Source: https://supreme.justia.com/cases/federal/us/586/17-340/
Timestamp: 2019-08-25 10:05:12
Document Index: 352245716

Matched Legal Cases: ['§1', '§3', '§1', '§2', '§3', '§1', '§3', '§2', '§1', '§1', '§1', '§1', '§3', '§1', '§2', '§1', '§3', '§3', '§2', '§1', '§1', '§3', '§2', '§1', '§1', '§56', '§51', '§1']

New Prime Inc. v. Oliveira :: 586 U.S. ___ (2019) :: Justia US Supreme Court Center
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New Prime Inc. v. Oliveira, 586 U.S. ___ (2019)
Oliveira is a driver for a trucking company, under an agreement that calls him an independent contractor and contains a mandatory arbitration provision. Oliveira filed a class action alleging that the company denies its drivers lawful wages. The company invoked the Federal Arbitration Act, arguing that questions regarding arbitrability should be resolved by the arbitrator. The First Circuit and Supreme Court agreed that a court should determine whether the Act's section 1 exclusion applies before ordering arbitration. A court’s authority to compel arbitration under the Act does not extend to all private contracts. Section 2 provides that the Act applies only when the agreement is “a written provision in any maritime transaction or a contract evidencing a transaction involving commerce.” Section 1 provides that “nothing” in the Act “shall apply” to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” The sequencing is significant. A “delegation clause,” giving the arbitrator authority to decide threshold questions of arbitrability is merely a specialized type of arbitration agreement and is enforceable under sections 3 and 4 only if it appears in a contract consistent with section 2 that does not trigger section 1’s exception. Because “contract of employment” refers to any agreement to perform work, Oliveira’s contract falls within that exception. At the time of the Act’s 1925 adoption, the phrase “contract of employment” was not a term of art; dictionaries treated “employment” as generally synonymous with “work," not requiring a formal employer-employee relationship. Congress used the term “contracts of employment” broadly.
Despite the presence of a "delegation clause,” giving an arbitrator authority to decide threshold questions of arbitrability, a court should initially determine whether an exception to the Federal Arbitration Act applies. A contract calling a worker an "independent contractor" is a contract of employment for purposes of an exception to the Act.
1. A court should determine whether a §1 exclusion applies before ordering arbitration. A court’s authority to compel arbitration under the Act does not extend to all private contracts, no matter how emphatically they may express a preference for arbitration. Instead, antecedent statutory provisions limit the scope of a court’s §§3 and 4 powers to stay litigation and compel arbitration “accord[ing to] the terms” of the parties’ agreement. Section 2 provides that the Act applies only when the agreement is set forth as “a written provision in any maritime transaction or a contract evidencing a transaction involving commerce.” And §1 helps define §2’s terms, warning, as relevant here, that “nothing” in the Act “shall apply” to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” For a court to invoke its statutory authority under §§3 and 4, it must first know if the parties’ agreement is excluded from the Act’s coverage by the terms of §§1 and 2. This sequencing is significant. See, e.g., Bernhardt v. Polygraphic Co. of America, 350 U.S. 198, 201–202. New Prime notes that the parties’ contract contains a “delegation clause,” giving the arbitrator authority to decide threshold questions of arbitrability, and that the “severability principle” requires that both sides take all their disputes to arbitration. But a delegation clause is merely a specialized type of arbitration agreement and is enforceable under §§3 and 4 only if it appears in a contract consistent with §2 that does not trigger §1’s exception. And, the Act’s severability principle applies only if the parties’ arbitration agreement appears in a contract that falls within the field §§1 and 2 describe. Pp. 3–6.
