On May 28, 2026, a unanimous Supreme Court held in Flowers Foods, Inc. v. Brock, 608 U.S. ___ (2026), that a worker who transports goods on a purely intrastate leg of an interstate journey can fall within Section 1 of the Federal Arbitration Act, even if the worker never crosses state lines and never interacts with a vehicle that does. Writing for the Court, Justice Gorsuch affirmed the Tenth Circuit and rejected the bright-line “cross-or-tag” rule urged by the employer. The decision is the fourth in the Court’s recent line of Section 1 cases, and for companies that depend on local delivery and franchise distribution networks, it narrows the availability of FAA arbitration against those workers while sharpening the defenses that remain.
The statutory backdrop
The FAA generally requires courts to enforce private arbitration agreements, but Section 1 carves out “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” 9 U.S.C. § 1. A worker who falls within that exemption cannot be compelled to arbitrate under the FAA.
The Court has construed the exemption three times in recent years, each time declining to cabin its reach. In one such decision, it held that “contracts of employment” reach independent-contractor agreements, not just employees. In another, it held that an airline cargo loader was covered even though she never flew planes or crossed state lines. And in a third, it held that a worker may qualify regardless of whether the employer is in the “transportation industry,” so long as the work plays a “direct and necessary role in the free flow of goods across borders.”
The dispute
Flowers Foods is one of the nation’s largest producers of packaged baked goods, with bakeries in 19 states and brands that include Wonder Bread. To get products to market, it relies in part on franchisees who buy the rights to distribute Flowers products in defined territories. Angelo Brock is one such franchisee. He serves the Denver area, picking up products from a Colorado warehouse and delivering them to local stores, all without leaving the state.
In 2022, Brock sued Flowers in federal court, alleging that the company underpaid him and other distributors in violation of federal and state law. Flowers moved to compel arbitration under a distribution agreement Brock had signed. The district court denied the motion, and the Tenth Circuit affirmed. Brock v. Flowers Foods, Inc., 121 F.4th 753 (10th Cir. 2024). The Tenth Circuit acknowledged that Brock neither crosses state lines nor interacts directly with those who do, but it found those facts not dispositive. What mattered was that Brock’s intrastate route formed a constituent part of the interstate journey of Flowers’s goods from out-of-state bakeries to their intended retail destinations.
The holding
The Court affirmed. The question presented was whether a worker can be “engaged in. . . interstate commerce” under Section 1 if he never crosses state lines and never interacts with vehicles that do. The Court answered that, at least sometimes, he can. A worker who transports goods on an intrastate leg of an interstate journey can qualify for the exemption without satisfying either criterion.
The Court grounded the result in the ordinary meaning of the statute at its 1925 enactment. To be “engaged in” something meant to take part in it or to be employed or involved in it, and “interstate commerce” meant the transportation of property between states or between points in one state and points in another. Nothing in those terms requires an individual to cross state lines or to touch a vehicle that does. A “continuous carriage[] may begin in one State and end in another” even though “much of the journey[] can take place []within the limits of a single state.”
Two hypotheticals carried the analysis. If one driver carries goods to a state border, a second driver takes them ten feet across, and a third completes the delivery, Flowers’s theory would treat only the middle driver as engaged in interstate commerce. The Court found that result untenable because each driver played a direct, active, and necessary part in moving the goods from their origin to their contractual destination. The Court added that this was hardly a hypothetical, pointing to an 1871 decision, in which a steamer operating entirely within Michigan was nonetheless “engaged in commerce between the States” because it carried goods destined for, or arriving from, other states.
Flowers’s principal rejoinder was that those authorities interpreted the Commerce Clause rather than Section 1. The Court agreed it was not holding the two coextensive, but reasoned that cases using the same or closely similar language offer probative evidence of how an ordinary person at enactment would have understood the statute’s terms. The Court reaffirmed its earlier formulation that Section 1 reaches workers who play a “direct,” “necessary,” and “active” role in moving goods across borders, and concluded that the cross-or-tag rule cannot be squared with the text.
What the Court did not decide
For employers, the most consequential part of the opinion may be what the Court left open. Flowers raised, but did not press, two arguments that the Court expressly declined to resolve.
First is whether a worker who operates under a distribution agreement, rather than a “contract of employment,” falls within Section 1 at all. The Court pointed to conflicting decisions on the point, comparing a Ninth Circuit decision holding that Section 1 is inapplicable to a contract between two business entities with a Second Circuit decision holding that Section 1 is applicable to certain agreements with single-employee corporations.
Second is if it matters whether a distributor like Brock orders, purchases, and takes title to the goods before reselling them to local stores. Some courts have treated facts of that kind as relevant to whether goods have reached their intended destination under an interstate contract. Because Flowers discussed these facts only in passing and did not ask the Court to decide their legal significance, the Court left them for another day.
These two issues are now the live battleground. Brock forecloses the argument that intrastate-only drivers categorically fall outside Section 1, but it does not resolve whether a franchise or distribution structure, or a buy-and-resell arrangement, takes a worker out of the exemption.
Takeaways for employers
Companies that rely on local or “last-mile” delivery should not assume their FAA arbitration clauses are enforceable against drivers who stay within a single state. After Brock, the relevant question is whether the worker’s leg is part of a continuous interstate movement of goods and whether the worker plays a direct, necessary, and active role in that movement, not whether the worker personally crosses a state line. Until the Court resolves the questions it left open, best practices include scrutinizing how each delivery relationship is structured and documented, rather than relying on geography alone to keep these disputes in arbitration, updating arbitration agreements in light of the decision, and considering alternative distribution or other contractual agreements that can break the chain of interstate commerce.