Southwest Airlines cargo worker challenges arbitration in Supreme Court

The U.S. Supreme Court will hear oral arguments on March 28 in a case involving Southwest Airlines over whether air cargo handlers are transportation workers who are not required to arbitrate employment disputes. .

The Federal Arbitration Act (FAA) generally requires enforcement of private agreements, but exempts mariners, railroad employees, or other workers engaged in foreign or interstate commerce from arbitration to limit disputes. work that impede the movement of goods essential to the economy. In 2001, the Supreme Court ruled that the exemption only applied to “transportation workers”.

The issue before the court in Southwest Airlines v. Saxon is this: when employees do not physically transport goods, are they engaged in commerce and exempt from arbitration?

In recent years, the Supreme Court has tended to side more often with the business community, especially with the rise of the conservative majority.

Conservative judges have always favored the application of arbitration and a conservative majority has previously argued that the FAA applies very broadly, while the exception for workers engaged in commerce remains very narrow, Emilia said. Janisch, labor and employment lawyer at Axley Brynelson.

Latrice Saxon is a Southwest Airlines (NYSE:LUV) ramp supervisor who manages and assists workers who load and unload cargo at Chicago’s Midway Airport. She sued the company for failing to pay overtime under the Fair Labor Standards Act. She also claimed that ramp handlers frequently fill the position of line workers handling freight. Unlike ramp agents, supervisors are not covered by a collective agreement and are instead required to arbitrate wage disputes, under their employment contract.

Saxon argued that the arbitration law did not apply to her trial because she was exempt.

The U.S. Court for the Northern District of Illinois sided with Southwest and dismissed the case, determining that a transportation worker must actually be transporting goods, not just handling them at one end of a network to be eligible. to the exemption.

Saxon appealed to the United States Court of Appeals for the 7th Circuit, which overturned the decision on the grounds that the act of loading cargo onto a conveyance to be transported interstate is itself commerce. He noted that sailors and railroad employees frequently help load and unload commercial goods for transportation in much the same way ramp supervisors do for airlines. The court determined that since Saxon and his fellow supervisors frequently loaded and unloaded, they were exempt from the arbitration law.

“For a class of worker to be exempt from the FAA, foreign or interstate commerce must be the very thing that the class of worker is engaged in and in fact does. It should not just be incidental to their work, but a central part of it. in an amicus brief providing information to the Supreme Court

A coalition of attorneys general from 18 states filed a brief this month asking the court to uphold the appeals court’s decision allowing ramp workers to seek legal remedies for employers’ unlawful conduct. They argue that the imposition of confidential arbitration agreements as a condition of employment for wage and hour, discrimination, and other disputes limits the ability of workers to enforce their rights. Failure to resolve transportation industry disputes in a transparent and public manner also makes it difficult for them to protect their economies and gather the information necessary to exercise their investigative and enforcement powers.

“The law is clear: Freight workers are an integral part of interstate commerce, and Congress never intended the FAA to apply to them,” California Attorney General Rob Bonta said in a press release. this month. “Transportation workers are entitled to a robust process for resolving disputes that may arise on the job. Public court procedures for workplace disputes protect workers’ rights, help states ensure uniform compliance with labor laws, and promote stability in the industry.

The conservative Washington Legal Foundation, on the side of Southwest Airlines, responded that Congress only excluded certain categories of workers because it expected them to get their own federal arbitration law and did not want not that the FAA is disrupting these separate methods of alternative dispute resolution.

Unless the Supreme Court intervenes, Airlines for America (A4A) said, the 7th Circuit’s ruling will create an uneven national landscape at odds with other courts that do not recognize the exemption for people who load and unload goods.

“The circuit disagreement is creating costly confusion nationwide, especially in the commercial aviation industry. Based largely on the geographic mishap, airlines and employees will be unable to predict whether their Arbitration agreements are binding under federal law. And when federal law gives way, that still leaves the issue of arbitrability under state law. The result is a dizzying patchwork of rules that compromise arbitration. efficiencies that arbitration agreements are meant to promote,” the A4A brief stated.

According to the 7th Circuit’s reasoning, Southwest and the A4A said that aircraft maintenance engineers, customer service representatives, facility maintenance workers, baggage handlers, cleaning crews aircraft and ground vehicle mechanics would be classified as transport workers who fall under the arbitration exemption.

E-commerce and logistics goliath Amazon, which operates its own cargo airline, submitted a friend brief on behalf of Southwest, arguing that the Supreme Court must offer a clear test that settles the exemption clause because it applies to a wide range of transport workers. . They include delivery contractors who cross state lines and ride-hailing drivers who use their personal vehicle to make local deliveries within a metropolitan area for out-of-state goods.

“For a class of worker to be exempt from the FAA, foreign or interstate commerce must be the very thing that the class of worker is engaged in and in fact does. It shouldn’t just be incidental to their job, but a central part of it,” Amazon said. And this transportation must be long distance. “Categories of workers who carry out local activities do not meet this test, and therefore the exemption does not apply to them.”

In their legal filing seeking dismissal, Saxon’s attorneys argue that the FAA never uses the term “transportation worker” and that the court has repeatedly found that running interstate commerce is interstate transportation. Southwest Airlines and its allies have misinterpreted the 7th Circuit Court’s decision by saying it applies only to the restricted class of workers who are “actively engaged in the business of transporting goods across interstate lines “, they said.

The airline’s argument that the decision splits with a 5th Circuit Court decision is flawed, they added, because the plaintiff in that case oversaw ticketing and gate agents, not a shipper. freight. Southwest’s petition shows that the real concern is “that it will face greater liability in court than it would in arbitration.” Corn [judicial review] does not exist, this court can therefore protect companies against liability for their own fault. It exists to resolve important and contested questions of law,” the Saxon team said.

Janisch said it’s possible the court will side with Saxon in a narrow ruling that leaves open the question of who else is exempt from arbitration law in the future.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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