(a) “[I]t’s a ‘fundamental canon of statutory construction’ that words generally should be ‘interpreted as taking their ordinary . . . meaning . . . at the time Congress enacted the statute.’ ” Wisconsin Central Ltd. v. United States, 585 U. S. ___, ___ (quoting Perrin v. United States, 444 U.S. 37, 42). After all, if judges could freely invest old statutory terms with new meanings, this Court would risk amending legislation outside the “single, finely wrought and exhaustively considered, procedure” the Constitution commands. INS v. Chadha, 462 U.S. 919, 951. The Court would risk, too, upsetting reliance interests by subjecting people today to different rules than they enjoyed when the statute was passed. At the time of the Act’s adoption in 1925, the phrase “contract of employment” was not a term of art, and dictionaries tended to treat “employment” more or less as a synonym for “work.” Contemporaneous legal authorities provide no evidence that a “contract of employment” necessarily signaled a formal employer-employee relationship. Evidence that Congress used the term “contracts of employment” broadly can be found in its choice of the neighboring term “workers,” a term that easily embraces independent contractors. Pp. 6–10.
(b) New Prime argues that by 1925, the words “employee” and “independent contractor” had already assumed distinct meanings. But while the words “employee” and “employment” may share a common root and intertwined history, they also developed at different times and in at least some different ways. The evidence remains that, as dominantly understood in 1925, a “contract of employment” did not necessarily imply the existence of an employer-employee relationship. New Prime’s argument that early 20th-century courts sometimes used the phrase “contracts of employment” to describe what are recognized today as agreements between employers and employees does nothing to negate the possibility that the term also embraced agreements by independent contractors to perform work. And its effort to explain away the statute’s suggestive use of the term “worker” by noting that the neighboring terms “seamen” and “railroad employees” included only employees in 1925 rests on a precarious premise. The evidence suggests that even “seamen” and “railroad employees” could be independent contractors at the time the Arbitration Act passed. Left to appeal to the Act’s policy, New Prime suggests that this Court order arbitration to abide Congress’ effort to counteract judicial hostility to arbitration and establish a favorable federal policy toward arbitration agreements. Courts, however, are not free to pave over bumpy statutory texts in the name of more expeditiously advancing a policy goal. Rather, the Court should respect “the limits up to which Congress was prepared” to go when adopting the Arbitration Act. United States v. Sisson, 399 U.S. 267, 298. This Court also declines to address New Prime’s suggestion that it order arbitration anyway under its inherent authority to stay litigation in favor of an alternative dispute resolution mechanism of the parties’ choosing. Pp. 10–15.
Ultimately, the district court and the First Circuit sided with Mr. Oliveira. 857 F.3d 7 (2017). The court of appeals held, first, that in disputes like this a court should resolve whether the parties’ contract falls within the Act’s ambit or §1’s exclusion before invoking the statute’s authority to order arbitration. Second, the court of appeals held that §1’s exclusion of certain “contracts of employment” removes from the Act’s coverage not only employer-employee contracts but also contracts involving independent contractors. So under any account of the parties’ agreement in this case, the court held, it lacked authority under the Act to order arbitration.
Instead, antecedent statutory provisions limit the scope of the court’s powers under §§3 and 4. Section 2 provides that the Act applies only when the parties’ agreement to arbitrate is set forth as a “written provision in any maritime transaction or a contract evidencing a transaction involving commerce.” And §1 helps define §2’s terms. Most relevant for our purposes, §1 warns that “nothing” in the Act “shall apply” to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” Why this very particular qualification? By the time it adopted the Arbitration Act in 1925, Congress had already prescribed alternative employment dispute resolution regimes for many transportation workers. And it seems Congress “did not wish to unsettle” those arrangements in favor of whatever arbitration procedures the parties’ private contracts might happen to contemplate. Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 121 (2001).
Nothing in our holding on this score should come as a surprise. We’ve long stressed the significance of the statute’s sequencing. In Bernhardt v. Polygraphic Co. of America, 350 U.S. 198, 201–202 (1956), we recognized that “Sections 1, 2, and 3 [and 4] are integral parts of a whole. . . . [Sections] 1 and 2 define the field in which Congress was legislating,” and §§3 and 4 apply only to contracts covered by those provisions. In Circuit City, we acknowledged that “Section 1 exempts from the [Act] . . . contracts of employment of transportation workers.” 532 U. S., at 119. And in Southland Corp. v. Keating, 465 U.S. 1, 10–11, and n. 5 (1984), we noted that “the enforceability of arbitration provisions” under §§3 and 4 depends on whether those provisions are “part of a written maritime contract or a contract ‘evidencing a transaction involving commerce’ ” under §2—which, in turn, depends on the application of §1’s exception for certain “contracts of employment.”
