New Prime Inc. v. Oliveira

Petitioner New Prime Inc. is an interstate trucking company, and respondent Dominic Oliveira is one of its drivers. Mr. Oliveira works under an operating agreement that calls him an independent contractor and contains a mandatory arbitration provision. When Mr. Oliveira filed a class action alleging that New Prime denies its drivers lawful wages, New Prime asked the court to invoke its statutory authority under the Federal Arbitration Act to compel arbitration. Mr. Oliveira countered that the court lacked authority because §1 of the Act excepts from coverage disputes involving “contracts of employment” of certain transportation workers. New Prime insisted that any question regarding §1’s applicability belonged to the arbitrator alone to resolve, or, assuming the court could address the question, that “contracts of employment” referred only to contracts that establish an employer-employee relationship and not to contracts with independent contractors. The District Court and First Circuit agreed with Mr. Oliveira.

Held:

1. A court should determine whether a §1 exclusion applies before ordering arbitration. A court’s authority to compel arbitration under the Act does not extend to all private contracts, no matter how emphatically they may express a preference for arbitration. Instead, antecedent statutory provisions limit the scope of a court’s §§3 and 4 powers to stay litigation and compel arbitration “accord[ing to] the terms” of the parties’ agreement. Section 2 provides that the Act applies only when the agreement is set forth as “a written provision in any maritime transaction or a contract evidencing a transaction involving commerce.” And §1 helps define §2’s terms, warning, as relevant here, that “nothing” in the Act “shall apply” to “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” For a court to invoke its statutory authority under §§3 and 4, it must first know if the parties’ agreement is excluded from the Act’s coverage by the terms of §§1 and 2. This sequencing is significant. See, e.g., Bernhardt v. Polygraphic Co. of America, 350 U. S. 198, 201–202. New Prime notes that the parties’ contract contains a “delegation clause,” giving the arbitrator authority to decide threshold questions of arbitrability, and that the “severability principle” requires that both sides take all their disputes to arbitration. But a delegation clause is merely a specialized type of arbitration agreement and is enforceable under §§3 and 4 only if it appears in a contract consistent with §2 that does not trigger §1’s exception. And, the Act’s severability principle applies only if the parties’ arbitration agreement appears in a contract that falls within the field §§1 and 2 describe. Pp. 3–6.

2. Because the Act’s term “contract of employment” refers to any agreement to perform work, Mr. Oliveira’s agreement with New Prime falls within §1’s exception. Pp. 6–15.

(a) “[I]t’s a ‘fundamental canon of statutory construction’ that words generally should be ‘interpreted as taking their ordinary . . . meaning . . . at the time Congress enacted the statute.’ ” Wisconsin Central Ltd. v. United States, 585 U. S. ___, ___ (quoting Perrin v. United States, 444 U. S. 37, 42). After all, if judges could freely invest old statutory terms with new meanings, this Court would risk amending legislation outside the “single, finely wrought and exhaustively considered, procedure” the Constitution commands. INS v. Chadha, 462 U. S. 919, 951. The Court would risk, too, upsetting reliance interests by subjecting people today to different rules than they enjoyed when the statute was passed. At the time of the Act’s adoption in 1925, the phrase “contract of employment” was not a term of art, and dictionaries tended to treat “employment” more or less as a synonym for “work.” Contemporaneous legal authorities provide no evidence that a “contract of employment” necessarily signaled a formal employer-employee relationship. Evidence that Congress used the term “contracts of employment” broadly can be found in its choice of the neighboring term “workers,” a term that easily embraces independent contractors. Pp. 6–10.

(b) New Prime argues that by 1925, the words “employee” and “independent contractor” had already assumed distinct meanings. But while the words “employee” and “employment” may share a common root and intertwined history, they also developed at different times and in at least some different ways. The evidence remains that, as dominantly understood in 1925, a “contract of employment” did not necessarily imply the existence of an employer-employee relationship. New Prime’s argument that early 20th-century courts sometimes used the phrase “contracts of employment” to describe what are recognized today as agreements between employers and employees does nothing to negate the possibility that the term also embraced agreements by independent contractors to perform work. And its effort to explain away the statute’s suggestive use of the term “worker” by noting that the neighboring terms “seamen” and “railroad employees” included only employees in 1925 rests on a precarious premise. The evidence suggests that even “seamen” and “railroad employees” could be independent contractors at the time the Arbitration Act passed. Left to appeal to the Act’s policy, New Prime suggests that this Court order arbitration to abide Congress’ effort to counteract judicial hostility to arbitration and establish a favorable federal policy toward arbitration agreements. Courts, however, are not free to pave over bumpy statutory texts in the name of more expeditiously advancing a policy goal. Rather, the Court should respect “the limits up to which Congress was prepared” to go when adopting the Arbitration Act. United States v. Sisson, 399 U. S. 267, 298. This Court also declines to address New Prime’s suggestion that it order arbitration anyway under its inherent authority to stay litigation in favor of an alternative dispute resolution mechanism of the parties’ choosing.

