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ARB Rules Airline Workers Exempt From Arbitration

In Willbanks v. Atlas Air Worldwide Holdings, Inc. et al., the Administrative Review Board for the U.S. Department of Labor ruled that airline workers are transportation workers and thus exempt from the arbitration requirements of the Federal Arbitration Act. The ARB ruling reversed an Administrative Law Judge’s grant of a motion to stay proceedings pending arbitration,.

The FAA provides that arbitration agreements are valid unless grounds exist for revoking the agreement. But the FAA specifically exempts contracts for the employment of “seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” In its ruling, the ARB acknowledged that the FAA should be interpreted liberally to favor arbitration, and that any exceptions should be viewed narrowly.

In its order staying proceedings pending arbitration, the ALJ had applied the “movement of goods” test established by the 8th Circuit in Lenz v. Yellow Transp. In formulating the “movement of goods” test, the 8th Circuit quoted from the Supreme Court’s decision in Circuit City Stores v. Adams that the only exception to the FAA is for “transportation workers, defined […] as those workers ‘actually engaged in the movement of goods in interstate commerce.’” Because Willbanks engaged in the transportation of people, not goods, the ALJ held that Willbanks was not a transportation worker, and therefore not exempt from the FAA.

In its reversal, the ARB stated that the “movement of goods” test mischaracterizes the Supreme Court’s decision in Circuit City Stores by taking the phrase “actually engaged in the movement of goods” without any context. When this phrase is considered in the entirety of the cited passage, according to the ARB, it is clear that the Supreme Court considered workers engaged in the transportation of goods to be one example of the type of workers exempted from the FAA.

The ARB also recognized that courts have interpreted the FAA to exclude seamen and railroad workers regardless of whether their duties involved the transportation of goods or passengers. In a footnote, the ARB said it is “simply nonsensical” to limit the exclusion from mandatory arbitration to employees engaged in the airline transportation of goods, and not extend that exclusion to employees engaged in the airline transportation of people.

The ARB also supported its decision by applying the doctrine of ejusdem generis to the wording of the FAA exception and concluding that Congress intended airline employees to be exempted, just as railroad employees and seamen are exempted. (Ejusdem generis provides that where a law lists specific classes of persons or things and then refers to them in general, the general statements only apply to the same kind of persons or things specifically listed.) In 1936, Congress amended the Railway Labor Act to cover the airline industry, including the passenger airline industry. While the RLA does not apply to the current action, the ARB found it significant that the RLA, which covers both railroad freight and passenger trains, also applies to both freight and passengers airlines.

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