SCOTUS’S Most Recent FAA Section 1 Transportation Worker Exemption Case: Introduction
May was a big month for arbitration in the U.S. Supreme Court. The Court decided the two Federal Arbitration Act (“FAA”) cases on its 2025 Term docket, one on subject matter jurisdiction, the other on the scope of the FAA Section 1 transportation workers exemption.
On May 14, 2026, the Court decided Jules v. Andre Balazs Properties, No. 25-83, slip op. (U.S. May 14, 2026). Jules held that “a federal court with pre-existing jurisdiction over claims that it stayed pending arbitration under §3 can adjudicate a §9 or §10 motion even if that motion does not present, on its face, an independent basis for federal jurisdiction.” Jules, slip op. at 7. Associate Justice Sonia Sotomayor wrote the Court’s well-reasoned, 9-0 opinion in Jules. Professor Angela Downes, Professor Richard D. Faulkner, and the author discussed the then-pending Jules case in a March 27, 2026 YouTube video hosted by the International Institute for Conflict Prevention and Resolution (“CPR”)’s Russ Bleemer and entitled Hot Topics: The Supreme Court’s March on Arbitration. The Arbitration Law Forum will be reporting more about Jules in the not-too-distant future.
But the focus of this post is the second of the two arbitration-law cases decided in May of this 2025 Term, Flowers Foods, Inc. v. Brock, No. 24-935, 608 U.S. ___, slip op. (May 28, 2026), which concerned the scope of the FAA Section 1 transportation workers’ exemption. In Brock the Court unanimously held that a worker who transports goods only within one State may still belong to a class of workers “engaged in . . . interstate commerce” if the transportation work they perform intrastate is part of the route the goods travel interstate. Brock, slip op. at 3. If so, then that worker’s arbitration agreement may under FAA Section 1 be exempt from FAA enforcement. Id.; 9 U.S.C. § 1.
Simple, right? Perhaps, but it underscores an important doctrinal point. Section 1 does not inquire whether a transportation worker actually crosses a state line. It does not ask whether the worker personally crosses a state line. And it does not ask whether the worker physically touched, loaded, unloaded, or otherwise interacted with a vehicle that crossed a state line. As interpreted by Brock, what Section 1 asks—though not in these precise words—is whether whether the transportation worker plays a “direct, active, and necessary” role in the interstate movement of goods, irrespective of where in the goods’ path of travel the worker played that role. Slip op. at 8. As Associate Justice Neil M. Gorsuch—who authored the opinion for a unanimous Court— aptly explained, applicability of the FAA does not turn on “a game of tag with vehicles” that cross state lines. Slip op. at 3.
Brock: Background and the QP
Flowers Foods produces packaged baked goods, including Wonder Bread and other products. It operates bakeries in 19 States, using franchisees for distribution in various geographic territories. Brock was a Flowers Foods franchise, who, without leaving Colorado, collected Flowers goods from a Colorado warehouse, and delivered them to local stores in Colorado. Slip op. at 1-2.
Brock commenced in 2022 against Flowers an action in Colorado federal district court, alleging that Flowers violated state and federal law by not paying him, and other distributors, the wages to which he and they were allegedly entitled under applicable law. Flowers moved under the FAA to compel arbitration, relying on Brock’s distribution agreement, which required arbitration of disputes between Brock and Flowers. The district court denied the motion and the Tenth Circuit affirmed. The Tenth concluded that Brock was part of a class of workers engaged in interstate commerce and accordingly FAA Section 1’s exemption applied, depriving the Court of its authority under the FAA to stay litigation and compel arbitration. Slip op. at 2; see 9 U.S.C. §§ 1, 3, & 4
Flowers sought certiorari on a deliberately narrow question: can a worker qualify as “engaged in . . . interstate commerce” under Section 1 if he never crosses state lines and never interacts with vehicles that do? (Slip op. at 3.) The question allowed Flowers to avoid what might otherwise have been some difficult factual questions, all in favor of inviting the Court to adopt a clear, bright-line, easily administrable rule. The Court responded to the invitation with equal clarity: it said there is no such rule.
The Court’s Reasoning
The opinion began with SCOTUS’s three, relatively recently decided, Section 1 cases. New Prime Inc. v. Oliveira, 586 U.S. 105 (2019), said Section 1’s “contracts of employment” extended to independent contractor relationships. 586 U.S. at 116. (See Arbitration Law Forum Posts here and here.) Southwest Airlines Co. v. Saxon, 596 U.S. 450 (2022), held an airline worker that loaded and unloaded cargo could fall within the Section 1 exemption even though that person did not fly across state lines or pilot planes. 596 U.S. at 459, 461. (See Arbitration Law Forum Post here.) Bissonnette v. LePage Bakeries Park St., LLC, 601 U.S. 246, 249 (2024), held there was no requirement that exemption be invoked by a transportation industry worker, provided the work “‘play[s] a direct and necessary role in the free flow of goods across borders.’” Slip op. at 3 (quoting Bissonnette, 601 U.S. at 256). (See Arbitration Law Forum post here.)
