Lawyers for Dallas-based Southwest Airlines go before the U.S. Supreme Court on Monday to assert that its baggage loaders and supervisors can be required to undergo arbitration when they file employment complaints.
That might seem trivial, but major companies such as Amazon, Uber and Lyft have weighed in with briefs supporting Southwest, fearful that if the airline loses, a range of transportation industries that impose arbitration on employees may succumb to court litigation instead. That would weaken the Federal Arbitration Act, they contend, which bolsters arbitration.
The outcome of the case, Southwest Airlines v. Saxon, “threatens to shrink considerably the FAA’s protections, a result that will harm both businesses and workers,” the U.S. Chamber of Commerce and the National Association of Manufacturers warned in an amicus brief supporting Southwest. Mayer Brown partner Andrew Pincus authored the brief.
At issue is a decades-long dispute over the meaning of a clause in the FAA that exempted “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”
Latrice Saxon, a ramp supervisor for Southwest at Chicago Midway International Airport, sued Southwest in federal court for failing to pay for overtime work that she and other supervisors are owed under the Fair Labor Standards Act. In her role as a ramp supervisor Saxon both loads cargo and supervises its loading.
But Southwest moved to dismiss the claim, asserting that an existing arbitration clause for its employees required that she arbitrate, not litigate.
Saxon countered that the FAA exemption clause meant that she could litigate, because she and colleagues were in fact a class of workers who were “engaged in foreign or interstate commerce.”
Gupta Wessler principal Jennifer Bennett, who represents Saxon and will argue on her behalf before the Supreme Court, urged the Court to consider how transportation has changed. “When the FAA was enacted, commerce took place by rail and by sea,” Wessler wrote. “Seamen and railroad employees played a ‘necessary role in the free flow’ of goods and passengers. Today, that same commerce takes place by air. And airline employees play the same ‘necessary role.’
“That is all that’s needed to resolve this case.”
No way, says Southwest, claiming that the FAA exemption does not protect Saxon and others because “neither the supervisors nor the baggage loaders actually transport anything, much less in foreign or interstate commerce.” Skadden, Arps, Slate, Meagher & Flom partner Shay Dvoretzky is counsel of record for Southwest and will argue on behalf of Southwest before the high court. No Texas lawyers are on Southwest’s Supreme Court briefs.
The U.S. Court of Appeals for the Seventh Circuit sided with Saxon, setting the stage for Southwest’s plea before the Supreme Court. The appeals panel ruled that “airplane cargo loaders, as a class, are engaged in that commerce, in much the way that seamen and railroad employees were, and Saxon and the ramp supervisors are members of that class. It therefore follows that they are transportation workers whose contracts of employment are exempted from the Arbitration Act.”
Southwest’s brief argues that if the Seventh Circuit ruling is upheld, it would “create a gaping hole in the FAA’s otherwise expansive coverage.”
Amazon’s amicus brief authored by Morgan, Lewis & Bockius partner Michael Kenneally, states that the exemption clause has already been abused: “There has been a boom in litigation over the FAA exemption during the past few years. Courts across the country have struggled to apply the exemption’s residual clause to a wide range of workers in the transportation industries.”
Uber also expressed concern that Uber drivers have resisted arbitration by citing the exemption. The rideshare company also urged the high court not to view “incidental crossing of interstate lines” as a way to invoke the exemption. Gibson, Dunn & Crutcher partner Theane Evangelis was counsel of record for Uber’s brief.
The American Association for Justice, which advocates for plaintiffs like Saxon, argued that Southwest’s “overly broad construction of the Federal Arbitration Act … undermines the right of American workers to pursue their statutory and common-law rights in a judicial forum.” Dallas lawyer Gerson Smoger of Smoger & Associates is counsel of record for the American Association for Justice.