DOMINIC OLIVEIRA, on his behalf and on behalf of all others similarly situated, Plaintiff, Appellee,
NEW PRIME, INC., Defendant, Appellee.
FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MASSACHUSETTS Hon. Patti B. Saris, U.S. District Judge.
Theodore J. Boutrous, Jr., with whom Joshua S. Lipshutz,
Jason C. Schwartz, Thomas M. Johnson, Jr., Lindsay S. See,
Gibson, Dunn & Crutcher LLP, William E. Quirk, James C.
Sullivan, Robert J. Hingula, Polsinelli PC, Judith A.
Leggett, and Leggett Law Firm, P.C. were on brief, for
Jennifer D. Bennett, with whom Public Justice, P.C., Hillary
Schwab, Fair Work, P.C., Andrew Schmidt, and Andrew Schmidt
Law, PLLC were on brief, for appellee.
Richard Frankel on brief for amicus curiae in support of
Thompson and Kayatta, Circuit Judges, and Barbadoro, [*] District Judge.
THOMPSON, Circuit Judge.
case raises two questions of first impression in this
circuit. First, when a federal district court is confronted
with a motion to compel arbitration under the Federal
Arbitration Act (FAA or Act), 9 U.S.C. §§ 1-16, in
a case where the parties have delegated questions of
arbitrability to the arbitrator, must the court first
determine whether the FAA applies or must it grant the motion
and let the arbitrator determine the applicability of the
Act? We hold that the applicability of the FAA is a threshold
question for the court to determine before compelling
arbitration under the Act. Second, we must decide whether a
provision of the FAA that exempts contracts of employment of
transportation workers from the Act's coverage, see
id. § 1 (the § 1 exemption), applies to a
transportation-worker agreement that establishes or purports
to establish an independent-contractor relationship. We
answer this question in the affirmative. Accordingly, we
affirm the district court's order denying the motion to
compel arbitration and dismiss this appeal for lack of
defendant, New Prime, Inc. (Prime), operates an interstate
trucking company. Under its Student Truck Driver Program
(apprenticeship program), Prime recruits and trains new
drivers. Prime touts its program as offering "[p]aid
[a]pprenticeship [Commercial Driver's License (CDL)]
[t]raining." After attending a four-day orientation,
student drivers hit the road with a Prime truck driver, who
acts as an on-the-job instructor. In this phase of the
apprenticeship program, student drivers must log 10, 000
miles as a driver or passenger, and, apart from an advance of
$200 per week for food (which eventually must be repaid), the
apprentices are not paid. After completing the supervised-driving
period, the student driver takes the examination for a CDL
and then must drive 30, 000 more miles as a B2 company driver
trainee (B2 trainee). Prime pays its B2 trainees fourteen
cents per mile. At the conclusion of the B2 trainee portion
of the apprenticeship program, the apprentices attend
additional orientation classes for approximately one week.
Apprentices are not paid for time spent in this orientation.
plaintiff, Dominic Oliveira, is an alum of Prime's
apprenticeship program. He was not paid for the time he spent
in orientation and was paid on a per-mile basis while driving
as a B2 trainee, although Prime docked his pay during this
period to recoup the $200 advances that it paid him during
the supervised-driving period.
are relieved of paying tuition for the apprenticeship program
as long as they remain with Prime for one year as either
company drivers or independent contractors. After completing
the program, drivers choose between the two options, and
Prime offers a $100 bonus to those who elect
independent-contractor status. When Oliveira finished the
apprenticeship program, Prime representatives informed him
that he would make more money as an independent contractor
than a company driver. Prime directed Oliveira to Abacus
Accounting (Abacus) - a company with offices on the second
floor of Prime's building - to assist him in forming a
limited liability company (LLC). After Oliveira filled out a
form provided by Abacus and listed his preferred LLC names,
Abacus created Hallmark Trucking LLC (Hallmark) on
then directed Oliveira to the offices of Success Leasing
(Success) - located on the first floor of the same building-
for help in securing a truck. After selecting a truck,
Oliveira was informed that his first load of freight was
ready to be trucked for Prime, and he was instructed to sign
the highlighted portions of several documents before hitting
the road. He hastily did so, and Prime then steered him
towards its company store, where he purchased - on credit -
$5, 000 worth of truck equipment and fuel.
