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Supreme Court rules airline cargo handlers exempt from arbitration

Ruling opens door for Southwest Airlines employee to pursue dispute over overtime pay

A Southwest Airlines ramp agent loads cargo onto a jet. (Photo: Southwest Airlines/Stephen Keller)

The U.S. Supreme Court on Monday unanimously ruled that a federal exemption against mandatory arbitration in wage-and-hour disputes for interstate transportation workers covers cargo loaders at Southwest Airlines, enabling a class action suit over overtime pay to proceed.

Justice Clarence Thomas’ opinion in Southwest Airlines Co. v. Saxon said cargo handlers are engaged in interstate and foreign commerce and subject to the Federal Arbitration Act (FAA), which exempts certain classes of transportation workers from being bound by private contracts to protect vital commerce from labor strife. Justice Amy Coney Barrett did not participate in the decision.

Latrice Saxon, a ramp supervisor for Southwest Airlines (NYSE: LUV) at Chicago Midway International Airport terminal, filed a class action over the company’s alleged failure to pay overtime. The supervisors frequently load and unload cargo alongside ramp agents and are eligible for overtime pay, the suit claims. Southwest sought to enforce an arbitration requirement in Saxon’s employment contract and dismiss the suit.

A district court agreed, saying that only those involved in the actual transportation of goods across borders are exempt from arbitration under federal law. But the Supreme Court sided with an appeals court decision that defined cargo loading as a critical component of interstate commerce. It said Saxon’s argument that all airline employees belong to the class of exempt workers was too broad, but that Southwest’s definition of the relevant class as those actually involved in the physical movement of goods was too narrow.


“Saxon is therefore a member of a ‘class of workers’ based on what she frequently does at Southwest — that is, physically loading and unloading cargo on and off airplanes — and not on what Southwest does generally,” Thomas wrote.

The 8-0 opinion stated that loading or unloading shipments is so intrinsic to interstate transportation that it is essentially part of the movement. Physically accompanying freight across state or international boundaries isn’t the sole criteria for determining whether the arbitration exemption applies, it said. 

“We think it equally plain that airline employees who physically load and unload cargo on and off planes traveling in interstate commerce are, as a practical matter, part of the interstate transportation of goods,” Thomas wrote.

Some court watchers had expected it to side with Southwest because conservative justices have typically favored enforcing arbitration and a conservative majority previously held that the Federal Arbitration Act applies very broadly. 


The ruling means that Saxon, and similarly situated workers in other modes of transportation, can bring claims for overtime pay in federal court rather than be forced into arbitration. Companies such as Amazon and Uber had sided with Southwest in briefs filed with the court. The ruling could encourage last-mile delivery drivers to claim they are engaged in interstate commerce and entitled to arbitration even if they don’t cross state lines.

Companies, however, can still pursue arbitration under state laws even if the federal law exempts a particular worker, according to a blog post by Scopelitis, Garvin, Light, Hanson & Feary, a transportation-focused law firm.

Employees who may be exempt from the FAA might still be required to arbitrate their claims under state arbitration statutes, many of which require enforcement of arbitration agreements without an exemption for transportation workers, Theane Evangelis, a partner at Gibson, Dunn & Crutcher LLP in Los Angeles, explained in a written overview of the ruling.

(This story was updated on June 7, 2022, at 4:32 P.M. ET)

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Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals and a Silver Medal from the American Society of Business Publication Editors for government and trade coverage, and news analysis. He was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. He won Environmental Journalist of the Year from the Seahorse Freight Association in 2014 and was the group's 2013 Supply Chain Journalist of the Year. In December 2022, he was voted runner up for Air Cargo Journalist by the Seahorse Freight Association. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. Eric is based in Portland, Oregon. He can be reached for comments and tips at [email protected]