Bissonnette ex rel. Situated v. Lepage Bakeries Park St., LLC

• Decision Date: 05 May 2022
• Docket Number: 20-1681,August Term 2021
• Citation: 33 F.4th 650
• Parties: Neal BISSONNETTE, Individually and on Behalf of All Others Similarly Situated, and Tyler Wojnarowski, Individually and on Behalf of All Others Similarly Situated, Plaintiffs-Appellants, v. LEPAGE BAKERIES PARK ST., LLC, C.K. Sales Co., LLC, and Flowers Foods, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

33 F.4th 650

Neal BISSONNETTE, Individually and on Behalf of All Others Similarly Situated, and Tyler Wojnarowski, Individually and on Behalf of All Others Similarly Situated, Plaintiffs-Appellants,

v.LEPAGE BAKERIES PARK ST., LLC, C.K. Sales Co., LLC, and Flowers Foods, Inc., Defendants-Appellees.

No. 20-1681

August Term 2021

United States Court of Appeals, Second Circuit.

Argued: October 22, 2021

Decided: May 5, 2022

Harold L. Lichten, Lichten & Liss-Riordan, P.C., Boston, MA (Matthew Thomson, Zachary L. Rubin, Lichten & Liss-Riordan, P.C., Boston, MA, on the brief), for Plaintiffs-Appellants.

Traci L. Lovitt, Jones Day, New York, NY (Matthew W. Lampe, Jones Day, New York, NY; Amanda K. Rice, Jones Day, Detroit, MI; Margaret Santen Hanrahan, Ogletree Deakins Nash Smoak & Stewart, P.C., Charlotte, NC, on the brief), for Defendants-Appellees.

Before: JACOBS, POOLER, Circuit Judges, GUJARATI, District Judge.^*

Judge Jacobs concurs in a separate opinion, and Judge Pooler dissents in a separate opinion.

Dennis Jacobs, Circuit Judge:

Plaintiffs deliver baked goods by truck to stores and restaurants in designated territories within Connecticut. They bring this action in the United States District Court for the District of Connecticut (Dooley, J.) on behalf of a putative class against Flowers Foods, Inc. and two of its subsidiaries, which manufacture the baked goods that the plaintiffs deliver. Plaintiffs allege unpaid or withheld wages, unpaid overtime wages, and unjust enrichment pursuant to the Fair Labor Standards Act and Connecticut wage laws. The district court granted the defendants’ motion to compel arbitration and dismissed the case.

The decisive question on appeal is whether the plaintiffs are "transportation workers" within the meaning of the Federal Arbitration Act ("FAA"). That matters because the FAA, which confers on the federal courts an expansive obligation to enforce arbitration agreements, has an exclusion for contracts with "seamen, railroad employees, [and] any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. That exclusion is construed to cover "transportation workers." Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001).

Of the issues subsumed in that question, some are settled. For example, an independent contractor can be a transportation worker, a point germane to this case in which the drivers own their routes and may sell them to others. New Prime Inc. v. Oliveira, ––– U.S. ––––, 139 S. Ct. 532, 543-44, 202 L.Ed.2d 536 (2019).

The district court ruled that the plaintiffs are not "transportation workers" and "grant[ed] the Defendants’ motion to dismiss in favor of arbitration." Special App'x 15. The court undertook a thorough review of the circumstances that might bear on the question, such as the extent of similarity between the plaintiffs’ work and the work of those in the maritime and railroad industries. That analysis is consonant with the prescription in Lenz v. Yellow Transportation, Inc., 431 F.3d 348 (8th Cir. 2005), which approached the question by considering eight non-exclusive factors. We affirm without rejecting or adopting the district court's analysis, which may very well be a way to decide closer cases. We hold that the plaintiffs are not "transportation workers," even though they drive trucks, because they are in the bakery industry, not a transportation industry.

In arriving at that holding, we first consider an alternative ground for affirmance that might obviate the federal statutory question by allowing the arbitration to proceed under Connecticut arbitration law, which has no exclusion for transportation workers; but vexed questions beset a ruling that affirms on that alternative basis. We therefore must come to grips with whether the plaintiffs are "transportation workers." We agree with the district court that they are not. We affirm the district court's order compelling arbitration and dismissing the case.

I

Flowers Foods, Inc. is the holding company of subsidiaries that produce breads (including Wonder Bread), as well as buns, rolls, and snack cakes in 47 bakeries. Other subsidiaries of Flowers Foods sell exclusive distribution rights for the baked goods within specified geographic areas. (Flowers Foods, Inc. and its subsidiaries, including defendants LePage Bakeries Park St., LLC and C.K. Sales Co., LLC, are hereinafter referred to as "Flowers.") The individuals who purchase the distribution rights--designated independent distributors--market, sell, and distribute Flowers baked goods. The relationship between Flowers and each independent distributor is set out in a Distributor Agreement. See Joint App'x 84-159.

