Silva v. Schmidt Baking Distribution, LLC

Summary

The United States Court of Appeals for the Second Circuit held that distribution agreements between a bakery distributor and single-employee corporations formed by delivery drivers were "contracts of employment" under § 1 of the Federal Arbitration Act. The court concluded that requiring the drivers to adopt a corporate form did not remove them from the transportation-worker exemption, given that they personally performed the same delivery work and were required to guarantee performance. The court vacated the district court's order compelling arbitration and remanded for further proceedings.

Holdings

1. The interlocutory appeal was properly accepted because the district court's order involved a controlling question of law with substantial grounds for difference of opinion and resolution of the question could materially advance the litigation.
2. The distributor agreements are contracts of employment within the meaning of § 1 of the FAA because they are contracts under which individual transportation workers perform work in interstate commerce, notwithstanding their independent-contractor language and corporate form.
3. An agreement does not fall outside the § 1 exception merely because it is signed by business entities; courts must examine the substance of the relationship and the work performed.

Questions Presented

1. Whether the interlocutory appeal was properly accepted under 28 U.S.C. § 1292(b).
2. Whether distributor agreements signed by individual transportation workers on behalf of corporations they were required to form are contracts of employment within the transportation-worker exception in § 1 of the Federal Arbitration Act.
3. Whether the § 1 exception may be avoided merely because the formal contracting parties are business entities rather than the individual workers.

Disposition

vacated