of workers engaged in foreign or interstate commerce,”
11 9 U.S.C. § 1—that is, “transportation workers,” Circuit City Stores, Inc. v. Adams,
12 532 U.S. 105, 119 (2001). The question, then, is whether the plaintiffs are
13 transportation workers.
14 When we first considered this case a few months ago, I thought the answer
15 was clear: Of course these truckers are transportation workers. See Bissonnette v.
16 LePage Bakeries Park St., LLC, 33 F.4th 650, 662 (2d Cir. 2022) (Pooler, J., dissenting).
17 After all, the “one area of clear common ground” concerning this exemption to the
18 FAA has been that truck drivers qualify. Kowalewski v. Samandarov, 590 F. Supp. 2d
1
1 477, 482-83 (S.D.N.Y. 2008) (Sullivan, J.) (collecting cases). In view of this
2 consensus, I thought anomalous and unfounded the majority’s contrary
3 conclusion that because the plaintiffs do their trucking for a bakery company, they
4 “are in the bakery industry, not a transportation industry,” hence not
5 transportation workers. Bissonnette, 33 F.4th at 652. Instead, I would have joined
6 the several other courts that have recognized the obvious: “[A] trucker is a
7 transportation worker regardless of whether he transports his employer’s goods
8 or the goods of a third party.” Int’l Broth. of Teamsters Loc. Union No. 50 v. Kienstra
9 Precast, LLC, 702 F.3d 954, 957 (7th Cir. 2012).
10 The Supreme Court’s decision in Southwest Airlines Co. v. Saxon, issued a
11 month after our ruling, reinforces my view. See 142 S. Ct. 1783 (2022). Saxon directs
12 our attention to “the actual work that the members of the class, as a whole,
13 typically carry out.” Id. at 1788. Someone “is therefore a member of a ‘class of
14 workers’ based on what she does” for her employer, “not what [the employer]
15 does generally.” Id. Yet the majority, caught flat-footed by Saxon, elects to ignore
16 it. The majority’s revised decision continues to hold that the plaintiffs are not
17 transportation workers, even though they “spend appreciable parts of their
18 working days moving goods from place to place by truck,” because of what their
2
1 employer, a baked goods company, does generally. Maj. Op. at 17. From the start,
2 this holding was textually baseless and inconsistent with the decisions of courts
3 nationwide. Add to that list the Supreme Court. For the second time now,
4 therefore, I must respectfully dissent.
5 I. The Plaintiffs Are Transportation Workers.
6 Latrice Saxon was a ramp supervisor for Southwest Airlines. Her work
7 “frequently require[d] her to load and unload baggage, airmail, and commercial
8 cargo on and off airplanes that travel across the country.” Saxon, 142 S. Ct. at 1787.
9 The question before the Supreme Court was whether she belonged to a class of
10 workers engaged in foreign or interstate commerce. In concluding that she did—
11 and that her employment contract was therefore exempt from the FAA—the Court
12 employed a two-step analysis. First, the Court sought to “defin[e] the relevant
13 ‘class of workers’ to which Saxon belong[ed].” Id. at 1788-89. Saxon argued that
14 “because air transportation as an industry is engaged in interstate commerce,
15 airline employees constitute a class of workers covered by § 1.” Id. at 1788
16 (alterations and internal quotation marks omitted). The Court “rejected Saxon’s
17 industrywide approach.” Id. Instead, it reasoned, “[t]he word ‘workers’ directs the
18 interpreter’s attention to the performance of work,” and “the word
3
1 ‘engaged’ . . . similarly emphasizes the actual work that the members of the class,
2 as a whole, typically carry out.” Id. (emphasis in original). Accordingly, Saxon was
3 “a member of a ‘class of workers’ based on what she does at Southwest, not what
4 Southwest does generally.” Id. And because Southwest had “not meaningfully
5 contested that ramp supervisors like Saxon frequently load and unload cargo,” the
6 Court “accept[ed] that Saxon belongs to a class of workers who physically load
7 and unload cargo on and off airplanes on a frequent basis.” Id. at 1788-89.
