SCOTUS draws arbitration boundaries

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NICK EICHER, HOST: Up next: our continued coverage of Supreme Court opinions.

Legal correspondent Jenny Rough has two for us today, both of them centering on arbitration.

JENNY ROUGH: Arbitration is an alternative way to handle legal conflicts. Instead of going to court, a neutral third party reviews the case in a private proceeding and makes a final decision. And each term, the Supreme Court usually hears cases related to that process. In doing so, it interprets a body of law known as the FAA, the Federal Arbitration Act. 

This year the court heard two: Jules vs Andre Balazs Properties and Flower Foods vs Brock.

I’ll start with Flower Foods.

Flower Foods produces baked goods. It contracts with truck drivers to deliver its products to states across the country. Angelo Brock is one of those drivers. He picks up baked goods from a warehouse in Denver and delivers them to grocery stores throughout Colorado. He never crosses state lines.

Brock filed a lawsuit over pay and wanted a federal court to hear that dispute even though he signed an arbitration agreement. He argued he falls under an exception to the FAA that exempts interstate transportation workers. 

But Flowers argued the exception does not apply, because Brock does not cross state lines. That prompted Justice Samuel Alito to ask this hypothetical at oral arguments:

JUSTICE SAMUEL ALITO: Suppose a company structures its delivery so that Driver 1 drives 10 hours on an intrastate leg. Then Driver 2 drives one minute across an interstate border. Then Driver 3 completes the journey with another 10-hour intrastate drive. Each driver uses a different vehicle. Is Driver 2 the only person covered by the exemption?

Brock does not even do that. He picks up his goods from a warehouse and has no interaction with other trucks that do cross state borders. Even so, the court agreed with him that he is engaged in interstate commerce. 

In a unanimous opinion written by Justice Neil Gorsuch, the court said that when goods are destined for states across the nation, the drivers play an active and necessary part of that process.

ADAM UNIKOWSKY: Mr. Chief Justice, and may it please the court.

In the second case, Adrien Jules was fired from his hotel job. He sued in federal court alleging unlawful discrimination. Because his lawsuit involved federal law, the federal court had jurisdiction to hear the case. 

But the court stayed the case pending arbitration. Jules lost. In fact, the arbitrator ruled he owed his employer over $30,000 for misconduct during the arbitration. The hotel asked the federal court—where Jules originally filed his lawsuit—to confirm that arbitration award. But Jules argued the federal court now lacked jurisdiction because there was no longer a federal question. The federal law issue had been resolved in arbitration.

Here’s Justice Clarence Thomas questioning Jules’ attorney about that reasoning.

JUSTICE CLARENCE THOMAS: Your client brings the federal case, right?

UNIKOWSKY: Yes.

THOMAS: The court then enters a stay so that the arbitration can take place?

UNIKOWSKY: That’s correct.

THOMAS: The arbitration then is decided, and the parties come back to that very same court to confirm the arbitral award or decision? 

UNIKOWSKY: That’s correct.

THOMAS: And you’re saying now that the jurisdiction of the court that you invoked is inadequate to decide this.

UNIKOWSKY: That’s correct, Your Honor.

No, that’s incorrect, the unanimous Court said.

Justice Sonia Sotomayor wrote that if the court had jurisdiction to hear the original dispute, it retains jurisdiction to decide if the arbitration award resolving that dispute is valid.

Reporting for WORLD, I’m Jenny Rough.

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