Amicus Curiae Brief — New Prime Inc. v. Oliveira, 139 S. Ct. 532 (2019) (No. 17-340)

No. 17-340

IN THE

Supreme Court of the United States

NEW PRIME, INC.,

Petitioner,

Vv.

DOMINIC OLIVEIRA,

Respondent.

On Writ of Certiorari to the United States

Court of Appeals for the First Circuit

BRIEF OF AMICUS CURIAE

AMERICAN ASSOCIATION FOR JUSTICE

IN SUPPORT OF RESPONDENT

ELISE SANGUINETTI, GERSON H. SMOGER

President Counsel of Record

JEFFREY R. WHITE SMOGER & ASSOCIATES

Associate General Counsel 13250 Branch View Lane

AMERICAN ASSOCIATION Dallas, TX 75234

FOR JUSTICE (972) 243-5297

777 6th Street, NW #200 gerson@texasinjurylaw.com

Washington, DC 20001

(202) 944-2839

jeffrey. white@justice org

Counsel for Amicus Curiae

TABLE OF CONTENTS

TABLE OF AUTHORITIES........................00000 iti

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

SUMMARY OF ARGUMENT............................. 1

Fe ei stancanrsnsarccsnsccanéseconsumseesnseseninenineses 4

|. The AFL, Representing the Teamsters

Union, Successfully Lobbied to Have All

Transportation Workers Exempted from the

FAA, Including Respondent, Without Regard

to Whether the Worker Was Paid as an

“Employee” or “Independent

{l. That Congress Meant to Exempt All Workers

in the Transportation Sector from the FAA,

Not Limited to How That Worker Happened

to Be Paid, Is Consistent with This Court's

Prior Decisions and Other Congressional

lll. In Historical Context the Use of the Term

“Contracts of Employment” Was Routinely

Used to Include the “Employment” of

“Independent Contractor” Drivers and,

Hence, Not Meant to Exclude Any Drivers

i

[V. Mandatory Individual Arbitration for Far-

Flung Transportation Workers Places Them

at a Distinct Disadvantage Inconsistent

with Congressional Intent That These

Critical Workers Would Not be Subject

a cisatlanidne, tnnnmendeianniinninnindenneda 20

V. Labels Attached by Petitioner to the

Agreement It Prepared Cannot Be

IIIT aiascosishintetiniadutipienistediciebadshapaadablsmesedibieiatet 28

TABLE OF AUTHORITIES

Cases

Amerigas Propane, LP v. Landstar Ranger, Inc.,

109 Cal. Rptr. 3d 686 (Cal. App. 2010) .............. 15

Campbell v. Washington County Technical Coll.,

a 30

Caron v. Powers-Simpson Co.,

104 N.W. 889 (Minn. 1905)................................ 18

Circuit City Stores, Inc. v. Adams,

Se i cictincsrretnincininiesneemnccnned passim

City of Chicago v. Robbins,

a ritititecrenenninemmennacnmennicints 17

Craig v. FedEx Ground Package Sys., Inc.,

686 F.3d 423 (7th Cir. 2012)................... 30, 31, 32

Daughtrey v. Honeywell, Inc.,

3 F.3d 1488 (11th Cir. 1993).......................c00 30

Drennon v. Patton-Worsham Drug Co.,

109 S.W. 218 (Tex. App. 1908) ........................... 19

Du Bois Electric Co. v. Fidelity Title & Trust Co.,

238 F. 129 (3d Cir. 1916).................:...cccecseeeeeees 17

Dwyer v. National S.S. Co.,

OF, GE Ge Bo, Sip iccecccerscccsvsssecssecsssesucevesss 18

iv

East Ramapo Cent. School Dist. v.

Mosdos Chofetz Chaim, Inc.,

en 29

Epic Sys. Corp. v. Lewis,

584 U.S. __, 138 S.Ct. 1612 (2018)............. 32, 33

Hamill v. Territilli,

1915 WL 2395, 195 Ill. App. 174 (1915)............. 19

Jackman v. Rosenbaum Co.,

a 17

James Griffith & Sons Co. v. Brooks,

4 SETS 17

K.C. Air Cargo Services, Inc. v. City of Kansas

City, 523 S.W.3d 1 (Mo. Ct. App. 2017) ............. 29

Kreipke v. Comm 'r of Internal Revenue,

32 F.2d 594 b(Sth Cir. 1929).............................+. 17

Lindsay v. McCaslin,

ee I i sicrenieenieriartainieaeinanteitaate 19

Luckie v. Diamond Coal Co.,

183 P. 178, 41 Cal. App. 468 (1919) ..0..0.0.00000..... 20

Maryland Dredging & Contracting Co. v.

State of Maryland,

Ps OS IES SiR cncesvsescseccssecenssonscsonsenst 17

McClaren v. Weber Bros. Shoe Co.,

| TS 18

v

McDermott Int'l, Inc. v. Wilander,

es

Middleton v. P. Sanford Ross,

IK

Morey v. Western Am.

Specialized Transp. Servs., Inc.,

968 F.2d 494 (5th Cir. 1992)................0.0000.0......

Murch Bros. Const. Co. v. Johnson,

te a csneeeiennn

Nationwide Mut. Ins. Co. v. Darden,

EEE i SE

Northern v. McGraw-Edison Co.,

542 F.2d 1336, (8th Cir. 1976),

cert. denied, 429 U.S. 1097 (1977)............000.......

Pioneer S.S. Co. v. McCann,

170 F. 873 (6th Cir. 1909)...................0....000c2eeee ee

Railway Employees’ Dep't, A.F.L. v. Indiana

Harbor Belt Railroad Co., Decision No. 982,

3 Dec. U.S. R.R. Lab. Bd. 332 (1922) .................

Robinson v. Shell Oil Co.,

i TE

Sharkey v. Ultramar Energy Lid.,

70 F.3d 226 (2d Cir. 1995)................cccccccceeeeeeeees

Sharpless v. Sim,

209 S.W.3d 825 (Tex.App.—Dallas 2006).......... 15

Slayman v. FedEx Ground Package System, Inc.,

765 F.3d 1033 (9th Cir. 2014).....................000002. 30

Sorah v. Sorah,

163 F.3d 397 (6th Cir. 1998)......................0.00000. 29

Standard Fashion Co. v. Magrane-Houston Co.,

I ST in nicindcrectnssncenemindionsemnqunacnien 29

Tankersley v. Webster,

a I I nec cncckasnsesitenctaninans 19

The Bjornefjord,

EE eI WEED vcccccccccccsusscccticscosasesctsere 17

The Indrani,

101 F. 596 (4th Cir. 1900).........................0..c0eeee 17

Topping v. Trade Bank of N_Y.,

86 F.2d 116 (2d Cir. 1936).......................0...c.ee 29

U.S. Fid. & Guar. Co. of Baltimore, Md.

v. Lowry, 231 S.W. 818 (Tex. Civ. App. 1921).... 19

Union Pac. Ry. Co. v. Chicago, RJ. & P. Ry Co.,

ee ee tennsadenicecmsenecsssncssesceseacnedsnssoes 29

W. A. Arthur v. Texas & P. Ry. Co.,

I ccectedisnmecncvansesteceqncsseioctiveennite 17

vil

Waldron v. Garland Pocahontas Coal Co..,

89 W. Va. 426, 109 S.E. 729 (1921)... 19

West Hartlepool Steam Navigation Co.

v. Benemelis S.S. Co., 1914 WL 1962,

12 Teiss 3 (La. Ct. App. 1914) 2000.00... 18

Woodward Iron Co. v. Limbaugh,

¥en 17

Statutes

| BG I em ne 15

I ate Fs, Paes 4, 16

SF es ye i scccctineciecsebeavetienseniaicsienean 2, 15

Other Authorities

Jay Newton Baker, The American Federation of

Labor, 22 Yale L.J. 73 (1912) ............................... 9

Lisa B. Bingham, Employment Arbitration: The

Repeat Player Effect, 1 Empl. Rts. & Employ.

ae Ma a nccicindicerncncdaenthiaiadiinceisinnnatitcie aan 24

Richard Carlson, Why the Law Still Can't Tell an

Employee When It Sees One and How It Ought

to Stop Trying, 22 Berkeley J. Emp. & Lab. L.

vill

Alexander Colvin & Mark D. Gough, Individual

Employment Rights Arbitration in the United

States: Actors & Outcomes, 68 Indus.

