49 F.4th 655
2d Cir.2022Background
- Plaintiffs are independent distributors who pick up Flowers Foods bakery products from Connecticut warehouses and deliver them by truck to stores/restaurants in assigned territories; they operate under Distributor Agreements that characterize them as independent contractors.
- Plaintiffs sued Flowers Foods in D. Conn., alleging unpaid/witheld wages, unpaid overtime, and unjust enrichment under the FLSA and Connecticut law; Flowers moved to compel arbitration under an arbitration clause invoking the FAA and Connecticut law.
- The Arbitration Agreement states arbitrability is generally for the arbitrator, but reserves to the court the applicability of the FAA and carve-outs (e.g., class-action prohibition).
- The district court concluded plaintiffs are not within §1’s exemption for “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” (i.e., not "transportation workers"), compelled arbitration, and dismissed the case.
- The Second Circuit affirmed, reasoning that plaintiffs work in the bakery industry (sales/distribution of baked goods), not the transportation industry, and therefore are not excluded from the FAA; the court declined to resolve the alternative argument about compelling arbitration under Connecticut law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1 transportation-worker exclusion to the FAA applies | Drivers are transportation workers integral to interstate distribution and thus §1 excludes their contracts from the FAA | Drivers are bakery distributors (not transportation-industry workers); §1 does not apply so FAA governs | Held: §1 does not apply; plaintiffs are not transportation workers (FAA governs) |
| How to determine "transportation industry" status | Focus on whether workers actively move goods in interstate commerce and whether movement is central to job | Industry-level test: whether the employer/industry pegs charges and revenue chiefly to movement of goods | Held: Court framed test by industry revenue/movement and concluded bakery industry predominates in sale of goods, so plaintiffs are not transportation-industry workers |
| If FAA excluded, can Connecticut arbitration law nonetheless compel arbitration | N/A (plaintiffs sought FAA exclusion) | Connecticut law could supply arbitration because it has no transportation-worker carve-out | Held: Court declined to adopt this alternate basis without remand/factual finding and instead resolved federal question; did not affirm on Connecticut-law ground |
| Whether district court must stay proceedings (9 U.S.C. §3) or may dismiss when compelling arbitration | Plaintiffs favored a stay (to preserve appeal/rights) | Flowers sought dismissal in lieu of a stay; district court dismissed | Held: Panel affirmed dismissal; concurring judge argued §3 compels (or prudently requires) a stay even if not requested; dissent addressed separate merits |
Key Cases Cited
- Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) (§1’s residual clause construed to cover "transportation workers")
- New Prime Inc. v. Oliveira, 139 S. Ct. 532 (2019) (§1 exclusion applies to independent contractors as well as employees)
- Lenz v. Yellow Transp., Inc., 431 F.3d 348 (8th Cir. 2005) (non‑exclusive multi‑factor test for §1 transportation-worker inquiry)
- Erving v. Virginia Squires Basketball Club, 468 F.2d 1064 (2d Cir. 1972) (§1 limited to workers involved in transportation industry)
- Maryland Cas. Co. v. Realty Advisory Bd. on Labor Relations, 107 F.3d 979 (2d Cir. 1997) (exclusion limited to transportation-industry workers)
- Eastus v. ISS Facility Servs., Inc., 960 F.3d 207 (5th Cir. 2020) (exemption covers those actually engaged in movement of goods in interstate commerce)
- Hamrick v. Partsfleet, LLC, 1 F.4th 1337 (11th Cir. 2021) (two-part class-based test: employed in transportation industry and primarily engaged in interstate commerce)
- Hill v. Rent-A-Ctr., Inc., 398 F.3d 1286 (11th Cir. 2005) (transportation exemption tied to class of workers in transportation industry; incidental transport duties insufficient)
- Katz v. Cellco P’ship, 794 F.3d 341 (2d Cir. 2015) (discussing whether dismissal vs. stay is required when compelling arbitration)
- Badgerow v. Walters, 142 S. Ct. 1310 (2022) (limits on "look-through" jurisdiction for confirmation/vacatur petitions; discussed by concurrence as relevant to stay/dismissal choice)