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Supreme Court Refuses Employer’s Demand to Compel Arbitration of Truck Driver’s Wage Claims

On Behalf of | Jan 15, 2019 | Uncategorized |

Today, the Supreme Court issued a unanimous 8-0 opinion by Justice Gorsuch (Justice Kavanaugh was not on the ruling as it was argued before he joined), holding that the employee, a truck driver, fell into an exception to the Federal Arbitration Act (it does not cover “contracts of employment” for certain transportation workers), so that the lower courts correctly ruled he did not have to arbitrate his dispute involving failure to pay minimum wages.

Here, the truck company paid its drivers zero wages during their “training” period (10,000 miles of driving), and less-than-minimum wages during the “apprentice” period (30,000 miles of driving), and even after passing those thresholds, the truck company deducted “lease payments” from the truck driver’s wages. The truck company also required the drivers to lease equipment from the company’s own stores, and attempted to treat the drivers as independent contractors, even though the truck company controlled all aspects of the driver’s work. When the driver brought a suit under the minimum wage statutes, the truck company tried to compel arbitration, but all three courts – district court, Court of Appeals, and Supreme Court – ruled in favor of the truck driver. 

Some excerpts follow:


[January 15, 2019]

JUSTICE GORSUCH delivered the opinion of the Court.

The Federal Arbitration Act requires courts to enforce private arbitration agreements. But like most laws, this one bears its qualifications. Among other things, §1 says that “nothing herein” may be used to compel arbitration in disputes involving the “contracts of employment” of certain transportation workers. 9 U. S. C. §1. And that qualification has sparked these questions: When a contract delegates questions of arbitrability to an arbitrator, must a court leave disputes over the application of §1’s exception for the arbitrator to resolve? And does the term “contracts of employment” refer only to contracts between employers and employees, or does it also reach contracts with independent contractors? Because courts across the country have disagreed on the answers to these questions, we took this case to resolve them. . . .. . . .

Eventually, of course, a dispute did arise. In a class action lawsuit in federal court, Mr. Oliveira argued that New Prime denies its drivers lawful wages. The company may call its drivers independent contractors. But, Mr. Oliveira alleged, in reality New Prime treats them as employees and fails to pay the statutorily due minimum wage. In response to Mr. Oliveira’s complaint, New Prime asked the court to invoke its statutory authority under the Act and compel arbitration according to the terms found in the parties’ agreements.

That request led to more than a little litigation of its own. Even when the parties’ contracts mandate arbitration, Mr. Oliveira observed, the Act doesn’t always authorize a court to enter an order compelling it. In particular, §1 carves out from the Act’s coverage “contracts of em-ployment of . . . workers engaged in foreign or interstate commerce.” And at least for purposes of this collateral dispute, Mr. Oliveira submitted, it doesn’t matter whether you view him as an employee or independent contractor. Either way, his agreement to drive trucks for New Prime qualifies as a “contract[ ] of employment of . . . [a] worker[] engaged in . . . interstate commerce.” Accordingly, Mr. Oliveira argued, the Act supplied the district court with no authority to compel arbitration in this case. . . .. . . .

Ultimately, the district court and the First Circuit sided with Mr. Oliveira. 857 F. 3d 7 (2017). The court of appeals held, first, that in disputes like this a court should resolve whether the parties’ contract falls within the Act’s ambit or §1’s exclusion before invoking the statute’s authority to order arbitration. Second, the court of appeals held that §1’s exclusion of certain “contracts of employment” removes from the Act’s coverage not only employer-employee contracts but also contracts involving independent contractors. So under any account of the parties’ agreement in this case, the court held, it lacked authority under the Act to order arbitration. . . .. . . .

To many lawyerly ears today, the term “contracts of employment” might call to mind only agreements between employers and employees (or what the common law sometimes called masters and servants). Suggestively, at least one recently published law dictionary defines the word “employment” to mean “the relationship between master and servant.” Black’s Law Dictionary 641 (10th ed. 2014). But this modern intuition isn’t easily squared with evidence of the term’s meaning at the time of the Act’s adoption in 1925. At that time, a “contract of employment” usually meant nothing more than an agreement to perform work. As a result, most people then would have understood §1 to exclude not only agreements between employers and employees but also agreements that require independent contractors to perform work. . . .. . . .

When Congress enacted the Arbitration Act in 1925, the term “contracts of employment” referred to agreements to perform work. 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 §1’s exception, the court of appeals was correct that it lacked authority under the Act to order arbitration, and the judgment is Affirmed. 

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