& Lab. Rel. Rev. 1019 (2015).................. 24, 27, 28

Alexander J.S. Colvin, An Empirical Study of

Employment Arbitration: Case Outcomes and

Processes, 8 J. Empirical Legal Stud. 1 (2011) .. 22

Alexander J.S. Colvin, Mandatory Arbitration

and Inequality of Justice in Employment,

35 Berk. J. Emp. & Lab. L. 71 (2014).......... 22, 23

Constitution and By-Laws of the Internationa!

Brotherhood of Teamsters, Chauffeurs,

Stablemen and Helpers of America

Constitution of the International Brotherhood of

Teamsters, Chauffeurs, Stablemen and

I tricktitientinsincanciinteindnnashesdeessundnensencines 10

Consumer Financial Protection Bureau, Arbitration

Study: Report to Congress, Pursuant to Dodd-

Frank Wall Street Reform and Consumer

Protection Act § 1028(a) (March 2015)............... 23

Lalith de Silva, et al., Independent Contractors:

Prevalence and Implications for Unemployment

Insurance Programs (Feb. 2000),

http://wdr.doleta.gov/owsdrr/00-5/00-5.pdf........ 31

Cynthia Estlund, The Black Hole of Mandatory

Arbitration, 96 N.C. L. Rev. 679 (2018)....... 21, 22

ix

Fight to Finish Opens on Unions in Trucking

Tieup, N.Y. Times (May 26, 1920)...................... 12

J. Maria Glover, Disappearing Claims and the

Erosion of Substantive Law, 124 Yale L.dJ.

SI irnttinsnisadsogbdsastemdiniidcindingenesnesces 22

Hearing Before a Subcommittee of the Committee

on the Judiciary, United States Senate, 67th

Cong., 4th Sess. (January 3, 1923)....................... 7

David Horton & Andrea Cann Chandrasekher,

Employment Arbitration After the Revolution,

65 DePaul L. Rev. 457, 462 (2016). .............. 23, 24

Robert D. Leiter, The Teamsters Union: A Study of

Its Economic Impact, New York, Bookman

PO 11

lan R. Macneil, American Arbitration Law:

Ref reg rcs rig

Internationalization (1992). .......................ce.e00000+ 7

Doug.ias J. McCarron, Worker Misclassification in

the Construction Industry, BNA Construction

Labor Report (April 7, 2011),

http://web.carpenters.org/Libraries/

PDFs_Misc/Construction_Labor_Report_--

_McCarron_on_Misclassification_4-7-

EES a 32

Organization and Membership of American

Trade Unions, 23(2) Monthly Lab. Rev. 8

x

Judith Resnick, Diffusing Disputes: The Public in

the Private of Arbitration, the Private in Courts,

and the Erasure of Rights,

124 Yale Lid. BBO4 CROUG) ..........ccccccccccccccccccccecceee 22

Jessica Silver-Greenberg and Michael Corkery, /n

Arbitration, a ‘Privatization of the Justice

System,’ N.Y. Times, Nov. 1, 2015,

http://www.nytimes.com/20 15/1 1/02/business/

dealbook/in-arbitration-a-privatization-of-the-

PE ee 26

Jessica Silver-Greenberg and Robert Gebeloff,

Arbitration Everywhere, Stacking the Deck of

Justice, N.Y. Times, Oct. 31, 2015,

http://www.nytimes.com/20 15/1 1/01/business/

dealbook/arbitration-everywhere-stacking-the-

I taicccisndeiscntntahnieisisintiiniiecsneiesannmes 26

Jean R. Sternlight, Disarming Employees: How

American Employers are Using Mandatory

Arbitration to Deprive Workers of Legal

Protection, 80 Brooklyn L. Rev. 1309 (2015)...... 22

Katherine V.W. Stone & Alexander J.S. Colvin,

The Arbitration Epidemic, Economic Policy

CS EES 22

Strike Paralyzes Railway Express, N.Y. Times

A EE OO 12

Theodore J. St. Antoine,

Labor and Employment Arbitration Today: Mid-

Life Crisis or New Golden Age?,

xl

32 Ohio St. J. on Disp. Resol. 1 (2017)............... 25

Teamster as Independent Contractor Under

Workmen's Compensation Acts,

ee 20

Teamsters, Teamster History Visual Timeline,

http://teamster.org/content/teamster-history-

a lmrltiamiemenens 10

Teamsters, The First Teamsters: Building a Union,

http://teamster.org/content/first-teamsters-

TT lsinccctcdeeneniectensnctenseunbdnbeindseninandatermenee 9

The National Workrights Institute, Employment

Arbitration: What Does the Data Show?,

http://web.archive.org/web/20 101202200115

/http://workrights.org/current/cd_arbitration.

U.S. Department of Labor, Unemployment

Insurance Tax Information, Calendar Year 2010,

http://oui.doleta.gov/unemploy/pdf/U1_taxinfo/

2010/MisclassifiedEmployees.pdf....................... 31

U.S. Department of Labor, Unemployment

Insurance Tax Information, Calendar Year 2017,

http://oui.doleta.gov/unemploy/pdf/U1_taxinfo/

2017/MisclassifiedEmployees.pdf....................... 31

U.S. Government Accountability Office,

Employment Arrangements: Improved Outreach

Could Help Ensure Proper Worker

Classification, GAO-06-656 (July 2006) ............ 31

l

INTEREST OF AMICUS CURIAE'

The American Association for Justice (“AAJ”)

was established in 1946 to strengthen the civil

justice system, preserve the right to trial by jury,

and protect access to the courts for those who have

been wrongfully injured. AAd is the world’s largest

trial bar. AAJ is concerned that the overly broad

construction of the Federal Arbitration Act

advanced by Petitioner in this case undermines the

right of American workers to pursue their statutory

and common-law rights in a judicial forum.

SUMMARY OF ARGUMENT

Petitioner argues that the Federal

Arbitration Act exemption language in Section |

must be given a modern reading and apply only to

transportation “workers” who are paid as employees.

AAJ believes it is clear that all workers in the

transportation sector, whether “employees” or

“independent contractors,” were meant to be

exempted from the Act.

The FAA was adopted to streamline

commercial disputes, particularly when the disputes

occur in international and interstate commerce.

However, when the International Seamen’s Union of

' Pursuant to Rule 37.6, amicus affirms that no counsel for any

party authored this brief in whole or in part and no person or

entity, other than amicus, its members, or its counsel has made

a monetary contribution to its preparation or submission.

Petitioner and Respondent have consented to the filing of this

brief.

