ContractsProf Blog

Editor: Jeremy Telman
Oklahoma City University
School of Law

Monday, April 15, 2024

Nancy Kim, on SCOTUS, the Federal Arbitration Act, and Wonder Bread

Nancy-kimThe blog covered this case after oral argument.  Now that the case has been decided, Nancy Kim (left) reports on the outcome.

The U.S. Supreme Court weighed in on a matter today involving some yummy things* – baked goods, contracts and arbitration (okay maybe the last one not so much).  In Bissonnette v. LePage Bakeries Park Street, the petitioners were franchisees and distributors for Flowers Foods, a multi-billion-dollar producer and marketer of baked goods that I’ve never even heard of but that owns brands that I eat regularly, including my favorite, Dave’s Bread (which I just had for breakfast).  It also makes the suspiciously delicious Wonder Bread which is almost the exact opposite of Dave’s Bread.  Anyway, Bissonnette and Wojnarowski signed Distributor Agreements that gave them rights to certain territories to pick up these delicious “bread and buns” and distribute them to various outlets.  They spent at least forty hours delivering these delectable treats and engaged in other activities promoting these products.  The Distributor Agreements incorporated an Arbitration Agreement that required that “any claim, dispute, and/or controversy” be arbitrated under the Federal Arbitration Act.

In 2019, they sued claiming that Flowers had unlawfully deducted from their wages, failed to pay them overtime, and engaged in other types of ungenerous activities.  SCOTUS noted that the FAA provides that arbitration agreements are “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”  There is a notable exception:  “nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”  (9 USC §1)  Bissonnette and Wojnarowski argued that they fell into this exception.  The District Court dismissed the case and compelled arbitration, finding that Bissonnette and Wojnarowski were required to arbitrate because their jobs were “much broader in scope” and so they were not just transportation workers.  The Second Circuit affirmed but on the grounds that the FAA exemption was only for transportation workers, and they were “in the bakery industry.”

SCOTUS noted a split between the Second Circuit and the First Circuit and resolved the conflict by finding that the Second Circuit erred; there was no requirement that a transportation worker work for a company in the transportation industry in order to be exempt under §1 of the FAA. 

*With apologies to the gluten-free and the hungry.

https://lawprofessors.typepad.com/contractsprof_blog/2024/04/nancy-kim-on-scotus-the-federal-arbitration-act-and-wonder-bread.html

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