8 Second, the Court determined that this class of workers was “engaged in
9 foreign or interstate commerce.” Id. at 1789. Because “to be ‘engaged’ in something
10 means to be ‘occupied,’ ‘employed,’ or ‘involved’ in it,” and because commerce
11 “includes, among other things, ‘the transportation of . . . goods, both by land and
12 by sea,’” the Court explained that “any class of workers directly involved in
13 transporting goods across state or international borders falls within § 1’s
14 exemption.” Id. The Court concluded that “[a]irplane cargo loaders are such a
15 class,” because, among other reasons, “it is ‘too plain to require discussion that the
16 loading or unloading of an interstate shipment by the employees of a carrier is so
17 closely related to interstate transportation as to be practically a part of it.’” Id.
18 (quoting Baltimore & Ohio Sw. R. Co. v. Burtch, 263 U.S. 540, 544 (1924)).
4
1 Applying this framework here, the plaintiffs plainly belong to a class of
2 workers engaged in interstate commerce. We start by defining the relevant class,
3 with a focus on the actual work the class members typically carry out. The
4 plaintiffs “work at least forty hours per week delivering the” defendants’ baked
5 goods. App’x at 17 ¶ 33. This work principally consists of driving Department of
6 Transportation-registered commercial trucks “to stores within a territory
7 designated by Defendants, delivering Defendants’ products to these stores, and
8 arranging the products on the shelves according to Defendants’ standards.” App’x
9 at 17 ¶ 33. The plaintiffs therefore belong to a class of workers who, in the
10 majority’s words, “spend appreciable parts of their working days moving goods
11 from place to place by truck.” Maj. Op. at 17. Or, in common parlance, they are
12 commercial truck drivers.
13 But are the plaintiffs “engaged in foreign or interstate commerce?”
14 9 U.S.C. § 1. At first, this may look like a closer question, because they do not cross
15 state lines. But neither did Saxon. She merely “load[ed] cargo on a plane bound
16 for interstate transit.” Saxon, 142 S. Ct. at 1790. Still, the Supreme Court held,
17 “airplane cargo loaders plainly do perform ‘activities within the flow of interstate
18 commerce’ when they handle goods traveling in interstate . . . commerce.” Id. at
5
1 1792. It did not matter that Saxon “d[id] not physically accompany freight across
2 state or international boundaries.” Id. at 1791. The same is true of these truckers.
3 The loaves of Wonder Bread they transport are delivered to the defendants’
4 warehouse from commercial bakeries outside Connecticut; they then transport the
5 bread to its final destination in-state. Like Saxon, the plaintiff truckers handle
6 goods traveling in interstate commerce every day. If Saxon is intimately involved
7 with the transportation of those goods, the truckers here are, too. The majority
8 opinion, in a footnote, states that the Court does not consider whether the case
9 could be decided on the ground that the interstate element of the exclusion is not
10 satisfied, noting that it is not a simple issue. See Maj. Op. at 18 n.5. However, the
11 district court acknowledged that defendants’ products are manufactured out of
12 state and are delivered to warehouses in-state, and as such, the plaintiffs meet the
13 threshold of being “engaged in . . . interstate commerce.” See 9 U.S.C. § 1; Bissonette
14 v. Lepage Bakeries Park St., LLC, 460 F. Supp. 3d 191, 198 (D. Conn. 2020).