2

America and the American Federation of Labor

(“AFL”) objected that the proposed language might

result in the FAA being applied to workers,

advocates for the bill, including the American Bar

Association and Commerce Secretary Herbert

Hoover, advanced exemption language to alleviate

those concerns. While the AFL did not represent

most seamen or railroad workers in 1925, one of the

largest AFL-affiliated unions and its largest

transportation-based union was the International

Brotherhood of Teamsters, Chauffeurs, Stablemen

and Helpers of America (“Teamsters”). The

Teamsters included independently contracting

vehicle owner-operators as a significant part of its

members.aip. The lobbying by the AFL in gaining an

exemptior for workers would surely have included

all members of one of its most important affiliates,

the Teamsters.

This Court found in Circuit City Stores, Inc. v.

Adams, 532 U.S. 105 (2001), that the Section 1

exemption focuses on a specific type of work —

transportation work — and not on how an individual

worker might be paid to perform that work. This is

consistent with the interpretation of other statutes

in the transportation sector that have been read to

include independent contractors. Although the

question of whether a worker is an employee or

independent contractor can be complex in modern

society, that is not an issue necessary for evaluating

Section 1. Even today, the Commercial Motor

Vehicle Safety Act includes “independent

contractor” in its definition of employee. See 49

U.S.C. § 31132(2)(A).

3

Historically, terms such as “contract of

employment,” “employee,” and “employer” were used

when discussing either independent contractors or

directly controlled employees. When Congress

enacted the FAA, these words were not governed by

the complicated mechanics of post-New Deal

“employee” payments, including the right to benefits

and the payment of taxes. In the early part of the

Twentieth Century, “employers” routinely hired

“independent contractors” and “owner-operators” as

“employees” under “contracts of employment.” That

both the ABA and Commerce Secretary Hoover used

the words “contracts of employment” when

suggesting the exemption amendment does not in

any way limit the “workers” expressly exempted by

the FAA, and certainly does not require an analysis

of the mechanics of their payment.

It was no doubt recognized by the AFL at the

time, as is it recognized today, that worker/employer

arbitration often favors employers and

disadvantages workers. Forcing individuals to

arbitrate single, small-value claims can also mean

that individuals may not have adequate

representation of their claims. The difficulty for

employees and working “independent contractors” is

particularly evident when arbitrating against larger

employers, such as Petitioner, who substantially

benefit from a “repeat player” bias.

Finally, Petitioner's argument that labeling

Respondent an “indepeudent contractor” in the

agreement is dispositive on the question of whether

Section 1 applies is simply wrong. Courts look

4

beyond the designations and labels in an agreement

to the true nature of the transaction and

relationship of the parties when interpreting an

agreement. This is particularly true in the context of

determining whether a worker is an employee or

independent contractor, as the advantages of such

misclassification have become profound in the past

twenty years and, as a result, misclassification has

proliferated to the disadvantage of compliant

businesses and all taxpayers generally.

Ultimately, the payment status of

Respondent is less important than the language of

Section 1 and its historical context. Respondent and

anyone else driving a vehicle for a living have always

been considered workers in interstate commerce,

thereby falling squarely within the Section |

exemption. When read in context with the legislative

history and the relationship of the AFL with the

Teamsters, it is clear that Respondent is exempted

from arbitrating his claims by Section 1.

ARGUMENT

Section 1 of the Federal Arbitration Act

(“FAA”) states that the Act 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

(emphasis added). Petitioner argues that this

broadly worded exemption must be read extremely

narrowly to apply only to expressly designated

“employees” engaged in interstate commerce rather

than all “workers” in the transportation sector,

5

including “independent contractors.” Using this

extremely narrow construction of the word “worker,”

Petitioner argues that the express exemption found

in the statute cannot be read to apply to any

“independent contractors” who performed the work

of driving a vehicle.

Petitioners narrow construction belies the

history behind the enactment of the FAA,

Congressional intent, and basic principles of

contract construction as applied by this Court and

elsewhere. Independent vehicle owner-operators

and others contracting to perform work themselves

certainly existed at the time the FAA was passed,

and had Congress not wished the exemption to apply

to all who actually worked in the transportation

sector, it would have said so.”

I. The AFL, Representing the Teamsters

Union, Successfully Lobbied to Have All

Transportation Workers Exempted from

the FAA, Including Respondent, Without

Regard to Whether the Worker Was Paid

2 The work at issue here is driving a type of vehicle, namely a

truck, for commercial purposes. Whether the driver owns a rig

outright, is driving a rig involved in a lease arrangement

(however complicated), or is simply an employee paid to drive

the mg, the work being performed is the same. As AAJ believes

that it ws clear that the Section | exemption was drafted to

exempt the worker who is actually performing that work, this

bnef will neither address the complicated subject of vehicle

ownership nor the mechanism by which the working driver is

paid — whether as an “independent contractor’ or employee.

The bottom line is that in every permutation of these vanables

the work itself does not vary.

6

as an “Employee” or “Independent

Contractor.”

The history and policy behind the Section |

exemption in the FAA for transportation workers is

contrary to Petitioner's and its amici supporters’

insistence that arbitration must be made mandatory

for Respondent. That history makes it clear that the

framers of the FAA undoubtedly meant to exempt al!

individual working drivers from its dictates.

Amicus Cato Institute discusses’ the

Congressional! history of the exemption language.

See Cato Br. 25-28. To summarize, the exemption

was inserted into the text of the bill in response to

objections from the International Seamen’s Union of

America and the American Federation of Labor

(“AFL”). At hearings on the bill in 1923 it was made

clear that “it was not the intention of this bill to

make an industrial arbitration in any sense.”*

®° W.H.H. Piatt, a lawyer from Kansas City, MO who was the

chairman of the Committee on Commerce, Trade, and

Commercial Law of the American Bar Association, testified on

the FAA bill which was being heavily promoted by the ABA.

After he made the above statement, which is quoted in the Cato

Institute's brief, Piatt continued:

[A]}nd so | suggest in as far as this committee is

concerned, if your honorable committee should

feel there us any danger of that, they should add

to the bill the following language: “but nothing

herein contained shall apply to seamen or any

class of workers in interstate and foreign

commerce.” It is not intended that this shall be

an act referring to labor disputes at all. It is

purely an act to give the merc*yants the right or

7

Hearing Before a Subcommittee of the Committee on

the Judiciary, United States Senate, 67th Cong., 4th

Sess., 9 (Jan. 3, 1923) [hereinafter “1923 Hearing”].

As part of the Hearing, Commerce Secretary

Herbert Hoover also submitted a letter in response

to the same objections. That letter stated the

following: “[I]f objection appears to the inclusion of

workers’ contracts in the law’s scheme, it might well

be amended by saying ‘but nothing herein shall

apply to contracts of employment of seamen,

railroad employees, or any other class of workers

engaged in interstate commerce.” 1923 Hearing at

14. Hoover’s letter thus included the basic text for

what was later adopted. According to the

the privilege of sitting down and agreeing with

each other as to what their damages are if they

want to do it. Now, that is all there is in this.

1923 Hearing at 9 (emphasis added). See also lan R. Macneil,

American Arbitration Law 89-91 (1992).

Shortly thereafter, Senator Thomas J. Walsh of Montana

articulated a problem that the objecting unions had with the

bill:

{I]t is the same with a good many contracts of

employment. “These are our terms. All right,

take it or leave it.’ Well, there is nothing for the

man to do except to sign it, and then he

surrenders his right to have his case tried by

the court, and he has to have it tried before a

tribunal in which he has no confidence at all.

