The Supreme Court heard oral argument today in Flowers Foods, Inc. v. Brock, No. 24-935, a case that squarely presents a long-running and acknowledged circuit split over what it means to be “engaged in interstate commerce” for purposes of Section 1 of the Federal Arbitration Act (FAA).

The FAA generally requires courts to enforce arbitration agreements, but Section 1 exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” The issue in the case was whether workers who transport goods on the last intrastate leg of a journey that originated out-of-state, but who do not transport the goods across borders and do not interact with vehicles that cross borders, are “engaged in foreign or interstate commerce” for purposes of the Section 1 exemption. Respondent Angelo Brock, an Independent Distributor who delivers baked goods from a Colorado warehouse to Colorado retailers, successfully argued below that he qualifies for the exemption. Flowers Foods petitioned for certiorari after the Tenth Circuit affirmed that ruling, deepening a split among the circuits that the Fifth and Eleventh Circuits have resolved the other way.

The parties offered sharply different readings of what it means to be “engaged in” interstate commerce. Flowers Foods argued that Section 1 extends only to transportation workers who themselves cross state borders or who directly engage with vehicles that transport goods across those borders, what it described as “cross-border transportation.” In that framework, the relevant question is what the driver does, not where the goods he carries have gone or will go. Because Brock’s routing was entirely confined to Colorado, he was not engaged in interstate commerce within the meaning of the statute. Brock countered that the ordinary meaning of “engaged in interstate commerce” has long encompassed workers who transport goods on the final, intrastate leg of a broader interstate journey. Brock also argued that the shipper’s “intended final destination” determines whether a given shipment is interstate or intrastate, drawing an analogy to the focus on the “shipper’s intent” found in Interstate Commerce Commission precedent and the Court’s interstate commerce cases.

In addition, the justices discussed several questions relevant to the Section 1 exemption that are not squarely presented by this case, including the impact of when title to goods passes and whether the exemption applies to business entities (as opposed to only natural persons). While the Court is unlikely to reach those questions in its opinion, as they are not necessary to resolve the case, they do highlight the fact that many aspects of the Section 1 exemption remain open and subject to further litigation. In fact, the questioning acknowledged that those issues are anticipated to come before the Court in the not-so-distant future.

The outcome will carry significant consequences for the transportation industry. Logistics companies, gig-economy platforms, and last- and final-mile delivery networks have been operating under conflicting legal regimes depending on the circuit, creating precisely the kind of threshold arbitrability litigation that the FAA was designed to avoid. A ruling for Flowers Foods would narrow the exemption and restore enforceability of arbitration agreements for a broad class of local delivery workers; a ruling for Brock would confirm that last-mile drivers completing an interstate shipment, even if entirely intrastate, fall outside the FAA’s reach.

An opinion is expected before the Court’s term ends in June. The Scopelitis Law Firm will provide an update when the Court issues its opinion.