Shook Wins Critical Victory in Federal Arbitration Act Exemption Claim

Shook won a critical victory for in a putative collection action brought pursuant to the Federal Arbitration Act, when a federal court ruled that airline ramp supervisors must individually arbitrate wage claims because they are not “transportation workers” and therefore are not eligible for an exemption pursuant to Section 1 of the Act. Partner Melissa Siebert represented Southwest Airlines in the matter. 

The case arose when a baggage and cargo ramp supervisor at Midway Airport brought the action alleging that Southwest failed to pay overtime wages to certain employees. The employee argued that the arbitration agreement she had signed was unenforceable because she fell under the Section 1 exemption. But the court noted that recent decisions in the Seventh Circuit and other jurisdictions “suggest that the linchpin for classification as a ‘transportation worker’ . . . is actual transportation, not merely handling goods.” In addition, the court pointed out that the Seventh Circuit “places great weight on whether the worker in question actually transported goods across state lines,” and that there exists a “liberal federal policy favoring arbitration agreements.” Accordingly, the court found that the FAA did not exempt the plaintiff and ordered that she must arbitrate her claim. It then granted Southwest’s motion to dismiss the matter for improper venue. 

After last term’s U.S. Supreme Court’s decision in in New Prime v. Oliviera, No. 17-340. where the Court affirmed, 8-0, a decision that upheld the arbitration exemption for transportation workers, a number of challenges have been filed arguing the applicability of Section 1. 

The case is Saxon v. Southwest Airlines Co., No. 19-403 (N.D. Ill., October 8, 2019).