1923 Hearing at 9.

‘ Secretary Hoover's letter offered essentially the same

language as the ABA, except for the addition of “railroad

employees.” 1923 Hearing at 14.

8

Proceedings of the Forty-Fifth Annual Convention of

the American Federation of Labor 52 (1925):

“Protests from the American

Federation of Labor and_ the

International Seamen’s Union brought

an amendment which provided that

‘nothing herein contained shall apply

to contracts of employment of Seamen,

railroad employees or any other class of

workers engaged in foreign or

interstate commerce.’ This exempted

labor from the provisions of the law,

although its sponsors denied it was

their intention to include labor

disputes.”

Quoted in Circuit City Stores, Inc. v. Adams, 532

U.S. 105, 127 n.8 (2001) (Stevens, J., dissenting).

After quoting these contemporaneous

documents, the Cato Institute jumps to the

conclusion that in making its objection, the AF L was

speaking on behalf of what they describe as

“traditional employees ... typically represented by

labor unions.” Cato Br. 27-28, arguing that it was for

the protection of railroad workers that the AFL

objected. However, up through 1926 none of what

were referred to as the “Big Four” railroad labor

organizations (Brotherhood of Locomotive

Engineers, Order of Railway Conductors of America,

Brotherhood of Locomotive Firemen and Engineers,

and Brotherhood of Railroad Trainmen) had ever

been affiliated with the AFL. Organization and

9

Membership of American Trade Unions, 23(2)

Monthly Lab. Rev. 8, 12 (Aug. 1926), available at

http://www.jstor.org/stable/4 1860265 (“These

organizations have always maintained their position

independent of the American Federation of Labor,

and have so thoroughly controlled their field that no

question of jurisdiction or dual unionism has

arisen.”).

Clearly, it is hard to believe that the AFL

would have invested its resources in lobbying on

behalf of a group of workers who were not part of its

membership. After all, the AFL had a vast

membership of its own to be concerned about, as it

was “divided into 115 national and international

unions” (Jay Newton Baker, The American

Federation of Labor, 22 Yale L.J. 73, 74 (1912)),

which did not include the “Big Four” railroad labor

organizations. In fact, in 1925 the largest AFL-

affiliated transportation-based membership union

was the International Brotherhood of Teamsters,

Chauffeurs, Stablemen and Helpers of America

(“Teamsters”) with 100,000 members. Organization

and Membership of American Trade Unions, at 13.

At the urging of Samuel Gompers, then the

head of the AFL, the Teamsters was formed in

Niagara Falls, NY in August 1903. See Teamsters,

The First Teamsters: Building a _ Union,

http://teamster.org/content/first-teamsters-

building-union (last visited July 23, 2018). After its

formation, the Teamsters was quickly granted a

Certificate of Affiliation by the AFL and remained

an affiliate until 1957. Teamsters, Teamster History

10

Visual Timeline, https://teamster.org/content/

teamster-history-visual-timeline (last visited July

23, 2018). Significantly, through at least 1925 the

worker membership in the Teamsters was not

restricted to “employees.” Both the 1915

Constitution and Bylaws of the International

Brotherhood of Teamsters and the next

Constitution, the 1925 Constitution and Bylaws of

the International Brotherhood of Teamsters,

describe Teamster membership as follows:

No person shall be entitled to

membership in this organization who

owns or operates more than one

team or vehicle. The General

Executive Board,... may allow a man

to own more than one team or vehicle

to [“and” replaced “to” in 1925] hold

membership, provided that he hires or

employs none but members of our

International Union and that he

drives a vehicle himself |.|

Constitution of the International Brotherhood of

Teamsters, Chauffeurs, Stablemen and Helpers, at

p.38 (1915), available at http://babel.

hathitrust.org/cgi/pt?id=uiug.30 1 1207350895 1; view

=lup;seq=5;size=150; Constitution and By-Laws of

the International Brotherhood of Teamsters,

Chauffeurs, Stablemen and Helpers of America, at

p.4 (Dec. 1, 1925) (emphasis added).

These owner-operators were a significant part

of the Teamster workforce. Amicus curiae for

1]

Petitioner, American Trucking Associations, Inc.,

highlights the importance of owner-operators to the

trucking industry and notes that their “role in

trucking operations has a history essentially as long

as the industry itself.” American Trucking

Associations Br. 4 (citing Ex Parte No. MC 43 (Sub-

No. 12), Leasing Rules Modifications, 47 Fed. Reg.

53858, 53860 (Nov. 30, 1982), which states that

“prior to the Motor Carrier Act of 1935, motor

carriers regularly performed authorized operations

in non-owned vehicles. To a large extent, ownership

of these vehicles was vested in the persons who

drove them, commonly referred to as owner-

operators.”).

Clearly, anyone lobbying for the AFL at any

time between 1923 and 1925 would have done so on

behalf of the members of its affiliated unions and

certainly would have advocated on behalf of the

drivers of the Teamsters, a union formed at the

direct request of the AFL. Indeed, Teamsters’

President Daniel Tobin was a member of the AF'L’s

executive counsel and was even Samuel Gompers’

campaign manager when Gompers successfully won

reelection as the AF L’s president in 1921,5 and the

refusal of Teamsters to cross picket lines was often

critical to the success of labor actions.® Further, the

® Robert D. Leiter, The Teamsters Union: A Study of Its

Economic Impact, New York, Bookman Associates, Inc., p. 38

(1957), available at http://archive. org/details

/teamunionstOO0leit.

® See, e.g., Strike Paralyzes Railway Express, N.Y. Times (Oct.

14, 1919), available at http://www.nytimes.com/1919/10/14/

archives/strike-paralyzes-railway-express-e mbargo-ordered-

12

Teamsters was one of the largest AF L-affiliated

unions and the largest affiliated transportation-

worker union. It strains credulity to think that the

AFL, in lobbying on behalf of its affiliates, would

have cut out a crucial portion of the Teamsters’

membership when successfully negotiating changes

to the FAA between 1923 and 1925, much less

bragging about those changes in 1925.

Il. That Congress Meant to Exempt All

Workers in the Transportation Sector

from the FAA, Not Limited to How That

Worker Happened to Be Paid, Is

Consistent with This Court’s Prior

Decisions and Other Congressional

Action.

As this Court has stated, any question of

statutory interpretation starts with an Act's

language. Robinson v. Shell Oil Co., 519 U.S. 337,

341 (1997). The meaning of statutory language “is

determined by reference to the language itself, the

specific context in which that language is used, and

the broader context of the statute as a whole.” Jd.

The descriptive language of the Section |

exemption focuses on the specific type of work and

not the mechanics of paying the individual worker

doing that work. Given the exemption’s inclusion in

the law, it must be concluded that Congress

on-all-shipments.html; Fight to Finish Opens on Unions in

Trucking Tieup, N.Y. Times (May 26, 1920), available at

http://www .nytimes.com/ 1 920/05/26/archives/fight-to-finish-

opens-on-unions-in-trucking-tieup-wrath-of-whole. htm]

13

intended to limit it only to categories of work —

railroad, maritime, and, at minimum, other

transportation — not concerning itself with the legal

mechanics of how workers were paid to perform the

work. This interpretation is consistent with this

Court’s only prior decision interpreting the Section

1 exemption, where the Court found that the

exemption was focused on contracts of employment

for “specific categories of workers,” such as

“seamen,” “railroad employees,” and “any other class

of workers” engaged in transportation activities.

