Amicus Curiae Brief — New Prime Inc., Petitioner v. Dominic Oliveira

No. 17-340

IN THE

Supreme Court of the United States

_______________

NEW PRIME INC.,

Petitioner,

v.

DOMINIC OLIVEIRA,

_______________

Respondent.

ON A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

_______________

BRIEF FOR AMERICAN TRUCKING

ASSOCIATIONS, INC., AS AMICUS CURIAE

SUPPORTING PETITIONER

_______________

RICHARD PIANKA

Counsel of Record

ATA Litigation Center

950 North Glebe Road

Arlington, VA 22203

(703) 838-1889

rpianka@trucking.org

Counsel for Amicus Curiae

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ...................................... ii

INTEREST OF THE AMICUS CURIAE...................1

INTRODUCTION AND

SUMMARY OF ARGUMENT ....................................2

ARGUMENT ..............................................................4

I. The Business Relationships Between Motor

Carriers and Independent Owner-Operators

Are Crucial to the Trucking Industry. .................4

II. The Decision Below Undermines the Federal

Policy Favoring Arbitration, by Depriving

Motor Carriers and Independent OwnerOperators of the Benefits of Arbitration Under

the FAA. ................................................................7

CONCLUSION .........................................................12

ii

TABLE OF AUTHORITIES

Page(s)

Cases

Allied-Bruce Terminix Cos. v. Dobson,

513 U.S. 265 (1995) ...............................................9

Am. Trucking Ass’ns, Inc. v. United States,

344 U.S. 298 (1953) ...............................................4

AT&T Mobility LLC v. Concepcion,

563 U.S. 333 (2011) ...............................................2

Boomer v. AT&T Corp.,

309 F.3d 404 (7th Cir. 2002) ...............................10

Circuit City Stores, Inc. v. Adams,

532 U.S. 105 (2001) ...............................................2

Garrido v. Air Liquide Industrial U.S. LP,

194 Cal. Rptr. 3d 297 (Cal. Ct. App. 2015) ........12

Moses H. Cone Mem’l Hosp. v. Mercury Constr.

Corp.,

460 U.S. 1 (1983) .......................................3, 11, 12

Owner-Operator Indep. Drivers Ass’n v. C.R.

England, Inc.,

325 F. Supp. 2d 1252 (D. Utah 2004) .................11

Palcko v. Airborne Express, Inc.,

372 F.3d 588 (3d Cir. 2004) ................................11

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

561 U.S. 63 (2010) .................................................3

Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp.,

559 U.S. 662 (2010) ...............................................8

iii

TABLE OF AUTHORITIES

(continued)

Page(s)

Transamerican Freight Lines, Inc. v. Brada

Miller Freight Sys.,

423 U.S. 28 (1975) .............................................5, 6

Valdes v. Swift Transp. Co.,

292 F. Supp. 2d 524 (2003) .................................11

Statutes and Regulations

49 C.F.R. § 376 ...........................................................4

9 U.S.C. 1 ....................................................................2

49 U.S.C. 14102 ..........................................................4

Ex Parte No. MC 43 (Sub-No. 12), Leasing Rules

Modifications,

47 Fed. Reg. 53858 (Nov. 30, 1982) ......................4

Y2K Act of 1999, Pub. L. No. 106-37 §

2(a)(3)(B)(iv), 113 Stat. 185 ..................................8

Other Authorities

American Trucking Associations,

American Trucking Trends (2017) ...............10, 11

Company History: The C.R. England Story,

http://www.crengland.com/

company-history ....................................................7

H.R. Rep. No. 68-96 (1924).........................................8

H.R. Rep. No. 97-542 (1982).......................................8

OOIDA: Who We Are,

http://www.ooida.com/WhoWeAre ........................5

iv

TABLE OF AUTHORITIES

(continued)

Page(s)

Philip J. Romero, The Economic Benefits of

Preserving Independent Contracting (Sept.

2011),

http://www.cbrt.org/wp-content/uploads/2012/

04/Final-Romero-Report.pdf .................................6

Theodore St. Antoine, Mandatory Arbitration:

Why It’s Better Than It Looks,

41 U. Mich. J.L. Reform 783 (2008) .....................9

U.S. Census Bureau, 2002 Vehicle Inventory and

Use Survey (Dec. 2004),

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

ec02tv-us.pdf .........................................................5

Stephen Ware, The Case for Enforcing Adhesive

Arbitration Agreements—With Particular

Consideration of Class Actions and Arbitration

Fees,

5 J. Am. Arb. 251 (2006) .....................................10

Rip Watson, Owner-Operators Make More

Income, Freight-Rate Gains, Industry Expert

Says, Transport Topics, Sept. 23, 2013. ...............6

INTEREST OF THE AMICUS CURIAE*

American Trucking Associations, Inc. (ATA), is the

national association of the trucking industry. Its

direct membership includes approximately 1,800

trucking companies and in conjunction with 50

affiliated state trucking organizations, it represents

over 30,000 motor carriers of every size, type, and

class of motor carrier operation. The motor carriers

represented by ATA haul a significant portion of the

freight transported by truck in the United States and

virtually all of them operate in interstate commerce

among the States. ATA regularly represents the

common interests of the trucking industry in courts

throughout the nation, including this Court.