To be sure, New Prime resists this straightforward understanding. The company argues that an arbitrator should resolve any dispute over §1’s application because of the “delegation clause” in the parties’ contract and what is sometimes called the “severability principle.” A delegation clause gives an arbitrator authority to decide even the initial question whether the parties’ dispute is subject to arbitration. Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 68–69 (2010). And under the severability principle, we treat a challenge to the validity of an arbitration agreement (or a delegation clause) separately from a challenge to the validity of the entire contract in which it appears. Id., at 70–71. Unless a party specifically challenges the validity of the agreement to arbitrate, both sides may be required to take all their disputes—including disputes about the validity of their broader contract—to arbitration. Ibid. Applying these principles to this case, New Prime notes that Mr. Oliveira has not specifically challenged the parties’ delegation clause and submits that any controversy should therefore proceed only and immediately before an arbitrator.
But all this overlooks the necessarily antecedent statutory inquiry we’ve just discussed. A delegation clause is merely a specialized type of arbitration agreement, and the Act “operates on this additional arbitration agreement just as it does on any other.” Id., at 70. So a court may use §§3 and 4 to enforce a delegation clause only if the clause appears in a “written provision in . . . a contract evidencing a transaction involving commerce” consistent with §2. And only if the contract in which the clause appears doesn’t trigger §1’s “contracts of employment” exception. In exactly the same way, the Act’s severability principle applies only if the parties’ arbitration agreement appears in a contract that falls within the field §§1 and 2 describe. We acknowledged as much some time ago, explaining that, before invoking the severability principle, a court should “determine[ ] that the contract in question is within the coverage of the Arbitration Act.” Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 402 (1967).
In taking up this question, we bear an important caution in mind. “[I]t’s a ‘fundamental canon of statutory construction’ that words generally should be ‘interpreted as taking their ordinary . . . meaning . . . at the time Congress enacted the statute.’ ” Wisconsin Central Ltd. v. United States, 585 U. S. ___, ___ (2018) (slip op., at 9) (quoting Perrin v. United States, 444 U.S. 37, 42 (1979)). See also Sandifer v. United States Steel Corp., 571 U.S. 220, 227 (2014). After all, if judges could freely invest old statutory terms with new meanings, we would risk amending legislation outside the “single, finely wrought and exhaustively considered, procedure” the Constitution commands. INS v. Chadha, 462 U.S. 919, 951 (1983). We would risk, too, upsetting reliance interests in the settled meaning of a statute. Cf. 2B N. Singer & J. Singer, Sutherland on Statutes and Statutory Construction §56A:3 (rev. 7th ed. 2012). Of course, statutes may sometimes refer to an external source of law and fairly warn readers that they must abide that external source of law, later amendments and modifications included. Id., §51:8 (discussing the reference canon). But nothing like that exists here. Nor has anyone suggested any other appropriate reason that might allow us to depart from the original meaning of the statute at hand.
What’s the evidence to support this conclusion? It turns out that in 1925 the term “contract of employment” wasn’t defined in any of the (many) popular or legal dictionaries the parties cite to us. And surely that’s a first hint the phrase wasn’t then a term of art bearing some specialized meaning. It turns out, too, that the dictionaries of the era consistently afforded the word “employment” a broad construction, broader than may be often found in dictionaries today. Back then, dictionaries tended to treat “employment” more or less as a synonym for “work.” Nor did they distinguish between different kinds of work or workers: All work was treated as employment, whether or not the common law criteria for a master-servant relationship happened to be satisfied.[1]
What the dictionaries suggest, legal authorities confirm. This Court’s early 20th-century cases used the phrase “contract of employment” to describe work agreements involving independent contractors.[2] Many state court cases did the same.[3] So did a variety of federal statutes.[4] And state statutes too.[5] We see here no evidence that a “contract of employment” necessarily signaled a formal employer-employee or master-servant relationship.