Circuit City Stores, Inc., 532 U.S. at 114. Because

the plain language centers on the type of work being

performed rather than the status of the person

performing it, the exemption was certainly written

to apply to all transportation workers. There is no

basis to exclude “independent contractors” when

they actually performed the work in question,

because there can be no question that they were

“workers” in the transportation sector.

Generally, laws that cover a particular

industry or category of worker apply to all workers

in that arena. With respect to those statutes, “[i]f the

worker did a particular type of work or worked in a

particular industry, then he enjoyed the benefit of

the law’s protection without regard to the extent of

the employer’s control over the performance of the

work.” See Richard Carlson, Why the Law Still Can't

Tell an Employee When It Sees One and How It

Ought to Stop Trying, 22 Berkeley J. Emp. & Lab. L.

295, 308 (2001).

14

Other statutes that applied to workers in the

transportation sector have been interpreted to

include such independent contractors. Statutes

relating to “seamen” focused on whether the

individual performed the work of a seaman, not on

whether the individual was paid as an employee or

an individual contractor. See, e.g., McDermott Int'l,

Inc. v. Wilander, 498 U.S. 337, 355 (1991).

Regarding the specific wording of the FAA exclusion,

in Circuit City Stores, Inc., this Court stated:

As for the residual exclusion of “any

other class of workers engaged in

foreign or interstate commerce,”

Congress’ demonstrated concern with

transportation workers and _ their

necessary role in the free flow of goods

explains the linkage to the two specific,

enumerated types of workers identified

in the preceding portion of the

sentence.

532 U.S. at 121.

In fact, even had Congress used the word

“employee” instead of the much broader term

“worker,” the resulting understanding of

Congressional intent would be no different. In

definitions related to the Commercial Motor Vehicle

Safety, Congress expressly provided:

“[E]mployee” means an operator of a

commercial motor vehicle (including

an independent contractor when

15

operating a commercial motor

vehicle) . . . who directly affects

commercial motor vehicle safety in the

course of employment.

49 U.S.C. § 31132(2)(A) (emphasis added).

The accompanying regulations similarly

define “employee” broadly as including “a driver of a

commercial motor’ vehicle’ (including an

independent contractor while in the course of

operating a commercial motor vehicle).” 49 C.F.R. §

390.5 (emphasis added). See, e.g., Sharpless v. Sim,

209 S.W.3d 825, 829 (Tex.App.—Dallas 2006);

Amerigas Propane, LP v. Landstar Ranger, Inc., 109

Cal. Rptr. 3d 686, 698 (Cal. App. 2010). If this is true

when the word “employee” is used, certainly the

much broader term “worker” — with no underlying

legal meaning but only a meaning descriptive of the

actual job performed — was meant to include anyone

performing actual transportation work.

Ill. In Historical Context the Use ofthe Term

“Contracts of Employment” Wis

Routinely Used to Include _ ine

“Employment” of “Independent

Contractor” Drivers and, Hence, Not

Meant to Exclude Any Drivers from the

Benefit of the Lobbied-For Exemption.

Petitioner relies on Section 1’s use of the

phrase “contracts of employment” to argue that

“non-employees” cannot fall within the exemption.

First, by focusing only on the phrase, “contracts of

16

employment,” Petitioner distorts the exemption and

is forced to ignore that Section 1 exempts “any other

class of workers engaged in foreign or interstate

commerce,” not merely “any other class of

employees.” (emphasis added). 9 U.S.C. § 1.

Moreover, in the general parlance of the early 20th

Century, descriptive words such as “worker,”

“employer,” and “contract of employment” were as a

rule used to describe the type of work performed

rather than referring to more modern legal

distinctions emanating from post-New Deal tax and

benefit relationships and mechanics of pay. As such,

when both the ABA and Commerce Secretary

Hoover suggested the use of the wording “contracts

of employment” in 1923, neither the ABA, the

Secretary, nor Congress would have understood

there to be any need to clarify further that non-

employee drivers were included among those

“workers” entering into “contracts of employment.”

Before the 1930’s, even the word “employee”

on its own did not exclude independent contractors.

When there was no reason to distinguish between

different kinds of workers, the word “employee” was

often used to refer to any worker, including

independent contractors. See, e.g., Railway

Employees’ Dep't, A.F.L. v. Indiana Harbor Belt

Railroad Co., Decision No. 982, 3 Dec. U.S. R.R. Lab.

Bd. 332, 337 (1922) (explaining that in the

Transportation Act of 1920, when Congress referred

to “railroad employees|,}] it § undoubtedly

contemplate[d] those engaged in the customary

work directly contributory to the operation of the

railroads”—including independent contractors).

17

At the time of the drafting of the FAA,

“independent contractors” in the transportation

industry were often described as _ individuals

engaged in “independent employment.” See, e.g.,

City of Chicago v. Robbins, 67 U.S. 418, 425 (1862)

(describing a skillful contractor exercising an

“independent employment” as an _ independent

contractor); Kreipke v. Comm ’r of Internal Revenue,

32 F.2d 594, 596 (8th Cir. 1929) (defining an

“independent contractor” as one who is “exercising

an independent employment”); Du Bois Electric Co.

v. Fidelity Title & Trust Co., 238 F. 129, 131 (3d Cir.

1916) (similar).

Independent contractors were frequently

referred to as “employed.” See, e.g., The Bjornefjord,

271 F. 682, 683 (2d Cir. 1921) (“. . . due to the

negligence of an independent contractor employed

by them. . .”); Maryland Dredging & Contracting Co.

v. State of Md., 262 F. 11, 13 (4th Cir. 1919) (“. . . on

the ground that its owner was employed as an

independent contractor.”); Jackman v. Rosenbaum

Co., 260 U.S. 22, 30 (1922) (“[T]he party employed

was an independent contractor.”); The Indrani, 101

F. 596, 598 (4th Cir. 1900) (‘If an independent

contractor is employed”); Woodward Iron Co. v.

Limbaugh, 276 F. 1, 2 (5th Cir. 1921) (“. . . which

Waters was employed to do as an independent

contractor.”); W. A. Arthur v. Texas & P. Ry. Co., 204

U.S. 505, 516-17 (1907) (describing “an independent

contractor” as “employed ... to do work”); James

Griffith & Sons Co. v. Brooks, 197 F. 723, 725 (6th

Cir. 1912) (‘[T]he company ... employed him as an

independent contractor.”); Pioneer S.S. Co. v.

18

McCann, 170 F. 873, 877 (6th Cir. 1909) (“[W]hen a

shipowner has employed an independent contractor

|

It was also true that those who hired

independent contractors were called _ their

“employers.” See, e.g., McClaren v. Weber Bros. Shoe

Co., 166 F. 714, 719 (1st Cir. 1909) (“In other words,

ordinarily, where work of this kind is done by a

skilled independent contractor, the law holds that

the employer . . . ”); Middleton v. P. Sanford Ross,

213 F. 6, 10 (5th Cir. 1914) (“. . . the employer of the

independent contractor.”); Murch Bros. Const. Co. v.

Johnson, 203 F. 1, 4 (6th Cir. 1913) (“The doctrine of

independent contractor is that one who lets work to

be done by another according to such other’s own

methods and without being subject to the control of

his employer. . .”); Dwyer v. National S.S. Co., 4 F.

493, 498 (E.D.N.Y. 1880) (If an independent

contractor is employed to do a lawful act, and in the

course of the work he or his servants commits some

casual act of wrong or negligence, the employer is

not answerable. (citation omitted)”).

