New Prime, Inc. v. Oliveira
Issues
Is arbitrability of a dispute over the applicability of the Federal Arbitration Act’s Section 1 exemption subject to determination by the courts or by an arbitrator pursuant to a valid delegation clause, and does the Section 1 exemption for contracts of employment apply to independent contractor agreements?
This case gives the Supreme Court an opportunity to determine whether a dispute over the applicability of the Federal Arbitration Act’s (“FAA”) Section 1 exemption is an arbitrable issue pursuant to a valid delegation clause. Additionally, the Court has the opportunity to decide whether the Section 1 exemption for contracts of employment includes, as a matter of law, independent contractor agreements. Section 1 of the FAA carves out an exception from the Act’s applicability for contracts of employment of seamen, railroad employees, and other classes of workers engaged in interstate commerce. New Prime argues that the delegation clause covers threshold disputes such as the applicability of the FAA and that the phrase “contract of employment” does not include independent contractor agreements. Oliveira counters that courts must first determine the applicability of the FAA before requiring arbitration and also that the ordinary meaning of “contracts of employment” at the time the FAA was enacted included independent contractor agreements. The Supreme Court’s decision has implications for the trucking industry and will likely influence whether this industry will continue to resort to arbitration to resolve disputes.
Questions as Framed for the Court by the Parties
- Whether a dispute over applicability of the Federal Arbitration Act's Section 1 exemption is an arbitrability issue that must be resolved in arbitration pursuant to a valid delegation clause.
- Whether the FAA's Section 1 exemption, which applies on its face only to “contracts of employment,” is inapplicable to independent contractor agreements.
Petitioner New Prime, Inc. (“New Prime”) is a national trucking company that recruits and trains new drivers through an apprenticeship program. Oliveira v. New Prime, Inc. at 3–4. Student apprentices participating in this program are unpaid, except during one phase of the program when they are paid fourteen cents per mile driven. Id.
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Additional Resources
- Erin Mulvaney, Senator’s SCOTUS Brief Challenges Wave of Pro-Arbitration Decisions, The National Law Journal (July 27, 2018).
- James Jaillet, Supreme Court to Hear New Prime Inc.’s Appeal to Uphold Arbitration Agreement with Drivers, Commercial Carrier Journal (February 28, 2018).