15 Pre-Saxon cases furnish the same conclusion. “The great weight of
16 authority . . . holds that interstate travel is not strictly necessary” to qualify
17 someone as a transportation worker. Haider v. Lyft, Inc., No. 20-cv-2997, 2021 WL
18 1226442, at *4 (S.D.N.Y. Mar. 31, 2021). The First and Ninth Circuits, for instance,
6
1 have held that so-called “last-mile delivery drivers” for Amazon are
2 transportation workers “[b]y virtue of their work transporting goods or people
3 ‘within the flow of interstate commerce,’” despite never personally crossing state
4 lines. Waithaka v. Amazon.com, Inc., 966 F.3d 10, 26 (1st Cir. 2020); see also Rittmann
5 v. Amazon.com, Inc., 971 F.3d 904, 916 (9th Cir. 2020). The theory is that, when a
6 product crosses state lines in a “single, unbroken stream of interstate commerce”
7 from origin to customer, interstate commerce becomes a “central part” of the job
8 description of even those delivery drivers who take the product on the last,
9 intrastate leg of the journey. Carmona v. Domino’s Pizza, LLC, 21 F.4th 627, 630 (9th
10 Cir. 2021).
11 So it is here. Like the Amazon drivers, the plaintiffs carry the goods for a
12 portion of a single interstate journey and are “indispensable parts of [an interstate]
13 distribution system.” Waithaka v. Amazon.com, Inc., 404 F. Supp. 3d 335, 343 (D.
14 Mass. 2019). These facts also distinguish the plaintiffs from those “workers whose
15 occupations have nothing to do with interstate transport” whom the Seventh
16 Circuit has worried might be “swe[pt] in” by an overbroad reading of the Section 1
17 exemption: for instance, the “dry cleaners who deliver pressed shirts
18 manufactured in Taiwan and ice cream truck drivers selling treats made with milk
7
1 from an out-of-state dairy.” Wallace v. Grubhub Holdings, Inc., 970 F.3d 798, 802 (7th
2 Cir. 2020).
3 Because the movement of goods through interstate commerce is a central
4 part of the plaintiffs’ occupation as truckers, I would hold that they belong to a
5 “class of workers engaged in foreign or interstate commerce,” 9 U.S.C. § 1, and
6 that the FAA does not apply to their Distributor Agreements.
7 II. The Majority’s Errors.
8 When considering the majority opinion’s erroneous contrary conclusion,
9 note what it does and does not hold. The majority does not hold, as had the district
10 court, that the plaintiffs are not transportation workers because their few
11 additional customer service and sales responsibilities make them “more akin to
12 sales workers or managers” than “traditional . . . long-haul trucker[s].” Bissonette,
13 460 F. Supp. 3d at 200. 1 Nor does the majority exclude the plaintiffs from the FAA’s
1 The district court’s reasoning is itself unconvincing. I have no issue with the
premise that a transportation worker’s job duties must be more than “tangentially
related to [the] movement of goods.” Lenz v. Yellow Transp., Inc., 431 F.3d 348, 351-
52 (8th Cir. 2005); see also, e.g., Hill v. Rent-A-Center, Inc., 398 F.3d 1286, 1289 (11th
Cir. 2005) (requiring that transportation work be more than “incidental” to a
worker’s employment). But it is impossible to conclude on this record that
transportation work is merely incidental or tangential to the plaintiffs’
employment. The title of their contracts—“Distributor Agreements”—defines
their principal purpose. The additional tasks the Distributor Agreements obligate
the plaintiffs to perform emanate from the delivery work. And the defendants
8
1 residual exemption on the ground that their work is insufficiently connected to
2 interstate commerce; this question, after all, “may not be simple,” as “there are
3 railroads that operate within a single state, terminus to terminus.” Maj. Op. at 18
4 n.4.
