Monday, March 5, 2018

SCOTUS to take on yet another arbitration case

The Federal Arbitration Act (FAA) generally allows parties to enter into binding contracts to arbitrate disputes that may arise later. However, under Section 1, 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.

Last week, SCOTUS granted certiorari (agreed to hear) New Prime Inc. v. Oliveira. The case presents two interesting FAA issues:

1. If the parties agree to arbitrate any disputes (including the arbitrability of the dispute), then who decides whether the exemptions in Section 1 apply? A court? Or an arbitrator?

2. Does Section 1's exemption for certain "contracts of employment" apply to independent contractors?

We should get answers next term. The case involves an independent contractor truck driver and could have important implications for arbitration agreements in the transportation industry.