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Transportation Brief: Arbitration with Owner-Operators Continues to Offer Promise and Peril

by Braden K. Core

Sep 21, 2017

Arbitration with Owner-Operators Continues to Offer Promise and Peril

When correctly applied, arbitration can be an efficient method of resolving disputes and mitigating the risk of class and collective litigation. For transportation providers, arbitration poses unique challenges due to the exception from the Federal Arbitration Act for “contracts of employment” with “transportation workers.” This exemption has mired several motor carriers in lengthy battles over whether arbitration agreements with owner-operators are enforceable. Even worse, some courts have concluded that owner-operators work under “contracts of employment” as a matter of law, as in a recent opinion by the U.S. Court of Appeals for the First Circuit (Oliveira v. New Prime). Transportation providers should review state law as an alternative means to compel arbitration for disputes with owner-operators. Lease agreements that are exempt under the FAA may still be enforced under state law. While those laws will vary and require careful study, they can provide an independent means of compelling arbitration and rendering moot any question as to whether the FAA applies.

 

Scopelitis’ Transportation Brief® is intended as a report to our clients and friends on developments affecting the transportation industry. The published material does not constitute an exhaustive legal study and should not be regarded or relied upon as individual legal advice or opinion.


 

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