Petitioners Brief — New Prime Inc., Petitioner v. Dominic Oliveira

Supreme Court briefMay 14, 2018

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No. 17-340

IN THE

Supreme Court of the United States

_______________

NEW PRIME, INC.,

Petitioner,

DOMINIC OLIVEIRA,

Respondent.

_______________

On Writ Of Certiorari To

The United States Court Of Appeals

For The First Circuit

_______________

BRIEF FOR PETITIONER

_______________

JASON C. SCHWARTZ

JOSHUA S. LIPSHUTZ

AMANDA C. MACHIN

GIBSON, DUNN & CRUTCHER LLP

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 955-8500

THEODORE J. BOUTROUS JR.

Counsel of Record

SAMUEL ECKMAN

GIBSON, DUNN & CRUTCHER LLP

333 South Grand Avenue

Los Angeles, CA 90071

(213) 229-7000

tboutrous@gibsondunn.com

Counsel for Petitioner New Prime, Inc.

QUESTIONS PRESENTED

Section 1 of the Federal Arbitration Act (“FAA”)

provides that the FAA does not apply “to contracts of

employment of seamen, railroad employees, or any

other class of workers engaged in foreign or interstate

commerce.” 9 U.S.C. § 1. Respondent is an independent contractor whose agreement with interstate trucking company New Prime, Inc. (“New Prime”) includes

a mandatory arbitration provision requiring respondent to arbitrate all workplace disputes with New

Prime on an individual basis. Respondent does not

challenge the validity of the arbitration agreement he

signed nor the delegation clause contained therein,

which mandates that all disputes regarding arbitrability be decided by an arbitrator. Nonetheless, respondent filed a putative class action in court and opposed arbitration on the basis of the Section 1 exemption.

The questions presented are:

1. Whether a dispute over applicability of the

FAA’s Section 1 exemption is an arbitrability

issue that must be resolved in arbitration pursuant to a valid delegation clause.

2. Whether the FAA’s Section 1 exemption, which

applies on its face only to “contracts of employment,” is inapplicable to independent contractor agreements.

PARTIES TO THE PROCEEDING AND RULE

29.6 STATEMENT

The caption contains the names of all the parties

to the proceeding below.

Pursuant to this Court’s Rule 29.6, undersigned

counsel state that petitioner New Prime, Inc. has no

parent corporation and no publicly held corporation

owns ten percent (10%) or more of its stock. New

Prime, Inc. is a privately owned company.

iii

TABLE OF CONTENTS

Page

OPINIONS BELOW ................................................... 1

JURISDICTION ......................................................... 1

STATUTORY AND REGULATORY

PROVISIONS INVOLVED ................................. 1

STATEMENT OF THE CASE ................................... 2

SUMMARY OF ARGUMENT .................................... 7

ARGUMENT .............................................................. 9

APPLICABILITY OF THE FAA SECTION 1

EXEMPTION IS AN ARBITRABILITY ISSUE

THAT THE PARTIES DELEGATED TO AN

ARBITRATOR .......................................................... 9

II. SECTION 1 DOES NOT EXEMPT INDEPENDENT

CONTRACTOR AGREEMENTS FROM THE FAA....... 16

A. Independent Contractor Agreements

Are Not “Contracts of Employment” ........... 16

B. “Contracts Of Employment” Must Be

Identified By The Terms Of The

Contract Alone ............................................. 29

C. Respondent’s Operating Agreements

Are Not “Contracts Of Employment” .......... 33

CONCLUSION ......................................................... 35

TABLE OF AUTHORITIES

Page(s)

Cases

Allied-Bruce Terminix Cos. v. Dobson,

513 U.S. 272 (1995) .................................. 27, 30, 32

Am. Trucking Ass’n v. United States,

344 U.S. 298 (1953) .............................................. 28

Amoco Prod. Co. v. Vill. of Gambell, AK,

480 U.S. 531 (1987) .............................................. 17

Apollo Computer, Inc. v. Berg,

886 F.2d 469 (1st Cir. 1989) ................................ 14

AT&T Mobility LLC v. Concepcion,

563 U.S. 333 (2011) .................................... 7, 10, 29

AT&T Techs., Inc. v. Commc’ns Workers

of Am.,

475 U.S. 643 (1986) .............................. 7, 10, 12, 31

Atl. Cleaners & Dyers v. United States,

286 U.S. 427 (1932) .............................................. 23

Atl. Transp. Co. v. Coneys,

82 F. 177 (2d Cir. 1897) ....................................... 20

Bernhardt v. Polygraphic Co. of Am.,

350 U.S. 198 (1956) ........................................ 30, 31

Boswell v. Laird,

8 Cal. 469 (1857) .................................................. 20

TABLE OF AUTHORITIES

(continued)

Page(s)

Buckeye Check Cashing, Inc. v.

Cardegna,

546 U.S. 440 (2006) .......................................... 9, 13

C&L Enters., Inc. v. Citizen Band

Potawatomi Indian Tribe of Okla.,

532 U.S. 411 (2001) .............................................. 12

Chamber of Commerce of U.S. of Am. v.

U.S. Dep’t of Labor,

885 F.3d 360 (5th Cir. 2018) ................................ 24

In re Checking Account Overdraft Litig.

MDL No. 2036,

674 F.3d 1252 (11th Cir. 2012) ............................ 13

Circuit City Stores, Inc. v. Adams,

532 U.S. 105 (2001) ........................ 3, 24, 26, 27, 32

Clackamas Gastroenterology Assocs.,

P.C. v. Wells,

538 U.S. 440 (2003) .............................................. 33

Contec Corp. v. Remote Sol’n, Co.,

398 F.3d 205 (2d Cir. 2005) ................................. 14

DirecTV, Inc. v. Imburgia,

136 S. Ct. 463 (2015) .............................................. 7

Edwards v. Doordash, Inc.,

___ F.3d ___, 2018 WL 1954090

(5th Cir. Apr. 25, 2018) ........................................ 13

TABLE OF AUTHORITIES

(continued)

Page(s)

FedEx Home Delivery v. NLRB,

563 F.3d 492 (D.C. Cir. 2009) .............................. 32

First Options of Chi., Inc. v. Kaplan,

514 U.S. 938 (1995) .............................................. 10

Gilmer v. Interstate/Johnson Lane

Corp.,

500 U.S. 20 (1991) ............................................ 9, 27

Green v. SuperShuttle Int’l, Inc.,

653 F.3d 766 (8th Cir. 2011) .................................. 6

Kindred Nursing Ctrs. Ltd. P’ship v.

Clark,

137 S. Ct. 1421 (2017) ................................ 7, 14, 15

Marx v. Gen. Revenue Corp.,

568 U.S. 371 (2013) .............................................. 31

Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc.,

473 U.S. 614 (1985) .............................................. 10

Moses H. Cone Mem’l Hosp. v. Mercury

Constr. Corp.,

460 U.S. 1 (1983) .................................................. 10

Nationwide Mutual Insurance Co. v.

Darden,

503 U.S. 318 (1992) .................................. 22, 23, 33

vii

TABLE OF AUTHORITIES

(continued)

Page(s)

NLRB v. Hearst Pubs.,

322 U.S. 111 (1944) .............................................. 23

NLRB v. United Ins. Co. of Am.,

390 U.S. 254 (1968) .............................................. 32

Nyback v. Champagne Labor Co.,

109 F. 732 (7th Cir. 1901) .................................... 20

O’Hare Truck Serv., Inc. v. City of

Northlake,

518 U.S. 712 (1996) .............................................. 18

Park ‘N Fly, Inc. v. Dollar Park and Fly,

Inc.,

469 U.S. 189 (1985) .............................................. 16

Performance Team Freight Sys., Inc. v.

Aleman,

241 Cal. App. 4th 1233 (2015) ............................... 7

Portland Gen. Elec. Co. v. Liberty Mut.

