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SCOTUS: Under the FAA, Interstate Commerce is Broader Than the Transportation of Good Across State Lines

Last month, in an 8-0 decision, the United States Supreme Court held that a ramp supervisor for Southwest Airlines belonged to a “class of workers engaged in foreign or interstate commerce.” Thus, the employee was exempt from coverage under the Federal Arbitration Act (FAA), which is a statute that governs the basic legal principles of arbitration in the United States, including arbitration agreements.

The Petitioner in this case, Latrice Saxon, is a ramp supervisor for Southwest Airlines (Southwest). Saxon’s position involves physically loading and unloading cargo on and off airplanes that travel across state lines. Saxon brought a putative class action against Southwest, alleging it violated the Fair Labor Standards Act (FLSA). However, because Saxon’s employment contract contained an arbitration agreement, Southwest moved to dismiss the class action suit, seeking to enforce the arbitration agreement under the FAA. In response, Saxon argued that ramp supervisors were a “class of workers engaged in foreign or interstate commerce” and, therefore, were exempt from coverage under § 1 of the FAA.  The District Court disagreed with Saxon, holding that only those workers involved in the “actual transportation” of goods – rather than the mere handling of goods – fell within the FAA’s § 1 exemption. On appeal, the Court of Appeals for the Seventh Circuit reversed the District Court’s decision, holding that the act of loading cargo onto a vehicle to be transported interstate is itself commerce, which was a ruling that conflicted with an earlier decision from the Fifth Circuit.

The Supreme Court affirmed the Seventh Circuit’s decision. The Court found that the physical loading and unloading of cargo on and off planes traveling interstate is, practically speaking, part of the interstate transportation of goods and within the ambit of the FAA’s § 1 exemption. Because loading cargo onto and unloading cargo from planes traveling interstate is part of Saxon’s day-to-day job responsibilities, the Court held that Saxon, as a ramp supervisor, is exempt under § 1 of the FAA, as she falls within a “class of workers engaged in foreign or interstate commerce.”

In its decision, the Court rejected Saxon’s argument that airline workers, generally, are exempt under § 1 of the FAA because of the nature of their work. The Court utilized a variety of canons of construction and context to analyze the FAA’s statutory text in its analysis. The Court also rejected Southwest’s argument that § 1 of the FAA included only workers that physically transported goods across state lines themselves, that loading and unloading cargo lacked a significant nexus to interstate commerce, and that including cargo loaders within § 1 is inconsistent with the FAA’s overarching goals.

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