Tuesday, January 15, 2019

Another Unanimous SCOTUS Decision on Arbitration: New Prime Inc. v. Oliveira

Today the Supreme Court issued an 8-0 decision in New Prime Inc. v. Oliveira. Justice Gorsuch authors the opinion (Justice Kavanaugh did not participate).

The case involves § 1 of the Federal Arbitration Act, which provides that “nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” This provision 

The Court addresses two questions. The first is: “When a contract delegates questions of arbitrability to an arbitrator, must a court leave disputes over the application of §1’s exception for the arbitrator to resolve?” [Op. at 1] The answer is no. “Given the statute’s terms and sequencing, we agree with the First Circuit that a court should decide for itself whether §1’s ‘contracts of employment’ exclusion applies before ordering arbitration.” [Op. at 4 (emphasis added)]

The second question is: “[D]oes the term ‘contracts of employment’ refer only to contracts between employers and employees, or does it also reach contracts with independent contractors?” [Op. at 1] The answer is that contracts with independent contractors can also be excluded from the FAA. Justice Gorsuch reasoned that “Congress used the term ‘contracts of employment’ in a broad sense to capture any contract for the performance of work by workers,” [Op. at 10 (emphasis in original)], and that the term ‘workers’ “easily embraces independent contractors.” [Op. at 10]

This part of Justice Gorsuch’s opinion emphasizes that statutory terms “generally should be interpreted as taking their ordinary meaning at the time Congress enacted the statute.” [Op. at 6 (citation omitted)]. Justice Ginsburg writes a brief concurring opinion to stress that there may be some exceptions to this interpretive principle, because Congress “may design legislation to govern changing times and circumstances” [Ginsburg Op. at 1]. Her opinion notes that “sometimes, words 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.” [Ginsburg Op. at 2 (citation omitted)]



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