the documents Oliveira signed was an Independent Contractor
Operating Agreement (the contract) between Prime and
Hallmark. The contract specified that the
relationship between the parties was that "of carrier
and independent contractor and not an employer/employee
relationship" and that "[Oliveira is] and shall be
deemed for all purposes to be an independent contractor, not
an employee of Prime." Additionally, under the contract,
Oliveira retained the rights to provide transportation
services to companies besides Prime,  refuse to haul any load
offered by Prime, and determine his own driving times and
delivery routes. The contract also obligated Oliveira to pay
all operating and maintenance expenses, including taxes,
incurred in connection with his use of the truck leased from
Success. Finally, the contract contained an arbitration
clause under which the parties agreed to arbitrate "any
disputes arising under, arising out of or relating to [the
contract], . . . including the arbitrability of disputes
between the parties."
alleges that, during his Hallmark days, Prime exercised
significant control over his work. According to Oliveira,
Prime required him to transport Prime shipments, mandated
that he complete Prime training courses and abide by its
procedures, and controlled his schedule. Because of
Prime's pervasive involvement in his trucking operation,
Oliveira was unable to work for any other trucking or
consistently shortchanged Oliveira during his time as an
independent contractor. Eventually, Oliveira - frustrated
and, he alleges, unlawfully underpaid - stopped driving for
Prime. It was a short-lived separation, however; Prime
rehired Oliveira a month later, this time as a company
driver. Oliveira alleges that his job responsibilities as a
company driver were "substantially identical" to
those he had as an independent contractor. Job
responsibilities were not the only constant; Oliveira's
pay as a company driver was as paltry as ever.
filed this class action against Prime, alleging that Prime
violated the Fair Labor Standards Act (FLSA), 29 U.S.C.
§§ 201-219, as well as the Missouri minimum-wage
statute, by failing to pay its truck drivers minimum wage.
Oliveira also asserted a class claim for breach of contract
or unjust enrichment and an individual claim for violation of
Maine labor statutes. Prime moved to compel arbitration under
the FAA and stay the proceedings or, alternatively, to
dismiss the complaint for improper venue and the breach of
contract/unjust enrichment count for failure to state a claim
upon which relief may be granted.In its motion, Prime asserted
that "Oliveira . . . entered into an
Independent Contractor Operating Agreement with . . . Prime .
. . to work as an owner-operator truck driver."
response, Oliveira argued that, because he was not a party to
the contract between Prime and Hallmark, he could not be
personally bound by any of its provisions, including the
arbitration clause. He further contended that the motion to
compel arbitration should be denied because, among other
reasons, the contract is exempted from the FAA under §
1. He also argued that the question of the applicability of
the § 1 exemption was one for the court, and not an
arbitrator, to decide.
disputed Oliveira's argument that he could not be
personally bound by the contract between Prime and Hallmark,
stating that "Oliveira and Hallmark Trucking are
factually one and the same." Prime also took issue with
both of Oliveira's other arguments, contending that the
§ 1 exemption does not include independent-contractor
agreements and, in any event, the question of whether the
§ 1 exemption applies is a question of arbitrability
that the parties had delegated to the
district court proceeded straight to the FAA issues and
concluded that the question of the applicability of the
§ 1 exemption was for the court, and not an arbitrator,
to decide. And it determined that it could not yet answer
that question because (1) the "contracts of
employment" language of the § 1 exemption does not
extend to independent contractors; and (2) discovery was
needed on the issue of whether Oliveira was a Prime employee
or an independent contractor before the court could decide
whether the contract was a contract of employment under the
§ 1 exemption. The district court therefore denied
Prime's motion to compel arbitration without prejudice
and permitted the parties to conduct discovery on
Oliveira's employment status. Prime timely
lies at the center of the two questions raised by this
appeal. Thus, before tackling those questions, we first
briefly outline the statutory framework.
combat deep-rooted judicial hostility towards arbitration
agreements, Congress enacted the FAA in 1925. See Circuit
City Stores, Inc. v. Adams, 532 U.S.