Ins. Co.,

862 F.3d 981 (9th Cir. 2017) ................................ 13

Prima Paint Corp. v. Flood & Conklin

Mfg. Co.,

388 U.S. 395 (1967) .............................................. 30

Rent-A-Center, W., Inc. v. Jackson,

561 U.S. 63 (2010) .................... 7, 10, 11, 13, 14, 15

viii

TABLE OF AUTHORITIES

(continued)

Page(s)

Shearson/Am. Exp., Inc. v. McMahon,

482 U.S. 220 (1987) .............................................. 10

Swift & Co. v. Bowling,

293 F. 279 (4th Cir. 1923) .................................... 20

In re Swift Transp. Co., Inc.,

830 F.3d 913 (9th Cir. 2016) ................ 6, 29, 31, 32

Thompson Caldwell Constr. Co. v.

Young,

294 F. 145 (4th Cir. 1923) .................................... 20

Transamerican Freight Lines, Inc. v.

Brada Miller Freight Sys.,

423 U.S. 28 (1975) ................................................ 28

Underwood Contracting Corp. v. Davies,

287 F. 776 (5th Cir. 1923) .................................... 20

In re Van Dusen,

654 F.3d 838 (9th Cir. 2011) .................................. 6

Statutes

9 U.S.C. § 1 ............................ 1, 3, 5, 16, 17, 24, 25, 30

9 U.S.C. § 2 ...................................................... 2, 13, 30

9 U.S.C. § 4 ................................................................ 16

9 U.S.C. § 16 ................................................................ 6

TABLE OF AUTHORITIES

(continued)

Page(s)

Federal Employers’ Liability Act,

45 U.S.C. § 51 ....................................................... 26

Jones Act, 46 U.S.C. § 30104 .................................... 26

Railway Labor Act of 1927,

45 U.S.C. § 151 ..................................................... 25

Shipping Commissioners Act of 1872,

17 Stat. 262, 267 c. 322, § 25 ............................... 26

Transportation Act of 1920, 41 Stat. 469 ................. 25

Treatises

1 William Blackstone, Commentaries on the Laws of

England .......................................................... 18, 19

Other Authorities

American Arbitration Association,

Commercial Arbitration Rules and

Mediation Procedures R-7

(Oct. 1, 2017) ........................................................ 11

Black’s Law Dictionary 393

(10th ed. 2014)...................................................... 17

Bouvier’s Law Dictionary 1035

(8th ed. 1914)........................................................ 17

TABLE OF AUTHORITIES

(continued)

Page(s)

Deanne M. Mosley & William C. Walter,

The Significance of the Classification

of Employment Relationships in

Determining Exposure to Liability,

67 Miss. L. J. 613 (1998) ...................................... 21

Gerald M. Stevens, The Test of the

Employment Relation,

38 Mich. L. Rev. 188 (1939) ................................. 21

James H. Wolfe, Determination of

Employer-Employee Relationships in

Social Legislation,

41 Col. L. Rev. 1015 (1941) .................................. 19

Jane P. Kwak, Note, Employees versus

Independent Contractors: Why States

Should Not Enact Statutes That

Target the Construction Industry,

39 J. Legis. 295 (2013) ......................................... 19

John Bruntz, The Employee/

Independent Contractor Dichotomy:

A Rose Is Not Always A Rose,

8 Hofstra Lab. L. J. 337 (1991) ............................ 20

Prime Inc. Company History,

http://www.primeinc.com/companyhistory................................................................... 28

Restatement (First) of Torts

§ 409, cmt. a (1934) .............................................. 21

TABLE OF AUTHORITIES

(continued)

Page(s)

Restatement (First) of Agency

§ 2, cmt. a (1933) .................................................. 21

Restatement (Second) of Agency

§ 220(1) (1933) ...................................................... 33

Restatement (Second) of Agency

§ 220(2) (1933) ...................................................... 33

Richard R. Carlson, Why the Law Still

Can’t Tell an Employee When It Sees

One And How It Ought to Stop

Trying,

22 Berkeley J. of Emp. & Lab. L. 295

(2001) .............................................................. 19, 22

S. Rep. No. 68-536 (1924) .......................................... 29

Theodore J. St. Antoine, Mandatory

Arbitration: Why It’s Better Than It

Looks,

41 U. Mich. J. L. Reform 783 (2008) ................... 29

U.S. Census Bureau, 2002 Vehicle

Inventory and Use Survey 15

(Dec. 2004),

http://www.census.gov/prod/ec02/ec0

2tv-us.pdf .............................................................. 28

Webster’s New Int’l Dictionary of the

English Language 488 (1923) .............................. 24

BRIEF FOR PETITIONER

Petitioner New Prime, Inc. respectfully requests

that the Court reverse the judgment of the United

States Court of Appeals for the First Circuit.

OPINIONS BELOW

The opinion of the Court of Appeals is reported at

857 F.3d 7 (1st Cir. 2017). J.A. 152. The order of the

Court of Appeals denying rehearing and rehearing en

banc is unpublished. J.A. 193. The order of the district court is reported at 141 F. Supp. 3d 125 (D. Mass.

2015). J.A. 134.

JURISDICTION

The First Circuit entered judgment on May 12,

2017, and denied New Prime’s timely petition for rehearing and rehearing en banc on June 27, 2017. New

Prime filed a petition for a writ of certiorari on September 6, 2017, and this Court granted it on February

26, 2018. This Court has jurisdiction under 28 U.S.C.

§ 1254(1).

STATUTORY AND REGULATORY

PROVISIONS INVOLVED

Section 1 of the Federal Arbitration Act, 9 U.S.C.

§ 1, provides:

“Maritime transactions,” as herein defined, means charter parties, bills of lading of water carriers, agreements relating to wharfage, supplies furnished vessels or repairs to vessels, collisions, or

any other matters in foreign commerce

which, if the subject of controversy,

would be embraced within admiralty jurisdiction; “commerce,” as herein defined, means commerce among the several States or with foreign nations, or in

the Territory of the United States or in

the District of Columbia, or between any

such Territory and another, or between

any such Territory and any State or foreign nation, or between the District of

Columbia and any State or Territory or

foreign nation, but 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.

Section 2 of the Federal Arbitration Act, 9 U.S.C.

§ 2, provides:

A written provision in any maritime

transaction or a contract evidencing a

transaction involving commerce to settle

by arbitration a controversy thereafter

arising out of such contract or transaction, or the refusal to perform the whole

or any part thereof, or an agreement in

writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be

valid, irrevocable, and enforceable, save

upon such grounds as exist at law or in

equity for the revocation of any contract.

STATEMENT OF THE CASE

The decision below reflects the latest effort by a

lower court to avoid the dictates of the Federal Arbitration Act (“FAA”) and invalidate an arbitration

agreement containing a class waiver. This time, the

feat was accomplished through a nonsensical interpretation of the FAA itself.

Section 1 of the FAA exempts a narrow class of

transportation workers from the purview of the statute—those who have signed “contracts of employment.” 9 U.S.C. § 1. This Court has instructed that

the Section 1 exemption must be given a “precise reading” and “a narrow construction,” in order to ensure

the FAA accomplishes its purpose of “overcom[ing] judicial hostility to arbitration agreements.” Circuit

City Stores, Inc. v. Adams, 532 U.S. 105, 118–19

(2001) (citation omitted).

The First Circuit did the opposite. It read the Section 1 exemption expansively and effectively eliminated arbitration as a viable means of dispute resolution for the entire transportation industry. According

to the court of appeals, the term “contracts of employment” in Section 1 should be read to include contracts

of non-employment—that is, independent contractor

agreements—notwithstanding the plain language of

Section 1 to the contrary. J.A. 182.

This Court should reverse the First Circuit and

compel arbitration, in accordance with the plain language of the parties’ agreements and the FAA.

1. Petitioner New Prime, Inc. (“New Prime”) is an

interstate trucking company that engages both company drivers and independent contractors to operate

vehicles. Respondent Dominic Oliveira is a former

New Prime truck driver who chose to become an independent contractor.