5 Instead, the majority concludes that, even assuming these plaintiffs are
6 traditional truckers, and even assuming the interstate element is satisfied, they are
7 still not transportation workers, because they work for a bakery. The majority
8 reasons that “[t]he specification of workers in a transportation industry is a reliable
9 principle for construing the [residual] clause.” Maj. Op. at 13 (emphasis in
10 original). It then instructs—without reference to the FAA’s text, any case law, the
11 business world, or even a dictionary—that “an individual works in a
12 transportation industry if the industry in which the individual works pegs its
offer no evidence to counter the complaint’s allegations that the actual delivery of
product constituted the lion’s share of the plaintiffs’ work. It is not surprising,
then, that in a case strikingly similar to this one, the District of Massachusetts
recently concluded that a group of the same defendants’ Massachusetts-based
delivery drivers qualified as transportation workers, principally because those
plaintiffs had submitted “sworn affidavits stating that they spend the majority of
their time making deliveries” and “there [was] nothing in the record to suggest
that Plaintiffs were carrying out all of the other responsibilities included in the[ir]
Distributor Agreements and business plans, or that those other responsibilities
took up more time than driving.” Canales v. Lepage Bakeries Park St. LLC, No. 1:21-
cv-40065-ADB, 2022 WL 952130, at *5-*6 (D. Mass. Mar. 30, 2022).
9
1 charges chiefly to the movement of goods or passengers, and the industry’s
2 predominant source of commercial revenue is generated by that movement.” Maj.
3 Op. at 16. The majority concludes that that the plaintiffs “are in the bakery
4 industry, not a transportation industry,” Maj. Op. at 5, because “the stores and
5 restaurants are not buying the movement of the baked goods, so long as they
6 arrive. The bill they pay is for the baked goods themselves; the movement of those
7 goods is at most a component of total price.” Maj. Op. at 17-18. Long story short,
8 the plaintiffs are not transportation workers because they do not work for a
9 trucking company.
10 Can this really be the law? Certainly not under Saxon. Only by looking to
11 what their employer does generally—making and selling bread—can the majority
12 conclude that the plaintiffs are not transportation workers. 2 The plaintiffs drive
2 In any event, I am not sure this even accurately depicts the defendants’
commerce. No facts in the record concerned each defendant’s “predominant
sources of commercial revenue.” For their part, the plaintiffs aver that discovery
“would reveal that CK Sales [the defendant with whom the plaintiffs executed the
Distributor Agreements] does not earn any revenues from the sale of baked goods,
[but rather] that it primarily generates revenue by designing ‘distribution
territories’ and selling the ‘distribution rights’ to perform deliveries within those
territories to Distributors like Plaintiffs—that is, it generates revenue through the
distribution of goods, not the manufacturing of them.” Plaintiffs-Appellants’
Petition for Rehearing or for Rehearing En Banc at 18.
10
1 trucks; they are not bakers. And while they happen to be employed by the bakery
2 whose bread they deliver, this is nothing new. See Loc. 50, Bakery & Confectionary
3 Workers v. Gen. Baking Co., 97 F. Supp. 73, 74 (S.D.N.Y. 1951) (describing labor
4 negotiations and strike of Bakery Drivers Union and production stoppage arising
5 therefrom). Nor is it uncommon today for a company to hire its own delivery
6 drivers. Scores of truckers in the United States work directly for beverage
7 companies, furniture companies, retailers, food manufacturers, energy companies,
8 and grocery stores. One cannot get far on an interstate without seeing an eighteen-
9 wheeler soliciting for “Drive4Walmart.com.” 3 Saxon makes plain that the drivers
10 these companies hire do not cease to be transportation workers the moment they
11 are brought in-house. If the workers’ principal daily tasks involve them in the
12 actual movement of goods through interstate commerce, they are transportation
13 workers. See Saxon, 142 S. Ct. at 1790 (describing as the “central feature of a
14 transportation worker” the “active[] engage[ment] in transportation of . . . goods
15 across borders via the channels of foreign or interstate commerce” (internal
3 See WALMART CAREERS, https://careers.walmart.com/drivers-distribution-
centers/drivers (last visited Aug. 16, 2022) (“Traveling over 900 million miles a
year, our private fleet of over 12,000 Class A drivers deliver countless loads of
merchandise to Walmart and Sam’s Club locations across the nation while
representing the values associated with our Spark.”).