Many of ATA’s members contract with owneroperators—independent businesspersons who own

one or more trucks and lease them to motor carriers,

and either operate them themselves or supply drivers

to do so—to haul freight for them. And in many such

arrangements, carriers and owner-operators enter

into agreements to arbitrate disputes that may arise

during the course of their business relationship. By

agreeing to arbitrate, motor carriers and owneroperators alike avoid costly and protracted litigation,

instead committing to rely on what both Congress and

the courts have repeatedly endorsed as an efficient,

fair, and less adversarial means of dispute resolution.

And they do so in the expectation that the Federal

Both parties have consented to the filing of this brief. See

Rule 37.2(a). Pursuant to Rule 37.6, amicus states that no

counsel for any party has authored this brief in whole or in

part, and no person or entity, other than amicus, its members,

or their counsel has made any monetary contributions

intended to fund the preparation or submission of this brief.

*

2

Arbitration Act (FAA) will ensure that those

commitments are honored. Because the decision below

renders those arbitration agreements unenforceable

under the FAA, ATA and its members have a strong

interest in the outcome of this case.

INTRODUCTION AND

SUMMARY OF ARGUMENT

This Court has repeatedly explained that “[t]he

overarching purpose of the FAA … is to ensure the

enforcement of arbitration agreements according to

their terms.” AT&T Mobility LLC v. Concepcion, 563

U.S. 333, 334 (2011). Section 1 of the FAA, however,

exempts “contracts of employment of seamen, railroad

employees, or any other class of workers engaged in

foreign or interstate commerce.” 9 U.S.C. 1. That

exception means that if motor carriers and their truck

driver employees include an agreement to arbitrate

disputes in their employment contracts, they cannot

expect those agreements to be enforced under the

FAA. See Circuit City Stores, Inc. v. Adams, 532 U.S.

105, 119 (2001) (“Section 1 exempts from the FAA only

contracts of employment of transportation workers.”).

Nevertheless, the FAA plays an important role in

other contractual relationships regularly entered into

in the trucking industry. In particular, many motor

carriers frequently contract with independent

businesses to haul freight on their behalf. Often,

motor carriers and their independent contractors will

agree to arbitrate any disputes that arise between

them (including, in some cases, the question whether

a given dispute is arbitrable), with the expectation

that the FAA will require them to honor those

agreements. The decision below upends that

expectation.

3

This case presents two questions, the First

Circuit’s answer to each of which greatly diminishes

the ability of the trucking industry—carriers and

operators alike—to take advantage of the

Congressional policy favoring arbitration of disputes.

The First Circuit’s holding that applicability of the

Section 1 exemption is always a question for the court,

even when the parties expressly delegate questions of

arbitrability to the arbitrator, J.A. 168, would

effectively nullify the advantages of arbitration in

misclassification disputes—i.e., disputes that turn on

whether a given owner-operator is properly classified

as an employee or an independent contractor—

because in such cases the court’s resolution of the

gateway question is “so bound up” with the merits of

the dispute as to constitute “the entire ball game.”

Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 87

(2010) (Breyer, J., dissenting). Such a result is

incompatible with the strong “federal policy favoring

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

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

But the First Circuit went much further, holding

that even if the relationship between an owneroperator and a motor carrier is that of a bona fide

independent contractor, the Section 1 exemption for

transportation-worker “contracts of employment”

nevertheless applies. J.A. 185. This sweeping,

idiosyncratic holding, if affirmed, would mean that

owner-operators and carriers who agree to arbitrate

disputes could never expect those agreements to be

enforced under the FAA—despite the substantial

benefits of arbitration to both parties, and their

potential to keep down the costs of shipping the

materials and goods that are the lifeblood of the

national economy. This Court should reverse, and

4

correct the First Circuit’s serious blow to the trucking

industry’s opportunities to avail itself of the

advantages of arbitration under the FAA.

ARGUMENT

I. The Business Relationships Between Motor

Carriers and Independent Owner-Operators Are

Crucial to the Trucking Industry.

