Supreme Court Hands Rare Win to Airline Cargo Handlers Over Forced Arbitration

On June 6, 2022, the U.S. Supreme Court unanimously held in Southwest Airlines Co. v. Saxon that the Federal Arbitration Act (FAA) does not apply to airline cargo handlers because they belong to a “class of workers engaged in foreign or interstate commerce” and are therefore exempt from coverage under Section 1 of the Act. This case represents a major win for a class of workers who were resisting forced arbitration over claims their employer failed to pay proper overtime under the Fair Labor Standards Act.

Southwest Airlines tried to force arbitration of wage claims on an individual, not class, basis. The district court below ordered the case to arbitration, but the Seventh Circuit Court of Appeals reversed, holding that “[t]he act of loading cargo onto a vehicle to be transported interstate is itself commerce, as that term was understood at the time of the [FAA’s] enactment in 1925.” Southwest sought Supreme Court review.

The worker argued that because the air transportation industry engages in interstate commerce, airline employees, as a whole, constitute a “class of workers” covered by the exemption. By contrast, Southwest argued that the relevant class includes only those airline employees actually engaged day-to-day in interstate commerce.

Writing for a unanimous Court, Justice Thomas wrote that the plaintiff-worker belongs to a “class of workers engaged in foreign or interstate commerce” to which Section 1’s exemption applies. The Court rejected the worker’s industrywide approach. By referring to “workers” rather than “employees,” the FAA directs attention to “the performance of work.” And the word “engaged” similarly emphasizes the actual work that class members typically carry out. The worker was therefore a member of a “class of workers” based on what she frequently does at the airline—that is, physically loading and unloading cargo on and off airplanes—and not on what the airline does generally.

The Court explained that “transportation workers” must at least play a direct and “necessary role in the free flow of goods” across borders. Cargo loaders exhibit this central feature of a transportation worker. The Court also noted that Section 1 of the FAA defines exempted “maritime transactions” to include “agreements relating to wharfage . . . or any other matters in foreign commerce.” Thus, if an “agreemen[t] relating to wharfage”—i.e., money paid to access a cargoloading facility—is a “matte[r] in foreign commerce,” it stands to reason that an individual who actually loads cargo on vehicles traveling across borders is actually engaged in such commerce.

The Saxon decision stands for the proposition that the Federal Arbitration Act has its limits and does not apply to certain workers who are engaged in interstate commerce, such as transporting goods across borders.

For more information on forced arbitration in the employment context (which is distinct from arbitration following a grievance procedure in a collective bargaining agreement) and how it can affect workers’ employment claims, contact your labor and employment law counsel.

By Sean W. McDonald | July 5, 2022

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