Final Leg Local Drivers Avoid Arbitration

In a major, unanimous ruling the Supreme Court firmly rejected a restrictive "cross-or-tag" rule for the Federal Arbitration Act's transportation worker exemption, holding that local drivers on the final leg of an interstate journey do not need to cross state lines or touch out-of-state vehicles to qualify Flowers Foods, Inc., et al. v. Angelo Brock, Docket Number: No. 24-935, Decision Date: May 28, 2026

 Background

The dispute arose out of Flowers Foods, Inc., a massive producer of commercial packaged baked goods known for iconic brands like Wonder Bread, Butterscotch Krimpets, and Jumbo Honey Buns. While Flowers operates bakeries across 19 states, it relies heavily on an independent contractor network of franchisees to distribute its goods locally.

Angelo Brock, a distributor serving the Denver, Colorado area, was one such franchisee. Brock’s daily routine was entirely local: he picked up Flowers' goods from a warehouse located within Colorado and delivered them to local retail and grocery stores. He never personally crossed state lines, and he never interacted directly with the long-haul vehicles that brought the products into the Colorado warehouse from out-of-state bakeries.

In 2022, Brock filed a lawsuit against Flowers Foods in federal district court, alleging that the company had underpaid its distributors in violation of federal and state employment laws.

Flowers immediately moved to compel arbitration, pointing to the standard mandatory arbitration clause built into Brock’s distribution agreement. Brock countered that he was exempt under Section 1 of the FAA.

Both the federal district court and the Tenth Circuit Court of Appeals agreed with Brock, setting up a definitive showdown at the Supreme Court.

Ruling

Writing for a unanimous 9-0 Court, Justice Neil Gorsuch ruled against Flowers Foods' primary defense. Flowers based it’s entire case on a singular, bright-line rule: an individual can never qualify as an exempt transportation worker unless they either physically cross state borders or directly interact with an interstate vehicle such as loading or unloading a cross-country plane or truck.

"Nor, we now add, does §1 turn on a game of tag with vehicles that do. At least sometimes, a worker who transports goods on an intrastate leg of an interstate journey can qualify for §1's exemption without satisfying either of those criteria."

The Court's rationale relied heavily on original public meaning and text dating back to the FAA's enactment in 1925. Gorsuch noted that at the time of the law's passage, to "engage" meant simply to "take part in" or be "involved in" something. "Interstate commerce" was universally understood to encompass the entire continuous carriage of goods from one state into another.

To expose the flaw in Flowers' logic, the opinion offered a vivid hypothetical involving three drivers hired to transport baked goods across state lines. Driver 1 takes the goods to the state border; Driver 2 drives them a mere ten feet across the state line; and Driver 3 picks them up on the other side to complete the delivery to the customer's headquarters. Under Flowers' theory, only Driver 2 would be engaged in interstate commerce. Justice Gorsuch flatly rejected this, noting that all three drivers play a "direct, active, and necessary part" in fulfilling the interstate transit contract.

The Court highlighted that this concept is far from novel, pointing back to the foundational 1871 case The Daniel Ball. In that case, a steamer operating completely within the boundaries of Michigan was legally deemed to be engaged in interstate commerce because it was moving cargo originating from or destined for other states. The century-old principle holds firm today: the local, intrastate leg of an inherently interstate journey maintains its interstate character, regardless of how many independent local agencies are utilized along the way.

Key Legal Takeaways

• Intrastate Paths Count: Local delivery couriers, final-mile distributors, and warehouse-to-store drivers do not lose their FAA exemption status simply because their physical route is contained within a single state.

• The "Cross-or-Tag" Rule is Dead: Courts will not require proof that a worker physically crossed borders or touched an interstate vehicle, effectively expanding the pool of workers who can avoid forced arbitration.

• Unanswered Questions: The Court explicitly noted it was not ruling on other common defenses raised by corporate entities, such as whether doing business through a single-employee corporate entity or taking title to the goods before retail distribution impacts the "contract of employment" definition under Section 1.