United States Supreme Court Rules Certain Airline Employees Exempt From Federal Arbitration Act

• Published date: 17 June 2022
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Contract of Employment, Employee Benefits & Compensation, Arbitration & Dispute Resolution, Trials & Appeals & Compensation
• Law Firm: Sheppard Mullin Richter & Hampton
• Author: Mr Myles Moran

On June 6, 2022, a unanimous United States Supreme Court issued another key decision interpreting the Federal Arbitration Act ("FAA") that will have a significant impact on certain employers going forward. In Southwest Airlines Co. v Saxon, the Court held that the airline's cargo ramp supervisors were exempt from the FAA as they were a "class of workers engaged in foreign or interstate commerce."

Background

The FAA exempts "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce" from coverage. 9 U.S.C. ' 1. The Supreme Court previously held that the phrase "any other class of workers engaged in foreign or interstate commerce" applies only to "transportation workers." Circuit City Stores v. Adams, 532 U.S. 105, 119 (2001).

Plaintiff Latrice Saxon worked as cargo ramp supervisor and brought a putative collective action against her employer for allegedly unpaid overtime wages. Saxon's employment contract contained a provision in which she agreed to arbitrate any wage disputes on an individual basis. When the airline sought to compel arbitration of her claim, Saxon contended that the agreement was unenforceable because she was exempt from FAA coverage as a "transportation worker." Specifically, Saxon alleged that cargo ramp supervisors frequently physically loaded and unloaded cargo on and off airplanes.

In reversing the district court, the U.S. Court of Appeals for the Seventh Circuit held that Saxon's purported job duties placed her and her fellow cargo ramp supervisors in the class of "transportation workers" exempt from the Act. In a similar case, the U.S. Court of Appeals for the Fifth Circuit reached the opposite conclusion. The Court granted certiorari to resolve this split of authorities. See e.g. Eastus v. ISS Facility Services, Inc., 960 F. 3d 207 (5th Cir. 2020).

Supreme Court Holding

In her briefing and oral argument before the Supreme Court, Saxon advocated for an industry-wide application of the "transportation worker" exemption that would cover all airline employees regardless of their job duties. The Supreme Court rejected this view stating that the key inquiry is to identify "the actual work that the members of the class, as a whole, typically carry out."

The employer argued for a narrower view that would only...