Dive Brief:
- The Supreme Court decided against Wonder Bread maker Flowers Foods regarding an arbitration case, backing lower courts that also sided with a truck driver seeking to resolve a contract dispute over allegedly insufficient wages.
- The high court rejected Flowers’ arguments, notably whether a truck driver engaged in an intrastate final-mile delivery was considered to be part of an interstate commerce clause under the Federal Arbitration Act. The justices unanimously found that the clause applied, thereby exempting such drivers from an arbitration agreement.
- “The Court held that a worker who transports goods on an intrastate leg of an interstate journey can qualify for the FAA exemption—even if that worker never crosses state lines,” Littler attorneys said regarding the case. “In doing so, the Court rejected a bright-line rule tied to geography and instead focused on participation in the overall movement of goods across state lines.”
Dive Insight:
Manufacturers seeking to move disputes like this from courtrooms to arbitration won’t get relief following this decision.
“The Federal Arbitration Act requires courts to enforce many private arbitration agreements. But not all,” Justice Neil Gorsuch said in the opinion.
The decision means the court found that “workers who transport goods on an intrastate leg of a larger interstate journey are covered by the Federal Arbitration Act's transportation worker exemption and cannot be forced into arbitration,” law firm Gupta Wessler said in a LinkedIn post. Attorney Jennifer Bennett of the firm argued on behalf of the truck driver, Angelo Brock, before the court.
Brock delivered food items in the Denver area from a Flowers Foods warehouse also in Colorado. He sued the company in 2022, alleging the company underpaid him and other distributors, the opinion noted.
The decision upheld a 10th U.S. Circuit Court of Appeals judgment but also delivered a blow to businesses that might try to confine a legal dispute to arbitration.
“The outcome will have significant implications for companies in the transportation and logistics sector that rely on arbitration agreements with their drivers and delivery contractors,” Husch Blackwell lawyers said in a pre-decision overview of the case.