Unsurprisingly, numerous cases during this

period refer to independent contractors’ agreements

to perform work as “contracts of employment.” See,

e.g., West Hartlepool Steam Navigation Co. v.

Benemelis S.S. Co., 1914 WL 1962, 12 Teiss 3, 5 (La.

Ct. App. 1914) (“It devolves upon him who relies

upon the defense of independent contractor to plead

and prove the nature of the contract of employment

...”); Caron v. Powers-Simpson Co., 104 N.W. 889,

syllabus (Minn. 1905) (“. . . where there is dispute of

19

fact as to whether the contract of employment was

made with an independent contractor . . . is for a jury

...”); Tankersley v. Webster, 243 P. 745, 747, (Okla.

1925) (‘[T]he contract of employment ...

conclusively shows that Casey was an independent

contractor.”); Lindsay v. McCaslin, 122 A. 412, 413

(Me. 1923) (‘When the contract of employment has

been reduced to writing, the question whether the

person employed was an independent contractor or

merely a servant is determined by the court as a

matter of law.”); Drennon v. Patton-Worsham Drug

Co., 109 S.W. 218, 219 (Tex. App. 1908) (‘Where the

work is done, however, in the manner and by the

means contemplated in the contract of employment,

and the contractor is performing the work strictly in

the manner expressly or impliedly directed by the

employer, the latter cannot escape liability by the

plea that an independent contractor committed the

act.”); Waldron v. Garland Pocahontas Coal Co., 109

S.E. 729, syllabus (W. Va. 1921) (‘Whether a person

performing work for another is an independent

contractor depends upon a consideration of the

contract of employment, the nature of the business,

{and] the circumstances under which the contract

was made and the work was done.”). See also, e.g.,

U.S. Fid. & Guar. Co. of Baltimore, Md., v. Lowry,

231 S.W. 818, 822 (Tex. Civ. App. 1921) (whether a

person is an independent contractor or employee

depends upon whether the “contract of employment”

gives the employer the right “to control the manner

and continuance of the particular service and the

final result” (citation omitted)); Hamill v. Territilli,

195 Ill. App. 174, 176 (1915) (“Appellant strongly

contends that under the contract of employment

20

Territilli and Scully were independent

contractors.”).

Thus, when Secretary Hoover and attorney

Piatt, representing the ABA, each suggested the use

of the words “contracts of employment,” they would

have understood this phrase to be the generic

terminology used to describe agreements under

which teamsters — that is, truck drivers — worked.

See, e.g., Luckie v. Diamond Coal Co., 41 Cal. App.

468, 477 (1919) (explaining that a motor truck lessee

performing transfer and delivery services under a

“written contract of employment” could be either “an

independent contractor or [a] servant” depending on

how the work was actually performed).’

IV. Mandatory Individual Arbitration for

Far-Flung Transportation Workers

Places Them at a Distinct Disadvantage

Inconsistent with Congressional Intent

That These Critical Workers Would Not

be Subject to the FAA.

Today, just as in 1925, those working in the

commercial trucking industry, including

“independent contractors” who drive their own rigs,

’ A contemporaneous article, Teamster as Independent

Contractor Under Workmen's Compensation Acts, 42 A.L.R.

607, 617 (1926), distinguishes these two types of “employment”

of “independent contractors” in greater detail: “When the

contract of employment is such that the teamster is bound to

discharge the work himself, the employment is usually one of

service, whereas, if, under the contract, the teamster is not

obligated to discharge the work personally... the employment is

generally an independent one.” (citing cases).

21

frequently stand unequally when they are engaged

in a legal dispute with those who pay for their work.

Often, they reside hundreds if not thousands of

miles away from those who employ them. Yet, by

contract the one that pays for their services

generally sets up where the arbitration may take

place and what law is to be followed. Large national

or regional employers also have the advantage of

frequent association with the same arbitral forum

and even at times the same arbitrators.

Amici Chamber of Commerce of the United

States of America and the Society of Human

Resource Management [collectively referred to as

“amici Chamber’] state in their amici brief

{hereinafter “Chamber Br.”] that workers benefit

from arbitration. Chamber Br. 12-14. Empirical

evidence contradicts these claims.

Arbitration has actually proven to be an

ineffective mechanism, especially for protecting

transportation workers, who, as has been stated, are

often disbursed throughout the nation and distant

from those paying for their services. This is

demonstrated by the fact that even before employers

began routinely including arbitration provisions in

their mandatory employment agreements, the

number of workers filing workplace claims in

arbitration dropped substantially, and the amount

of those workers’ recoveries was comparatively low.

See, eg., Cynthia Estlund, The Black Hole of

Mandatory Arbitration, 96 N.C. L. Rev. 679 (2018)

(citing recent empirical studies and analyzing

structural causes); Judith Resnick, Diffusing

22

Disputes: The Public in the Private of Arbitration,

the Private in Courts, and the Erasure of Rights, 124

Yale L.J. 2804, 2813-14 (2015); J. Maria Glover,

Disappearing Claims and the Erosion of Substantive

Law, 124 Yale L.J. 3052 (2015); Jean R. Sternlight,

Disarming Employees: How American Employers are

Using Mandatory Arbitration to Deprive Workers of

Legal Protection, 80 Brooklyn L. Rev. 1309 (2015);

Alexander J.S. Colvin, Mandatory Arbitration and

Inequality of Justice in Employment, 35 Berk. J.

Emp. & Lab. L. 71 (2014) [hereinafter “Colvin

2014”]; Alexander J.S. Colvin, An Empirical Study

of Employment Arbitration: Case Outcomes and

Processes, 8 J. Empirical Legal Stud. 1, 6 (2011).

Many attorneys are also unwilling to take

individual arbitration cases because a plaintiff's

chances of winning in arbitration are so low and

often costlier than pursuing the matter in court (and

certainly when the alternative is the ability to

pursue the grievance collectively). See Katherine

V.W. Stone & Alexander J.S. Colvin, The Arbitration

Epidemic, Economic Policy Institute (Dec. 7, 2015),

available at http://www.epi.org/publication/the-

arbitration-epidemic/. This lack of representation

not only acts as a barrier to entry, but also reduces

the likelihood of a successful outcome in arbitration.

See generally Colvin 2014, supra (summarizing

information from multiple studies); Estlund, supra.

For instance, one study found that employees

recovered compensation in only 21.4 percent of

arbitrations as compared to 57 percent of state court

employment cases, and that the median award was

23

over $30,000 less in arbitrations than in state court

cases. Colvin 2014, supra, at 79-80.

Few employees subject to arbitration

agreements bring small claims, because the cost of

doing so, including time and travel costs, can easily

outweigh any potential benefit. When they do bring

claims, regardless of size, they achieve

systematically worse results against employers. See,

e.g., David Horton & Andrea Cann Chandrasekher,

Employment Arbitration After the Revolution, 65

DePaul L. Rev. 457, 462 (2016). For example,

individual employees who avail themselves of

telephonic hearings, which are often touted as a

uniquely informal device that facilitates access to

arbitration, have win rates that are significantly

lower than those who do not take advantage of the

informal procedure. Id. at 492.8

Moreover, although such informal procedures

ostensibly allow employees to present claims

without the assistance of lawyers, unrepresented

® There is also no empirical evidence to suggest that arbitration

provisions result in savings to consumers. In its 2015 Report to

Congress, the Consumer Financial Protection Bureau found

that pre-dispute arbitration clauses in the consumer financial

products or services setting did not result in lower costs to

consumers, stating, “[Wje did not identify statistically

significant empirical support for the claim that companies pass

cost savings relating to their use of pre-dispute arbitration

clauses to consumers.” Consumer Financial Protection Bureau,

Arbitration Study: Report to Congress, Pursuant to Dodd-

Frank Wall Street Reform and Consumer Protection Act §

1028(a), Section 10.3 p. 19 (March 2015) available at

https: //files.consumerfinance.gov/f/201503_cfpb_arbitration-

study-report-to-congress-2015.pdf.

