U.S. Supreme Court hears oral arguments in New Prime case

From the Scopelitis Firm.

On October 3, the U.S. Supreme Court heard oral argument in Oliveira v. New Prime Inc ., a case concerning the use of arbitration to resolve disputes with owner-operators. The plaintiff, who worked as an owner-operator, alleges that New Prime “misclassified” him as an independent contractor but in fact treated him like an employee. His independent-contractor operating agreement with New Prime contained a provision requiring the parties to submit any disputes to binding arbitration under the Federal Arbitration Act (FAA). The lower courts held that the plaintiff qualified under the FAA’s exemption for “transportation workers.” This meant that he could not be compelled to arbitration.

During the oral argument, even the more pro-arbitration justices appeared receptive to Oliveira’s position on the exemption, reasoning that, when the FAA was enacted, the phrase “contract of employment” was sometimes used to describe independent-contractor relationships. An opinion is not expected until 2019. Whatever the Court decides, its opinion will have a direct impact on transportation companies that have existing arbitration agreements with owner-operators, as well as those that may be considering implementing them. However, even if the FAA does not apply to independent-contractor operating agreements, a transportation business may still be able to compel arbitration by invoking the provisions of state arbitration law. As such, it is imperative that transportation businesses carefully consider choice-of-law issues in arbitration agreements with owner-operators.

See the complete article from the Scopelitis Firm online (PDF).