Tenth Circuit Reaffirms National Policy Favoring Arbitration Where Appropriate
The Tenth Circuit recently upheld the transportation employee exemption within the Federal Arbitration Act as it applied to independent contractors delivering goods for the employer. Brock v. Flowers Foods, 121 F.4th 753 (10th Cir. 2024). This case also highlighted the federal policy favoring arbitration where a valid arbitration clause exists within a contract.
Angelo Brock, an independent contractor and delivery driver for Flowers Foods, sued his employer for alleged violations of the Fair Labor Standards Act, including failure to pay overtime where warranted. Flowers sought to enforce arbitration pursuant to the arbitration clause in the distribution agreement between the parties.
The Federal Arbitration Act (“FAA”) governs these arbitration agreements and promotes a liberal, federal policy which favors this form of dispute resolution in which the parties agree to have specified issues determined by an arbitrator instead of a court. 9 U.S.C. § 1 et seq. While arbitration cannot be favored over litigation, the FAA requires courts to give equal emphasis to valid arbitration agreements as they do to other provisions of a contract.
However, there are some exceptions to the FAA’s insistence on arbitration. Section 1 of the FAA exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. In effect, § 1 shields employees engaged in interstate commerce via transporting goods exempt from compelled arbitration under the FAA. The U.S. Supreme Court, and here the Tenth Circuit reaffirms, has interpreted § 1 to cover employees who play a direct and necessary role in the free flow of goods across borders. See Bissonnette v. LePage Bakeries Park St., LLC, 601 U.S. 246, 256 (2024).
Where this “transportation employee” exemption does not apply, however, the FAA compels state and federal courts to require the parties to engage in arbitration over courtroom litigation where there is a valid arbitration clause within the agreement and that the arbitration agreement covers the issue at hand.
The Tenth Circuit found Brock was engaged in interstate transportation when he delivered Flowers’ baked goods to grocery stores and other commercial outlets in his delivery area. Though an independent contract delivery driver, Brock was classified as a “last mile delivery driver” and distinguished from rideshare and food-delivery driver cases which would not fall into the FAA exemption from compelled arbitration.
Where a contract contains an arbitration clause – whether it’s a contract for goods, services, or for employment – it is important to understand the nature of the work done by both parties to ensure the FAA will apply to compel arbitration or to understand why the FAA will not apply and courtroom litigation is appropriate.
Read the full opinion here: https://cases.justia.com/federal/appellate-courts/ca10/23-1182/23-1182-2024-11-12.pdf?ts=1731427258