Has the 11th Circuit Clarified the Transportation Worker Exemption of the FAA or Just Created a Circuit Split?

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In a published June 22 opinion, the Eleventh Circuit laid out a clear test for the Federal Arbitration Act (FAA) Section 1 exemption. It answered the reoccurring question “Who is a transportation worker?” See Hamrick v. Partsfleet, LLC, No. 19-13339, 2021 WL2546405 (11th Cir. June 22, 2021). Hamrick involved final-mile delivery drivers who transported goods and materials shipped from out-of-state to local warehouses and then to “their final destination” by the driver. Hamrick used his personal car to take car parts from Lakeland and Tampa, Florida warehouses to local Advance Auto Parts retailers.

While Hamrick signed an independent contractor agreement, he ultimately brought a Fair Labor Standards Act (FLSA) collective action seeking overtime compensation, liquidated damages, and declaratory and other relief, claiming he and other drivers were misclassified.

The district court had denied the companies’ motion to compel arbitration because the drivers were “transportation workers” under the Section 1 exemption, who carried goods that moved in interstate commerce and were central to their jobs. The district court also refused to compel arbitration under state arbitration law because the independent contractor agreements were “governed by the [FAA].”

The Eleventh Circuit

The Eleventh Circuit reversed with instructions. The appellate court articulated a straight-forward test for the exemption based on circuit precedent. The first element is that the worker “must be in a class of workers ‘employed in the transportation industry.’” The second is that the class of workers “must, in the main ‘actually engage’ in the transportation of goods in interstate commerce.” 2021WL2546405 at *7. Based on its analysis, the Eleventh Circuit (with Judges Branch, Luck and Ed Carnes on the Panel) reversed the district court order denying the motion to compel arbitration and remanded the case so the lower court could apply the appropriate standards premised on circuit case law. Finally, the court found it did not have jurisdiction to review the district court order refusing to grant the motion to compel arbitration under state law.

Only days after issuing the Hamrick opinion, the Eleventh Circuit was again confronted with questions surrounding the FAA Section 1 exemption, in Martins v. Flowers Foods, Inc., Case No. 20-11378. The Martins case involved the distribution of Flowers Foods products in intrastate territories. On July 9, 2021, the court vacated the district court’s order finding the distributors were “transportation workers.” The Court’s per curiam order (with Judges Wilson, Newsom and Anderson on the Panel) declared:

“On June 22, 2021, this Court issued its opinion in Hamrick v. Partsfleet, LLC, . . . which held that the FAA’s transportation-worker exemption applies only if the worker belongs to a class of workers in the transportation industry and the class of worker actually engages in foreign or interstate commerce. We hereby VACATE the district court’s order on appeal and REMAND this matter for further consideration in light of Hamrick.”

Now, Appellee Curtis Hamrick has asked the Eleventh Circuit to grant an en banc rehearing and consideration of its prior panel decision because it “conflicts with binding Eleventh Circuit Court precedent, Supreme Court authority and unnecessarily creates an inter-circuit split.” Specifically, the Petition for Rehearing En Banc, filed July 13, 2021, asserts that “upholding the Panel decision would needlessly create a circuit split on whether a class of workers must physically cross state lines to be ‘engaged in commerce’ under the FAA’s Section 1 . . . exemption,” citing Waithaka v. Amazon.com, Inc., 966 F.3d 10 (1st Cir. 2020); Wallace v. Grubub Holdings, Inc., 970 F.3d 798 (7th Cir. 2020) and Rittmann v. Amazon.com, Inc., 971 F.3d 904 (9th Cir. 2020).

We addressed the murky and sometimes conflicting standards applied by courts to determine coverage of the Section 1 exemption in our blog articles of June 1, 2020, August 7, 2020, November 11, 2020 and March 1, 2021. Part of the confusion stems from varying interpretations of the exemption language – “a class of workers engaged in foreign or interstate commerce.” Broadly interpreted, the language could sweep in almost any individual who delivers food or goods or even airport passengers. But is that what was intended when the FAA was passed in 1925? Probably not. As the Hamrick opinion explained, the district court concluded the drivers were within the exemption because “the goods at issue . . . originate[d] in interstate commerce and [were] delivered, untransformed, to their destination.”

But the district court’s focus on “the movement of the goods and not the class of workers” was a mistake. Based on Hill v. Rent-A-Center, Inc., 398 F.3d 1286, 1290 (11th Cir. 2005), the exemption applies only when “the worker belongs to a class of workers in the transportation industry and the class of workers actually engages in foreign or interstate commerce.” Id. at 1290. (Emphasis added.)

So, Hamrick reversed but left it to the district court on remand to determine if the drivers actually met the more rigorous standard. And the Eleventh Circuit subsequently sent the Martins case back to the district court for application of the same standard.

Placed in this context, it appears unlikely that the appellate court will grant en banc review in Hamrick when it articulated more exacting standards in line with circuit authority that may remove some of the lingering uncertainty regarding the definition of “transportation workers.” Given that result, a circuit split is not a crucial event.

Bottom Line:

In Hamrick, the Eleventh Circuit established a more workable test for determining who constitutes a transportation worker. Whether that test conflicts with tests of other circuits is of lesser consequence if it is actually premised on the language of the FAA.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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