24

employees prevail just 7 percent of the time. When

represented, their success rate nearly triples, as

employees represented by lawyers prevail between

19 percent and 28 percent of the time. /d. at 485; see

also Alexander Colvin & Mark D. Gough, /ndividual

Employment Rights Arbitration in the United States:

Actors & Outcomes, 68 Indus. & Lab. Rel. Rev. 1019,

1037 (2015) [hereinafter “Colvin & Gough”)

(observing that self-represented employees have

lower success rates, lower damages awards, and

greater susceptibility to repeat player effects).

Citing the twenty-year-old article Lewis L.

Maltby, Private Justice: Employment Arbitration

and Civil Rights, 30 Colum. Hum. Rts. L. Rev. 29, 46

(1998), amici Chamber maintain that “employees

who arbitrate their claims are more likely to prevail

than those who go to court” and that this applies

with “equal force to independent contractors.”

Chamber Br. 12. They support this by referring to

Maltby’s characterization of an article by Lisa B.

Bingham, Employment Arbitration: The Repeat

Player Effect, 1 Empl. Rts. & Employ. Pol’y J. 189,

210 (1997). However, the Bingham article does not

compare litigation outcomes with arbitration

outcomes. It compares outcomes of employees

arbitrating against “Repeat Player” employers with

those arbitrating against “non-Repeat Player”

employers. When the employer is a “repeat player,”

employees succeeded in recovering damages just

16% of the time, more than four times worse than

arbitrating against employers who were not repeat

players. Jd. Because these amici have taken these

underlying statistics out of context, the meaning of

25

the success rate they attribute to employees is not

useful.®

In their struggle to find additional support for

their position, amici Chamber cite a report compiled

by the National Workrights Institute, which relies

on two Bingham reports, the Maltby article, and a

fourth report, “Eisenberg,” to claim that employees

who arbitrate have an overall 62 percent success

rate. This study appears to build on the same

erroneous findings amici Chamber cite originally. '°

Additionally, the National Workrights study

concludes that the “number of studies, and the size

of the data sets involved, is too small to draw

conclusions.” The National Workrights Institute,

Employment Arbitration: What Does the Data

Show?, https://web.archive.org/web/20 1012022001 |

5/http://workrights.org/current/cd_arbitration. htm]

(last visited July 9, 2018).

Similarly, another article amici Chamber cite

notes that “the figures on arbitration and court

litigation are all over the plot.” Theodore J. St.

Antoine, Labor and Employment Arbitration Today:

Mid-Life Crisis or New Golden Age?, 32 Ohio St. J.

on Disp. Resol. 1, 16 (2017). But St. Antoine does

identify a significant difference in the success rates

of higher-paid employees and lower-paid employees

(id.), and lower-paid employees would include

® Also, these statistics do not account for the people who cannot

bring claims because the potential damages are too small.

'© Due to the lack of internal citations in the study, it is difficult

to evaluate these findings with more specificity.

26

Respondent and those similarly situated to

Respondent.

In addition, when individuals do participate

in arbitration proceedings, there is evidence that the

arbitrators tend to favor the “repeat player”

corporations that appear before them and pay them

on a regular basis. Where a corporation, such as

Petitioner, can force hundreds, if not thousands, of

individuals into arbitration, there is a documented

bias that results in favor of the corporate entity. This

“repeat player” bias issue is also well-documented in

academic studies. !!

'! The press has also recognized this “repeat player” bias. See

Jessica Silver-Greenberg and Robert Gebeloff, Arbitration

Everywhere, Stacking the Deck of Justice, N.Y. Times, Oct. 31,

2015, http://www.nytimes.com/20 15/1 1/01/business/dealbook/

arbitration-everywhere-stacking-the-deck-of-justice. htm!

([T]he rules of arbitration largely favor companies, which can

even steer cases to friendly arbitrators, interviews and records

show.”); Jessica Silver-Greenberg and Michael Corkery, Jn

Arbitration, a ‘Privatization of the Justice System,’ N.Y. Times,

Nov. 1, 2015, http://www .nytimes.com/20 15/1 1/02/

business/dealbook/in-arbitration-a-privatization-of-the-

justice-system.html (‘[Arbitration Rjules tend to favor

businesses, and judges and juries have been replaced by

arbitrators who commonly consider the companies their

clients, The Times found.... “This is a business and arbitrators

have an economic reason to decide in favor of the repeat

players.”). Further, “in interviews with The Times, more than

three dozen arbitrators described how they felt beholden to

companies. Beneath every decision, the arbitrators said, was

the threat of losing business. [§] Victoria Pynchon, an

arbitrator in Los Angeles, said plaintiffs had an inherent

disadvantage. ‘Why would an arbitrator cater to a person they

will never see again? she said.” Jd.

27

A recent study’ by Colvin & Gough, supra, found

that:

1)

3)

Earlier academic research on repeat player

effects in arbitration have _ generally

supported the existence of a repeat player

effect and that employers involved in multiple

arbitration cases tend to do better than first-

time participants. /d. at 1023-25.

On average, each previous interaction

between a given employer and an arbitrator

decreases the odds of an employee’s winning.

When all other independent variables are

controlled, the probability an employee will

win her case when bringing it before a first-

time employer-arbitrator pairing is 17.9%,

but if the defending employer had four

previous interactions with the arbitrator, the

probability decreases to 15.3%, a 14.9%

decrease. If there were 25 previous

interactions between an employer-arbitrator

pairing, the probability declines to 4.5%, a

75% decrease relative to first time pairings.

Id. at 1031-1035.

Even when they controlled for employer size

and experience in_ arbitration, every

“ Colvin’s and Gough's study used a database of American

Arbitration Association ( AAA”) arbitrations. Colvin & Gough

pp. 1026-27. AAA is a non-profit organization and its neutrals

only make money on the cases they personally handle. In

contrast, JAMS is a “for-profit” entity and its owner-neutrals

also make money on cases they do not personally handle.

Because the economic incentives are greater, there is no reason

to believe that the repeat player effect would be lessened at all

in JAMS arbitrations.

28

additional interaction between an employer

and an arbitrator resulted in reduced

employee outcomes as measured by (a) win

rates and (b) monetary award amounts. “One

possible explanation for this relationship is

that some arbitrators may be responding to

economic incentives and issuing favorable

awards to repeat clients.” Jd. at 1037.

The authors conclude:

Justice in mandatory arbitration is not

blind if parties are able to gain an

advantage .. . especially if there are

gains from doing repeat business with

the same arbitrator.

Id. at 1040.

V. Labels Attached by Petitioner to the

Agreement It Prepared Cannot Be

Dispositive.

