US Supreme Court Rules Against Forced Trucker Arbitration

In a decision that could have a broad impact on trucking companies contracting with owner-operators, the US Supreme Court decided Tuesday that motor carrier New Prime cannot force a driver suing the company into arbitration, upholding an appeals court decision that allowed the plaintiff to pursue wage and worker classification claims in federal court.

That could lead trucking companies to reconsider language in their contracts, or how they contract independents. The decision may also affect other disputes over whether drivers are correctly classified as owner-operators or actually are employees. Drivers and groups seeking to represent them may find it easier to take such cases to court as a result of the ruling.

"This is a huge decision as it will probably bring about a number of class action lawsuits against owner-operator fleets," Steve Bojan, vice president of global insurance transportation company Hub International said in a statement. "As we have seen in a number of decisions, some trucking companies were not as disciplined in managing their owner-operator arrangements as they needed to be," Bojan said. Class action attorneys specializing in employment law "will look at this as an area of opportunity," he said.

The Supreme Court didn't rule on Dominic Oliveira's complaint that New Prime, which does business as Prime, treats independent contractors as employees and fails to pay the statutorily due minimum wage. The high court's decision focused only on whether Oliveira would have to pursue those claims through arbitration or would have access to the courts.

The Supreme Court justices ruled 8-0 in favor of Oliveira and against New Prime, deciding that exemption language in the Federal Arbitration Act that covers "seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce," covers owner-operators, while independent contractors still have a "contract of employment" with motor carriers. The decision holds that a trial court should determine whether the arbitration law's exclusion for disputes involving the "contracts of employment" of certain transportation workers applies to a case before ordering parties into arbitration. The ruling effectively overrides mandatory arbitration clauses commonly found in motor carrier contracts with owner-operators.

The potential impact wasn't lost on the Teamsters union. "This is a great victory for all workers in the transportation industry, including employees, legitimate independent contractors, and drivers misclassified as independent contractors who are suffering egregious wage theft," Fred Potter, vice president at large and director of the Teamsters Port Division, said in a statement Tuesday.

The ruling "makes it clear that employers cannot and should not require drivers to waive their right to their day in court through binding arbitration agreements," Potter said. The Teamsters are part of a coalition in arguing port drayage drivers have been misclassified as independent contractors rather than employees, which prevents their organization as union members.

The decision also could affect a class action lawsuit against Swift Transportation, the largest US truckload carrier. That lawsuit was stayed last Feb. 27 by the Ninth Circuit US Court of Appeals in Phoenix after the Supreme Court agreed to hear the New Prime-Oliveira case. The high court decision likely will revive that case and bring it before the appellate court once again.

Source: Journal of Commerce