The U.S. Supreme Court has denied Southwest Airlines’ efforts to ground a class action lawsuit brought by a group of its ramp workers, over claims the airline failed to properly pay them overtime.
And that decision could open the gates to even more lawsuits against companies in the transportation sector, as lawyers bring potential myriad class actions seeking to claim workers’ legal claims can’t be forced into arbitration by employment agreements.
In the 8-0 decision, the high court said airline ramp workers, who load and unload baggage and other cargo from airliners, should be considered transportation workers under federal law, and cannot be forced by an employment agreement to take their wage and hour disputes to arbitration.
Andrew C. Ficzko
| stephanzouras.com
The decision upheld an earlier ruling issued by the U.S. Seventh Circuit Court of Appeals in Chicago in the case.
Justice Clarence Thomas wrote the court’s opinion. Justice Amy Coney Barrett, who had formerly served on the Seventh Circuit court, recused herself from the Supreme Court’s consideration of the case.
The decision centers on a lawsuit filed in Chicago federal court in 2019 by attorneys with the firm of Stephan Zouras, of Chicago, against Southwest Airlines.
The lawsuit was filed on behalf of named plaintiff Latrice Saxon, and potentially all other ramp supervisors working for Southwest.
According to the complaint, Saxon works for Southwest at its Chicago hub at Midway International Airport, helping to oversee Southwest ramp agents, who actually move most of the cargos onto and off the aircraft.
In the lawsuit, Saxon and her lawyers accuse Southwest of failing to pay Saxon and other ramp supervisors overtime for hours worked beyond 40 hours per week. They assert this violated the federal Fair Labor Standards Act.
The FLSA allows employers to defeat such claims, if they can, by arguing employees like its ramp supervisors are managers, who should be considered exempt from the mandatory overtime pay rules.
In response to Saxon’s lawsuit, however, Southwest argued the lawsuit didn’t even belong in court. The airline argued Saxon was employed under an agreement which required her to submit such pay disputes to an arbitrator, rather than a judge in a court of law.
In turn, Saxon and her lawyers, however, argued Saxon and other ramp workers should be exempted from such mandatory arbitration. They argued the Federal Arbitration Act, which created the pathway to such arbitration of labor disputes, specifically exempts people employed as “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”
Saxon’s team argued ramp workers should be grouped into those classes of workers, under the Arbitration Act.
U.S. District Judge Robert M. Dow Jr. sided with Southwest, ruling Saxon and her fellow ramp workers shouldn’t included under the Arbitration Act’s transportation exemption, because such ramp workers only loan and unload cargo. They are not directly involved in the physical movement of freight across state lines, nor do they, as managers, have any direction over the movement of the freight.
On appeal, however, the Seventh Circuit and ultimately, the Supreme Court disagreed with Dow’s interpretation of the law.
The Seventh Circuit ruled “the act of loading cargo onto a vehicle to be transported interstate is itself commerce, as that term was understood at the time of the (Arbitration Act’s) enactment in 1925.”
That decision contradicted a related decision from the U.S. Fifth Circuit Court of Appeals, which had landed differently on a similar question of the law.
With the appeals circuits divided, the Supreme Court took up the question, and sided with the Seventh Circuit.
“… Transportation workers must be actively ‘engaged in transportation’ of those goods across borders via the channels of foreign or interstate commerce,” Justice Thomas wrote. “Cargo loaders exhibit this central feature of a transportation worker.
“… One who loads cargo on a plane bound for interstate transit is intimately involved with the commerce (e.g., transportation) of that cargo.”
In their ruling, the Supreme Court justices rejected Saxon’s attempts to persuade them to apply such arbitration exemptions to virtually all airline employees. The justices noted the Arbitration Act’s use of “seamen” applied only to people who worked on the sea-going vessels. It “did not include all those employed by companies engaged in maritime shipping.”
Similarly, the Supreme Court said the arbitration exemption can apply to those airline employees actually engaged in the work of loading and unloading cargo, but not also to “shift schedulers” or “those who design Southwest’s website.”
The case drew attention from a host of businesses and trade groups, including Uber, Amazon, the U.S. Chamber of Commerce and the National Association of Manufacturers, among others. They argued the Seventh Circuit’s holdings were “overbroad,” and will lead to legal uncertainty which will only invite a cascade of litigation from plaintiffs lawyers seeking to secure potentially big class action paydays on behalf of workers seeking similar arbitration exemptions.
They noted other courts have grappled with the question of whether mechanics who work on delivery trucks could be counted as transportation workers exempted by the Arbitration Act.
“The upshot of the Seventh Circuit’s expansive interpretation of the residual clause is that courts will be forced into an endless series of inquiries that produce different results ‘for reasons that have nothing to do with the on-the-ground work [the workers] perform,’” the Chamber and the Manufacturers argued in a brief they filed with the Supreme Court in support of Southwest.
Editor’s note: The Cook County Record is owned by the U.S. Chamber of Commerce’s Institute for Legal Reform.
The FLSA action marks just one of the legal actions against Southwest mounted by Stephan Zouras, on behalf of Saxon.
Also in 2019, Saxon, with other ramp agents, mounted a separate class action against Southwest, accusing the company of violating Illinois’ state biometrics privacy law. That lawsuit centered on claims Southwest improperly required Saxon and other workers to scan their fingerprints when punching in and out of work shifts, without first obtaining consent or providing certain notices they claim are required under the Illinois Biometric Information Privacy Act.
One of the other workers in that class action was not a member of the union. But the judge determined his claims needed to go before an arbitrator. That decision could face another look, in light of the U.S. Supreme Court’s holding in Saxon’s case, potentially reviving such BIPA-related claims.
Chicago attorney Gerald Maatman, who specializes in defending complex labor and employment cases at the firm of Seyfarth Shaw, said the Supreme Court’s decision could have far-reaching consequences, indeed.
Maatman did not represent any parties involved in the Saxon case.
“Saxon would apply to any sort of case where an arbitration defense is asserted by virtue of the Federal Arbitration Act (in a wage & hour case, in a BIPA case, in an antitrust case, etc.),” Maatman said in an email responding to questions from The Cook County Record.
Maatman predicted uncertainty.
“The broader implications are that the exact dividing line as to who is covered and not covered by the holding in Saxon is not completely clear, and companies in the transportation industry may have workers who are covered by the holding in Saxon (those who handle goods shipped in interstate commerce) and others (like a clerical worker in the office) who are not covered by the ruling.”
Southwest was represented before the Supreme Court by attorneys Melissa A. Siebert and Scott A. Chesin, of the firm of Shook Hardy & Bacon, of Chicago and New York; and Shay Dvoretzky, Parker Rider-Longmaid, Kyser Blakely, Hanaa Khan and Raza Rasheed, of the firm of Skadden Arps Slate Meagher & Flom, of Washington, D.C., and Los Angeles.
Saxon was represented before the Supreme Court by attorneys Jennifer D. Bennet, Jessica Garland, Deepak Gupta, Jonathan E. Taylor, Linnet Davis-Stermitz and Joanne Grace L. Dela Pena, of the firm of Gupta Wessler PLLC, of Washington, D.C., and San Francisco.
Saxon continues to be also be represented in Chicago court by attorneys Andrew C. Ficzko, Ryan F. Stephan and James B. Zouras, of the Stephan Zouras firm.