Intrastate delivery worker can be ruled interstate in dispute: SCOTUS

Brock’s franchised area was in the Denver area. He did not need to cross state lines to either pick up or deliver baked products.  

Arbitrate or litigate?

A 2022 suit by Brock against Flowers Foods over pay issues ultimately led to the Supreme Court taking up a question: can an intrastate worker that is part of an interstate supply chain still be considered interstate for the purposes of being able to sue over a dispute under an exception in the Federal Arbitration Act? Or are they intrastate and must take that dispute to arbitration? (Brock had signed an agreement to arbitrate as part of his franchise contract with Flowers Foods).

Brock’s argument that he was interstate despite his activities being entirely within Colorado was upheld both at the district court level and by the Tenth Circuit.

Without dissent, the Supreme Court said the fact that Brock’s company never sent workers across state lines did not negate his role as the final piece of an interstate process.

“The Federal Arbitration Act requires courts to enforce many private arbitration agreements,” Justice Gorsuch wrote in the opening paragraph of his opinion. “But not all.”

Employers prefer arbitration for several reasons. One of the largest: a grievance brought by an individual employee can not grow into a potentially expensive class action lawsuit. 

Justice Gorsuch cited the opening section of the FAA that says the act can not be used to compel arbitration in disputes that involve the “contracts of employment” of workers “engaged in interstate commerce.”

“This case is the latest in a line posing questions about the scope of that exemption,” Gorsuch wrote.

“Flowers’ sole theory is that, to be engaged in interstate commerce for purposes of (the FAA), a worker must either cross state lines or interact with a vehicle that does, say, by loading or unloading the goods it carries,” Justice Gorsuch wrote. 

He added that the first question–whether a fully intrastate worker can be considered interstate–already had been decided in a precedent, Southwest Airlines vs. Saxon. “Nor, we now add, does (the FAA) turn on a game of tag with vehicles that do,” Justice Gorsuch wrote. 

“At least sometimes, a worker who transports goods on an intrastate leg of an interstate journey can qualify for (the FAA’s interstate) exemption without satisfying either of those criteria.”

Southwest vs. Saxon shows that the interstate vs. intrastate question is not limited to delivery of goods. In that case, the issue was over a tarmac worker for the airline. 

So what if this happened…

Justice Gorsuch laid out a hypothetical situation. Customer A makes a deal to buy Butterscotch Krimpets from Company B in State B. 

“Company B makes the Krimpets in state B, but the contract requires Company B to deliver them to Customer A’s headquarters in state A. So Company B hires a driver to take the Krimpets from the bakery in state B to the headquarters in State A. All agree that the driver in a case like that is engaged in interstate commerce.”

But Justice Gorsuch then took another twist on the supply chain. What if there were three drivers? And the added one gets the Krimpets from the first driver, goes 10 feet across the state border, “puts the Krimpets down and heads off.” The third driver then takes the snacks and brings them to the headquarters of company A.

“Who was engaged in interstate commerce?” Justice Gorsuch asks. “On Flowers’s account, only Driver 2 would be—neither Driver 1 nor Driver 3 crossed state lines or touched a vehicle that had. But that cannot be right. Each of the drivers played a direct, active, and necessary part in ensuring the Krimpets got from a point in State B (the bakery) to a point in State A (the headquarters) as the contract required.”

Justice Gorsuch, citing a precedent that goes back more than 150 years, said his example “is hardly a hypothetical at all.” In that precedent, known as Daniel Ball, waterborne ships did something like the justice’s example. And all the players in the supply chain were considered to be engaged in interstate commerce under the court’s decision.

Flowers Foods is 0-2 in recent years

It was the second time in the last three Supreme Court terms that Flowers Foods lost before the Supreme Court in a decision involving how a worker is classified under the FAA. Both times, the  defeat was unanimous. 

In 2024, Flowers Foods argued that its transportation workers were involved in baking rather than transportation. Given that the interstate exemption in FAA involves “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce,” a finding that the workers were part of the baking sector rather than transportation would have required their disputes to go to arbitration. 

But that argument went down to the same 9-0 defeat that the company encountered in its case against Angelo Brock.

Reaction among attorneys

Attorneys who represent transportation clients were quick to check in with their reaction. 

Christopher Ward, an attorney with Foley & Lardner, said he saw the Brock decision as widening the exemption in the FAA.

“For years, the Supreme Court has said the transportation exemption is narrow, but in recent  transportation worker cases, it has taken a less narrow view,” Ward said in an email to FreightWaves. He cited the Saxon case as an example.

As a result of these precedents, Ward said “lower courts are using these opinions to substantially expand the exemption even beyond what the Supreme Court may have suggested.  But here, while keeping its analysis narrowly confined to the specific factual pattern and question presented, the Court gave no guidance to how the transportation worker exemption applies to classes of workers who never themselves transport anything, and are more loosely connected to the process of transport (such as mechanics, station attendants, etc.).”

Jennifer Bennett of the law firm of Gupta Wessler successfully argued Brock’s case before the Supreme Court. Her firm took a victory lap in releasing a statement. 

“Last-mile delivery drivers, like Amazon drivers and UPS workers, are essential to the nation’s economy – without them, packages wouldn’t be delivered, and bread wouldn’t make it to grocery store shelves,” Bennett said. “Today’s opinion decisively rejects the latest attempt by companies like Flowers to force these drivers into arbitration.”

The trucking-focused Scopelitis law firm also suggested the issue is not totally settled.

“The Court acknowledged a difference in opinion in the lower courts on whether contracting with a business entity qualifies as a “contract of employment” even when the business is engaged in interstate commerce, another element of the transportation worker exemption,” the firm said in an email blast. “The Court’s opinion leaves open that question, which may present the next opportunity for the Court to further refine the scope of the exemption.”

Joe Diedrich, an appellate litigation partner at the law firm of Husch Blackwell, noted the Supreme Court ruling might not be the final word.

“Many states have similar arbitration acts, often without the FAA’s transportation-worker exemption,” Diedrich said in an email to FreightWaves. “It remains to be seen whether employers will be able to turn to state law to enforce arbitration clauses.”

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