Pp. 10–15. 857 F. 3d 7, affirmed. 

GORSUCH, J., delivered the opinion of the Court, in which all other Members joined, except KAVANAUGH, J., who took no part in the consideration or decision of the case. GINSBURG, J., filed a concurring opinion.

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Duffey v. Tender Heart Home Care Agency

Plaintiff Nichelle Duffey (Plaintiff) sued defendant Tender Heart Home Care Agency, LLC (Tender Heart) for, among other claims, failure to pay overtime wages under the Domestic Worker Bill of Rights (Labor Code, §§ 1450 et seq.; DWBR), which requires that domestic work employees receive overtime wages for all hours worked more than nine hours per day or 45 hours per week.  The trial court granted Tender Heart’s motion for summary adjudication on the DWBR cause of action, finding the undisputed facts demonstrated Plaintiff was an independent contractor rather than an employee of Tender Heart for purposes of the DWBR.  We first conclude the trial court erred in exclusively applying the so-called “common law” test set forth in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341 (Borello), to determine the issue.  We next conclude that, under the appropriate tests, there is a dispute of fact as to whether Plaintiff was Tender Heart’s employee.  Accordingly, we reverse and remand.

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Ricasa v. Office of Admin. Hearings

Southwestern Community College District (District) and its governing board (Board) (together Southwestern) demoted Arlie Ricasa from an academic administrator position to a faculty position on the grounds of moral turpitude, immoral conduct, and unfitness to serve in her then-current role.  Ricasa filed two petitions for writs of administrative mandamus in the trial court seeking, among other things, to set aside the demotion and reinstate her as an academic administrator.

Ricasa appeals from the denial of her petitions, arguing the demotion occurred in violation of the Ralph M. Brown Act (the Brown Act) (Gov. Code, § 54950 et seq.) because Southwestern failed to provide her with 24 hours' notice of the hearing at which it heard charges against her, as required by Government Code section 54957.  Assuming we reject her first argument, she argues that the demotion was unconstitutional because no nexus exists between her alleged misconduct and her fitness to serve as academic administrator.  

Southwestern also appeals, arguing that the trial court made two legal errors when it:  (1) held that Southwestern was required to give 24-hour notice under the Brown Act prior to conducting a closed session at which it voted to initiate disciplinary proceedings, and (2) enjoined Southwestern from committing future Brown Act violations.

We conclude that Southwestern did not violate the Brown Act and that substantial evidence supported Ricasa's demotion.  However, we reverse that part of the judgment enjoining Southwestern from future Brown Act violations.

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NLRB Further Extends Time for Submitting Comments on Proposed Joint-Employer Rulemaking in Light of DC Circuit’s Recent Browning-Ferris Decision

In light of the unique circumstance presented by the December 28, 2018 issuance by the United States Court of Appeals for the District of Columbia Circuit of its decision in Browning-Ferris Industries of California v. NLRB, --- F.3d ---, 2018 WL 6816542, the National Labor Relations Board (“NLRB”) is extending the time for submitting comments regarding its Notice of Proposed Rulemaking (“NPRM”) on joint-employer status in order to permit issues raised by that decision to be addressed.  Comments must now be received on or before January 28, 2019.  Comments replying to the comments submitted during the initial comment period must be received by the NLRB on or before February 11, 2019.

Public comments should be submitted either electronically to www.regulations.gov, or by mail or hand-delivery to Roxanne Rothschild, Acting Executive Secretary, National Labor Relations Board, 1015 Half Street S.E., Washington, D.C. 20570-0001.

Due to the partial government shutdown, the Office of the Federal Register is unable to publish the notice of this extension.   Please refer to the order here.

Click here to read the request for comments in the Federal Register.

Click here to read the original announcement regarding the Notice of Proposed Rule-Making.

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NLRB Division of Judges Issues Updated Bench Book

Washington, D.C—The Judges Division of the National Labor Relations Board (NLRB) has issued an updated Bench Book, which replaces an earlier version issued in January 2018.  The new January 2019 edition contains citations to numerous additional Board and court decisions and other authorities.  It also contains several new sections, including sections addressing compliance/backpay proceedings and consolidated unfair labor practice (ULP) and representation cases. In addition, certain sections have been substantially reorganized, including those addressing privileged or protected material.  

Like the 2018 edition, the new 2019 edition was edited by NLRB Administrative Law Judge (ALJ) Jeffrey Wedekind and contains a Foreword by Chief ALJ Robert Giannasi describing the Bench Book’s history and purpose.  As discussed in the Foreword, the basic sources that govern Board ULP hearings are the National Labor Relations Act (NLRA), the Administrative Procedure Act (APA), the Board's Rules and Regulations and Statements of Procedure, and Board decisions. The Board also applies, so far as practicable, the Federal Rules of Evidence (FRE), and frequently seeks guidance from the Federal Rules of Civil Procedure (FRCP).  The Bench Book serves as an NLRB Trial Manual, and is designed to provide NLRB judges with a reference guide during hearings.  It is also a useful tool for trial practitioners before the Board because it sets forth Board precedent and other rulings and authorities on certain recurring procedural and evidentiary issues that may arise during a hearing.

