WASHINGTON—The Supreme Court on Monday ruled unanimously that airline baggage handlers can’t be compelled to resolve employment disputes through individual private arbitration, bucking a trend of recent decisions making it easier for employers to avoid class-action lawsuits brought by workers.
Writing for the court, Justice
Clarence Thomas
said baggage handlers expressly are exempted from the Federal Arbitration Act, a 1925 law that allows employers to make it a condition of employment that workers agree to mandatory arbitration of workplace disputes.
Monday’s case involved
Southwest Airlines Co.
, which argued a ramp supervisor at Chicago’s Midway International Airport, Latrice Saxon, couldn’t file a class-action lawsuit alleging unpaid overtime but instead must submit her claim to private individual arbitration.
The arbitration act generally makes it impossible to escape contract clauses requiring private arbitration to resolve employment disputes, but has an exemption for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Justice Thomas wrote that ramp supervisors, like the ramp agents they oversee, frequently load and unload cargo and therefore qualify for the exemption.
The scope of the carve-out, known as the “transportation workers exemption,” has been frequently litigated in recent years. It is an important issue for many businesses because it determines their exposure to class-action lawsuits for employer misconduct, which if settled or successful can result in significant damages. Employers frequently prefer to require employees to bring claims individually through private arbitration.
Commerce has changed in significant ways since 1925, and the case has been watched closely for its implications for other types of workers, such as drivers hired by
Amazon.com Inc.
or
Uber Technologies Inc.
But Monday’s opinion adhered closely to the facts of the Southwest case.
“It’s a very narrow decision on a narrow issue in the world of arbitration,” said Adam Zimmerman, a professor at Loyola Law School in Los Angeles.
Because the court stuck closely to the facts of the case, its decision doesn’t have clear ramifications for “gig economy” workers or Amazon delivery drivers, Mr. Zimmerman said. “It looks like it’s left those questions for another day,” he said.
Sarah Rudolph Cole, a professor at Ohio State University’s Moritz College of Law, said the court’s analysis suggests the justices wouldn’t exempt Uber and Lyft drivers from arbitration if that question were to eventually come before the Supreme Court.
“It’s been a very long time that Southwest has been fighting to keep these claims out of court,” said Ms. Saxon’s lawyer, Jennifer Bennett of the law firm Gupta Wessler. “We’re excited that she is going to actually get her day in court now.”
Southwest Airlines didn’t immediately respond to a request for comment.
Federal appellate courts had divided over the status of baggage handlers under the arbitration act, and Monday’s decision sets a nationwide rule in favor of such workers. But Justice Thomas’s opinion rejected Ms. Saxon’s argument that nearly all airline employees are exempted from mandatory arbitration simply because airlines themselves carry cargo in interstate commerce.
The 1925 law “speaks of ‘workers,’ not ‘employees’ or ‘servants,’” who are “engaged” in interstate commerce, Justice Thomas wrote. That indicates the exception depends on “the actual work that the members of the class, as a whole, typically carry out,” he wrote. Ramp supervisors such as Ms. Saxon are exempted from the arbitration clause because “based on what [they do] at Southwest, not what Southwest does generally,” he wrote.
“Any class of workers directly involved in transporting goods across state or international borders falls within” the exception, the court said. “Airplane cargo loaders are such a class.”
The Supreme Court for decades has aggressively enforced the arbitration act against employees and consumers who sought to bring claims and class-action suits in civil court. But in recent months, both Congress and the high court have found instances in which traditional public litigation is called for. In March, President
Biden
signed bipartisan legislation exempting employees’ sexual-assault and sexual-harrassment claims from arbitration clauses in employment contracts.
Last month, in another case alleging wage theft, the Supreme Court unanimously sided with an employee arguing that the defendant employer wasn’t entitled to a special procedural rule that could require arbitration.
Monday’s opinion was 8-0. Justice
Amy Coney Barrett,
who previously sat on the appeals court that heard the Saxon case in Chicago, recused herself from the Supreme Court appeal.
When Ms. Saxon sued Southwest claiming it had failed to pay overtime to her and other workers, Southwest moved to dismiss the case and steer Ms. Saxon’s claim into arbitration.
A federal appeals court in Chicago found that Ms. Saxon’s job engaged her in interstate commerce even though she stays at the airport and doesn’t personally cross state lines as luggage moves along.
The airline appealed to the Supreme Court, which heard oral arguments in March and sought to figure out whether Ms. Saxon’s job was analogous to the transportation workers Congress exempted in 1925.
The high court has yet to decide another 30 cases argued this term, including potential watershed changes in abortion rights, weapons access and religious activity at public schools. Typically, the court delivers before July all its decisions for an annual term.
Uber and another ride-hailing platform,
Lyft Inc.,
submitted briefs urging the justices not to interfere with lower-court rulings that allowed the companies to arbitrate disputes with drivers, saying they aren’t transportation workers engaged in interstate commerce.
Amazon had also submitted a friend-of-the-court brief, urging the high court to adopt a “clear and workable” test to determine what types of delivery workers are covered by the exemption.
