A Discussion of Recent Federal Arbitration Act Decisions

In this episode of S&C’s Critical Insights, Annie Ostrager and Diane McGimsey, Co-Heads of S&C’s Labor & Employment Group, discuss two recent decisions from the U.S. Court of Appeals for the Second and Ninth Circuits involving preemption and Section 1 of the Federal Arbitration Act. They analyze how those courts interpreted two recent U.S. Supreme Court decisions addressing the FAA’s scope in the employment context: Viking River Cruises v. Moriana and Southwest Airlines v. Saxon. In Bissonnette v. LePage Bakeries Park St., the plaintiffs, who delivered baked goods to stores and restaurants, claimed they were transportation workers, which would exempt them from Section 1 of the FAA. The Second Circuit held that because the plaintiffs charged for the baked goods, the transportation was incidental and the plaintiffs were in the baked goods industry and therefore not excluded from the FAA. After the Supreme Court issued its Saxon ruling a month later, the Second Circuit panel reconsidered Bissonnette, but adhered to its original ruling, which affirmed the district court order compelling arbitration. In Chamber of Commerce v. Bonta, a divided Ninth Circuit panel examined a California law, A.B. 51, that broadly prohibits employers from requiring mandatory arbitration agreements. Reversing a district court, the majority held that the A.B. 51’s restrictions are valid but could not be enforced if an unlawful agreement was entered into. After the Supreme Court issued its ruling in Viking River Cruises, the Ninth Circuit panel reheard the case and came to the opposite conclusion, upholding the district court’s injunction against A.B. 51. Annie and Diane said that in light of the Chamber of Commerce ruling, they expect California employers who had temporarily gotten rid of their arbitration agreements to be revising those policies. The Saxon and Bissonnette decisions left things less clear, but clients may wish to reexamine arbitration agreements to ensure employees’ work is characterized properly.