The National Labor Relations Board is an independent federal agency vested with the power to safeguard employees’ rights to organize and to determine whether to have unions as their bargaining representative. The agency also acts to prevent and remedy unfair labor practices committed by private sector employers and unions. 

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Henry Schein, Inc. v. Archer & White Sales, Inc.

Respondent Archer & White Sales, Inc., sued petitioner Henry Schein, Inc., alleging violations of federal and state antitrust law and seeking both money damages and injunctive relief. The relevant contract between the parties provided for arbitration of any dispute arising under or related to the agreement, except for, among other things, actions seeking injunctive relief. Invoking the Federal Arbitration Act, Schein asked the District Court to refer the matter to arbitration, but Archer & White argued that the dispute was not subject to arbitration because its complaint sought injunctive relief, at least in part. Schein contended that because the rules governing the contract provide that arbitrators have the power to resolve arbitrability questions, an arbitrator—not the court—should decide whether the arbitration agreement applied. Archer & White countered that Schein’s argument for arbitration was wholly groundless, so the District Court could resolve the threshold arbitrability question. The District Court agreed with Archer & White and denied Schein’s motion to compel arbitration. The Fifth Circuit affirmed.

Held: The “wholly groundless” exception to arbitrability is inconsistent with the Federal Arbitration Act and this Court’s precedent. Under the Act, arbitration is a matter of contract, and courts must enforce arbitration contracts according to their terms. Rent-A-Center, West, Inc. v. Jackson, 561 U. S. 63, 67. The parties to such a contract may agree to have an arbitrator decide not only the merits of a particular dispute, but also “ ‘gateway’ questions of ‘arbitrability.’ ” Id., at 68– 69. Therefore, when the parties’ contract delegates the arbitrability question to an arbitrator, a court may not override the contract, even if the court thinks that the arbitrability claim is wholly groundless. That conclusion follows also from this Court’s precedent. See AT&T Technologies, Inc. v. Communications Workers, 475 U. S. 643, 649– 650.

Archer & White’s counterarguments are unpersuasive. First, its argument that §§3 and 4 of the Act should be interpreted to mean that a court must always resolve questions of arbitrability has already been addressed and rejected by this Court. See, e.g., First Options of Chicago, Inc. v. Kaplan, 514 U. S. 938, 944. Second, its argument that §10 of the Act—which provides for back-end judicial review of an arbitrator’s decision if an arbitrator has “exceeded” his or her “powers”—supports the conclusion that the court at the front end should also be able to say that the underlying issue is not arbitrable is inconsistent with the way Congress designed the Act. And it is not this Court’s proper role to redesign the Act. Third, its argument that it would be a waste of the parties’ time and money to send wholly groundless arbitrability questions to an arbitrator ignores the fact that the Act contains no “wholly groundless” exception. This Court may not engraft its own exceptions onto the statutory text. Nor is it likely that the exception would save time and money systemically even if it might do so in some individual cases. Fourth, its argument that the exception is necessary to deter frivolous motions to compel arbitration overstates the potential problem. Arbitrators are already capable of efficiently disposing of frivolous cases and deterring frivolous motions, and such motions do not appear to have caused a substantial problem in those Circuits that have not recognized a “wholly groundless” exception.

The Fifth Circuit may address the question whether the contract at issue in fact delegated the arbitrability question to an arbitrator, as well as other properly preserved arguments, on remand. Pp. 4–8. 878 F. 3d 488, vacated and remanded.

KAVANAUGH, J., delivered the opinion for a unanimous Court.

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International Brotherhood of Electrical Workers, Local Union 357, AFL-CIO (Desert Sun Enterprises Limited d/b/a Convention Technical Services)

The Board (Chairman Ring and Member Kaplan; Member McFerran, dissenting) adopted the Administrative Law Judge’s conclusion that the Respondent violated Section 8(b)(4)(ii)(B) when it notified a neutral employer at a common situs that it intended to picket and it did not qualify that it would comply with the legal limitations on common situs picketing so as to not entangle neutrals.  After acknowledging that this longstanding unqualified-threat rule has not been clearly explained by the Board and that some courts have disapproved of it, the Board majority stood by the rule with a full explanation of its basis in Congress’s deep concern with protecting neutrals from entanglement in labor disputes and the inherent coercion presented by such an unqualified notice.  Dissenting, Member McFerran would have overruled the Board’s unqualified-threat rule and dismissed the present complaint.  She disagrees that an unqualified notice is inherently coercive and, instead, would examine all of the relevant circumstances to determine if a notice is coercive.

Charge filed by Desert Sun Enterprises Limited d/b/a Convention Technical Services.  Administrative Law Judge Gerald A. Wacknov issued his decision on July 28, 2014.  Chairman Ring and Members McFerran and Kaplan participated.

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