U.S. Supreme Court rules in favor of driver in dispute with New Prime

(Photo: Jim Allen/FreightWaves)

(Photo: Jim Allen/FreightWaves)

New Prime v. Oliveira tests use of arbitration in disputes with motor carrier to avoid more costly and lengthier court hearings.

A truck driver who sued Missouri-based Prime Inc. for back wages prevailed in U.S. Supreme Court case that was seen as big test about whether motor carriers can force arbitration in disputes with drivers.

The “independent contractor” business model so common throughout trucking lost as the Supreme Court unanimously ruled in favor of Dominic Oliveira. The Court ruled that his 2013 lawsuit against the former New Prime does not have to go into forced arbitration and his work for New Prime was not covered under terms of the existing arbitration statutes.

The case pitted different sides of the industry against one another, with the American Trucking Associations saying the case would affect the enforceability of agreements between owner-operators and motor carriers.

The case hinged largely on the Federal Arbitration Act, a 1926 law that requires courts to push cases involving interstate commerce disputes to arbitration, thereby negating the right to appeal.

The law, however, does not require arbitration in a “contract of employment.”

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New Prime asked the Court to invoke the Federal Arbitration Act and push Oliveira to arbitration. In doing so, it argued that Oliveira’s status as a trainee driver and then independent contractor meant he was not covered under a “contract of employment” as defined by the 1926 law.  

In writing the opinion for the Court, Justice Neil Gorsuch noted the Federal Arbitration Act only applies when it’s a “written provision in any maritime transaction or a contract evidencing a transaction involving commerce.” Justice Gorsuch also noted that nothing in the 1926 law “shall apply” to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”

LIkewise, Gorsuch says the term “contracts of employment” could be interpreted “more or less as a synonym for work,” thus covering even independent contractors like Oliveira. New Prime had argued that the term only covered employer-employee relations.