11
1 quotation marks omitted)). By focusing on the nature of the defendants’ business,
2 and not on the nature of the plaintiffs’ work, the majority offers the sort of
3 industrywide approach Saxon proscribes.
4 The majority, of course, tries to sidestep Saxon. Its argument seems to be that
5 because Saxon worked for a company that likely “pegs its charges chiefly to the
6 movement of goods and passengers,” Maj. Op. at 16, while the plaintiffs (per the
7 majority) do not, the “distinctions drawn in Saxon do not come into play.” Maj.
8 Op. at 17. Yet Saxon is not so limited. To the contrary, the Court squarely foreclosed
9 that Southwest Airlines’ “predominant source of commercial revenue” could be
10 relevant to whether Saxon was a transportation worker. Again: “Saxon is . . . a
11 member of a ‘class of workers’ based on what she does at Southwest, not what
12 Southwest does generally.” Saxon, 142 S. Ct. at 1788.
13 But the majority conflicts with more than just Saxon. For decades, the “one
14 area of clear common ground among the federal courts” has been “that truck
15 drivers—that is, drivers actually involved in the interstate transportation of
16 physical goods”—are transportation workers. Kowalewski, 590 F. Supp. 2d at 482-
17 83. See also Lenz, 431 F.3d at 351 (declaring it “[i]ndisputabl[e]” that, if the plaintiff
18 “were a truck driver, he would be considered a transportation worker”); Palcko v.
12
1 Airbone Express, 372 F.3d 588, 593-94 (3d Cir. 2004) (assuming that truck drivers fall
2 within the residuary exemption); Harden v. Roadway Package Sys., 249 F.3d 1137,
3 1140 (9th Cir. 2001) (“delivery driver” was transportation worker); Smith v. Allstate
4 Power Vac. Inc., 482 F. Supp. 3d 40, 46 (E.D.N.Y. 2020) (truck driver for waste
5 removal company was transportation worker); Veliz v. Cintas Corp., No. 03-cv-
6 1180, 2004 WL 2452851, at *5 (N.D. Cal. Apr. 5, 2004) (“The most obvious case
7 where a plaintiff falls under the FAA exemption is where the plaintiff directly
8 transports goods in interstate [commerce], such as [an] interstate truck
9 driver . . . .”).
10 A natural corollary, as several courts have correctly recognized, is that “a
11 transportation worker need not work for a transportation company.” Saxon v. Sw.
12 Airlines Co., 993 F.3d 492, 497 (7th Cir. 2021), aff’d Saxon, 142 S. Ct. 1783. Rather, “a
13 trucker is a transportation worker regardless of whether he transports his
14 employer’s goods or the goods of a third party.” Kienstra, 702 F.3d at 957; see also
15 Waithaka, 966 F.3d at 23 (“[A] class of workers [need not] be employed by an
16 interstate transportation business or a business of a certain geographic scope to
17 fall within the Section 1 exemption[.]”); Canales, 2022 WL 952130, at *6 (rejecting
18 the argument that “an employer [must] be a transportation company for § 1 to
13
1 apply”). These observations align with the FAA’s text: Section 1 asks whether a
2 worker belongs to a class of workers “engaged in interstate or foreign commerce.”
3 9 U.S.C. § 1. It does not ask for whom the worker undertakes her transportation
4 work.
5 The majority ignores all these cases. And the ones it does rely on do not
6 support its novel rule that only those employed by transportation companies can
7 be transportation workers. The Second Circuit cases allegedly demonstrating a
8 “transportation industry” limitation involved workers whose occupations did not
9 involve the movement of goods or passengers. See Adams v. Suozzi, 433 F.3d 220,
10 226 n.5 (2d Cir. 2005) (sheriffs); Maryland Cas. Co. v. Realty Advisory Bd. on Lab. Rels.,
11 107 F.3d 979, 982 (2d Cir. 1997) (commercial cleaning workers); Erving v. Virginia
12 Squires Basketball Club, 468 F.2d 1064, 1069 (2d Cir. 1972) (the basketball player
13 Julius “Dr. J” Erving). These cases tell us little about people like the plaintiffs, who
14 actually transport goods through interstate commerce every day. Nor does Hill v.
