Latrice Saxon wanted her day in court, and Southwest Airlines wanted to make sure she never got it. Saxon is a “ramp supervisor” for the company, which requires her to load and unload cargo from its planes. Southwest allegedly required her to work much longer than the 40 hours a week for which she was compensated—but it never provided the overtime pay mandated by federal law. When she sued on behalf of herself and other alleged victims, the airline asked the court to toss out her case. It turns out Southwest imposes mandatory arbitration on non-union employees like Saxon, compelling them to make their case individually before a private (and often biased) arbitrator instead of a judge and jury. And so, the company argued, she forfeited her right to sue by agreeing to work there.
On Monday, the Supreme Court unanimously rejected Southwest’s argument, siding with the tens of thousands of people who handle baggage, airmail, and other cargo for U.S airlines. The decision marks the second time in two weeks that the court has shot down a corporation’s efforts to escape the courthouse by forcing an employee into arbitration. It does not augur a shift in SCOTUS’ pro-business bent, or even a reconsideration of its atrocious arbitration precedents. Rather, these two victories primarily demonstrate that public interest lawyers have become incredibly skilled at litigating arbitration cases, developing shrewd, savvy strategies to overcome the conservative majority’s arbitration mania.
Monday’s decision in Southwest Airlines v. Saxon is a sequel to the court’s 2019 decision in New Prime v. Oliveira, which lit the path to an expansion of labor rights across the transportation industry. Both cases involve the Federal Arbitration Act of 1925. At the time, some companies seeking a cheaper, quicker alternative for litigation agreed to arbitrate their claims in private, but federal courts were hesitant to enforce these contracts; Congress intended the FAA to overcome that judicial hostility. The Act remained relatively obscure until the 1980s, when corporate law firms pushed the judiciary to expand its scope by orders of magnitude. At the behest of the business bar, the Supreme Court used the FAA to authorize mandatory arbitration for millions of workers and consumers, overriding state laws that deemed such provisions unenforceable. Corporations began slipping arbitration requirements into the fine print of every contract, eviscerating both class actions and individual lawsuits.
Arbitration is now the industry norm. Every time you buy a product or take a new job, there is a good chance that you are signing away your right to sue, and “agreeing” to arbitrate instead. Your arbiter will probably be chosen by, and biased toward, the party you are trying to sue. You are much less likely to win, and if you do win, you will collect far less money. This process is not a legitimate alternative to litigation.
With its arbitration decisions, the Supreme Court “grossly erred in interpreting the FAA,” as one expert put it. The conservative majority mangled the statute’s text and history to reach business-friendly results, shunting plaintiffs into a system that is designed to prevent them from collecting a cent. There is, however, one substantial exception to the FAA: Its first section exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” In other words, those engaged in commerce between states or countries can escape the FAA’s grasp.
Who, exactly, falls into this exemption? Seamen and railroad employees, obviously; they’re mentioned in the law itself. What about truckers? Absolutely, the Supreme Court held in 2019’s New Prime—even if they’re not “employees” but “independent contractors,” since those agreements are “contracts of employment” under the FAA. And what about people who load and unload cargo for airlines? The 5th U.S. Circuit Court of Appeals said “no,” insisting that workers are not exempt unless they participate in the “actual movement” of goods across state lines. The 7th U.S. Court of Appeals said “yes,” creating a circuit split that obligated the Supreme Court to resolve the dispute. And now SCOTUS has sided with the workers in an 8–0 decision by Justice Clarence Thomas. (Justice Amy Coney Barrett recused because of her involvement with the case while sitting on the 7th Circuit.)
Thomas’ reasoning is straightforward. Airline employees who “physically load and unload cargo on and off planes traveling in interstate commerce,” he wrote, “are, as a practical matter, part of the interstate transportation of goods.” They play a “necessary role in the free flow of goods” across state lines and are, themselves, “intimately involved” in the cross-border transportation of cargo. As a result, they are “engaged” in interstate commerce, even if they do not personally carry goods between states, and fall under the FAA’s exemption.
This result is so obviously just and logical that it might seem inevitable. It wasn’t. Southwest’s lawyers devised a meretricious historical argument: They asserted that airline cargo handlers are the modern equivalent of the “stevedores” who loaded and unloaded cargo from ships and trains. But the FAA doesn’t mention “stevedores,” only “seamen.” It stands to reason, Southwest claimed, that stevedores were not “seamen,” and were not exempt from the FAA—meaning today’s airline cargo handlers should not be, either.
This assertion appeared to appeal to the conservative justices; Justice Neil Gorsuch called it Southwest’s “strongest argument.” And this is where good lawyering can make the difference. Jennifer Bennett, who represented Saxon, deployed her seemingly encyclopedic knowledge of interstate labor in 1920s America to shred each layer of Southwest’s reasoning. Stevedores were, in fact, deemed a kind of “seamen” by the Supreme Court itself. More importantly, both Congress and SCOTUS saw stevedores as engaging in commerce, even though they were not part of the crew that actually crossed a border. They were, Bennett argued, a perfect example of workers “engaged in foreign or interstate commerce” who are not subject to mandatory arbitration. And so their 21st century equivalent must be, as well.
Bennett backed up this argument with so many legal and historical sources that the Supreme Court apparently had no choice but to agree. In that respect, this case echoes last month’s Morgan v. Sundance, in which Public Justice’s Karla Gilbride pressed the justices into a corner with forceful, unassailable advocacy. Corporate lawyers have gotten used to winning arbitration cases in their sleep, and just assumed that they could wield the FAA to crush every lawsuit, no matter how tenuous their legal theories might be. It turns out, though, that there is some limit to the court’s tolerance of atextual, ahistorical arguments for mandatory arbitration. Progressive attorneys have mastered the art of testing those limits.
The resulting victories for labor may not topple the broader pro-arbitration regime. But they are the best that anyone can reasonably hope for at this Supreme Court.