What does New Prime have to say about the case building against it? Mainly, it seeks to shift the debate from the term “contracts of employment” to the word “employee.” Today, the company emphasizes, the law often distinguishes between employees and independent contractors. Employees are generally understood as those who work “in the service of another person (the employer) under an express or implied contract of hire, under which the employer has the right to control the details of work perform- ance.” Black’s Law Dictionary, at 639. Meanwhile, independent contractors are sometimes described as those “entrusted to undertake a specific project but who [are] left free to do the assigned work and to choose the method for accomplishing it.” Id., at 888. New Prime argues that, by 1925, the words “employee” and “independent contractor” had already assumed these distinct meanings.[6] And given that, the company contends, the phrase “contracts of employment” should be understood to refer only to relationships between employers and employees.
Still, the parties do share some common ground. They agree that the word “employee” eventually came into wide circulation and came to denote those who work for a wage at the direction of another. They agree, too, that all this came to pass in part because the word “employee” didn’t suffer from the same “historical baggage” of the older common law term “servant,” and because it proved useful when drafting legislation to regulate burgeoning industries and their labor forces in the early 20th century.[7] The parties even agree that the development of the term “employee” may have come to influence and narrow our understanding of the word “employment” in comparatively recent years and may be why today it might signify to some a “relationship between master and servant.”[8]
When New Prime finally turns its attention to the term in dispute, it directs us to Coppage v. Kansas, 236 U.S. 1, 13 (1915). There and in other cases like it, New Prime notes, courts sometimes used the phrase “contracts of employment” to describe what today we’d recognize as agreements between employers and employees. But this proves little. No one doubts that employer-employee agreements to perform work qualified as “contracts of employment” in 1925—and documenting that fact does nothing to negate the possibility that “contracts of employment” also embraced agreements by independent contractors to perform work. Coming a bit closer to the mark, New Prime eventually cites a handful of early 20th-century legal materials that seem to use the term “contracts of employment” to refer exclusively to employer-employee agreements.[9] But from the record amassed before us, these authorities appear to represent at most the vanguard, not the main body, of contemporaneous usage.
New Prime’s effort to explain away the statute’s suggestive use of the term “worker” proves no more compelling. The company reminds us that the statute excludes “contracts of employment” for “seamen” and “railroad employees” as well as other transportation workers. And because “seamen” and “railroad employees” included only employees in 1925, the company reasons, we should understand “any other class of workers engaged in . . . interstate commerce” to bear a similar construction. But this argument rests on a precarious premise. At the time of the Act’s passage, shipboard surgeons who tended injured sailors were considered “seamen” though they likely served in an independent contractor capacity.[10] Even the term “railroad employees” may have swept more broadly at the time of the Act’s passage than might seem obvious today. In 1922, for example, the Railroad Labor Board interpreted the word “employee” in the Transportation Act of 1920 to refer to anyone “engaged in the customary work directly contributory to the operation of the railroads.”[11] And the Erdman Act, a statute enacted to address disruptive railroad strikes at the end of the 19th century, seems to evince an equally broad understanding of “railroad employees.”[12]
Unable to squeeze more from the statute’s text, New Prime is left to appeal to its policy. This Court has said that Congress adopted the Arbitration Act in an effort to counteract judicial hostility to arbitration and establish “a liberal federal policy favoring arbitration agreements.” Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). To abide that policy, New Prime suggests, we must order arbitration according to the terms of the parties’ agreement. But often and by design it is “hard-fought compromise[ ],” not cold logic, that supplies the solvent needed for a bill to survive the legislative process. Board of Governors, FRS v. Dimension Financial Corp., 474 U.S. 361, 374 (1986). If courts felt free to pave over bumpy statutory texts in the name of more expeditiously advancing a policy goal, we would risk failing to “tak[e] . . . account of” legislative compromises essential to a law’s passage and, in that way, thwart rather than honor “the effectuation of congressional intent.” Ibid. By respecting the qualifications of §1 today, we “respect the limits up to which Congress was prepared” to go when adopting the Arbitration Act. United States v. Sisson, 399 U.S. 267, 298 (1970).