The Court explained that in each of these three cases the Court had rejected a proposed limitation on Section 1 that would limit the exemption’s scope by creating a category of exempt cases rather than limiting it based on Section 1’s text. “Make this case the fourth[,]” said the Court. slip op. at 3.
A textual analysis demonstrated that the individual transportation worker was not required to cross any borders to qualify for the exemption. Nor does Section 1 require the worker to interact with a vehicle that has crossed or is intending to cross the border. Slip op. at 6-7.
Section 1, explained the Court, exempts from the FAA “workers engaged in . . . interstate commerce.” Slip op. at 7 (quoting 9 U.S.C. § 1). At the time the FAA was in enacted in 1925, to “engage,” meant to “take part in” something, or to be “employ[ed]” or “involve[d]” in it. Slip op. at 7 (quotations and citations omitted). “Interstate commerce” was traffic, intercourse, or “the transportation of persons or property between or among the several states” or from points in one State to points in another. Slip op. at 7 (citations and quotations omitted).
Interstate transportation, observed the Court, frequently includes intrastate segments. Slip op. at 7. It consists not only of “crossing state lines but intrastate activity too.” Slip op. at 7. “[A] continuous carriage[,]” explained the Court, “can begin in one State and end in another even though much of the journey occurs within a single State.” Slip op. at 7.
The Butterscotch Krimpets’ Excellent (but Hypothetical) Adventure
Simple hypotheticals can illustrate with great clarity complex principals or rules. Justice Gorsuch masterfully used this technique in the Opinion. The Court posited a company in State B that contracts to deliver a truckload of Butterscotch Krimpets to a customer in State A. One driver carries them across the state line, and the Court noted that all would agree that the driver was engaged in interstate commerce. Changing the hypothetical slightly, the Court supposed that three drivers divvied up the work as follows: Driver 1 would take the goods from the bakery to the border of State B, where Driver 2 collects them and drives them 10 feet across the border. Driver 3 collects them in State A and delivers them to the customer in State A. Slip op. at 4-5.
The Court observed that under Flowers’s proposed, bright-line rule, only Driver 2 was engaged in interstate commerce. “[T]hat cannot be right,” the Court said, for each driver “played a direct, active, and necessary part” in moving the goods from State B to State A. Slip op. at 8.
That hypothetical illustrates why Flower’s rule would make Section 1 turn on how the transportation was choreographed, so to speak, rather than on how the transportation scheme functioned to transport the goods from starting to end point. The statutory inquiry is aligned not with which driver crossed the border but with whether the worker’s class participates in interstate transportation as part of a continuous, coordinated movement of goods from starting to end point.
The Court Grounds FAA Section 1 Hypothetical in Historical Practice
Pointing to certain cases illustrating how engaging in commerce was generally understood at or about late nineteenth and early twentieth centuries—that is, a period roughly contemporaneous with the FAA’s 1925 enactment—the Court demonstrated how general commonsense aligns with historical practice. Discussing The Daniel Ball, 10 Wall. 557, 565 (1871), the Court explained how a steamship operated entirely within Michigan waterways nevertheless was “engaged in commerce between the States” because it transported goods destined for other States, or goods that had come from outside Michigan and were destined for points within Michigan. Slip op. at 8 (quotation and citation omitted) The rule The Daniel Ball applied was functional, not mechanical or technical: “that several different and independent agencies are employed in transporting the commodity, some acting entirely in one State, and some acting through two or more States, does in no respect affect the character of the transaction.” Slip op. at 8 (citation and quotation omitted). The steamship was “engaged in interstate commerce even though it stayed in Michigan,
and even though it did not come into direct contact with a vessel that had crossed state lines.” Slip op. at 8-9.
The Court also cited Rearick v. Pennsylvania, 203 U.S. 507, 510-13 (1906); Rhodes v. Iowa, 170 U.S. 412, 413-414, 426 (1898); and Norfolk & Western R. Co. v. Pennsylvania, 136 U.S. 114, 119-120 (1890), for like propositions. The Court carefully explained that it does “not mean to suggest that the scope of §1 is coterminous with the scope of the Commerce Clause as it was interpreted at the time of the FAA’s adoption in 1925.” Slip op. at 9, see slip op. at 9-10; U.S. CONST. art. I, § 8, cl. 3. The point was textual: contemporaneous cases using language like “engaged in commerce between the States” are “probative evidence of what an ordinary person at the time of the FAA’s enactment would have understood its terms to mean.” Slip op. at 10.
FAA Section 1: What the Court Reaffirmed, and What It Did Not Decide
The Court did not hold that every local, intrastate delivery worker falls under FAA Section 1. There must be, the Court explained, a “direct,” “necessary,” and “activ[e]” role in moving goods across borders. Slip op. at 10, quoting Saxon, 596 U.S. at 458.) Workers’ whose nexus to interstate commerce is too remove, too general, or merely incidental would not qualify. See slip op. at 10.
