Is Mandatory Arbitration at Risk in the “Last Mile”?

The U.S. Supreme Court is reviewing the scope of the Federal Arbitration Act’s “transportation worker” exemption and its potential implications for the enforceability of mandatory arbitration agreements.

On March 25, 2026, the U.S. Supreme Court heard argument in Flowers Foods, Inc. et al. v. Angelo Brock (No. 24-935).[1]  The case concerns the scope of the Federal Arbitration Act’s (FAA) “transportation worker” exemption.  While the FAA generally mandates enforcement of arbitration agreements, Section 1 of the Act does not apply to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”[2]  Arbitration agreements entered into by workers who fall within this exemption are therefore unenforceable under the FAA.

Key Facts

The dispute involves petitioner Flowers Foods, the nation’s second‑largest seller of packaged bakery goods, and Brock, Inc., a local delivery services company.  Flowers Foods’ baked goods are produced at facilities around the United States and shipped across state lines to local warehouses.  From there, logistics companies distribute the products within designated geographic areas and perform the final, in-state delivery to retailers, a process commonly referred to as “last‑mile” delivery.

Angelo Brock, operating as Brock, Inc., entered into an “Independent Distributor Agreement” with Flowers Foods to distribute its products within Colorado – the “last mile” distributor for Flowers.  The agreement contains a mandatory arbitration provision.  Despite that provision, Brock filed a putative class and collective action in the U.S. District Court for the District of Colorado, alleging Flowers misclassified him as an independent contractor, in violation of the Fair Labor Standards Act and Colorado labor law.  Flowers Foods moved to compel arbitration pursuant to the arbitration provision in the parties’ agreement.

The district court denied the motion, concluding that Brock falls within the FAA’s Section 1 exemption for transportation workers engaged in interstate commerce, even though Brock himself worked entirely within Colorado and did not cross state lines while making deliveries.  The U.S. Court of Appeals for the Tenth Circuit affirmed, holding that Brock was part of a “continuous interstate journey” because the goods were baked out of state and shipped across state lines before their final, in-state delivery.  Accordingly, the court concluded that Brock was exempt from mandatory arbitration under the FAA.

Flowers Foods appealed to the U.S. Supreme Court, which granted certiorari to hear the case.

Proceedings before the Supreme Court

The question before the Supreme Court is whether workers who perform only local deliveries of goods that previously traveled in interstate commerce, and who do not themselves cross state lines, are “transportation workers” “engaged in foreign or interstate commerce” within the meaning of Section 1 of the FAA.

Flowers Foods urged the Court to adopt a bright‑line rule, according to which the FAA’s Section 1 exemption would apply only to workers who personally engage in interstate transportation, such as by crossing state lines or directly interacting with vehicles that do.  Under this approach, last‑mile delivery drivers operating solely within one state would fall outside the exemption, even if the goods they deliver were produced out of state, thus leaving arbitration agreements with such workers enforceable.  Flowers emphasized that FAA coverage depends on the nature of the worker’s duties rather than the interstate movement of the goods themselves, and argued that a narrow construction of the exemption would promote efficiency and limit litigation.

Brock, by contrast, urged the Court to view his intrastate delivery work as the final link in a broader interstate transaction.  Brock advocated a functional approach under which workers performing any segment of a continuous interstate journey would be exempt from the FAA, even if their deliveries are purely local.  Under this approach, the analysis would focus on the intended final destination of the goods rather than on whether a particular driver crosses state lines.

The Justices’ questioning suggested hesitation toward the rigid, border‑crossing test proposed by Flowers Foods.  This would lead to treating drivers differently, based on whether a particular leg of a delivery route happens to cross a state line, where workers perform essentially the same transportation function.  Several Justices expressed concern about the arbitrariness of exempting a driver who briefly crosses a state boundary while denying the same status to drivers handling longer intrastate segments of the same shipment.  At the same time, the Court voiced reservations about adopting a broader theory, which may require difficult line drawing exercises, such as determining when an interstate journey begins and ends: at a warehouse, a retail store, or with the ultimate consumer.

In any event, the exchanges indicated that the interstate movement of the goods themselves may be central to the analysis.  The argument reflected a Court searching for a workable middle ground, cautious about embracing either party’s formulation in the absence of a clear, limiting principle.

Takeaways

The case arises amid a growing wave of challenges to the use of arbitration agreements and independent‑contractor classifications as mechanisms for limiting exposure to employment claims and class actions.  The Court’s decision could carry significant implications for businesses that rely on arbitration provisions to manage wage‑and‑hour disputes and litigation costs, particularly in the transportation and logistics sectors, including last-mile delivery operations.

If the Court adopts a broader reading of the FAA’s transportation worker exemption, the result could be a more limited use of arbitration across the transportation industry.  Workers who perform purely local delivery services may fall outside the FAA when the goods they handle have moved in interstate commerce.  Unenforceability under the FAA, however, does not necessarily preclude enforcement of the agreement under applicable state law, although state arbitration statutes are often less predictable and less favorable to the enforcement of arbitration agreements.

Companies operating delivery and logistics labor models may face increased exposure to class and collective actions, even where workers operate solely intrastate and have signed mandatory arbitration agreements.

Our team will continue to monitor these developments and provide an update when the Court issues its opinion, which is expected by late June.

Contact us

Please contact David Bigge or your Wordstone attorney if you have questions about how this case may impact your business.

This article is provided for general informational purposes only and does not constitute legal advice.  It is not intended to be comprehensive, and readers should not rely on it as a substitute for legal counsel tailored to their specific circumstances.

[1] Supreme Court of the United States, Docket No. 24-935, https://www.supremecourt.gov/search.aspx?filename=/docket/docketfiles/html/public/24-935.html.
[2] See 9 U.S.C. § 1.