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Law Alert: First Circuit Denies Full-Court Review of Arbitration Opinion Unfavorable for Transportation Providers

by Braden K. Core, Gregory M. Feary, Ryan W. Wright

June 30, 2017


First Circuit Denies Full-Court Review of Arbitration Opinion Unfavorable for Transportation Providers

The Scopelitis Firm has long cautioned transportation providers about the risks in seeking to enforce mandatory arbitration provisions against owner-operators under the Federal Arbitration Act. Such efforts might prompt a defense based on the exemption from the FAA for “contracts of employment” with transportation workers, which some courts have extended to cover even independent contractors. The First Circuit Court of Appeals recently did just that in a case called Olveira v. New Prime, holding that owner-operators work under “contracts of employment” regardless of whether they are independent contractors. New Prime sought full-court review of this opinion (and was supported in that effort by the American Trucking Associations and the U.S. Chamber of Commerce), but that request was denied on Tuesday. Review by the U.S. Supreme Court may be sought, but it is unclear whether the Court would agree to hear the case, or if so how it might rule.

New Prime and decisions like it underscore the need for transportation providers to look closely at state law as an alternative means of compelling arbitration of disputes with owner-operators. Lease agreements that are found to be exempt under the FAA may nonetheless be enforced under state arbitration law. While those laws will vary by jurisdiction and so require careful study, they can provide an independent mechanism by which a court could send a dispute to arbitration, rendering moot any question as to whether the FAA applies.

Scopelitis attorneys regularly counsel transportation providers on the risks involved in seeking to compel arbitration against owner-operators under the FAA and the possibility of gaining enforcement of such agreements under state law. If you have any questions along these lines, please contact Greg Feary, Braden Core, Ryan Wright, or Brandon Wiseman.