A. In the trucking industry, the use of “owneroperators”—independent

businesspersons

who

contract their services and lease their motor vehicle

equipment to trucking companies pursuant to 49

U.S.C. 14102 and related regulations set forth at 49

C.F.R. § 376—is widespread and economically crucial.

Their role in trucking operations has a history

essentially as long as the industry itself. See Ex Parte

No. MC 43 (Sub-No. 12), Leasing Rules Modifications,

47 Fed. Reg. 53858, 53860 (Nov. 30, 1982) (“Prior to

the Motor Carrier Act of 1935, motor carriers

regularly performed authorized operations in nonowned vehicles. To a large extent, ownership of these

vehicles was vested in the persons who drove them,

commonly referred to as owner-operators.”). More

than sixty years ago, this Court noted the trucking

industry’s extensive use of leased equipment and

drivers supplied by owner-operators. Am. Trucking

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

(“Carriers … have increasingly turned to owneroperator truckers to satisfy their need for equipment

as their service demands.”).

Accurate, recent estimates of the number of

independent owner-operators are difficult to obtain,

but there is no question that they constitute a large

segment of the industry. The Owner-Operator

Independent

Drivers

Association—the

trade

5

association

representing

independent

owneroperators and professional drivers—boasts over

160,000 members operating more than 300,000 trucks

in the U.S. and Canada. See OOIDA: Who We Are,

http://www.ooida.com/WhoWeAre.

The

Census

Bureau’s 2002 Vehicle Inventory and Use Survey—

the most recent comprehensive inventory of trucks

nationwide—counted over 545,000 trucks primarily

operated by owner-operators. U.S. Census Bureau,

2002 Vehicle Inventory and Use Survey 15, 39 (Dec.

2004), available at http://www.census.gov/prod/ec02/

ec02tv-us.pdf. These independent contractors play a

crucial role not just in long-haul over-the-road

trucking operations, but in every sector of the

trucking industry, from moving shipping containers

from ports to nearby distribution centers, to

nationwide express package delivery.

For trucking companies, independent contractors

provide a number of advantages. Independent owneroperators often are mature, experienced drivers, with

proven safety records, and highly motivated. The

availability of such owner-operators and their

equipment enables carriers to save on equipment and

capital costs, and provides the flexibility necessary to

meet fluctuations in demand for trucking services. As

the Court has recognized,

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

fluctuate seasonally or day by day. Keeping

expensive equipment operating at capacity, and

avoiding the waste of resources attendant upon

empty backruns and idleness, are necessary

and continuing objectives. It is natural,

therefore, that a carrier that finds itself short of

equipment necessary to meet an immediate

demand will seek the use of a vehicle not then

6

required by another carrier for its operations,

and the latter will be pleased to accommodate.

Each is thereby advantaged.

Transamerican Freight Lines, Inc. v. Brada Miller

Freight Sys., 423 U.S. 28, 35 (1975). Contracting with

independent businesses to supply capacity is, in short,

critical to the ability of motor carriers to remain

nimble and competitive in the face of inevitable

fluctuation in demand for hauling freight.

B. Independent contracting provides significant

advantages to owner-operators as well. By

successfully and skillfully managing operations, an

independent contractor can grow his or her own

business, whether by productively performing

services him or herself, or by hiring employees to

provide additional services. See, e.g., Philip J.

Romero, The Economic Benefits of Preserving

Independent Contracting 30 (Sept. 2011), available at

http://www.cbrt.org/wp-content/uploads/2012/04/

Final-Romero-Report.pdf. Owner-operators who drive

their own trucks typically outearn similarly situated

employee drivers by a significant margin: as one

industry expert stated, “the average owner-operator

fares better than company driver counterparts,” with

a net income of $51,912 compared to “about $40,000

per year for the same amount of work” by an employee

driver. Rip Watson, Owner-Operators Make More

Income, Freight-Rate Gains, Industry Expert Says,

Transport Topics, Sept. 23, 2013, at 12.

But independent owner-operators have the

opportunity to do far more than simply make more

money by personally hauling freight. Because

business start-up costs in the trucking industry are

comparatively modest—consisting principally of the

cost of a tractor and various licensing and insurance

7

fees—trucking provides independent contractors an

affordable opportunity to start their own businesses.

Entrepreneurial owner-operators can purchase

additional trucks and trailers, and employ drivers and

other staff to carry out and expand their business.

Independent contracting in the trucking industry

allows owner-operators to be their own bosses, and to

nurture their own enterprises. In fact, some of today’s

largest trucking companies—the petitioner here

among them—grew from a single-truck operation.

