SCOTUS to decide if Southwest baggage handlers exempt from arbitration

REUTERS/Kate Munsch
  • Court will decide if handling goods is enough to qualify for FAA exemption
  • 7th and 5th Circuits split over the question
  • Supreme Court has not address scope of exemption since 2001

(Reuters) - The U.S. Supreme Court has agreed to decide whether airline workers who supervise baggage handlers play a large enough role in interstate commerce to exempt them from having to arbitrate their employment-related claims and allow them to sue in court instead.

The court on Friday granted Southwest Airlines Co's petition for review of a March ruling by the 7th U.S. Circuit Court of Appeals that said workers involved in loading and unloading cargo that crosses state lines are "engaged in interstate commerce" and exempt from the Federal Arbitration Act.

The arbitration act generally requires courts to uphold agreements workers sign to arbitrate legal disputes but exempts seamen, railroad employees and other workers who play a key role in moving goods across the country.

Arbitration of workers' individual legal claims can be far cheaper for companies than defending against class actions in court, which can lead to multimillion-dollar judgments and settlements.

The 7th Circuit said the exemption applies to Southwest's "ramp supervisors" because they are integral to air travel, and revived a proposed class action seeking overtime pay.

The 5th Circuit had come to the opposite conclusion in a separate 2020 case involving Lufthansa workers with the same job.

Dallas-based Southwest and its lawyers at Shook, Hardy & Bacon did not immediately respond to requests for comment. Nor did Jennifer Bennett of Gupta Wessler, who represents the plaintiffs.

Several other appeals courts have addressed the scope of the FAA exemption over the last two years, including its application to Amazon.com Inc delivery workers and Uber Technologies Inc drivers.

But the Supreme Court has not taken up the issue since 2001, when it ruled in Circuit City Stores Inc v. Adams that the FAA exemption should apply narrowly to transportation workers who are directly involved in moving goods.

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

For Southwest: Melissa Siebert of Shook, Hardy & Bacon

For Saxon: Jennifer Bennett of Gupta Wessler

Read more:

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

Lufthansa supervisor not a 'transportation worker' exempt from arbitration - 5th Circuit

SCOTUS won't decide if 'last mile' Amazon drivers are exempt from arbitration

Interstate commerce arbitration exemption may apply to N.J. Uber drivers - 3rd Circuit

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Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at daniel.wiessner@thomsonreuters.com.