Term: 2018
Docket: 17-340
New Prime Inc. v. Oliveira
- Pro
17-340 NEW PRIME INC. V. OLIVEIRA DECISION BELOW: 857 F.3d 7 CERT. GRANTED 2/26/2018 QUESTION PRESENTED: Section 1 of the Federal Arbitration Act ("FAA") provides that the FAA does not apply "to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. Respondent is an independent contractor whose agreement with interstate trucking company New Prime, Inc. ("Prime") includes a mandatory arbitration provision requiring Respondent to arbitrate all workplace disputes with Prime on an individual basis. Respondent does not challenge the validity of the arbitration agreement he signed or the delegation clause contained therein, which mandates that all disputes regarding arbitrability be decided by an arbitrator. Nonetheless, Respondent filed a putative class action in court and opposed arbitration on the basis of the Section 1 exemption. The questions presented are: 1. Whether a dispute over applicability of the FAA's Section 1 exemption is an arbitrability issue that must be resolved in arbitration pursuant to a valid delegation clause. 2. Whether the FAA's Section 1 exemption, which applies on its face only to "contracts of employment," is inapplicable to independent contractor agreements. LOWER COURT CASE NUMBER: 15-2364
In the case of New Prime Inc. v. Oliveira, the U.S Supreme Court ruled in favor of truck driver Dominic Oliveira who was involved in a dispute with his employer, New Prime Inc., over unpaid wages. The company argued that under their contract's arbitration clause, any disputes should be resolved privately rather than through court litigation. However, Oliveira claimed that as an independent contractor he fell within the exemptions outlined by Section 1 of the Federal Arbitration Act (FAA), which excludes "contracts of employment" from its purview and thus allows him to bring his claim to court instead. The Supreme Court unanimously agreed with Oliveira’s interpretation and held that transportation workers engaged in interstate commerce are exempted from FAA regardless if they are classified as independent contractors or employees. The ruling also clarified that it is for a judge - not an arbitrator - to decide whether these exemptions apply when there is a legal dispute about them.
In the case of New Prime Inc. v. Oliveira, there was no dissenting opinion as the decision was unanimous. The Supreme Court ruled 8-0 in favor of Oliveira, holding that a court should determine whether the Federal Arbitration Act’s (FAA) Section 1 exclusion for disputes involving “contracts of employment” applies before ordering arbitration. The Court also held that "contracts of employment" include not only contracts establishing an employer-employee relationship but also contracts where workers commit their work to another entity, such as independent contractors like Oliveira.