Write to Jess Bravin at jess.bravin+1@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
WASHINGTON—The Supreme Court on Monday ruled unanimously that airline baggage handlers can’t be compelled to resolve employment disputes through individual private arbitration, bucking a trend of recent decisions making it easier for employers to avoid class-action lawsuits brought by workers.
Writing for the court, Justice
Clarence Thomas
said baggage handlers expressly are exempted from the Federal Arbitration Act, a 1925 law that allows employers to make it a condition of employment that workers agree to mandatory arbitration of workplace disputes.
Monday’s case involved
Southwest Airlines Co.
, which argued a ramp supervisor at Chicago’s Midway International Airport, Latrice Saxon, couldn’t file a class-action lawsuit alleging unpaid overtime but instead must submit her claim to private individual arbitration.
The arbitration act generally makes it impossible to escape contract clauses requiring private arbitration to resolve employment disputes, but has an exemption for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Justice Thomas wrote that ramp supervisors, like the ramp agents they oversee, frequently load and unload cargo and therefore qualify for the exemption.
The scope of the carve-out, known as the “transportation workers exemption,” has been frequently litigated in recent years. It is an important issue for many businesses because it determines their exposure to class-action lawsuits for employer misconduct, which if settled or successful can result in significant damages. Employers frequently prefer to require employees to bring claims individually through private arbitration.
Commerce has changed in significant ways since 1925, and the case has been watched closely for its implications for other types of workers, such as drivers hired by
Amazon.com Inc.
or
Uber Technologies Inc.
But Monday’s opinion adhered closely to the facts of the Southwest case.
“It’s a very narrow decision on a narrow issue in the world of arbitration,” said Adam Zimmerman, a professor at Loyola Law School in Los Angeles.
Because the court stuck closely to the facts of the case, its decision doesn’t have clear ramifications for “gig economy” workers or Amazon delivery drivers, Mr. Zimmerman said. “It looks like it’s left those questions for another day,” he said.
Sarah Rudolph Cole, a professor at Ohio State University’s Moritz College of Law, said the court’s analysis suggests the justices wouldn’t exempt Uber and Lyft drivers from arbitration if that question were to eventually come before the Supreme Court.
“It’s been a very long time that Southwest has been fighting to keep these claims out of court,” said Ms. Saxon’s lawyer, Jennifer Bennett of the law firm Gupta Wessler. “We’re excited that she is going to actually get her day in court now.”
Southwest Airlines didn’t immediately respond to a request for comment.
Federal appellate courts had divided over the status of baggage handlers under the arbitration act, and Monday’s decision sets a nationwide rule in favor of such workers. But Justice Thomas’s opinion rejected Ms. Saxon’s argument that nearly all airline employees are exempted from mandatory arbitration simply because airlines themselves carry cargo in interstate commerce.
The 1925 law “speaks of ‘workers,’ not ‘employees’ or ‘servants,’” who are “engaged” in interstate commerce, Justice Thomas wrote. That indicates the exception depends on “the actual work that the members of the class, as a whole, typically carry out,” he wrote. Ramp supervisors such as Ms. Saxon are exempted from the arbitration clause because “based on what [they do] at Southwest, not what Southwest does generally,” he wrote.
“Any class of workers directly involved in transporting goods across state or international borders falls within” the exception, the court said. “Airplane cargo loaders are such a class.”
The Supreme Court for decades has aggressively enforced the arbitration act against employees and consumers who sought to bring claims and class-action suits in civil court. But in recent months, both Congress and the high court have found instances in which traditional public litigation is called for. In March, President
Biden
signed bipartisan legislation exempting employees’ sexual-assault and sexual-harrassment claims from arbitration clauses in employment contracts.
Last month, in another case alleging wage theft, the Supreme Court unanimously sided with an employee arguing that the defendant employer wasn’t entitled to a special procedural rule that could require arbitration.
Monday’s opinion was 8-0. Justice
Amy Coney Barrett,
who previously sat on the appeals court that heard the Saxon case in Chicago, recused herself from the Supreme Court appeal.
When Ms. Saxon sued Southwest claiming it had failed to pay overtime to her and other workers, Southwest moved to dismiss the case and steer Ms. Saxon’s claim into arbitration.
A federal appeals court in Chicago found that Ms. Saxon’s job engaged her in interstate commerce even though she stays at the airport and doesn’t personally cross state lines as luggage moves along.
The airline appealed to the Supreme Court, which heard oral arguments in March and sought to figure out whether Ms. Saxon’s job was analogous to the transportation workers Congress exempted in 1925.
The high court has yet to decide another 30 cases argued this term, including potential watershed changes in abortion rights, weapons access and religious activity at public schools. Typically, the court delivers before July all its decisions for an annual term.
Uber and another ride-hailing platform,
Lyft Inc.,
submitted briefs urging the justices not to interfere with lower-court rulings that allowed the companies to arbitrate disputes with drivers, saying they aren’t transportation workers engaged in interstate commerce.
Amazon had also submitted a friend-of-the-court brief, urging the high court to adopt a “clear and workable” test to determine what types of delivery workers are covered by the exemption.
Write to Jess Bravin at jess.bravin+1@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8