Arbitration month at the Supreme Court continued this morning with the unanimous decision in New Prime Inc. v. Oliveira – following by a single week the unanimous decision in Henry Schein v. Archer & White Sales. New Prime, though, is anything but business as usual: Justice Neil Gorsuch’s opinion for a unanimous court rejects a claim for arbitration for the first time in a string of more than a dozen of the Supreme Court’s cases stretching back more than a decade. Indeed, I doubt the court has rejected such a claim in any previous decision since the turn of the millennium.

New Prime involves an exception to the rule in the Federal Arbitration Act that obligates courts to enforce arbitration agreements that involve interstate commerce. Specifically, under the “transportation” exclusion in Section 1 of the act, “nothing” in the act applies to “contracts of employment of … seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” In this case, all agree that the truck drivers (including respondent Dominic Oliveira) driving trucks for petitioner New Prime are “workers engaged in foreign or interstate commerce.”

The question for the court is whether the lower courts should have sent this dispute to arbitration even though the drivers might work for New Prime as independent contractors rather than as employees. New Prime argued in the lower courts that the exception for “contracts of employment” applies only when the workers are employees; because New Prime endeavors to structure its relations with its drivers so that they are independent contractors rather than employees, New Prime argued that the act should apply notwithstanding the transportation exclusion.

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