New Prime Inc. V. Oliveira (2019)
Petitioner:- New Prime Inc. Defendant:- Oliveira
The case of New Prime Inc. V. Oliveira is a case related to the enforceability of the agreements in Arbitration. This case was decided by the U.S. Apex Court on January 15th, 2019.
The petitioner, New Prime Inc. is an interstate truck company which hires driver and driver pursuant. Dominic Oliveira (defendant) was hired as a driver pursuant by this company to an “independent contractor operating agreement” and this agreement contained the clause of delegation as well as arbitration , as per the clauses, the arbitrator gets the authority to ‘threshold questions of Arbitrability.’
Oliveira filed an action against the new prime in the federal court of Massachusetts making allegations that “new prime failed to pay the minimum wage pursuant according to the fair labor standard act and Missouri and Maine labor laws.” In response to it the new prime inc. filed a motion to ‘compel arbitration under section 4 of federal arbitration act (FAA).’ Oliveira argued that new arbitration cannot be compelled by the new prime because section 1 of FAA excludes “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” which are also known as transportation workers exclusion.
The district court after listing to the appeals and arguments asked to discover that “whether Oliveira was an independent contractor or an employee?”
On appealing the first circuit court agreed the applicability of transportation worker inclusion is an “antecedent determination”, however the circuit court ruled the decision given by the district court holding that ‘exclusion does not apply to independent contractors.’
Issues before the Supreme Court:-
? “Should a court determine whether a section 1 exclusion of FAA applies before ordering arbitration where the parties contract contains a delegation clause?“
? “Does the transportation worker exclusion apply to both independent contractor as well as employees?”
Both the issues were dealt by court cleverly. The court argued that in matters of all private contracts courts do not have the limitless powers. Rather “section 2 of the FAA is such that is limited to arbitration agreements which involve commerce and maritime transactions which is informed in the section 1.”
The court also put forward a thought on the meaning of the phrase “contracts of employment” because this phrase was used during the adoption of FAA in the year 1925. Many more arguments were put forward during the hearing of the case and finally “the court refused to stray from statutory text in favor of indiscriminately enforcing the policy behind FAA, concluding that even a liberal federal policy favoring arbitration agreements has limits, and that courts must respect such limits.”
In conclusion we can say that, the decision of the court revolved only around the questions of federal law, also the decision delivered by the court will not broaden the exclusion of the transportation workers in the other industrial areas and also there was a longer distinction between the independent contractor and the employees. With this judgment the courts have given a task for future state laws in which these arbitration agreements regarding the transportation workers to determine the enforceability of these agreements should be involved.