Even if the distinction as to whether

Respondent is an employee or independent

contractor were germane, that is not an analysis

that can be blindly accepted based upon the mere

fact that Petitioner elected to include the words

“independent contractor” in the underlying

agreement it prepared. It is well-settled that in

determining the relationships between parties and

the true nature of an agreement, courts will look

beyond the formal designations and labels in the

agreement. See, e.g., Union Pac. Ry. Co. v. Chicago,

29

RA. & P. Ry Co., 163 U.S. 564, 582 (1896) (what the

agreement “was styled by the parties does not

determine its character or their legal relations...”);

Standard Fashion Co. v. Magrane-Houston Co., 258

U.S. 346, 354 (1922) (a debtor does not become the

agent of his creditor simply because he is called an

agent); Topping v. Trade Bank of N.Y., 86 F.2d 116,

117-18 (2d Cir. 1936) (a usurious loan is not made

lawful by falsely terming it a sale . . . or a corporate

obligation); Sorah v. Sorah, 163 F.3d 397, 401 (6th

Cir. 1998) (instructing bankruptcy courts to look

beyond the label applied in the decree to determine

whether a debtor’s obligation to a spouse arising

from a divorce decree “is actually support” and not

dischargeable); see generally K.C. Air Cargo

Services, Inc. v. City of Kansas City, 523 S.W.3d 1, 7

(Mo. Ct. App. 2017) (“[Courts] are to interpret a

contract by what its language means rather than by

the definition of certain terms or what the parties

call it.”); East Ramapo Cent. School Dist. v. Mosdos

Chofetz Chaim, Inc., 36 N.Y.S.3d 344, 345 (2016) (“It

is well settled that an agreement’s characterization

is not determinative of the nature of the transaction;

‘rather, the true nature of the transaction must be

gleaned from the rights and obligations set forth

therein’ (citations omitted)”).

Numerous courts, including this Court, have

found that the simple designation of a worker as an

independent contractor on the face of an agreement

is not determinative of the relationship between the

parties. See, e.g., Nationwide Mut. Ins. Co. v.

Darden, 503 U.S. 318, 323-24 (1992) (employment

status depends on all of the factual incidents of the

30

relationship); Campbell v. Washington County

Technical Coll., 219 F.3d 3, 7 (1st Cir. 2000) (“Maine

courts follow the oft-stated rule that the legal

relationship between the parties does not turn on

the label the parties themselves attach.”); Sharkey

v. Ultramar Energy Litd., 70 F.3d 226, 232 (2d Cir.

1995) (employment or agency status “not

determined solely by the label used in the contract

between the parties”); Morey v. Western Am.

Specialized Transp. Servs., Inc., 968 F.2d 494, 498

n.56 (5th Cir. 1992) (contractual designation of

trucker as “independent contractor” held “not

determinative”); Craig v. FedEx Ground Package

Sys., Inc., 686 F.3d 423, 427 (7th Cir. 2012) (each

case must be decided on its own facts and

circumstances); Northern v. McGraw-Edison Co.,

542 F.2d 1336, 1343 n.7 (8th Cir. 1976), cert. denied,

429 U.S. 1097 (1977) (an employee does not become

an independent contractor simply because a contract

describes him as such); Slayman v. FedEx Ground

Package System, Inc., 765 F.3d 1033, 1042 (9th Cir.

2014) (under Oregon law, “a contract’s recitation of

an independent-contractor relationship is not

dispositive.”); Daughtrey v. Honeywell, Inc., 3 F.3d

1488, 1492 (11th Cir. 1993) (the employment status

of an individual for the purposes of ERISA is not

determined solely by the label used in the contract

between the parties).

Indeed, in recent times, so many advantages

have been found to exist in misclassifying employees

as “independent contractors” that such

misclassification of employees has become a

pervasive issue throughout the nation. Between

31

February 1999 and February 2005, the number of

workers classified as independent contractors in the

United States grew by 25.4 percent. See US.

Government Accountability Office, Hmployment

Arrangements: Improved Outreach Could Help

Ensure Proper Worker Classification, GAO-06-656,

App. Ill. Tbl.4 p.47 (@July 2006), available ai

http://www.gao.gov/assets/260/250806.pdf (showing

changes in size of contingent workforce). The U.S.

Department of Labor’s Employment and Training

Administration found that between 2010 and 2017

the number of misclassified employees discovered as

part of audits increased from 206,626 to 347,320

even though fewer audits were conducted. U.S.

Department of Labor, Unemployment Insurance Tax

Information, Calendar Year 2010,

http://oui.doleta.gov/unemploy/pdf/UI_taxinfo/20 10/

MisclassifiedEmployees.pdf; U.S. Department of

Labor, Unemployment Insurance Tax Information,

Calendar Year 2017,

http://oui.doleta.gov/unemploy/pdf/U1_taxinfo/2017/

MisclassifiedEmployees. pdf.

Another study commissioned by the U.S.

Department of Labor found that up to 30 percent of

audited employers misclassified workers. Lalith de

Silva, et al., Independent Contractors: Prevalence

and Implications for Unemployment Insurance

Programs, p.iii (Feb. 2000)

http://wdr.doleta.gov/owsdrr/00-5/00-5.pdf.

Courts also have recognized that this is a

growing concern. Craig, 686 F.3d at 430-31 (“The

number of independent contractors in this country is

32

growing’ because of the “economic incentives for

employers to use independent contractors and there

is a potential for abuse in misclassifying employees

as independent contractors.”) The Craig court also

recognized that this misclassification results in

significant costs to the government: “[Bjetween

1996 and 2004, $34.7 billion of Federal tax revenues

went uncollected due to the misclassification of

workers and the tax loopholes that allow it.’ 156

Cong. Rec. S7135-01, S7136 (daily ed. Sept. 15,

2010).” Id. at 431. In addition, a 2010 study

estimated that misclassifying by employers shifts

$831.4 million in unemployment insurance taxes

and $2.54 billion in workers’ compensation

premiums from those misclassifying to law-abiding

businesses annually. Douglas J. McCarron, Worker

Misclassification in the Construction Industry: Time

to Stand Up for Law-Abiding Employers,

Construction Labor Report, BNA Insights (April 7,

2011), http://web.carpenters.org/Libraries/PDFs_

Misc/Construction_Labor_Report_--_McCarron_on_

Misclassification_4-7-2011_sm.sflb.ashx.

* * a

In 2018, this Court addressed the FAA in Epic

Sys. Corp. v. Lewis, 584 U.S. __, 138 S.Ct. 1612,

1625 (2018). In so doing, this Court noted that there

was no “clear and manifest congressional command”

to displace the FAA when passing the NLRA, and

specifically pointed to the fact that the NLRA does

not mention class or collective action procedures. /d.

at 1624. However, the issue before this Court here

is not whether “two statutes cannot be harmonized”

33

but instead whether Section 1 of the FAA itself

manifests the clear intent of Congress to exempt all

transportation workers from its purview. /d. at

1624. As this Court held in Circuit City Stores, Inc.

the FAA does manifest just such a_ clear

congressional intent to exempt “specific categories of

workers” such as “seamen,” “railroad employees,”

and “any other class of workers” engaged in

transportation activities from its requirements. /d.

at 114. Respondent is exempted from the FAA.

CONCLUSION

For the foregoing reasons, AAJ urges this

Court to affirm the judgment of the U.S. Court of

Appeals for the First Circuit.

Respectfully submitted,

ELISE SANGUINETTI, GERSON H. SMOGER

President Counsel of Record

JEFFREY R. WHITE SMOGER & ASSOCIATES

Associate General Counsel 13250 Branch View Lane

AMERICAN ASSOCIATION Dallas, TX 75234

FOR JUSTICE (972) 243-5297

777 6th Street, NW #200 gerson@texasinjurylaw com

Washington, DC 20001

(202) 944-2839

jeffrey.white@justice org

July 24, 2018