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U.S. Supreme Court Finds Limits in Arbitration

Dominic Oliveira worked as an independent contractor truck driver for New Prime Inc. He challenged his classification as an independent contractor in a federal district court. The company moved to dismiss the case on the grounds that arbitration was the required forum based on the contract signed by Mr. Oliveira. However, he opposed arbitration on the grounds that the Federal Arbitration Act (FAA) states that “contract of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” are exempt from arbitration. As a truck driver, Mr. Oliveira argued he was exempt from the Act. New Prime disagreed, arguing that the term “contract of employment” required a formal employer-employee relationship. The company also argued that an arbitrator, and not the courts, should determine whether the parties’ dispute was covered by the FAA.
The Supreme Court agreed with Dominic Oliveira. In a unanimous opinion, the court ruled that Congress’ reference to workers included independent contractors. There was nothing to support New Prime’s argument that a formal employer-employee relationship was necessary. The Court further determined that the courts, and not arbitrators, must assess whether Mr. Oliveria’s arbitration agreement falls within the exception. As an essential question to whether the FAA would be triggered, it was not an issue that could be delegated to an arbitrator. The Court did not address the issue of who qualifies as a transportation worker under the FAA.