Tenth Circuit Becomes Third Federal Circuit to Expand Transportation Workers' Exemption from Arbitration.

Factual Background

This blog post serves as an update to our previous blog post regarding the Supreme Court’s clarification of §1 of the Federal Arbitration Act.  Flower Foods, Inc. is at the center of another federal arbitration decision.  These cases involve Flower Foods’s distribution agreements with local delivery companies.  In this iteration, driver Angelo Brock entered such a distribution agreement and obtained the exclusive rights to deliver certain baked goods from a warehouse in Colorado to local Colorado retail stores.

The distribution agreement contained an arbitration agreement, and Flower Foods sought to enforce the arbitration agreement after a putative class action was filed against Flower Foods alleging wage and hour violations. The Colorado district court denied Flower Foods’s motion and the Tenth Circuit affirmed, holding that Brock was a transportation worker engaged in interstate commerce and was thus immune from arbitration.

Tenth Circuit’s Decision

As explained in our prior blog post, the Supreme Court left open the question as to whether local delivery drivers who enter these distribution agreements with Flower Foods are “transportation workers” who are “engaged in interstate commerce”.  The primary issue on appeal for the Tenth Circuit in Brock was whether this local distributor engaged in interstate commerce. 

As the distributor, Brock picked up certain baked goods from a warehouse in Colorado, and delivered the goods to retails stores in Colorado.  No part of Brock’s business operation took place outside Colorado.  However, the Tenth Circuit explained that the proper test to determine whether a worker is exempt from arbitration is whether that worker “plays a direct and necessary role in the free flow of goods across borders”.  Because Flower Foods imported the goods to Colorado across state lines, then Brock made the final delivery, within Colorado borders, the Court said that the proper question to answer in this case was whether workers making solely intrastate deliveries are “directly involved in transporting goods across state or international borders”.

The Tenth Circuit reasoned that because Brock was in the business of making the “last leg” of a delivery of goods ultimately transported across state lines, Brock was engaged in interstate commerce.  Courts in the First Circuit and Ninth Circuit have come to similar conclusions ruling that some Amazon delivery drivers are “engaged in interstate commerce” and thus immune from arbitration when making solely intrastate deliveries because the delivery drivers made the “last mile” delivery of a good that was ultimately transported across state lines to its final destination. See Waithaka v. Amazon.com, Inc., 966 F.3d 10, 26 (1st Cir. 2020) (held that last-mile delivery drivers from Amazon engaged in interstate commerce, despite transporting good “entirely within a single state”); Rittman v. Amazon.com, Inc., 971 F.3d 904, 919 (9th Cir. 2020) (held that Amazon’s last-mile delivery providers engaged in interstate commerce when transporting packages in the final intrastate leg of the interstate journey).

Future Transportation Worker Arbitration Litigation

The Tenth Circuit’s decision in Brock marks the third federal circuit to rule in favor of transportation workers on the “last leg” or “last mile” delivery issue, allowing them to avoid arbitration.  After Brock, we expect transportation workers to continue to seek expansion of the FAA’s § 1 transportation workers’ exemption.