Southwest Airlines asks Supreme Court to block its workers from suing

(Reuters) - Justices on the U.S. Supreme Court seemed to struggle on Monday to pin down the outer limits of a federal law exempting certain transportation workers from having to arbitrate legal disputes with their employers, in a case involving supervisors of Southwest Airlines Co's baggage handlers.

The court heard oral arguments in Southwest's bid to reverse a lower court ruling that said supervisors suing the airline for overtime pay were "engaged in interstate commerce" and thus exempt from the Federal Arbitration Act because their work was critical to loading plane cargo.

The FAA generally requires the enforcement of agreements employee sign to bring disputes in arbitration rather than court but exempts “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce."

The scope of the exemption is a critical issue for businesses, because it determines who can pursue class-action claims in court that can lead to high-dollar judgments and settlements.

Justices from across the court's ideological spectrum sounded skeptical on Monday of Southwest's claim that the exemption only applied to workers directly involved in operating planes, trains or ships.

“Why wouldn't we naturally understand someone who is loading and unloading cargo from interstate commerce to be involved in interstate commerce?" Justice Neil Gorsuch asked Southwest’s lawyer, Shay Dvoretzky of Skadden, Arps, Slate, Meagher & Flom.

"That would be a sweeping interpretation" of the exemption, Dvoretzky responded.

"You can call it sweeping, you can call it narrow, [but] why wouldn't that be a proper reading?" Gorsuch said.

Reuters listened to a livestream of the arguments.

At the same time, the justices also expressed concerns about applying the exemption too broadly and sweeping in categories of workers with tenuous connections to interstate commerce, such as those who maintain Southwest's website or drivers who make local package deliveries.

“I'm not sure I can get my head around how [the exemption] covers the last mile from the dock or the railyard to the consumer," Gorsuch said to the plaintiffs' lawyer, Jennifer Bennett of Gupta Wessler.

Bennett said the exemption should be applied to any employee whose job duties contribute directly to the transportation of goods or people across state lines.

She told the court that thorny questions about the precise scope of the exemption could be left for another case, because the Southwest supervisors clearly qualified. The workers were responsible for overseeing the loading and unloading of cargo from passenger planes.

The 7th U.S. Circuit Court of Appeals when it ruled against Southwest last year created a split with the 5th Circuit, which had previously said that Lufthansa baggage supervisors were too far removed from interstate commerce to qualify for the FAA exemption.

Those decisions are part of a broader conflict among federal appeals courts over the scope of the carveout. The Supreme Court has turned away two appeals by Amazon.com Inc of decisions that said the company's "last mile" delivery drivers qualified for the FAA exemption even though they only made local deliveries.

The case is Southwest Airlines Co v. Saxon, U.S. Supreme Court, No. 21-309.

For Southwest: Shay Dvoretzky of Skadden, Arps, Slate, Meagher & Flom; and Melissa Siebert of Shook, Hardy & Bacon

For Saxon: Jennifer Bennett of Gupta Wessler

Read more:

SCOTUS to decide if Southwest baggage handlers exempt from arbitration

Southwest Airlines cargo supervisors exempt from arbitrating wage claims - 7th Circuit

Administrative law and arbitration to take center stage at Supreme Court

Amazon again loses bid for SCOTUS review on FAA exemption

Our Standards: The Thomson Reuters Trust Principles.