15 Rent-A-Center, Inc., an Eleventh Circuit case, help the majority. The majority
16 asserts that Hill held that “an account manager at a company that rents and
17 delivers furniture across state borders was not excluded from the FAA because he
18 was ‘not a transportation industry worker.’” Maj. Op. at 14 (quoting 398 F.3d at
14
1 1288). But the majority omits the court’s reasoning. It was not because Hill worked
2 for a “company that rents and delivers furniture” that he was deemed not to be a
3 transportation worker. Instead, the court focused on the nature of Hill’s work for
4 the company. Hill was not “within a class of workers within the transportation
5 industry” because, unlike the truckers here, he was an account manager who only
6 “incidentally transported goods interstate” as part of that job. Hill, 398 F.3d at 1289.
7 Even Hill thus recognized what Saxon instructs and the majority rejects: that the
8 FAA requires us to characterize the work of the employed, not the employer.
9 In any event, the majority’s analysis fails on its own terms. Even assuming
10 that “[t]he specification of workers in a transportation industry is a reliable principle
11 for construing the [residual] clause,” Maj. Op. at 13, the plaintiffs do work in a
12 transportation industry: trucking. A company may employ different classes of
13 workers, some in transportation and some outside it. I have little doubt that the
14 people who bake Wonder Bread are not transportation workers. See Signal-Stat
15 Corp. v. Loc. 475, United Elec. Radio & Mach. Workers of Am., 235 F.2d 298, 303 (2d
16 Cir. 1956), overruled on other grounds by Coca-Cola Bottling Co. of N.Y., Inc. v. Soft
17 Drink & Brewery Workers Union Loc. 812, 242 F.3d 52 (2d Cir. 2001) (factory workers
18 who manufactured automotive electrical equipment were not transportation
15
1 workers because they were “merely engaged in the manufacture of goods for
2 interstate commerce”). But the plaintiffs’ mission, reflected on the first page of
3 their Distributor Agreements, is to move goods. See App’x at 86 (stating that
4 plaintiffs will be operating a “distributorship business”). They are actively
5 engaged in the enterprise of interstate transportation in a way those bakers are not.
6 And to the extent that, in efficiently delivering the defendants’ baked goods, the
7 plaintiffs incidentally satisfy that “fundamental tenet of the bakery industry” of
8 “[m]aintaining a fresh market,” App’x at 95, they do so in the same way that all
9 truckers serve the industries of the companies whose products they deliver.
10 There are few classes of workers more paradigmatically “engaged in foreign
11 or interstate commerce” than those who operate commercial trucks to deliver
12 products. Abandoning this universally recognized principle, the majority departs
13 from the FAA’s text, the Supreme Court’s clear instructions, and decades of case
14 law nationwide.
15 III. Other Issues.
16 As in my dissent the first time around, I address two other brief points
17 before concluding. The first is the defendants’ argument, unavailing in my view,
18 that Connecticut law provides an alternative basis to compel arbitration regardless
16
1 of the FAA’s applicability. A few district courts in this Circuit have enforced
2 arbitration clauses under state law where the clauses “d[id] not plausibly suggest
3 that the parties intended for the clause[s] to be discarded in the event that the FAA
4 was found inapplicable.” Islam v. Lyft, Inc., 524 F. Supp. 3d 338, 359 (S.D.N.Y. 2021);
5 see also, e.g., Valdes v. Swift Transp. Co., Inc., 292 F. Supp. 2d 524, 528 (S.D.N.Y. 2003);
6 Burgos v. Ne. Logistics, Inc., No. 15-CV-6840 (CBA) (CLP), 2017 WL 10187756, at *4
7 (E.D.N.Y. Mar. 30, 2017). This case is different. The arbitration agreement states
8 that it “shall be governed by the FAA and Connecticut law to the extent
9 Connecticut law is not inconsistent with the FAA.” App’x at 199 (underlining in
10 original). But Connecticut law and the FAA are crucially inconsistent here: While
11 the FAA exempts transportation workers like the plaintiffs, Connecticut law
12 contains no analogous carve-out. See Conn. Gen. Stat. Ann. § 52-408. Given this
13 inconsistency, the arbitration agreement itself prohibits recourse to Connecticut
14 law should the FAA be held inapplicable.