Prior to becoming an independent contractor, respondent took part in New Prime’s Student Truck

Driver Program, which allowed him to work under the

supervision of a licensed truck driver as he gained the

30,000-plus miles of driving experience necessary to

obtain a commercial driver’s license under federal regulations. After completing the program, respondent

had the option of becoming a New Prime employee,

but chose instead to establish an independent business, Hallmark Trucking LLC, that contracted to perform services for New Prime. On behalf of Hallmark

Trucking LLC, respondent entered into two separate

“Independent Contractor Operating Agreements”

with New Prime, the purpose of which was “to establish an independent contractor relationship at all

times.” J.A. 65; see also id. at 86. Both Agreements

provided that “[a]ny disputes arising under, arising

out of or relating to [the] agreement, including . . . the

arbitrability of disputes between the parties, shall be

fully resolved by arbitration[.]” J.A. 82; id. at 102–03.

As an independent contractor working with New

Prime, respondent enjoyed substantial freedoms and

opportunities he would not otherwise have had as a

New Prime employee. He was able to “determine the

means and methods of performance of all transportation services undertaken under the terms of th[e]

Agreement, including driving times and deliver[y]

routes,” to “refuse to haul any load offered . . . by [New]

Prime,” and “to provide services for another carrier

during the term of th[e] Agreement.” J.A. 65; id. at

86. Respondent was also permitted to hire other drivers to provide shipping services under the Agreements. J.A. 70–71; id. at 91–92. Each of these features of respondent’s independent-contractor relationship with New Prime allowed him the flexibility to

make independent business decisions that would have

been unavailable to him as an employee.

2. Notwithstanding the plain directive of the Independent Contractor Operating Agreements to arbitrate all disputes arising under them, respondent filed

a putative class action in federal district court, asserting claims for unpaid wages, misclassification, and

breach of contract. When New Prime moved to compel

arbitration, respondent opposed. He did not dispute

that he freely executed the Independent Contractor

Operating Agreements, nor did he dispute that his

claims fell within the scope of the arbitration provisions. Instead, respondent insisted that the Operating Agreements were “contracts of employment of seamen, railroad employees, or any other class of workers

engaged in foreign or interstate commerce,” 9 U.S.C.

§ 1, such that New Prime could not enforce the arbitration provisions under the FAA.

3. The district court denied New Prime’s motion

to compel arbitration. The court concluded that although the delegation clause was valid, the applicability of the Section 1 exemption could not be adjudicated

by an arbitrator. The district court acknowledged

that Section 1’s reference to “contracts of employment” refers to employer-employee arrangements

only, not independent contractor agreements, explaining that “[t]his construction comports well” with the

FAA’s purpose and this Court’s decision in Circuit

City. J.A. 141. But because the contract terms and

factual record did not, in the district court’s view,

make clear whether New Prime and respondent were

engaged in an employer-employee or independentcontractor relationship under state law, the district

court ordered discovery and announced its intention

to hold a mini-trial on that question before it would

determine whether the Section 1 exemption applies.

4. New Prime immediately appealed the district

court’s order denying its motion to compel arbitration.

9 U.S.C. § 16. The First Circuit affirmed. The court

agreed with the district court that despite the existence of an indisputably valid delegation clause, the

applicability of the Section 1 exemption was not for an

arbitrator to decide. J.A. 168; id. at 186. The First

Circuit acknowledged that this conclusion conflicted

with a prior decision of the Eighth Circuit, which

found that applicability of the Section 1 exemption is

an arbitrable issue. See Green v. SuperShuttle Int’l,

Inc., 653 F.3d 766, 769 (8th Cir. 2011). Contra In re

Van Dusen, 654 F.3d 838, 843 (9th Cir. 2011) (holding

that a court is required to assess whether the Section

1 exemption applies before ordering arbitration).

Two members of the panel went further, however,

holding—contrary to the district court’s decision below—that there was no need for discovery or a minitrial to determine respondent’s employment status because the phrase “contracts of employment” in Section

1 of the FAA simply means “an agreement to perform

work of a transportation worker.” J.A. 182. Thus, according to the First Circuit, the parties’ Independent

Contractor Operating Agreements were exempt from

the FAA irrespective of whether respondent was an

employee or independent contractor. In so ruling, the

panel majority acknowledged that “the weight of district-court authority to consider the issue ha[d] concluded that the § 1 exemption does not extend to contracts that establish or purport to establish an independent-contractor relationship.” J.A. 172. And in a

footnote, the panel majority conceded that the Ninth

Circuit—the only other circuit court to address the issue—had embraced the opposite interpretation. J.A.

173–74 (quoting In re Swift Transp. Co., Inc., 830 F.3d

913 (9th Cir. 2016) (“Van Dusen III”)); see also Performance Team Freight Sys., Inc. v. Aleman, 241

Cal. App. 4th 1233 (2015).

Judge Barbadoro, sitting by designation, dissented

from the second part of the panel’s decision. J.A. 187.

SUMMARY OF ARGUMENT

I. Where, as here, a contract contains a valid delegation clause, the question whether the contract is a

“contract of employment” within the meaning of Section 1 of the FAA is an arbitrability issue that must

be submitted to arbitration. This Court has explained

that delegation clauses are simply “additional, antecedent agreement[s]” to arbitrate that must be enforced the same as any other arbitration agreement.

Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 70

(2010).

The FAA must be interpreted against the background principle that a bargained-for arbitration

agreement is enforceable so long as the agreement is

“susceptible of an interpretation that covers the asserted dispute.” AT&T Techs., Inc. v. Commc’ns

Workers of Am., 475 U.S. 643, 650 (1986). This exacting standard is necessary because courts must pay

“due regard” to the liberal “federal policy favoring arbitration.” DirecTV, Inc. v. Imburgia, 136 S. Ct. 463,

471 (2015) (citation omitted); see also Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 137 S. Ct. 1421, 1426

(2017); AT&T Mobility LLC v. Concepcion, 563 U.S.

333, 338 (2011). The First Circuit’s refusal to enforce

the parties’ bargained-for delegation clause in this

case flouts this Court’s commands, usurping the authority to decide an important arbitrability issue notwithstanding the parties’ express agreement that an

arbitrator should resolve the issue.

II. The text, historical context, and purpose of the

FAA leave no doubt that “contracts of employment”

exempted from arbitration under Section 1 include

only those agreements that purport to establish an

employer-employee relationship under common-law

agency principles, and not independent-contractor

agreements.

A. At the time the FAA was enacted, just as today,

the plain meaning of the term “contracts of employment” encompassed only contracts between an employer and an employee that stated the terms and conditions of employment. The distinction between employees and independent contractors goes back centuries and was well understood when Congress enacted

the FAA. In fact, Congress used terms such as “employer,” “employee,” and “employment” in numerous

contemporaneous statutes for the express purpose of

distinguishing common-law employees from independent contractors. Reading “contracts of employment” to include independent contractor agreements

contradicts the plain language of the statute, frustrates the statute’s purpose, and violates the Court’s

admonition that the Section 1 exemption be given a

narrow and precise reading.

B. The determination of whether a contract is a

“contract of employment” or something else (such as

an independent-contractor agreement) for purposes of

Section 1 of the FAA must be made by looking only at

the relationship described within the four corners of

the contract. No discovery or mini-trial into the nature of the parties’ interactions is necessary or appropriate under the FAA.

C. The Independent Contractor Operator Agreements executed between New Prime and respondent

plainly are not contracts of employment—not only by

virtue of their express declaration of intent “to establish an independent contractor relationship at all

times,” J.A. 65; see also id. at 86, but also because they

grant respondent the authority to choose the method

and manner in which he performs his work, to refuse

any work at his discretion, to hire others to perform

his work for him, and to work for other trucking companies. In fact, respondent entered into the agreements as proprietor of his own limited liability company, Hallmark Trucking LLC. Because the Section

1 exemption is inapplicable to the contracts between

New Prime and respondent, the court below should

have compelled arbitration of the parties’ dispute under the FAA.