See, e.g., Pet. Br. 28; Company History: The C.R.

England Story, http://www.crengland.com/companyhistory.

II. The Decision Below Undermines the Federal

Policy Favoring Arbitration, by Depriving Motor

Carriers and Independent Owner-Operators of the

Benefits of Arbitration Under the FAA.

Petitioner explains in detail why the First Circuit

erred in holding that the phrase “contracts of

employment” in Section 1 encompasses agreements

between motor carriers and independent owneroperators. Pet. Br. 16–29. If affirmed, that holding

would broadly eliminate the ability of trucking

businesses to rely on arbitration under the FAA.

A. Success in the trucking industry, for carriers

and owner-operators alike, presents any number of

challenges, with fierce competition resulting in low

margins. Unsurprising, then, that carriers and owneroperators aggressively pursue measures that promote

efficiency. Like any number of other businesses,

trucking businesses frequently agree to arbitrate

disputes that may arise between them in the course of

their relationship. Motor carriers and independent

contractors turn to arbitration because—as Congress

8

has repeatedly found—arbitration allows parties to

avoid the “delays, expense, uncertainties, loss of

control, adverse publicity, and animosities that

frequently accompany litigation of business disputes.”

Y2K Act of 1999, Pub. L. No. 106-37 § 2(a)(3)(B)(iv),

113 Stat. 185, 186; see also H.R. Rep. No. 68-96, at 2

(1924) (“the costliness and delays of litigation … can

be largely eliminated by agreements for arbitration”);

H.R. Rep. No. 97-542, at 13 (1982) (arbitration is

“cheaper and faster than litigation,” has “simpler

procedural and evidentiary rules,” “minimizes

hostility,” and is “more flexible in regard to

scheduling”). As this Court has put it, in arbitration,

“parties forgo the procedural rigor and appellate

review of the courts in order to realize the benefits of

private dispute resolution: lower costs, greater

efficiency and speed, and the ability to choose expert

adjudicators to resolve specialized disputes.” StoltNielsen S. A. v. AnimalFeeds Int’l Corp., 559 U.S. 662,

685 (2010).

The First Circuit’s holding, if affirmed, would

ensure that arbitration will be adopted less widely, if

at all, in contracts between carriers and independent

owner-operators. After all, if the parties to the

agreement know that it can be unilaterally repudiated

by either party when a dispute arises, they will have

little incentive to choose arbitration in the first place.

As a result, motor carriers will no longer be able to

count on arbitration as a lower-cost, more efficient

alternative to litigation as a means of resolving

disputes with owner-operators.

B. But motor carriers are not the only losers under

the First Circuit’s decision: while the plaintiff in this

case may have concluded that he would fare better in

court than in arbitration, for owner-operators faced

9

with relatively small, individual disputes with a

motor carrier, arbitration may well be the only

realistic opportunity to vindicate their rights. As the

Court has observed, “arbitration’s advantages often

would seem helpful to individuals … who need a less

expensive alternative to litigation.” Allied-Bruce

Terminix Cos. v. Dobson, 513 U.S. 265, 280 (1995).

Without recourse to arbitration, someone “who has

only a small damages claim (who seeks, say, the value

of only a defective refrigerator or television set)” is left

“without any remedy but a court remedy, the costs

and delays of which could eat up the value of an

eventual small recovery.” Id. at 281.

The same would be true of any number of

inherently individualized disputes that regularly

arise between motor carriers and owner-operators—

say, a dispute in which an owner-operator believes the

motor carrier has breached their contract by

underpaying for a load, to the tune of a few thousand

dollars. Such a claim (unless it was low enough to be

resolved in small claims court) might be too small for

an owner-operator to pursue in a potentially lengthy,

expensive lawsuit, even if he or she is confident of

ultimately prevailing. But such a dispute might very

well be worth pursuing in arbitration, where the

reduced procedural and evidentiary burdens mean a

party can resolve a claim more efficiently and

expeditiously than they could in court—depending on

the circumstances, perhaps without the expense of a

lawyer at all, “in this much less formal and

intimidating forum.” Theodore St. Antoine,

Mandatory Arbitration: Why It’s Better Than It

Looks, 41 U. Mich. J.L. Reform 783, 792 (2008).1

In principle, owner-operators would be free to simply

adhere to an arbitration agreement when they felt that they

1

10

The inevitable result of the First Circuit’s

approach to the Section 1 exemption, then, will be that

any number of meritorious claims that owneroperators might have cost-effectively vindicated in

arbitration will instead go unremedied.

