Supreme Court Rules Against Forced Federal Arbitration in Carrier-Driver Disputes
In a unanimous decision, the U.S. Supreme Court on Jan. 15 limited the ability under federal law for motor carriers to force disputes with owner-operators to be resolved in arbitration, a ruling that could cause an increase in future class-action lawsuits by truck drivers.
The 8-0 ruling came in an appeal of a class-action lawsuit led by truck driver Dominic Oliveira against motor carrier New Prime Inc. that posed the question of whether an independent owner-operator under contract with a motor carrier must take any disputes to arbitration, or instead be permitted to take grievances to court. (Arguments were held before Justice Brett Kavanaugh joined the court, so he did not participate in the ruling.)
Richard Pianka, deputy general counsel for American Trucking Associations, said the high court ruling means in effect that the Federal Arbitration Act — which generally requires parties to honor agreements to arbitrate disputes — no longer underpins agreements between motor carriers and independent contractor drivers.
“That doesn’t mean that arbitration agreements can’t be enforced, because many states would enforce arbitration agreements under their own laws,” Pianka told Transport Topics. “But it sort of takes away the ability of carriers and owner-operators to rely on the uniformity of the Federal Arbitration Act, and that is very disappointing because our industry is one that crosses state lines all the time and we need that federal uniformity.”
Pianka added, “It doesn’t necessarily mean that arbitration is going to vanish from these business relationships. There are still other mechanisms for them to be enforced.”
Trucking attorneys said that arbitration remains a critical tool for motor carriers to solve disputes, primarily because they are informal, quicker to resolve and do not allow a contract driver’s complaint to be turned into an entire class.
“Nearly one million men and women work as truck drivers nationwide,” said a statement by the employment and labor law firm of Fisher Phillips, which has offices throughout the U.S. “This ruling could open the floodgates to a host of new class and collective action lawsuits against interstate transportation employers in federal and state courts; employers in this industry should immediately coordinate with their labor and employment counsel to determine how this development might affect them.”
The case was argued before the high court on Oct. 3, and several legal experts said at the time that the court’s questions tended to suggest the justices were leaning toward taking the drivers’ side.
The legal arguments harken back to the Federal Arbitration Act of 1925, which contains a provision that would exempt a transportation “worker” from arbitration, thereby allowing the worker to file his grievance in state or federal court.
“A court should determine whether an exclusion applies before ordering arbitration,” the Supreme Court said in its ruling. “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.”