Guest Post: Gelernter on the FAA "transportation workers" Exclusion

Dispatch from Lise Gelernter (Buffalo):

The issue of the FAA § 1 exemption for “transportation workers” has led to court decisions that I think take an over-narrow view of the exemption. FAA § 1 says that the FAA does not apply to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” And in Circuit City, the Supreme Court said that the group of “any other class of workers engaged in foreign or interstate commerce,” was confined to “transportation workers.” 532 U.S. 105, 119 (2001). The Court did not provide its own definition of what it considered “transportation workers,” but it did cite to and quote the D.C. Circuit’s opinion in Cole v. Burns International Security Services, 105 F.3d 1465 (D.C. Cir. 1997), which stated that transportation workers were workers who were “actually engaged in the movement of goods in interstate commerce.” 105 F.3d at 1471. The Cole case involved a security guard at a railroad station, Union Station in Washington, D.C. One issue in that case was whether the guard’s arbitration agreement was exempt from the FAA; the court held that the guard was not a “transportation worker” and therefore not exempt. It should be noted that Cole, the guard, did not work for the railroad, but for the security service hired by the station.

This has led many courts to find that for “transportation workers” to be exempt from the FAA, they must be involved in the “movement of goods” across state lines. The case of Kowalewski v. Samadarov has a good discussion of the debate over who is a “transportation worker.” 590 F.Supp.2d 477 (S.D.N.Y. 2008) (finding that car service drivers transporting passengers across state lines were not “transportation workers” exempt from the FAA). As Rick Bales has pointed out, this begs the question of what happens when an Uber driver transports a salesperson from New York to New Jersey carrying samples of her products. Moreover, why should Uber drivers be treated any differently than railroad engineers and airline pilots who carry passengers in interstate commerce? All airline and railroad workers should be exempt under FAA § 1 if the reference to “railroad employees” includes anybody covered by the Railway Labor Act (RLA), 45 U.S.C. §§ 151-187 (airline employees became subject to the RLA by virtue of an amendment adding §§ 181-187). The RLA provides that it applies to: “every common carrier by air engaged in interstate or foreign commerce, and every carrier by air transporting mail for or under contract with the United States Government, and every air pilot or other person who performs any work as an employee [for the carrier].” The RLA also goes beyond pilots – there are any number of RLA cases involving flight attendants, mechanics and other airline employees.

Justice Kennedy appeared to endorse the concept of FAA exemption for all employees covered by the RLA in Circuit City when he stated:

When the FAA was adopted, moreover, grievance procedures existed for railroad employees under federal law, see Transportation Act of 1920, §§ 300–316, 41 Stat. 456, and the passage of a more comprehensive statute providing for the mediation and arbitration of railroad labor disputes was imminent, see Railway Labor Act of 1926, 44 Stat. 577, 46 U.S.C. § 651 (repealed). It is reasonable to assume that Congress excluded “seamen” and “railroad employees” from the FAA for the simple reason that it did not wish to unsettle established or developing statutory dispute resolution schemes covering specific workers.

532 U.S. at 121. In TWA v. Sinicropi, the District Court stated flat out: “Contracts of airline employees, however, are exempted from the Federal Arbitration Act.” 887 F.Supp. 595, n. 13 (S.D.N.Y. 1995), aff’d on other grounds, 84 F.3d 116 (2d Cir. 1996), cert. denied, 519 U.S. 149 (1996).

It seems clear to me that the Appellate Division, First Department of the New York Supreme Court got it all wrong when it held that Jet Blue pilots were not exempt from the FAA because they were not “transportation workers” whose primary activity was moving goods across state lines. JetBlue Airways Corp. v. Stephenson, 88 A.D.3d 567 (N.Y. App. Div. 1st Dept. 2011). Instead, because they moved passengers, the court said, they could not claim the “transportation workers” exemption. This, of course, ignored the exemption for “railroad workers,” which I am pretty sure should mean everyone covered by the RLA.

I doubt that the Supreme Court would find that the FAA § 1 exemption is applicable only to airline or railroad employees who actually transport goods across state lines; I think they would have to find the exemption covers all RLA-covered employees (but of course, the Supreme Court has recently often done the unexpected). Therefore, if “transportation workers” are supposed to be people in the transportation industry who perform work similar to the airline and railroad employees covered by the RLA, why should there be a “goods” requirement for them?

See also this article in the National Law Journal today FAA exemption and Uber drivers.

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