C. This disincentive to arbitration is similarly a

losing proposition for the shippers and consumers the

trucking industry serves. Arbitration permits a

business to resolve disputes more cheaply, and those

“cost-saving benefits … are reflected in a lower cost of

doing business that in competition are passed along to

customers.” Boomer v. AT&T Corp., 309 F.3d 404, 419

(7th Cir. 2002) (internal quotation marks and citation

omitted); see also Stephen Ware, The Case for

Enforcing Adhesive Arbitration Agreements—With

Particular Consideration of Class Actions and

Arbitration Fees, 5 J. Am. Arb. 251, 254–255 (2006)

(arbitration “lower[s] [businesses’] dispute-resolution

costs,” and this “benefit to business[] is also a benefit

to consumers” because “whatever lowers costs to

businesses tends over time to lower prices to

consumers”). Given the pervasive role of trucking in

delivering the goods on which the nation and its

economy depend, this is, cumulatively, no small

consideration. See, e.g., American Trucking

Associations, American Trucking Trends 5 (2017) (in

could vindicate a particular dispute more readily in

arbitration than in court, without recourse to enforcement

under the FAA. As a practical matter, however, if carriers and

contractors cannot count on their arbitration agreements

being enforced ex ante, they will be unlikely to enter into them

in the first place. And even if they did, what’s sauce for the

goose is sauce for the gander: the First Circuit’s holding would

allow motor carriers as well as owner-operators to walk away

from their arbitration agreements when a dispute arises, if

they saw a tactical advantage in doing so.

11

2016, transportation by truck represented 79.8% of

the nation’s primary shipment freight bill, and 70.6%

of domestic tonnage).

D. In his opposition to the petition for certiorari,

respondent suggests that the First Circuit’s expansive

construction of the Section 1 exemption will not

greatly diminish the use of arbitration in the trucking

industry, because “[i]t merely means that state law—

rather than federal—applies to their enforcement.”

Opp. 28. But that assertion ignores the fact that the

FAA expresses a strong federal policy favoring

arbitration—and that especially for an industry

whose business is to constantly cross state lines,

federal law is the only reliable option.

To be sure, some courts have enforced arbitration

agreements between carriers and owner-operators

under state law even when they were, in the court’s

view, exempt under Section 1 of the FAA. See, e.g.,

Palcko v. Airborne Express, Inc., 372 F.3d 588, 596 (3d

Cir. 2004) (enforcing arbitration agreement in

transportation

employment

contract

under

Washington law); Valdes v. Swift Transp. Co., 292 F.

Supp. 2d 524, 530 (2003) (enforcing arbitration

agreement in transportation employment contract

under New York law). Other courts, however, have

declined to enforce such agreements under state law.

See, e.g., Owner-Operator Indep. Drivers Ass’n v. C.R.

England, Inc., 325 F. Supp. 2d 1252, 1258–59 (D. Utah

2004) (refusing to enforce arbitration agreement in

transportation employment contract under Utah law).

Thus, neither carriers nor owner-operators could be

confident, ex ante, that their arbitration agreements

will be enforced if their only recourse is to state law.

Moreover, the FAA “creates a body of federal

substantive law establishing and regulating the duty

12

to honor an agreement to arbitration.” Mercury

Constr., 460 U.S. at 25 n.32. The substance of state

arbitration law, by contrast, will vary from

jurisdiction to jurisdiction. Thus, even where state

arbitration law might not exempt an arbitration

agreement altogether simply on the ground that it

was a transportation worker “contract of

employment,” carriers and owner-operators still could

not rely on the well-developed federal law of

arbitration to be confident that the agreement will be

enforced according to its terms. See, e.g., Garrido v.

Air Liquide Industrial U.S. LP, 194 Cal. Rptr. 3d 297,

308 (Cal. Ct. App. 2015) (holding that California

Arbitration Act applied to agreement that was exempt

under Section 1 of FAA, but refusing to enforce

because agreement did not provide for class

arbitration).

In short, particularly in an industry whose

constant movement of goods and people from state to

state provides limitless opportunities for forum

shopping, the theoretical prospect of enforcing an

arbitration agreement under state law amounts is for

all practical purposes illusory. If carriers and owneroperators cannot count on the uniformity of the FAA,

they will have little incentive to enter into arbitration

agreements in the tenuous hope that it will be

enforced according to its terms under the law of

whatever state a particular dispute happens to land

in.

CONCLUSION

The judgment of the Court of Appeals for the First

Circuit should be reversed.

13

Respectfully submitted.

RICHARD PIANKA

Counsel of Record

ATA Litigation Center

950 North Glebe Road

Arlington, VA 22203

(703) 838-1889

rpianka@trucking.org

Counsel for Amicus Curiae

May 2018