ARGUMENT

I. APPLICABILITY OF THE FAA SECTION 1

EXEMPTION IS AN ARBITRABILITY ISSUE THAT

THE PARTIES DELEGATED TO AN ARBITRATOR

It is undisputed that New Prime and respondent

agreed to arbitrate all disputes arising out of their relationship, “including the arbitrability of disputes between the parties.” J.A. 82; id. at 103. The question

whether the FAA Section 1 exemption applies is a delegable arbitrability issue. Thus, the courts below

should have enforced the parties’ delegation clause

and compelled the Section 1 dispute to an arbitrator.

A. Congress enacted the FAA in 1925 “to reverse

the longstanding judicial hostility to arbitration

agreements that had existed at English common law

and had been adopted by American courts.” Gilmer v.

Interstate/Johnson Lane Corp., 500 U.S. 20, 24

(1991). The Act “embodies [a] national policy favoring

arbitration and places arbitration agreements on an

equal footing with all other contracts.” Buckeye Check

Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006).

In fact, this Court’s “cases place it beyond dispute that

the FAA was designed to promote arbitration.” Concepcion, 563 U.S. at 345 (emphasis added).

In light of this “emphatic federal policy in favor of

arbitral dispute resolution,” Mitsubishi Motors Corp.

v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631

(1985), “where [a] contract contains an arbitration

clause, there is a presumption of arbitrability,” and

“‘[a]n order to arbitrate [a] particular grievance

should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted

dispute.’” AT&T Techs., 475 U.S. at 650. “The burden

is on the party opposing arbitration . . . to show that

Congress intended to preclude a waiver of judicial

remedies,” Shearson/Am. Exp., Inc. v. McMahon, 482

U.S. 220, 227 (1987), and “any doubts concerning the

scope of arbitrable issues should be resolved in favor

of arbitration,” Moses H. Cone Mem’l Hosp. v. Mercury

Constr. Corp., 460 U.S. 1, 24–25 (1983).

A delegation clause is an “additional, antecedent

agreement,” and “the FAA operates on this additional

arbitration agreement just as it does on any other.”

Rent-A-Center, 561 U.S. at 70. This “flow[s] inexorably from the fact that arbitration is simply a matter of

contract between the parties.” First Options of Chi.,

Inc. v. Kaplan, 514 U.S. 938, 943 (1995). “Just as the

arbitrability of the merits of a dispute depends upon

whether the parties agreed to arbitrate that dispute,

so the question ‘who has the primary power to decide

arbitrability’ turns upon what the parties agreed

about that matter.” Id. So long as the delegation is

“clear and unmistakable,” the court must enforce it.

Id. at 944.

B. Here, it is undisputed that the parties agreed

to a valid, clear, and unmistakable delegation clause:

Any disputes arising under, arising out

of or relating to this agreement, including . . . any disputes arising out of or relating to the relationship created by the

agreement, and any disputes as to the

rights and obligations of the parties, in-

cluding the arbitrability of disputes between the parties, shall be fully resolved

by arbitration.

J.A. 82 (emphasis added); see also id. at 102–03. As

the district court found, “the parties do not contest

that the two operating agreements [respondent]

signed . . . contain valid delegation provisions,” which

encompass “the arbitrability of disputes between the

parties.” J.A. 145. And this Court has found similar

language sufficiently clear and unmistakable to require arbitration of threshold questions of arbitrability. See Rent-A-Center, 561 U.S. at 66 (enforcing a delegation clause that provided that “[t]he Arbitrator . . .

shall have exclusive authority to resolve any dispute

relating to the interpretation, applicability, enforceability or formation of this Agreement . . . .”).

Moreover, the Independent Contractor Operating

Agreements expressly incorporate the AAA’s Commercial Arbitration Rules. J.A. 82–83; id. at 103.

Those rules provide that “[t]he arbitrator shall have

the power to rule on his or her own jurisdiction, including any objections with respect to the existence,

scope, or validity of the arbitration agreement or to

the arbitrability of any claim or counterclaim.” American Arbitration Association, Commercial Arbitration

Rules and Mediation Procedures R-7 (Oct. 1, 2017).

This Court has repeatedly enforced AAA rules that

are incorporated into an arbitration contract, as they

are here. See C&L Enters., Inc. v. Citizen Band Potawatomi Indian Tribe of Okla., 532 U.S. 411, 419 n.1

(2001) (AAA rules “are not secondary interpretive

aides that supplement [a] reading of the contract; they

are prescriptions incorporated by the express terms of

the agreement itself”); AT&T Techs., 475 U.S. at 649.

Neither respondent nor the courts below disputed

that the delegation clause at issue here covers, by its

plain terms, the question whether the Operating

Agreements are “contracts of employment” for purposes of Section 1. Nevertheless, both the district

court and the First Circuit held that applicability of

the Section 1 exemption is a non-delegable issue that

cannot be submitted to arbitration no matter how

clearly the parties intend to delegate the question. In

the words of the First Circuit, the issue is “an ‘antecedent determination’ for the district court to make

before it can compel arbitration” because “the district

court can [compel arbitration] only if it has authority

to act under the FAA,” and if the Operating Agreements are “contracts of employment” within the

meaning of Section 1, then “the FAA does not apply.”

J.A. 165–66 (quotation marks omitted).

The First Circuit’s circular logic proves far too

much. Threshold arbitrability issues are always questions that go to the court’s authority to compel arbitration under the FAA—if they are decided against

the party seeking to compel arbitration, then there is

no enforceable arbitration agreement and the FAA is

inapplicable. Yet courts routinely enforce delegation

clauses and order arbitration of such threshold issues.

For example:



Where a party is coerced into signing an arbitration agreement, or where the arbitration agreement is unconscionable or otherwise invalid under

state law, the agreement is null and void and the

FAA does not apply. 9 U.S.C. § 2. Yet this Court

and other courts routinely enforce delegation

clauses to allow an arbitrator to decide whether an

arbitration agreement is invalid by reason of coercion, unconscionability, or other state-law

grounds. See Buckeye Check Cashing, 546 U.S. at

446 (compelling arbitration of threshold contention that arbitration agreement was void as illegally usurious); Edwards v. Doordash, Inc., ___

F.3d ___, 2018 WL 1954090, at *5 (5th Cir. Apr. 25,

2018) (“[Plaintiff’s] unconscionability arguments

. . . should be addressed by the arbitrator”).



Where the underlying dispute between the parties

falls outside the scope of the parties’ arbitration

agreement, the FAA has no force with respect to

that dispute. Yet this Court and other courts routinely enforce delegation clauses to allow an arbitrator to decide whether the parties’ underlying

dispute falls within the scope of the arbitration

agreement. See Rent-A-Center, 561 U.S. at 68–69

(“[P]arties can agree to arbitrate . . . whether their

agreement covers a particular controversy.”); Portland Gen. Elec. Co. v. Liberty Mut. Ins. Co., 862

F.3d 981, 985–86 (9th Cir. 2017) (“question[] of the

scope of the arbitration agreement . . . [is] delegated to the arbitrators”); In re Checking Account

Overdraft Litig. MDL No. 2036, 674 F.3d 1252,

1256–57 (11th Cir. 2012) (“Under the delegation

provision . . . the decision of whether Given’s

claims are within the scope of the arbitration

agreement is a decision for an arbitrator.”)



Where a non-signatory to an arbitration agreement seeks to enforce the agreement, and a party

argues that the non-signatory is without such authority, a ruling against the non-signatory would

mean the FAA does not apply. Yet this Court and

other courts routinely enforce delegation clauses to

allow an arbitrator to decide whether the non-signatory may enforce the agreement. See Rent-ACenter, 561 U.S. at 68–69 (“[P]arties can agree to

arbitrate . . . whether the parties have agreed to

arbitrate.”); Contec Corp. v. Remote Sol’n, Co., 398

F.3d 205, 209–10 (2d Cir. 2005) (considering

“whether a non-signatory can compel a signatory

to arbitrate under an agreement where the question of arbitrability is itself subject to arbitration,”

and concluding that the “purported right to enforce

the 1999 Agreement is a matter of the Agreement’s

continued existence, validity and scope, and is

therefore subject to arbitration under the terms of

the arbitration clause”); Apollo Computer, Inc. v.