105, 111 (2001). Section 2 of the FAA enshrines the
"liberal federal policy favoring arbitration agreements,
" Moses H. Cone Mem'l Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 24 (1983), by
declaring that an arbitration agreement in "a contract
evidencing a transaction involving commerce . . . shall be
valid, irrevocable, and enforceable, save upon such grounds
as exist at law or in equity for the revocation of any
contract, " 9 U.S.C. § 2.
FAA does not simply talk the talk. Instead, two separate
provisions provide the bite to back up § 2's bark.
See Rent-A-Ctr., W., Inc. v.
Jackson, 561 U.S. 63, 70 (2010). First, under §
3, a party may obtain a stay of federal-court litigation
pending arbitration. See 9 U.S.C. § 3. Second,
§ 4 authorizes district courts to grant motions to
compel arbitration. See id. § 4.
scope of the FAA, however, is not unbounded. Section 1 of the
FAA provides that the Act shall not apply "to contracts
of employment of seamen, railroad employees, or any other
class of workers engaged in foreign or interstate
commerce." Id. § 1. The Supreme Court has
interpreted this section to "exempt from the FAA . . .
contracts of employment of transportation workers."
Circuit City, 532 U.S. at 119.
case presents us with two questions pertaining to the §
1 exemption. We address each question in turn.
Who Decides Whether the § 1 Exemption Applies?
question of whether the district court or the arbitrator
decides the applicability of the § 1 exemption is one of
first impression in this circuit. The parties champion
dueling out-of-circuit precedent in support of their
respective positions on this issue. Relying on the Eighth
Circuit's decision in Green v.
SuperShuttle International, Inc., 653 F.3d 766 (8th
Cir. 2011), Prime argues that the question of whether the
§ 1 exemption applies is a question of arbitrability
that must be decided by the arbitrator where, as here, the
parties have delegated such questions to the arbitrator.
Green, the plaintiffs, a class of shuttle-bus
drivers, alleged that the defendant, a shuttle-bus company,
misclassified the drivers as franchisees instead of
classifying them as employees. 653 F.3d at 767-68. When the
defendant moved under the FAA to compel arbitration pursuant
to the arbitration clause contained in the parties'
contracts, the plaintiffs countered that their contract was
outside the scope of the FAA by virtue of the § 1
exemption. Id. at 768. The Eighth Circuit upheld the
district court's grant of the defendant's motion,
concluding that "[a]pplication of the FAA's
transportation worker exemption is a threshold question of
arbitrability" in the parties' dispute. Id.
at 769. Because the parties' agreements incorporated the
AAA rules, which provide that the arbitrator has the power to
determine his or her own jurisdiction, the court concluded
that the parties agreed to allow the arbitrator to determine
threshold questions of arbitrability, including the
applicability of the § 1 exemption. Id.
Green as its guide, Prime offers several reasons why
the question of § 1's applicability is one for the
arbitrator to determine, but each of these arguments flows
from the Green court's characterization of this
issue as a question of arbitrability. The case on which
Oliveira relies - the Ninth Circuit's decision in In
re Van Dusen, 654 F.3d 838 (9th Cir. 2011) - considered
this characterization to be a flawed starting premise.
Dusen arose on facts strikingly similar to those in this
case; the plaintiffs, interstate truck drivers, alleged that
one of the defendants, a trucking company, misclassified its
truck drivers as independent contractors to circumvent the
requirements of the FLSA and parallel state laws. See
id. at 840; see also Van Dusenv.Swift Transp. Co., 830 F.3d 893, 895 (9th Cir. 2016)
(later appeal in same case). The defendant moved to compel
arbitration under the FAA, and the plaintiffs opposed that
motion, asserting that the § 1 exemption applied to
their contracts. Van Dusen, 654 F.3d at 840. The
district court ordered arbitration, concluding that the
question of whether the § 1 exemption applied was one
for the arbitrator to decide in the first ...