New Prime Inc. v. Oliveira

2019-01-15

Headline: Court affirms that arbitration cannot be forced for many transportation work contracts, says courts must decide the Federal Arbitration Act’s §1 exception first, and that ‘contracts of employment’ include independent contractors.

Holding: The Court held that courts must first decide whether the Federal Arbitration Act’s §1 exclusion applies and that “contracts of employment” includes independent-contractor agreements, so arbitration could not be compelled here.

Real World Impact:

Prevents many trucking companies from forcing arbitration for drivers labeled independent contractors.
Requires courts to decide the FAA’s §1 exclusion before sending disputes to arbitration.
Protects transportation workers from immediate compelled arbitration under the Arbitration Act.

Topics: arbitration agreements, transportation workers, independent contractors, wage disputes

Summary

Background

New Prime is an interstate trucking company and Dominic Oliveira is a driver whose contract labels him an independent contractor. The parties’ agreement required an arbitrator to resolve disputes, and New Prime asked a court to compel arbitration after Oliveira sued over unpaid wages.

Reasoning

The Court faced two questions: whether a court or an arbitrator must first decide whether the Act’s §1 exclusion applies, and whether “contracts of employment” reaches independent-contractor agreements. The Court held a court must decide the §1 question before ordering arbitration. Looking to how people used words in 1925, the Court concluded “contracts of employment” meant agreements to perform work and can include independent contractors. Because Oliveira’s agreement falls within §1’s exception, the court of appeals correctly found the district court lacked authority under the Arbitration Act to compel arbitration.

Real world impact

The ruling limits when courts may use the Federal Arbitration Act to force arbitration for certain transportation workers. Drivers and others labeled as independent contractors for interstate work may be able to keep wage and related disputes in court rather than being sent to arbitration. The decision rests on the historical meaning of the 1925 statute, so its application depends on whether a contract fits §1’s description.

Dissents or concurrances

Justice Ginsburg concurred, agreeing with the Court’s focus on the statute’s meaning at enactment while noting that some statutes may properly change scope over time.