Berg, 886 F.2d 469, 473–74 (1st Cir. 1989)

(“Whether the right to compel arbitration . . . was

validly assigned to the defendants and whether it

can be enforced by them against Apollo are issues

relating to the continued existence and validity of

the agreement,” which “[t]he arbitrator should decide”).

Indeed, the First Circuit’s reasoning flies in the

face of this Court’s recent decision in Kindred Nursing

Centers Limited Partnership v. Clark, 137 S. Ct. 1421

(2017). In that case, the Kentucky Supreme Court refused to enforce an arbitration agreement entered into

under a power of attorney, holding that “a power of

attorney could not entitle a representative to enter

into an arbitration agreement without specifically

saying so.” Id. at 1426. The plaintiff defended the

state court’s clear-statement rule on the ground that

it “affect[ed] only contract formation,” and “the FAA

has no application to contract formation issues” because the Act operates only once a court determines

that a valid arbitration agreement has been formed.

Id. at 1428 (quotation marks omitted). The Court disagreed, reasoning that the FAA “cares not only about

the ‘enforce[ment]’ of arbitration agreements, but also

about their initial ‘valid[ity].’” Id. But if the FAA applies in determining whether an arbitration agreement exists, surely it must also apply in determining

whether such an agreement is enforceable under Section 1. That is precisely the question at issue here.

These holdings follow from the settled fact that a

delegation clause is an “additional, antecedent agreement” that must be enforced as a standalone contract.

Rent-A-Center, 561 U.S. at 70. Because a delegation

clause is a freestanding and severable agreement to

arbitrate questions of arbitrability, a challenge to the

enforceability of such an agreement must be “specific

to” the delegation clause itself. Id. at 74. Where a

party challenges a delegation clause only on grounds

that would “render[] the entire Agreement invalid,”

the delegation clause is unaffected and the threshold

arbitrability dispute must be compelled to arbitration.

Id.

In this case, the only challenge to the delegation

clause is that it falls within a “contract of employment” such that the entire agreement is exempted

from the FAA under Section 1. But it is beyond dispute that the standalone delegation clause is not itself

a “contract of employment.” Thus, the FAA applies to

the delegation clause even if it ultimately does not apply to the parties’ broader contract.

The First Circuit was correct that some issues cannot be delegated to the arbitrator. But those issues

are identified in the FAA itself. See 9 U.S.C. § 4 (court

must compel arbitration only once it is “satisfied that

the making of the agreement for arbitration or the

failure to comply therewith is not in issue”). Respondent here does not challenge the elements of contract

formation nor dispute that he has refused to submit

his claims to arbitration. As a result, the district court

was required to compel the parties to submit their

threshold arbitrability dispute to arbitration under

the plain terms of the delegation clause.

II. SECTION 1 DOES NOT EXEMPT INDEPENDENT

CONTRACTOR AGREEMENTS FROM THE FAA

Section 1 exempts certain “contracts of employment” in the transportation sector from the provisions

of the FAA. 9 U.S.C. § 1. Independent contractor

agreements are not “contracts of employment” and

thus do not fall within the Section 1 exemption.

A. Independent Contractor

Agreements Are Not “Contracts of

Employment”

The term “contracts of employment” in Section 1

means what it says: agreements that purport to establish an employer-employee relationship, not an independent contractor relationship. “Statutory construction must begin with the language employed by

Congress and the assumption that the ordinary meaning of that language accurately expresses the legislative purpose.” Park ‘N Fly, Inc. v. Dollar Park and

Fly, Inc., 469 U.S. 189, 194 (1985). “When statutory

language is plain . . . , that is ordinarily the end of the

matter.” Amoco Prod. Co. v. Vill. of Gambell, AK, 480

U.S. 531, 552–53 (1987) (quotation marks omitted).

1. The FAA 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.” 9 U.S.C.

§ 1 (emphasis added). The meaning of the term “contracts of employment” was as plain in 1925, when the

FAA was enacted, as it is today. Indeed, Black’s Law

Dictionary treats the term “contract of employment”

as synonymous with “employment contract,” a term

that it traces back to 1927 and which means “[a] contract between an employer and employee in which the

terms and conditions of employment are stated.”

Black’s Law Dictionary 393 (10th ed. 2014) (emphasis

added).

Moreover, at the time the FAA was enacted, it was

well established that independent contractors were

not employees, and that an independent contractor

agreement did not establish employment. Bouvier’s

Law Dictionary explained this important distinction:

“Strictly and etymologically, [employee] means ‘a person employed,’ but in practice . . . and as generally

used with us, though perhaps not confined to any official employment, it is understood to mean some permanent employment or position.” Bouvier’s Law Dictionary 1035 (8th ed. 1914) (emphasis added). By contrast, “independent contractor” was defined as “[o]ne

who . . . contracts to do a piece of work according to his

own methods, and without being subject to the control

of his employer, except as to the result of his work.”

Id. at 1533.

When Congress chose the words “contracts of employment” in Section 1, it did so with full awareness

of the distinction between an employee and an independent contractor, and with an appreciation of the

important legal consequences that attach to a

worker’s classification. “[T]he distinction between

employees and independent contractors has deep

roots in our legal tradition.” O’Hare Truck Serv., Inc.

v. City of Northlake, 518 U.S. 712, 721–22 (1996). And

although the contours along which the law distinguishes these classes of workers have evolved with the

economy, the distinction itself goes back centuries and

has been a crucial element of regulations seeking both

to promote growth and protect workers.

As early as the Ordinance of Labourers, enacted in

1349 in response to the labor-market dislocations occasioned by the bubonic plague, English law recognized fundamental differences between ordinary laborers and independent craftsmen and, consequently,

subjected them to different regulatory schemes. For

example, although that statute required “every man

and woman” to work until age 60 and established

strict wage controls, it exempted those “living in merchandise, []or exercising any craft, []or having of his

own whereof he may live, []or proper land.” See 23

Edw. III (1349).

By the time of Blackstone, an intricate taxonomy

had developed, distinguishing master-servant relationships from other work relationships, and further

distinguishing among master-servant relationships.

See 1 William Blackstone, Commentaries on the Laws

of England *422–32. These distinctions had profound

legal importance. For example, a master could be held

vicariously liable for the acts of his servants, but not

for others with whom he contracted, and a master

could “abet and assist his servant in any action at law

against a stranger; whereas, in general, it [wa]s an offense against public justice to encourage suits and animosities by helping to bear the expense of them.” See

id. at *429, 431.

With industrialization and its “accompanying explosion of new occupations and ways of organizing

work,” there came “a number of new or newly important issues that required differentiation between

categories of workers whose degree of dependence

made them more or less needful of protection, or made

the public more or less needful of the employer’s financial responsibility for risks associated with the work.”

Richard R. Carlson, Why the Law Still Can’t Tell an

Employee When It Sees One And How It Ought to Stop

Trying, 22 Berkeley J. of Emp. & Lab. L. 295, 303–04

(2001). It was during this period of rapid commercial

development that the modern concept of the “independent contractor” took form.

The more specific legal “conception of an independent contractor, not so-called until later, dates back not

much before Bush v. Steinman[, 126 Eng. Rep. 978],

in 1799.” James H. Wolfe, Determination of EmployerEmployee Relationships in Social Legislation, 41 Col.

L. Rev. 1015, 1020–21 (1941).1 At that time, the distinction was largely relevant “in determining the

scope of vicarious liability,” and so courts naturally

“embraced Blackstone’s control rationale of respondeat superior as the logical test of the master-

1 “The definition of independent contractor originated from the

phrase, ‘independent calling’ in the late 1800’s,” and “referred to

the fact that an independent contractor was his own master.”