2 See, e.g., Watkins v. Sedberry, 261 U.S. 571, 575 (1923) (agreement between trustee and attorney to recover bankrupt’s property); Owen v. Dudley & Michener, 217 U.S. 488, 494 (1910) (agreement between Indian tribe and attorneys to pursue claims).
3 See, e.g., Lindsay v. McCaslin (Two Cases), 123 Me. 197, 200, 122 A. 412, 413 (1923) (“When the contract of employment has been reduced to writing, the question whether the person employed was an independent contractor or merely a servant is determined by the court as a matter of law”); Tankersley v. Webster, 116 Okla. 208, 210, 243 P. 745, 747 (1925) (“[T]he contract of employment between Tankersley and Casey was admitted in evidence without objections, and we think conclusively shows that Casey was an independent contractor”); Waldron v. Garland Pocahontas Coal Co., 89 W. Va. 426, 427, 109 S.E. 729 (1921) (syllabus) (“Whether a person performing work for another is an independent contractor depends upon a consideration of the contract of employment, the nature of the business, the circumstances under which the contract was made and the work was done”); see also App. to Brief for Respondent 1a–12a (citing additional examples).
9 See, e.g., 1 T. Conyngton, Business Law: A Working Manual of Every-day Law 302–303 (2d ed. 1920); Newland v. Bear, 218 App. Div. 308, 309, 218 N.Y.S. 81, 81–82 (1926); Anderson v. State Indus. Accident Comm’n, 107 Ore. 304, 311–312, 215 P. 582, 583, 585 (1923); N. Dosker, Manual of Compensation Law: State and Federal 8 (1917).
10 See, e.g., The Sea Lark, 14 F.2d 201 (WD Wash. 1926); The Buena Ventura, 243 F. 797, 799 (SDNY 1916); Holt v. Cummings, 102 Pa. 212, 215 (1883); Allan v. State S. S. Co., 132 N.Y. 91, 99, 30 N.E. 482, 485 (1892) (“The work which the physician does after the vessel starts on the voyage is his and not the ship owner’s”).
“[W]ords generally should be ‘interpreted as taking their ordinary . . . meaning . . . at the time Congress enacted the statute.’ ” Ante, at 6 (quoting Wisconsin Central Ltd. v. United States, 585 U. S. ___, ___ (2018) (slip op., at 9)). The Court so reaffirms, and I agree. Looking to the period of enactment to gauge statutory meaning ordinarily fosters fidelity to the “regime . . . Congress established.” MCI Telecommunications Corp. v. American Telephone & Telegraph Co., 512 U.S. 218, 234 (1994).
Congress, however, may design legislation to govern changing times and circumstances. See, e.g., Kimble v. Marvel Entertainment, LLC, 576 U. S. ___, ___ (2015) (slip op., at 14) (“Congress . . . intended [the Sherman Antitrust Act’s] reference to ‘restraint of trade’ to have ‘changing content,’ and authorized courts to oversee the term’s ‘dynamic potential.’ ” (quoting Business Electronics Corp. v. Sharp Electronics Corp., 485 U.S. 717, 731‒732 (1988))); SEC v. Zandford, 535 U.S. 813, 819 (2002) (In enacting the Securities Exchange Act, “Congress sought to substitute a philosophy of full disclosure for the philosophy of caveat emptor . . . . Consequently, . . . the statute should be construed not technically and restrictively, but flexibly to effectuate its remedial purposes.” (internal quotation marks and paragraph break omitted)); H. J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 243 (1989) (“The limits of the relationship and continuity concepts that combine to define a [Racketeer Influenced and Corrupt Organizations] pattern . . . cannot be fixed in advance with such clarity that it will always be apparent whether in a particular case a ‘pattern of racketeering activity’ exists. The development of these concepts must await future cases . . . .”). As these illustrations suggest, sometimes, “[w]ords in statutes can enlarge or contract their scope as other changes, in law or in the world, require their application to new instances or make old applications anachronistic.” West v. Gibson, 527 U.S. 212, 218 (1999).
September 6, 2017 Petition for a writ of certiorari filed. (Response due October 6, 2017)
September 21, 2017 Order extending time to file response to petition to and including November 6, 2017.
