YOUR BUSINESS AUTHORITY
Last edited 10:16 a.m., Jan. 16, 2019
The Supreme Court of the United States today made a ruling on a case involving New Prime Inc., setting a precedent that affects more than just the Springfield trucking company.
The Supreme Court’s 8-0 ruling came about after New Prime, dba Prime Inc., appealed a decision by lower courts prohibiting the company from forcing arbitration in a lawsuit involving one of its truck drivers. Justice Brett Kavanaugh recused himself since the arguments were made in October, before he joined the court, according to the Supreme Court’s ruling.
In the class-action suit filed in 2015, the driver, Dominic Oliveira, alleges a Fair Labor Standards Act violation against Prime for failing to pay its apprentices the lawful minimum wage. The Supreme Court ruling means Oliveira’s suit can proceed.
At the crux of Prime’s arbitration argument was that independent contractors, such as Oliveira, should not be exempt from the Federal Arbitration Act. Oliveira argued a provision in the nearly century-old law excludes the employment contracts of transportation workers. Prime sought to invoke its authority under the act to compel arbitration, according to court documents.
Under his operating agreement with Prime, Oliveira is described as an independent contractor with a clause containing a mandatory arbitration provision. Prime attorneys have indicated the provision meant Oliveira could not use the Federal Arbitration Act clause as an argument.
Prime, according to court documents, sought to force arbitration, arguing “contracts of employment” referred to traditional employer-employee relationships and not independent contractors.
“When Congress enacted the Arbitration Act in 1925, the term ‘contracts of employment’ referred to agreements to perform work,” said Supreme Court Justice Neil Gorsuch, who delivered today’s ruling. “No less than those who came before him, Mr. Oliveira is entitled to the benefit of that same understanding today.”
The ruling, according to Gorsuch, means courts will be able to determine whether the “contracts of employment” exclusion applies before arbitration begins.
“The parties’ private agreement may be crystal clear and require arbitration of every question under the sun, but that does not necessarily mean the act authorizes a court to stay litigation and send the parties to an arbitral forum,” Gorsuch wrote in his 20-page opinion.
Prime General Counsel Steve Crawford called the outcome a "disappointing loss."
"As is evident, the high court held onto principles first laid out nearly 100 years ago," he said in an emailed statement. "We obviously felt that the court’s ruling should have evolved with the law of business and culture. However, when they can hang on to something tied closer to our founding tenets, they tend to do so. We will return to the First Circuit optimistic and prepared to address these allegations on their merits."
Prime is represented in the case by Los Angeles-based Gibson Dunn & Crutcher LLP. Oliveira is represented by Public Justice PC, Andrew Schmidt Law PLLC and Fair Work PC, according to court records.
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