Jane P. Kwak, Note, Employees versus Independent Contractors:

Why States Should Not Enact Statutes That Target the Construction Industry, 39 J. Legis. 295, 296 (2013).

servant relationship.”

John Bruntz, The Employee/Independent Contractor Dichotomy: A Rose Is

Not Always A Rose, 8 Hofstra Lab. L. J. 337, 338–39

(1991). Thus, “[t]he right-to-control test” for distinguishing employees from independent contractors

“was first developed in the mid-nineteenth century by

English courts and was soon adopted by American

courts.” Id. at 339 (discussing Boswell v. Laird, 8 Cal.

469 (1857)).

By the turn of the twentieth century, the distinction between employees and independent contractors

was omnipresent. As the Second Circuit observed in

1897, “[t]he fact of a distinction between the liability

of an employer for an injury caused by the negligence

of his employe[e] or his servant, and the liability of an

owner for an injury caused by the negligence of an independent contractor . . . , was formerly not well recognized, but is now distinctly understood.” Atl.

Transp. Co. v. Coneys, 82 F. 177, 178 (2d Cir. 1897);

see also, e.g., Nyback v. Champagne Labor Co., 109 F.

732, 741 (7th Cir. 1901) (“[U]pon the facts stated, and

as they appear in this record, Barber was not an independent contractor, but a servant of the defendant.”);

Thompson Caldwell Constr. Co. v. Young, 294 F. 145,

146–47 (4th Cir. 1923) (distinguishing precedent on

the ground that “[t]he defendant admits that its status was that of an independent contractor,” and “[i]n

the [earlier case], the defendant was an employee of

the county, and not an independent contractor”); Underwood Contracting Corp. v. Davies, 287 F. 776, 780

(5th Cir. 1923) (“We do not think that [the contract]

created the relation of master and servant between

said bank and said defendant. The District Court did

not err in construing it as constituting the Underwood

Contracting Corporation an independent contractor.”); Swift & Co. v. Bowling, 293 F. 279, 281 (4th Cir.

1923) (“Th[e] contract on its face made Cox an independent contractor” but “there was evidence on the

part of the plaintiff tending to show that in the actual

work the contract was disregarded, and that Cox

acted and was treated by defendant as an employee.”).

When the FAA was enacted in 1925, the distinction

between employees and independent contractors—

and the importance of that distinction—was so well

recognized that it was shortly thereafter memorialized in the Restatements of Law. See Restatement

(First) of Agency § 2, cmt. a (1933) (“The words ‘master’ and ‘servant’ are herein used to indicate the relationship from which arises the tort liability of an employer to third persons for the tort of an employee, and

the special duties and immunities of an employer to

the employee.”); Restatement (First) of Torts § 409,

cmt. a (1934) (“The words ‘independent contractor’ are

used throughout this Topic as describing any person

who does work for another under conditions which are

not sufficient to make him a servant of the other.”).

Even today, there are material differences between

employees and independent contractors, “[w]hether it

is a familiar claim such as an employer’s liability for

the tort of his alleged employee . . . or a less known

advantage such as a preference under insolvency statutes or exemption of employees’ wages from garnishment; or a comparative innovation such as the duty to

pay social security taxes or to pay a statutory minimum wage.” Gerald M. Stevens, The Test of the Employment Relation, 38 Mich. L. Rev. 188, 188 (1939).

Indeed, “[t]he question of whether a worker is in fact

an agent, servant, employee, or independent contractor is crucial in determining the hiring party’s potential liability exposure in tort and under Title VII, as

well as other federal statutes.” Deanne M. Mosley &

William C. Walter, The Significance of the Classification of Employment Relationships in Determining Exposure to Liability, 67 Miss. L. J. 613, 642 (1998).

Given the long-entrenched and legally significant

distinction between employees and independent contractors, it is generally assumed that a statute’s use

of the term “employee” is meant to incorporate the

common-law master-servant relationship. As one

commentator explained:

“Employee,” being derived from the verb

“to employ,” might have suggested application to persons engaged to render services. Instead “employee” served mainly

as a near substitute for “servant,” and it

seems always to have been accepted by

the courts that neither term extends to

persons of “independent employment” or

“independent contractors” as such persons came to be known.

Carlson, supra, 22 Berkeley J. Emp. & Lab. L. at 309–

10.

Most notably, this Court declared in Nationwide

Mutual Insurance Co. v. Darden, 503 U.S. 318 (1992),

that “when Congress has used the term ‘employee’

without defining it, we have concluded that Congress

intended to describe the conventional master-servant

relationship as understood by common-law agency

doctrine.” Id. at 322–23. In fact, courts apply a “presumption that Congress means an agency law defini-

tion for ‘employee’ unless it clearly indicates otherwise.” Id. at 325 (emphases added).2 There is no such

indication here.

The First Circuit brushed aside this overwhelming

weight of authority, instead relying on contemporaneous case law in which courts used the term “contracts

of employment” loosely to include any service arrangement. See J.A. 178–82. But the court acknowledged

that those cases “d[id] not deal with the FAA.” J.A.

181; see Atl. Cleaners & Dyers v. United States, 286

U.S. 427, 433 (1932) (“Where the subject-matter to

which the words refer is not the same in the several

places where they are used, or the conditions are different . . . the meaning well may vary to meet the purposes of the law.”).

The First Circuit also cited lay dictionaries that, in

its view, “confirm that the ordinary meaning of ‘contracts of employment’ in 1925 was agreements to perform work.” J.A. 177–78. But those dictionaries did

not purport to define the term “contracts of employment” at all. Rather, the court deconstructed the statutory term and cobbled together a meaning from the

atomized definitions of its constituent parts. See id.

(noting that one dictionary “defin[ed] ‘contract’ . . . as

2 Darden overruled earlier case law holding that the term “employee” might sweep more broadly than the common-law definition of a master-servant relationship. Darden, 503 U.S. 325. But

notably, even those overruled cases did not entirely abandon the

distinction between employees and independent contractors, as

the First Circuit did here. See, e.g., NLRB v. Hearst Pubs., 322

U.S. 111, 124 (1944) (“Congress, on the one hand, was not thinking solely of the immediate technical relation of employer and

employee. . . . It cannot be taken, however, that the purpose was

to include all other persons who may perform service for another

or was to ignore entirely legal classifications made for other purposes.”).

‘[a]n agreement between two or more persons to do or

forbear something,’” “‘employment’ as ‘[a]n act of employing, or state of being employed,’” and “‘employ’ as

‘[t]o make use of the services of; to have or keep at

work; to give employment to’”) (citing Webster’s New

Int’l Dictionary of the English Language 488, 718

(1923)). This “technique of defining individual words

in a vacuum fails to view the entire provision in context.” Chamber of Commerce of U.S. of Am. v. U.S.

Dep’t of Labor, 885 F.3d 360, 372 (5th Cir. 2018).

2. The context in which the FAA uses the term

“contracts of employment” bolsters the plain meaning

of the text—that “contracts of employment” refers

only to agreements that purport to create an employer-employee relationship.

Section 1 exempts only certain “contracts of employment” from the FAA: those of “seamen, railroad

employees, and any other class of workers engaged in

foreign or interstate commerce.” 9 U.S.C. § 1. As this

Court has explained, Section 1 was drafted in that

manner to preserve other statutory schemes that already contained alternative dispute resolution mechanisms for particular workers. “By the time the FAA

was passed, Congress had already enacted federal legislation providing for the arbitration of disputes between seamen and their employers.” Circuit City

Stores, Inc. v. Adams, 532 U.S. 105, 121 (2001). Similarly, “grievance procedures existed for railroad employees under federal law, and the passage of a more

comprehensive statute providing for the mediation

and arbitration of railroad labor disputes was imminent.” Id. Consequently, “[i]t is reasonable to assume

that Congress excluded ‘seamen’ and ‘railroad employees’ from the FAA for the simple reason that it did not

wish to unsettle established or developing statutory

dispute resolution schemes covering specific workers.”

