What's Ahead At The Supreme Court?

There are at least four cases now before the U.S. Supreme Court that may be of significant interest to employers. Three were argued in October 2018, and certiorari was granted in the last case on Dec. 10.

The Three Cases Already Argued

The three cases argued all involve arbitration. The first, New Prime Inc. v. Oliveira, No. 17-340, was argued on Oct. 3, 2018. The issues presented were:

Whether a dispute over applicability of the Federal Arbitration Act's (FAA's) Section 1 exemption is an arbitrability issue that must be resolved in arbitration pursuant to a valid delegation clause; and (2) whether the FAA's Section 1 exemption, which applies on its face only to "contracts of employment," is inapplicable to independent contractor agreements.

Section 1 of the FAA excludes from the act's coverage "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1.

This case is significant because of its potential impact on the arbitration of disputes with independent contractors in the trucking business. (We addressed the background of the case in our Feb. 28, 2018, blog article.) Petitioner New Prime Inc. argued that the scope of the Section 1 exemption should be resolved by an arbitrator based upon a valid delegation clause in the arbitration agreement. On the other hand, Dominic Oliveira argued that the court must resolve whether the FAA even applies before using it to compel arbitration. Both parties agreed that the term "contracts of employment" should be given its ordinary meaning from 1925, when the FAA was enacted. The sides, however, disagreed on the proper meaning of the term.

During oral argument on Oct. 3, several of the justices seemed to struggle with the meaning of contracts of employment and whether the use of the term "workers" broadened the scope of the provision beyond the employee/employer relationship. Indeed, Oliveira maintained that when the FAA was passed, contracts of employment merely referred to agreements to perform work, not a master-servant relationship.

Interestingly, counsel for Oliveira also stated that workers, not businesses, would fall within the exemption. In other words, "Did the parties contemplate that the person with whom they agreed would personally perform the work?" (Transcript at 42). But, counsel for New Prime pointed out that the independent contractor agreement at issue involved a limited liability company that Oliveira...