The Court understandably declined to decide a number of important FAA Section 1 issues. Flowers noted that it contracted with an independently operated company owned by Brock but not with Brock in his individual or personal capacity. Slip op. at 10. Certain lower courts have considered business-entity contracting as relevant to whether there exists a “contract of employment” for purposes of FAA Section 1. While the Court noted the contrast between Fli-Lo Falcon, LLC v. Amazon.com, Inc., 97 F. 4th 1190, 1197-1198 (9th Cir. 2024), and Silva v. Schmidt Baking Distribution, LLC, 162 F. 4th 354, 356-357 (2d Cir. 2025), on that issue, it did not have occasion to resolve it and declined to do so. Slip op. at 10-11.
Flowers also argued that Brock ordered, purchased, and took title to the products before selling them locally. Some lower courts have treated such facts as relevant, especially when asking whether goods have reached their intended destination or whether the worker is simply engaged in a new local sale. Slip op. at 10-11. The Court acknowledged the issue by citing Rittmann v. Amazon.com, Inc., 971 F.3d 904, 916 (9th Cir. 2020); Immediato v. Postmates, Inc., 54 F. 4th 67, 72, 78 (1st Cir. 2022), and the Court below, but left the question open. Slip op. at 10-11.
The Court did so because Flowers did not ask the Court to decide those questions. It “venture[d] all upon one cast” by seeking a bright-line rule that a worker does not qualify for a Section 1 exemption unless he or she crosses state lines or interacts with vehicles that do. Slip op. at 11. The Court rejected that rule and stopped there. Brock thus expands the field of workers who may qualify for an FAA Section 1 exemption, but, not surprisingly, it does not purport to eliminate Section 1’s textual boundaries, even though their scope continues to be the subject of ongoing judicial debate.
Doctrinal Implications
First, Brock confirms that Section 1 doctrine is work-centered. The Court continues to eschew decision-making based on industry, employment, and now border-crossing categorizations. What the workers actually do as respects the interstate movement of goods is what matters.
Second, what constitutes being “engaged in interstate commerce” remains important but it is defined more broadly than perhaps some may want it to be. Yes, a purely local delivery is not automatically interstate commerce. But an intrastate leg of a continuous interstate journey can be enough. That means courts will focus on the path of the goods, their destination, and the structure of the distribution arrangement, and the worker’s role in enabling the interstate goods movement.
Third, Section 1 continues to be an important limit on FAA arbitration agreement enforcement. If anything it is more robust than perhaps some thought or preferred. If the exemption applies, a court cannot use the FAA to compel arbitration. That does not necessarily invalidate the arbitration agreement. It means the party seeking arbitration must identify an alternative, possible source under which to seek enforcement, such as state law, and to deal with whatever limits that alternative enforcement source may present.
Fourth, while drafting is and always has been extremely important in arbitration law and practice, the parties cannot rewrite FAA Section 1 any more than they can rewrite any other provision of the FAA. Businesses using arbitration agreements with drivers, distributors, couriers, franchisees, and owner-operators should continue to consider the FAA’s savings clause (9 U.S.C. § 2); choice of law and forum provisions; and class, collective-action, and mass arbitration strategy. But after Brock, no drafter should assume that a local route is outside Section 1 simply because it never crosses a state line.
Fifth, while Brock may make evidence of border-crossing nonessential in many cases, its application nevertheless requires a well-developed documentary record. Parties litigating Section 1 issues should develop the facts concerning, among others, where the goods were manufactured, where they originated and are intended to go, whether the worker’s route was assigned as part of the interstate movement of the goods, and whether, and if so, to what extent, title, purchase, resale, or warehousing has changed the character of the movement.
Conclusion
Flowers Foods’ messages is straightforward: Section 1 concerns participation in interstate transportation, not physical border crossing. A worker who participates in the intrastate leg of an interstate trip may fall within the transportation worker exemption, provided the work performed is directly related to, and required for, the shipment of goods across borders.
For employees and independent contractors, Brock gives Section 1 real significance in disputes arising in distribution systems that use local franchisees, owner-operators, and last-mile contractors. For employers and their counsel, the message is that interpretations that dictate outcomes for particular categories of conduct are not likely to succeed. For transportation workers who do not wish to arbitrate disputes, the message is perhaps more promising.
Contacting the Author
If you have any questions about this article, arbitration, arbitration law, or arbitration-related litigation, then please contact Philip J. Loree Jr. at (516) 941-6094 or PJL1@LoreeLawFirm.com.
Philip J. Loree Jr. is principal of the Loree Law Firm, a New York attorney who focuses his practice on arbitration and associated litigation. A former BigLaw partner, he has more than 35 years of experience representing a wide variety of domestic and international corporate, other entity, and individual clients in trial-court and appellate matters arising under the Federal Arbitration Act—including matters arising under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. He also has significant experience arbitrating and litigating insurance- and reinsurance-related and other commercial disputes, and in advising clients and co-counsel involved in arbitration, trial court and appellate litigation concerning arbitration, and other dispute resolution matters.
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Tags: Arbitration Agreements, Bissonnette, distribution agreements, FAA Section 1, Federal Arbitration Act, Flowers Foods v. Brock, independent contractors, interstate commerce, Jules, Jules v. Andre Balazs, last-mile delivery, motion to compel, motion to stay litigation, New Prime, Saxon, Supreme Court arbitration cases, transportation worker exemption