Id.

Crucially, the alternative dispute resolution mechanisms established by these other statutes applied

only to employees—and not independent contractors.

For example, the Railway Labor Act expressly invokes

the right-of-control test that distinguishes employees

from independent contractors at common law: “The

term ‘employee’ as used herein includes every person

in the service of a carrier (subject to its continuing authority to supervise and direct the manner of rendition

of service) who performs any work defined as that of

an employee or subordinate official in the orders of the

Surface Transportation Board.” Railway Labor Act of

1926, May 20, 1926, c. 347, § 1, 44 Stat. 577, 45 U.S.C.

§ 151 (emphasis added). To avoid any doubt on that

score, Congress drafted Section 1 of the FAA to apply

only to “contracts of employment of . . . railroad employees.” 9 U.S.C. § 1 (emphasis added).

Similarly, the Transportation Act provides that

“[i]t shall be the duty of all carriers and their officers,

employees, and agents to exert every reasonable effort

. . . to avoid any interruption to the operation of any

carrier growing out of any dispute between the carrier

and the employees or subordinate officials thereof.”

Transportation Act of 1920, § 301, 41 Stat. 469 (emphasis added). Tellingly, the Act imposes this duty

not only on employees but also “agents” of the carrier—a term capacious enough to include independent

contractors—yet limits the scope of the duty to disputes between “carrier[s] and the[ir] employees”—not

agents or independent contractors.

The list goes on: The Federal Employers’ Liability

Act states that “every common carrier by railroad . . .

shall be liable in damages to any person suffering injury while he is employed by such carrier.” Apr. 22,

1908, c. 149, § 1, 35 Stat. 65, 45 U.S.C. § 51 (emphasis

added). The Jones Act provides that “any seaman who

shall suffer personal injury in the course of his employment may, at his election, maintain an action for damages at law . . . and in such action all statutes of the

United States modifying or extending the commonlaw right or remedy in cases of personal injury to railway employees shall apply.” June 5, 1920, c. 250, § 33,

66 Stat. 988, 1007, 46 U.S.C. § 30104 (emphasis

added). And the Shipping Commissioners Act of 1872

commands that “every shipping-commissioner shall

hear and decide any question whatsoever between a

master, consignee, agent, or owner, and any of his

crew, which both parties agree in writing to submit to

him.” June 7, 1872, c. 322, § 25, 17 Stat. 262, 267.

In short, although the First Circuit speculated that

it would have been “strange” for Congress to draw a

distinction in Section 1 between employees and independent contractors because both categories of workers “play the same necessary role in the free flow of

goods,” J.A. 181–82, Congress drew precisely that distinction in numerous contemporaneous statutes addressing alternative dispute resolution in the transportation sector, and the Section 1 exemption was

drafted to preserve those statutes.

Because the “enumerated categories of workers”

include only employees, the “other class of workers”

addressed in Section 1’s residual clause should similarly be limited to employees. See Circuit City, 532

U.S. at 114–15, 121 (“The wording of § 1 calls for the

application of the maxim ejusdem generis”; thus, the

residual clause—“any other class of workers engaged

in foreign or interstate commerce”—“should be read to

give effect to the terms ‘seamen’ and ‘railroad employees,’ and should itself be controlled and defined by reference to the enumerated categories of workers which

are recited just before it.”). Consequently, it would

make little sense to read the term “contracts of employment” to include independent contractor agreements—contracts those workers would not have

signed.

3. This Court’s two prior cases interpreting the

Section 1 exemption further confirm this interpretation of “contracts of employment.” In Circuit City, for

example, the Court rejected the proposition that the

term “contracts of employment of . . . any other class

of workers engaged in foreign or interstate commerce”

included all such workers, instead holding that “Section 1 exempts from the FAA only contracts of employment of transportation workers.” 532 U.S. at 119, 121

(emphasis added). As the Court explained, the “proarbitration purposes of the FAA . . . compel that the

§ 1 exclusion provision be afforded a narrow construction.” Circuit City, 532 U.S. at 115, 118. “[T]he fact

that the provision is contained in a statute that ‘seeks

broadly to overcome judicial hostility to arbitration

agreements’” demands a “precise reading of a provision that exempts contracts from the FAA’s coverage.”

Id. at 118–19 (quoting Allied-Bruce Terminix Cos. v.

Dobson, 513 U.S. 265, 272–73 (1995)). Indeed, “it

would be incongruous to adopt . . . a conventional

reading of the FAA’s coverage in § 2 in order to implement proarbitration policies and an unconventional

reading of the reach of § 1 in order to undo the same

coverage.” Id. at 122; see also Gilmer, 500 U.S. at 25

n.2 (interpreting the term “contract[] of employment”

narrowly to include only the written agreement between the employer and employee and not a related

agreement).

4. The First Circuit’s broad interpretation of “contracts of employment” would have profound, deleterious consequences for both the trucking industry and

the wider economy, upsetting reliance interests, depriving transportation workers of efficient dispute

resolution, and increasing the cost of business in a

field that touches every sector of the American economy. These are the very consequences the FAA is designed to avoid.

Independent contractors are a large and important

part of the interstate trucking industry. Because

“[d]emand for a motor carrier’s services may fluctuate

seasonally or day by day,” independent contractors

are critical to “[k]eeping expensive equipment operating at capacity, and avoiding the waste of resources

attendant upon empty backruns and idleness.”

Transamerican Freight Lines, Inc. v. Brada Miller

Freight Sys., 423 U.S. 28, 35 (1975). As a result, for

decades “[c]arriers . . . have increasingly turned to

owner-operator truckers to satisfy their need for

equipment as their service demands.” Am. Trucking

Ass’n v. United States, 344 U.S. 298, 303 (1953).

Today, more than half a million trucks are primarily operated by independent contractors. See U.S.

Census Bureau, 2002 Vehicle Inventory and Use Survey

15,

(Dec.

2004),

http://www.census.gov/prod/ec02/ec02tv-us.pdf. Some of these independent contractors operate as sole proprietorships,

some (like respondent) as small independent businesses, and others as larger corporations in which the

owner who executes the independent contractor

agreement does not personally perform any of the

work under the agreement, but rather hires others to

do so. Indeed, New Prime began as a single-truck operation and grew into an industry leader. See Prime

Inc. Company History, http://www.primeinc.com/company-history.

Although some independent contractors may find

advantage in a rule that refuses to enforce their agreements to arbitrate, it is just as likely that such a rule

would hurt those workers. The drafters of the FAA

recognized that “[t]he settlement of disputes by arbitration appeals to big business and little business

alike, to corporate interests as well as to individuals.”

S. Rep. No. 68-536 at 3 (1924). But the First Circuit’s

rule would deprive all independent contractors engaged in transportation of a cost-effective means of resolving their disputes, instead forcing them to submit

to a judicial process that is often “slower, more costly,

and more likely to generate procedural morass than

final judgment.” Concepcion, 563 U.S. at 348. For

many such individuals and small businesses, the cost

of litigation in a judicial forum is prohibitive. For

these independent contractors, “it looks like arbitration—or nothing.” Theodore J. St. Antoine, Mandatory Arbitration: Why It’s Better Than It Looks, 41 U.

Mich. J. L. Reform 783, 792 (2008).

B. “Contracts Of Employment” Must

Be Identified By The Terms Of The

Contract Alone

In determining whether a particular agreement is

a “contract of employment” for purposes of Section 1,

the FAA compels a factfinder to take a “categorical approach that focuses solely on the words of the contract

and the definition of the relevant category.” In re

Swift Transp. Co., 830 F.3d at 920 (Ikuta, J., dissenting); contra J.A. 151 (district court ordering “factual

discovery on the threshold question of the plaintiff’s

status as an employee or independent contractor”). If

the relationship described in the contract is that of an

independent contractor, then the Section 1 exemption

does not apply.

