The U.S. Supreme Court on Tuesday, Jan. 15, ruled that all transportation workers – including independent contractors – are exempt from the Federal Arbitration Act.
Upholding a previous First Circuit decision, the Supreme Court ruled against New Prime, saying that the trucking company couldn’t compel arbitration in a class action lawsuit brought against them by truck driver Dominic Oliveira.
Justice Neil Gorsuch delivered the opinion of the court, in which all other justices joined except Justice Brett Kavanaugh, who didn’t take part in the case.
“When Congress enacted the Arbitration Act in 1925, the term ‘contracts of employment’ referred to agreements to perform work,” Gorsuch wrote. “No less than those who came before him, Mr. Oliveira is entitled to the benefit of that same understanding today. Accordingly, his agreement with New Prime falls within (the) exception. The court of appeals was correct that it lacked authority under the Act to order arbitration.”
In 2015, Oliveira filed a class action against New Prime, alleging that the trucking company violated the Fair Labor Standards Act, as well as the Missouri minimum-wage statute. According to Oliveira, New Prime paid him less than minimum wage, and deductions for fuel and lease payments on the truck occasionally left him owing money at the end of a pay period.
New Prime moved to compel arbitration under the Federal Arbitration Act.
The U.S. Court of Appeals for the First Circuit ruled that the exemption does apply to independent contractors.
New Prime, which is based in Springfield, Mo., then petitioned the ruling to the Supreme Court, arguing that the First Circuit’s decision would deprive both companies and workers in the transportation industry of the benefits of the Federal Arbitration Act.
Oliveira’s attorneys contended that the Federal Arbitration Act prohibits courts from applying the statute to the “contracts of employment of seamen, railroad employers or any other class of workers engaged in foreign or interstate commerce.”
However, New Prime argued that “contracts of employment” referred only to contracts that establish an employer-employee relationship and not to contracts with independent contractors.
The Supreme Court said that “employment” and “work” were often used as synonyms during the time the Federal Arbitration Act was written.
“New Prime’s argument that early 20th century courts sometimes used the phrase ‘contracts of employment’ to describe what are recognized today as agreements between employers and employees does nothing to negate the possibility that the term also embraced agreements by independent contractors to perform work,” Gorsuch wrote.
“The Court should respect ‘the limits up to which Congress was prepared’ to go when adopting the Arbitration Act.”
Justice Ruth Bader Ginsburg wrote a concurring opinion.
“Words generally should be ‘interpreted as taking their ordinary meaning at the time Congress enacted the statute,’” Ginsburg wrote. “The Court so reaffirms, and I agree. Looking to the period of enactment to gauge statutory meaning ordinarily fosters fidelity to the ‘regime Congress established.’”
In July, the Owner-Operator Independent Drivers Association filed an amicus brief to the Supreme Court in support of Oliveira.
“The Congress and federal agencies’ historical oversight and regulation of motor carrier/owner-operator contracts and their provision of different procedures and forums to resolve disputes under those contracts demonstrate precisely the type of contract for employment of persons engaged in interstate commerce that Congress intended to exempt from the FAA,” OOIDA wrote.
“A definitive finding by this Court that motor carrier/owner-operator contracts are not exempted from the FAA would erect such a burden that it would effectively defeat an owner-operator’s ability to enforce his or her rights, and therefore frustrate the public policy choices of Congress and the regulating agencies.”
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