In a recent Federal Arbitration Act ("FAA") decision, the United States Supreme Court unanimously made getting to arbitration more difficult for trucking companies. In Oliveira v. New Prime, the Supreme Court determined that it was for a court, not an arbitrator, to decide if the exemption in Section 1 of the FAA applies. More importantly for truckers, the Court decided that the Section 1 exemption applied to all truck drivers, whether employees or independent contractors. This means the FAA cannot be used to compel arbitration of claims involving truck drivers.
Larson & Gaston recently won a major transportation law defense victory on behalf of one of its motor carrier clients. Four of the carrier's owner-operators filed claims with California's Division of Labor Standards Enforcement (DLSE), claiming to be employees of the motor carrier rather than independent contractors. This is a common accusation in the ongoing wave of litigation overtaking the transportation industry. The drivers sought over $500,000 in damages and penalties. L&G, on behalf of its carrier client, petitioned to compel arbitration of the claims pursuant to the arbitration clauses appearing in the independent contractor agreements. The drivers opposed, arguing that the arbitration clauses were unenforceable because they were unconscionable and therefore their claims should be resolved at DLSE Berman hearings