As noted above, Section 1 provides that “nothing

herein contained shall apply to contracts of employment.” 9 U.S.C. § 1 (emphasis added). The object of

that sentence is the contract itself, not the de facto relationship between the parties. See Prima Paint Corp.

v. Flood & Conklin Mfg. Co., 388 U.S. 395, 402 n.9

(1967) (noting that certain “categories of contracts otherwise within the Arbitration Act” are excluded under

Section 1) (emphasis added). Had Congress meant for

the Section 1 exemption to turn on the nature of parties’ interactions, rather than the legal relationship

described in their contract, it would have used far different language—just as it did in the very next section

of the FAA. Unlike Section 1, Section 2 provides that

“[a] written provision in any maritime transaction or

a contract evidencing a transaction involving commerce to settle by arbitration a controversy . . . shall

be valid, irrevocable, and enforceable.” 9 U.S.C. § 2

(emphasis added). It is this additional language in

Section 2—“evidencing a transaction”—that authorizes a court to look beyond the four corners of the contract to the economic realities of the parties’ interactions.

As the Court explained in Allied-Bruce, “‘evidencing a transaction’ mean[s] . . . that the transaction

(that the contract ‘evidences’) must turn out, in fact,

to have involved interstate commerce.” 513 U.S. at

277 (emphasis in original). In reaching this decision,

the Court relied on Bernhardt v. Polygraphic Company of America, 350 U.S. 198 (1956), which concluded

that a contract did not “evidence ‘a transaction involving commerce’ within the meaning of § 2 of the Act”

because “[t]here [wa]s no showing that petitioner

while performing his duties under the employment

contract was working ‘in’ commerce, was producing

goods for commerce, or was engaging in activity that

affected commerce.” Id. at 200–01 (emphasis added).

Reading the term “contracts of employment” in

Section 1 to require the same inquiry into the economic realities of the parties’ relationship, as the district court did below, would ignore this important textual distinction, rendering the “evidencing a transaction” language in Section 2—critical to this Court’s

holdings in Bernhardt and Allied-Bruce—mere surplusage. See Marx v. Gen. Revenue Corp., 568 U.S.

371, 386 (2013) (“[T]he canon against surplusage is

strongest when an interpretation would render superfluous another part of the same statutory scheme.”).

It also would undermine the FAA for several other

reasons:

First, in the context of a misclassification suit (like

this one), the employment status of the worker is the

merits question at issue; once it is determined

whether the worker is an employee or independent

contractor, there is often nothing left to adjudicate.

Thus, “requiring the parties to litigate the underlying

substance of [a putative employee’s] claim[s]” as part

of the Section 1 inquiry “risks depriving [the defendant] of the benefits of its contract” and destroying the

arbitration agreement. In re Swift, 830 F.3d at 920

(Ikuta, J., dissenting). Such an approach would contravene this Court’s admonition that, “in deciding

whether the parties have agreed to submit a particular grievance to arbitration, a court is not to rule on

the potential merits of the underlying claim.” AT&T

Techs., 475 U.S. at 649.

Second, inquiring into the factual relationship between the parties under Section 1 could yield different

results under the same contract. Although two workers may have signed the same independent contractor

agreement, one may be compelled to arbitrate his

claims whereas the other may not, based solely on the

evidence of their interactions with the putative employer. In fact, the same worker may be compelled to

arbitrate at one point in time, but allowed to proceed

in court at another point in time, if his relationship

with the putative employer is found to have evolved in

the interim.

Third, an interpretation of Section 1 that requires

a factfinder to evaluate the parties’ underlying relationship would create countless complexities every

time a putative employer moves to compel arbitration.

“There is no question that the common-law agency

test makes for difficult line drawing,” FedEx Home Delivery v. NLRB, 563 F.3d 492, 509 (D.C. Cir. 2009),

and this Court has recognized that “[t]here are innumerable situations which arise in the common law

where it is difficult to say whether a particular individual is an employee or an independent contractor.”

NLRB v. United Ins. Co. of Am., 390 U.S. 254, 258

(1968). Requiring a court or arbitrator to undertake

this analysis simply to determine whether a dispute

should be compelled to arbitration would create “considerable complexity and uncertainty” that “would

call into doubt the efficacy of alternative dispute resolution procedures” and “undermin[e] the FAA’s proarbitation purposes [by] ‘breeding litigation from a statute that seeks to avoid it.’” Circuit City, 532 U.S. at

123 (quoting Allied-Bruce, 513 U.S. at 275).

Instead, applicability of the Section 1 exemption

should be “clear on the face of the contract” and “require[] only the examination of its terms.” In re Swift,

830 F.3d at 920 (Ikuta, J., dissenting).

C. Respondent’s Operating

Agreements Are Not “Contracts Of

Employment”

Should this Court decide to adjudicate the applicability of the Section 1 exemption to the claims at issue

here, rather than delegate that question to an arbitrator, it should hold that respondent’s Independent Contractor Operating Agreements are not contracts of employment.

Because Congress did not articulate a specific

meaning of the term “contracts of employment” in the

FAA, “the conventional master-servant relationship

as understood by common-law agency doctrine” applies. Darden, 503 U.S. at 322–23. “At common law

the relevant factors defining the master-servant relationship focus on the master’s control over the servant.” Clackamas Gastroenterology Assocs., P.C. v.

Wells, 538 U.S. 440, 448 (2003) (citing Restatement

(Second) of Agency § 220(1) (1933)). These factors include, inter alia, “the extent of control which . . . the

master may exercise over the details of the work,”

“whether the employer or the workman supplies the

instrumentalities, tools, and the place of work for the

person doing the work,” and “the method of payment,

whether by the time or by the job.” Restatement (Second) of Agency § 220(2) (1933).

Under these common-law principles, the Operating Agreements—contractual arrangements between

New Prime, Inc. and Hallmark Trucking LLC—

plainly set forth an independent contractor relationship. In addition to being captioned “Independent

Contractor Operating Agreements,” the contracts declare in no uncertain terms that their purpose is “to

establish an independent contractor relationship at

all times.” J.A. 65; see also id. at 86. And the Operating Agreements’ terms support that characterization.

They provide respondent with broad control over the

details of his work, stating that he “shall determine

the means and methods of performance of all transportation services undertaken under the terms of this

Agreement, including driving times and delivery

routes.” J.A. 86; see also id. at 65. They permit respondent either to “drive the Equipment Yourself,”

“employ . . . drivers for the Equipment,” or “lease drivers for the Equipment.” J.A. 70; id. at 91. They permit respondent to “refuse to haul any load offered to

[him] by [New] Prime.” J.A. 65; id. at 86. And they

expressly reserve to respondent “the right to provide

services for another carrier during the term of th[e]

Agreement[s].” Id. Respondent also supplies the instrumentalities of work under the Independent Contractor Operating Agreements: “You are willing to

lease the following-described tractor (the ‘Equipment’)

to Prime for the purpose of hauling freight pursuant

to the terms and conditions of the Agreement.” J.A.

64; id. at 85. And respondent is paid by the job, rather

than time worked. See J.A. 65–66; id. at 86–87.

Such terms are the hallmarks of an independent

contractor agreement, not a “contract of employment.”

CONCLUSION

The judgment of the Court of Appeals for the First

Circuit should be reversed.

Respectfully submitted.

JASON C. SCHWARTZ

JOSHUA S. LIPSHUTZ

AMANDA C. MACHIN

GIBSON, DUNN & CRUTCHER LLP

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 955-8500

THEODORE J. BOUTROUS JR.

Counsel of Record

SAMUEL ECKMAN

GIBSON, DUNN & CRUTCHER LLP

333 South Grand Avenue

Los Angeles, CA 90071

(213) 229-7000

tboutrous@gibsondunn.com

Counsel for Petitioner New Prime, Inc.

May 14, 2018

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.