The GigReporter

The United States Supreme Court is currently considering a case that will further define the transportation worker exemption under the Federal Arbitration Act (“FAA”) by helping to define who is a “transportation worker.”  The FAA requires enforcement of arbitration agreements but contains an exemption for the “contracts of employment” of “transportation workers.” Regardless of how the Court rules, logistics brokers will continue to find it difficult to avoid the FAA exemption because of the factual differences with this case.

Bissonette v. Lepage Bakeries Park St., LLC is about the arbitrability of a dispute between bakeries and distributors; the distributors do not only transport baked goods between the bakeries and restaurants, but they are also responsible for buying and selling them. The trial court and the Second Circuit Court of Appeals found the distributors were not “transportation workers” under the FAA exemption.  According to the Court, they were in the business of buying and selling baked goods, even if much of their time was spent moving those goods by truck.

It is clear the case presents a situation factually different from most final-mile delivery businesses. However, an important lesson from all these FAA exemption cases is that brokers would do better to rely on arbitration agreements that are part of a TPA’s agreement than those that come from direct agreements the logistics broker has with individual independent contractors. These contracts are not “contracts of employment”, and logistics brokers have been able to enforce their arbitration provisions through the third-party beneficiary doctrine. SCI has long included comprehensive mandatory arbitration provisions in its owner/operator agreements that have been used successfully in many jurisdictions to avoid class action litigation.  Call SCI today to see how we can help your business.