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.
In its last term, the United States Supreme Court began revamping employee arbitration rights, particularly with respect to class actions. With the current term under way, the Supreme Court has cases in front of it that could further alter these rights.
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
Before a person works with an attorney to resolve a contract dispute through litigation, he or she should consider using other methods to make sure all the possibilities of the case are covered. If the parties can work out their differences outside court, it can be much easier on both. The first approach is always to try to work out the dispute through simple discussion. Many disputes arise from misunderstandings. Too often those misunderstandings become emotional and the parties lock into positions. This is when other approaches might be warranted.
We've written twice recently, here and here about per diem disputes between motor carriers and equipment providers. This issue heated up over the fall and winter of 2014-2015 when many disputes were submitted to arbitration by the motor carriers. According to a report from the Journal of Commerce this past May 2015, as of May 11, 2015, the Intermodal Association Of North America (IANA) had received 109 arbitration requests from motor carriers on the West Coast challenging per diem fees. This was about ten times the normal rate.