SCOTUS again has eschewed an opportunity to clear up the split over the Federal Arbitration Act’s (“FAA”) section 1 exemption for workers engaged in commerce, this time by refusing to reconsider its prior Certiorari denial.

As reported in SAA 2021-24 (Jun. 24), the Supreme Court on June 21 denied Amazon’s January 29 Petition for Certiorari in Waithaka v., Inc., No. 19-1848 (1st Cir. Jul. 17, 2020), petition for reh’g denied (Sep. 1), a case we had covered in SAA 2020-27 (Jul. 22). To review, there’s a clear circuit split on whether the Federal Arbitration Act’s (“FAA”) section 1 exemption embraces only workers actually moving goods or people in interstate commerce or is to be construed broadly to cover those who are part of the “flow” of interstate commerce. The Waithaka Court had held: “After close examination of the text and purpose of the statute and the relevant precedent, we now hold that the [FAA section 1] exemption encompasses the contracts of transportation workers who transport goods or people within the flow of interstate commerce, not simply those who physically cross state lines in the course of their work.”

Request for Reconsideration

We missed that Amazon on June 29 filed a Petition for Rehearing stating: “In accordance with this Court’s Rule 44.2, petitioners respectfully seek rehearing of the Court’s order denying certiorari based on the intervening decision in Hamrick v. Partsfleet, LLC___ F.3d ___, 2021 WL 2546405 (11th Cir. June 22, 2021). The Eleventh Circuit’s ruling — one day after the denial of certiorari here — directly conflicts with the First and Ninth Circuits’ rulings on the same legal question and facts. Indeed, the Eleventh Circuit expressly endorsed the dissenting view in the Ninth Circuit, eliminating any doubt about whether a circuit split exists.”

We reported on Hamrick in the “Quick Takes” section of SAA 2021-26 (Jul. 15), quoting liberally from the Court’s Opinion:

“This [section 1] ‘exemption,’ we’ve said, excludes from the reach of the Federal Arbitration Act employees who are in a class of workers: (1) employed in the transportation industry; and (2) that, in the main, actually engages in interstate commerce. See Hill v. Rent-A-Center, Inc., 398 F.3d 1286, 1290 (11th Cir. 2005). The issue in this case is whether (despite agreeing to arbitrate any dispute with their employer) final-mile delivery drivers — drivers who make local deliveries of goods and materials that have been shipped from out-of-state to a local warehouse — are in a ‘class of workers engaged in foreign and interstate commerce’ and, thus, exempt under the Federal Arbitration Act from having to arbitrate their Fair Labor Standards Act claims. The district court concluded that they were exempt and refused to compel them to arbitrate their claims under the Federal Arbitration Act. But the district court misapplied Hill and wrongly determined that the exemption applied. We reverse the part of the district court’s order denying the employer’s motion to compel arbitration under the Federal Arbitration Act and remand for the court to determine whether the drivers are in a class of workers employed in the transportation industry and whether the class, in general, is actually engaged in foreign or interstate commerce.”

SCOTUS on August 2 summarily denied the reconsideration Motion (see page 1 of Order List).

(ed: *The SCOTUS case is, Inc. v. Waithaka, No. 20-1077, appearing on page 4 of the Order List. **We really think SCOTUS should take on this significant split in the Circuits. ***For an in-depth analysis of the issue, see Huertero, Ruben, Supreme Court Declines to Engage in the Interpretation of “Engaged in Commerce”, 2021:15 Sec. Arb. Alert 1 (Apr. 29, 2021).)

This post first appeared on the Securities Arbitration Alert blog.  The blog’s editor-in-chief is George H. Friedman, Chairman of the Board of Directors for Arbitartion Resolution Services, Inc.