October 6, 2017 Brief amicus curiae of American Trucking Associations, Inc. filed.
October 6, 2017 Brief amicus curiae of Chamber of Commerce of the United States of America filed.
October 27, 2017 Order further extending time to file response to petition to and including November 20, 2017.
November 20, 2017 Brief of respondent Dominic Oliveira in opposition filed.
December 1, 2017 Reply of petitioner New Prime Inc. filed.
February 26, 2018 Petition GRANTED.
March 6, 2018 Motion for an extension of time filed.
March 9, 2018 Motion to extend the time to file (the joint appendix and petitioner's brief on the merits) granted and the time is extended to and including May 14, 2018. The time to file respondent's brief on the merits is extended to and including July 11, 2018.
May 14, 2018 Brief of petitioner New Prime Inc. filed.
May 14, 2018 Joint appendix filed. (Statement of cost filed).
May 21, 2018 Brief amicus curiae of Cato Institute filed.
May 21, 2018 Brief amicus curiae of New England Legal Foundation filed.
May 21, 2018 Brief amicus curiae of American Trucking Associations, Inc. filed.
May 21, 2018 Brief amicus curiae of Customized Logistics and Delivery Association filed.
May 21, 2018 Brief amici curiae of Chamber of Commerce of the United States of America, et al. filed.
June 8, 2018 Motion for a further extension of time filed.
June 20, 2018 Motion for a further extension of time to file respondent's brief on the merits granted, and the time is extended to and including July 18, 2018.
July 18, 2018 Brief of respondent Dominic Oliveira filed.
July 20, 2018 Motion of New Prime Inc. for an extension of time not accepted for filing. (July 24, 2018)
July 24, 2018 Brief amicus curiae of American Association for Justice filed.
July 24, 2018 Brief amicus curiae of Public Citizen, Inc. filed.
July 25, 2018 Brief amicus curiae of Sen. Sheldon Whitehouse filed.
July 25, 2018 Brief amici curiae of Historians filed.
July 25, 2018 Brief amicus curiae of Constitutional Accountability Center filed.
July 25, 2018 Brief amici curiae of Massachusetts, et al. filed.
July 25, 2018 Brief amicus curiae of Employment Law Scholars filed.
July 25, 2018 Brief amicus curiae of Owner-Operator Independent Drivers Association, Inc. filed.
July 25, 2018 Brief amici curiae of International Brotherhood of Teamsters, et al. filed.
July 25, 2018 Brief amici curiae of Statutory Construction Scholars filed.
July 25, 2018 Application (18A99) to extend the time to file a reply brief on the merits from August 17, 2018 to August 24, 2018, submitted to Justice Breyer.
July 25, 2018 Brief amici curiae of Steve Viscelli, et al. filed.
July 30, 2018 Application (18A99) granted by Justice Breyer extending the time to file petitioner's reply brief on the merits to and including August 24, 2018.
August 7, 2018 Record requested from the U.S.C.A. 1st Circuit.
August 14, 2018 Record received from U.S.C.A. 1st Circuit. 1 envelope.
August 22, 2018 Reply of New Prime Inc. submitted.
July 20, 2018 Motion of New Prime, Inc. for an extension of time not accepted for filing. (July 24, 2018)
August 22, 2018 Reply of petitioner New Prime, Inc. filed. (Distributed)
August 8, 2018 Record for the U.S.C.A. 1st Circuit is electronic and located on PACER.
Oliveira v. New Prime, Inc., No. 15-2364 (1st Cir. May. 12, 2017)
The First Circuit answered two questions of first impression regarding the Federal Arbitration Act (FAA) by holding (1) in a case where a federal district court is confronted with a motion to compel arbitration under the FAA and the parties have delegated questions of arbitrability to the arbitrator, the applicability of the FAA is a threshold question for the court to determine before compelling arbitration under the FAA; and (2) a provision of the FAA that exempts contracts of employment of transportation workers from the FAA’s coverage applies to a transportation-worker agreement that purports to establish an independent-contractor relationship. Accordingly, the First Circuit affirmed the district court’s order denying the motion to compel arbitration and dismissed this appeal for lack of appellate jurisdiction.