15 My second brief point is in response to the concurrence’s view that, once a
16 court decides that arbitration is appropriate, “the FAA mandates a stay whether
17 or not a party requests one.” Concur. Op. at 4. To be clear, because I conclude that
18 arbitration should not have been compelled here, resolution of this issue is not
17
1 necessary to my analysis. I write only to correct what I see as the concurrence’s
2 misreading of Section 3 of the FAA. That provision states that a district court,
3 “upon being satisfied that [an issue] is referable to arbitration . . . shall on
4 application of one of the parties stay the trial of the action until such arbitration
5 has been had in accordance with the terms of the agreement, providing the
6 applicant for the stay is not in default in proceeding with such arbitration.”
7 9 U.S.C. § 3. Section 3’s use of the mandatory “shall,” we have held, means that
8 where a party specifically applies for a stay pending the outcome of arbitration,
9 the district court lacks discretion to dismiss the case instead. Katz v. Cellco P’ship,
10 794 F.3d 341, 346 (2d Cir. 2015).
11 It does not follow, however, that where a party does not request a stay—or
12 where, as here, a party expressly seeks dismissal—a district court is still required
13 to issue a stay. Section 3 is triggered “on application of one of the parties [to] stay
14 the trial” and where, among other things, the “applicant for the stay is not in
15 default.” 9 U.S.C. § 3. This reference to the “applicant for the stay” thus squarely
16 contradicts the concurrence’s assertion that “[t]he text does not contemplate (let
17 alone require) a separate application to stay proceedings in the district court.”
18 Concur. Op. at 5. Accordingly, where a party does not request a stay, there is no
18
1 “application [to] stay the trial,” and a district court retains the authority to dismiss
2 the action. See Katz, 794 F.3d at 346 (explaining that, absent a statutory mandate to
3 stay proceedings, district courts “enjoy an inherent authority to manage their
4 dockets”); Nicosia v. Amazon.com, Inc., 384 F. Supp. 3d 254, 277 (E.D.N.Y. 2019)
5 (“Although Section 3 of the FAA only speaks of staying proceedings, it is well-
6 settled than an arbitrable dispute may be dismissed in lieu of a stay if the
7 defendant requests dismissal.”); Zambrano v. Strategic Delivery Sols., LLC, No. 15-
8 CV-08410, 2016 WL 5339552, at *10 (S.D.N.Y. Sept. 22, 2016) (“[B]ecause
9 Defendants seek dismissal rather than a stay . . . this Court has discretion whether
10 to stay or dismiss Plaintiffs’ action under the FAA.”); Benzemann v. Citibank N.A.,
11 622 F. App’x 16, 18 (2d Cir. 2015) (summary order) (endorsing this view).
12 Conclusion
13 The plaintiffs’ daily work transporting goods in the stream of interstate
14 commerce places them in the transportation worker exemption’s heartland. They
15 belong to a “class of workers engaged in foreign or interstate commerce,”
16 9 U.S.C. § 1; the FAA does not apply to their Distributor Agreements; and, for the
17 second time, I respectfully dissent. Now it rests with our Court as a whole, or the
18 Supreme Court, to correct the majority’s mistakes.
19
Bissonnette v. LePage Bakeries
Combined Opinion