Plaintiffs Neal Bissonnette and Tyler Wojnarowski are two of these independent distributors, both of whom own distribution rights in Connecticut. Bissonnette, who previously delivered baked goods as an employee of Flowers, entered into a Distributor Agreement with Flowers in 2017. Wojnarowski entered into a Distributor Agreement with Flowers in 2018.

Pursuant to the Distributor Agreement, the plaintiffs pick up the baked goods from local Connecticut warehouses and deliver the goods to stores and restaurants within their assigned territories. Subject to certain adjustments, the plaintiffs earn the difference between the price at which the plaintiffs acquire the bakery products from Flowers, and the price paid by the stores and restaurants. In their roles as independent distributors, the plaintiffs undertake to maximize sales; solicit new locations; stock shelves and rotate products; remove stale products; acquire delivery vehicles; maintain equipment and insurance; distribute Flowers’ advertising materials and develop their own (with prior approval by Flowers); retain legal and accounting services; and hire help. The plaintiffs may also profit from the sale of their distribution rights.¹ Though the plaintiffs are permitted to sell noncompetitive products alongside Flowers products, the plaintiffs concede that they do not work for any other company or entity, and that they typically work at least forty hours per week selling and distributing Flowers products.

The Distributor Agreement states that the parties may submit disputes arising from the Distributor Agreement to binding arbitration in accordance with the conditions set forth in an appended Arbitration Agreement. The Arbitration Agreement provides that "any claim, dispute, and/or controversy ... shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act ( 9 U.S.C. §§ 1, et seq. ) ..." Joint App'x 117. Arbitrability is an issue reserved to the arbitrator except for issues concerning the "prohibition against class, collective, representative or multi-plaintiff action arbitration" and the "applicability of the FAA." Id. at 118. The Arbitration Agreement is "governed by the FAA and Connecticut law to the extent Connecticut law is not inconsistent with the FAA." Id. at 119.

II

We have jurisdiction over the district court's order compelling arbitration and dismissing the case because it is a "final decision with respect to an arbitration" pursuant to Section 16(a)(3) of the FAA. See Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 86-87, 89, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000).

III

We review de novo the district court's order compelling arbitration. Atlas Air, Inc. v. Int'l Bhd. of Teamsters, 943 F.3d 568, 577 (2d Cir. 2019).

The Arbitration Agreement, which provides for arbitration "under the Federal Arbitration Act," elsewhere provides that it "shall be governed by the FAA and Connecticut law to the extent Connecticut law is not inconsistent with the FAA ." Joint App'x 117, 119 (emphasis added). Since Connecticut arbitration law has no exclusion for transportation workers, see Conn. Gen. Stat. Ann. § 52-408 (arbitration agreements shall be "valid, irrevocable and enforceable"), Flowers urges that we compel arbitration pursuant to Connecticut law, regardless of whether the FAA applies.

The Second Circuit has not ruled on the application of state law to arbitration agreements under the FAA. One court within this Circuit has observed that "[m]ultiple courts" have rejected the proposition that "state arbitration law is preempted" when a plaintiff is excluded from the FAA. Smith v. Allstate Power Vac, Inc., 482 F. Supp. 3d 40, 47 (E.D.N.Y. 2020) (Gershon, J.); see also Michel v. Parts Auth., Inc., 15 Civ. 5730 (ARR), 2016 WL 5372797, at *3 (E.D.N.Y. Sept. 26, 2016) ("Even assuming the FAA does not apply, New York state law governing arbitration does apply."). Other Circuits lean the same way.²

Even if state law can compel arbitration when the FAA does not, the meaning of the phrase "not inconsistent" in the Arbitration Agreement is unclear. Joint App'x 119. Flowers argues that Connecticut law is "not inconsistent" with the FAA because the FAA does not preclude the enforcement of arbitration agreements with transportation workers. The plaintiffs counter that Connecticut law is inconsistent because the FAA excludes transportation workers while Connecticut law does not.

Prudence counsels against a remand for arbitration to proceed under Connecticut law. The availability of Connecticut arbitration entails the construal of a phrase with a disputed meaning. Ascertaining the intent of the parties would ordinarily involve a remand for fact finding. Although the Agreement provides that issues of arbitrability are reserved for the arbitrator, that expedient may be blocked because the arbitrator's ambit excludes the applicability of the FAA, which is implicated here.

True, "a court should decide for itself whether § 1 ’s ‘contracts of employment’ exclusion applies before ordering arbitration." New Prime Inc., 139 S. Ct. at 537. But that prescription may not bear upon whether the availability of arbitration under state law can obviate the exclusion. See Harper v. Amazon.com Servs., Inc., 12 F.4th 287, 296 n.8...