The Supreme Court awarded an extraordinarily narrow victory to an equally narrow subset of American workers on Monday. The outcome of the Court’s decision Southwest Airlines v. Saxon is that workers who “frequently” load and unload cargo for airlines can sue their employers.
But it is worth emphasizing again how narrow the Saxon decision is. Judge Clarence Thomas’s 8-0 opinion to the Court (Judge Amy Coney Barrett was turned down in this case) benefits workers who load and unload cargo onto planes traveling across state lines — and may benefit no one else. And, if anything, this reaffirms an earlier line of anti-worker rulings that enshrine a practice known as “forced arbitration,” which allows companies to strip their employees of the right to sue the employer.
In the workplace, forced arbitration occurs when an employer requires its workers to waive their right to sue the company as a condition of their employment. According to the decisions of the Court in Circuit City x Adams (2001) and Epic Systems vs Lewis (2018), most employers can order their workers to waive this right under penalty of immediate termination.
Workers forced into arbitration can still take any dispute they may have with their employer before a privatized arbitration system, but that system predominantly favors the corporate parties. A 2015 study of forced workplace arbitration found that workers are about half as likely to prevail in an arbitrator as they are in litigation. And when workers prevail in arbitration, they typically receive about a fifth of the value of a worker who prevails before a judge.
Decisions that allow forced arbitration in the workplace were wrongly made. The Federal Arbitration Act of 1925 requires courts to enforce some contracts that provide for arbitration, but not employment contracts with forced arbitration provisions. As the late Judge Ruth Bader Ginsburg explained in a 2015 dissent, the law was enacted to counter “the reluctance of some judges to enforce commercial arbitration agreements between merchants with relatively equal bargaining power.”
Not only was this law never intended to allow employers to force their workers to arbitrate, it was also never intended to apply to employment contracts. The Arbitration Law explicitly exempts employment contracts involving “workers involved in foreign or interstate commerce”.
Even so, in Circuit Citythe Court held that the Arbitration Act applies to almost all workers – even most workers who are engaged in foreign or interstate commerce, under the Court’s current understanding of “trade”.
Said that, Circuit City held that “transport workers” are exempt from forced arbitration, and the Saxon The ruling considers workers who “load and unload cargo” for airlines to be transport workers. So good for those workers. If you happen to be a worker whose job it is to handle cargo for an airline, you should now have the right to sue your employer if he violates your legal rights.
But Saxon gave the Court the opportunity to review Circuit City more widely – and did not risk it. Circuit City, with its notorious misinterpretation of the Arbitration Act, remains a good law. This means that the overwhelming majority of workers can still be victimized by forced arbitration.
Circuit City It’s a shamefully ill-founded decision
O Circuit City case linked the correct way to read two separate provisions of the Arbitration Act. The first provides that contracts requiring arbitration must normally be “valid, irrevocable and enforceable”. This provision only applies to contracts relating to a “transaction involving trade”.
The second relevant provision is the one that exempts workers from the Law. It states that “nothing contained herein shall apply to contracts of employment of seamen, railway workers or any other class of workers engaged in foreign or interstate commerce.”
To understand how to read these two provisions, it is helpful to understand some constitutional history – and particularly how the Supreme Court changed its understanding of the word “commerce”. The word “trade” appears in one of the most important provisions of the Constitution, which states that Congress may “regulate commerce with foreign nations, and among the various states, and with Indian tribes.”
When the Federal Arbitration Act was enacted in 1925, the Supreme Court defined the word “commerce” very narrowly – too narrowly to allow Congress to regulate most American workplaces.
In fact, seven years before the Arbitration Act became law, in hammer v. Dagenhart (1918), the Supreme Court struck down a federal law that tried to outlaw child labor. Dagenhart held that the power of Congress to regulate “commerce … among the various states” was limited to the power to regulate “the transportation of persons[,] Earth [or] ownership, as well as the purchase, sale and exchange of goods”.
Thus, as the Federal Arbitration Act was originally understood in 1925, all employment contracts were beyond the scope of the law. Again, the law applies to any “contract evidencing a transaction involving commerce”. But in 1925, only workplaces that transported people or goods, or that traded goods, were subject to the Arbitration Act.
Likewise, the provision which states that contracts involving “employment of seamen, railroad workers or any other class of workers engaged in foreign or interstate commerce” would have been read to exempt all workers who would otherwise be subject to the law – i.e. , all workers who work in the transport or trade of goods.
During the Franklin Roosevelt administration, however, the Court abandoned Dagenhartthe restricted reading of the word “commerce”; was explicitly annulled Dagenhart in 1941. Under the modern reading of the Constitution, Congress’ authority to regulate commerce broadly extends to all “activities substantially affecting interstate commerce.” Among other things, this means that nearly all workplaces are subject to Congressional regulation.
Thus, if the word “trade” is given its modern meaning, the provision of the Arbitration Act that extends the law to all contracts that “evidence a transaction involving trade” applies to almost all workplaces. But the provision that exempts “workers engaged in foreign or interstate commerce” should also be read broadly to exempt virtually all workplaces in the United States.
But Circuit City read the first provision broadly, to apply the Arbitration Act to all workplaces. He then read the second provision narrowly, to apply only to transport workers.
This is anachronistic and wrong. Again, as originally understood in 1925, the law would have been read not to apply to any workplace. And even though the law is read using a modern definition of the word “trade”, that word appears in the statute twice and must have the same meaning both times.
Instead of, Circuit City defined the word one way in determining the scope of the Arbitration Act itself, then defined it in a different, much narrower way, in interpreting the exemption for workers engaged in interstate commerce.
This was wrong and it was a disaster for workers who can now be diverted into an arbitration system that does not adequately protect their legal rights.
Saxon creates an extremely narrow exception to Circuit Citybroader rule
again, the Saxon The ruling admits that many workers who load or unload cargo for airlines meet the definition of a “transport worker”. This is good news for them.
But the decision is extremely narrow. Among other things, Judge Thomas’ opinion rejects the argument that airline workers “as an industry” are transportation workers exempt from forced arbitration. SaxonThe exemption only applies to workers who “physically load and unload cargo on and off planes frequently.”
It is unclear whether other airline employees – supervisors who oversee the unloading of cargo but do not handle that cargo, airport employees who check passenger tickets, workers who sell tickets, etc. – are exempt from forced arbitration. These workers may well be the subject of future litigation.
The result is that, while Saxon exempts some workers from forced arbitration, the decision reaffirms Circuit Citymisreading the Federal Arbitration Act, and suggests that any future exclusions from forced arbitration will be limited.