Law Alert: Supreme Court to Consider the “Transportation Worker” Exemption from the Federal Arbitration Act
March 6, 2018
Supreme Court to Consider the “Transportation Worker” Exemption from the Federal Arbitration Act
Last week the U.S. Supreme Court agreed to hear an appeal by motor carrier New Prime, Inc. challenging a decision by the U.S. Court of Appeals for the First Circuit that found the company’s owner-operators worked under “contracts of employment.” This holding meant that the owner-operators were exempt from the Federal Arbitration Act, and that the carrier therefore could not require the owner-operators to arbitrate their claims alleging violations of the Fair Labor Standards Act and state law.
We first brought the New Prime opinion to your attention in our Transportation Law Alert dated June 30, 2017, when the First Circuit denied full-court review of the panel’s opinion. The Supreme Court’s decision last week to consider the case could have far-reaching implications for the ability of transportation companies to enforce arbitration agreements with owner-operators. While we are closely monitoring this case (and others pending before the Court asking whether class-arbitration bans with employees violate the National Labor Relations Act), New Prime and cases like it underscore the need for transportation companies 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 vary by jurisdiction and require careful study, they can provide an independent avenue 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.
Scopelitis Transportation Law Alerts are intended as a report to our clients and friends on legal 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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