On January 15, 2019, the U.S. Supreme Court issued a unanimous decision in New Prime Inc. v. Oliveira, a case concerning the enforceability of arbitration agreements.

Petitioner New Prime Inc. (“New Prime”) is an interstate trucking company that engaged Dominic Oliveira to perform work as a driver pursuant to an “Independent Contractor Operating Agreement,” containing both an arbitration clause and a delegation clause giving the arbitrator authority to decide threshold questions of arbitrability.

Oliveira filed a putative class action against New Prime in federal court in Massachusetts alleging failure to pay truck drivers minimum wage pursuant to the Fair Labor Standards Act and Missouri and Maine labor laws. New Prime filed a motion to compel arbitration under Section 4 of the Federal Arbitration Act (“FAA”). In response, Oliveira argued that New Prime cannot compel arbitration because Section 1 of the FAA excludes “contracts of employment of . . . seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce,” commonly known as the transportation workers exclusion.

The district court determined that although the parties agreed to arbitrate gateway questions of arbitrability, the applicability of the transportation worker exclusion is not a question of arbitrability that the parties may delegate to an arbitrator. The court concluded that the exclusion does not extend to independent contractors and therefore ordered the parties to conduct discovery as to whether Oliveira was an independent contractor or an employee.

On appeal, the First Circuit agreed that applicability of the transportation worker exclusion is an “antecedent determination” that must be made by the court before arbitration can be compelled under the FAA. However, the First Circuit overturned the district court’s holding that the exclusion does not apply to independent contractors, relying on the ordinary meaning of the statutory phrase “contracts of employment” at the time Congress enacted the FAA.

The Supreme Court focused on two legal issues:

  1. Should a court determine whether a Section 1 exclusion to the FAA applies before ordering arbitration where the parties’ contract contains a delegation clause?
  2. Does the transportation worker exclusion apply to independent contractors as well as employees?

The Court answered both inquiries in the affirmative. On the question of arbitrability, the Court reasoned that courts do not have limitless power to compel arbitration of all private contracts. Rather, Section 2 of the FAA states that such power is limited to arbitration agreements involving commerce or maritime transactions, which is informed by Section 1. Thus, in order to properly assert its power to compel arbitration, a court must first determine whether the FAA applies to the contract at issue. The Court rejected the proposition that courts are barred from making this threshold determination when the parties’ contract contains a delegation clause, emphasizing that a delegation clause is “merely a specialized type of arbitration agreement,” enforceable only to the extent that the “involving commerce” requirement under Section 2 of the FAA is satisfied and the exclusion under Section 1 is inapplicable.

On the merits of the New Prime’s Section 1 challenge, the Court looked to the meaning of “contracts of employment” as that phrase was used at the time the FAA was adopted in 1925. The Court sought to avoid ascribing new meaning to “old statutory terms” in a way that would effectively and improperly amend legislation. The Court looked at dictionary entries from the time for this phrase and, in finding none, concluded that the phrase was not a term of art and was construed broadly to cover any “work,” not just work in a formal employer-employee relationship. The Court found further support for this conclusion in early twentieth-century case law and statutes that construe this phrase to cover work agreements involving independent contractors. The Court also noted that Section 1’s statutory text also includes—in close proximity to the phrase “contract of employment”—the term “workers” (i.e., “workers engaged in interstate commerce”). Finally, the Court refused to stray from the statutory text in favor of indiscriminately enforcing the policy behind the FAA, concluding that even a liberal federal policy favoring arbitration agreements has limits, and that courts must respect such limits.

While the New Prime decision is being heralded by some as a great victory to employees, likely because it is the first Supreme Court decision in years to ultimately reject a claim for arbitration, its impact on employers and employees appears to be rather limited in scope. First, the Court took no position as to whether Oliveira was an independent contractor or an employee, as Oliveira assumed for purposes of appeal that his contract established only an independent contractor relationship. Second, the Court did not affirmatively find that Oliveira qualified as a “worker[] engaged in . . . interstate commerce,” as again, the parties did not dispute this point. Third, the Court declined to address New Prime’s argument that courts have inherent authority to stay litigation in favor of the alternative dispute resolution of parties’ voluntary agreement.

Most importantly, the Court’s decision in no way broadens the transportation workers exclusion to cover workers in other industries. The decision does not curtail earlier rulings in which the Court construed Section 1’s language “any other class of workers engaged in . . . commerce” as excluding from the FAA only contracts of employment of transportation workers. Nothing in New Prime suggests that the Court would now deviate from this position. Although there is no longer a distinction between employee and independent contractor for purposes of Section 1, New Prime does not allow all contractors to suddenly bypass arbitration and vindicate their rights in court because this exception is limited to transportation workers.

The Court’s decision resolves only questions of federal law, meaning that courts presented in the future with arbitration agreements involving transportation workers will need to determine the enforceability of the agreements under state law. This issue will turn on state arbitration statutes, as well as contract law, public policy, and other considerations. Significant variation by jurisdiction seems likely.

A Maine dairy company has received a potentially expensive grammar lesson from the U.S. Court of Appeals for the First Circuit, which held on March 13, 2017, that the company’s delivery drivers may be eligible for up to $10 million in overtime pay, because the lack of a comma in the statute regarding exemptions from the state’s wage and hour law rendered the scope of the exemption ambiguous.

Grammarians have long disputed whether writers should include a comma before the final item in a list—the so-called “serial” or “Oxford” comma.  Opponents of the serial comma consider it superfluous.  Supporters argue that the serial comma is necessary to eliminate potential ambiguity, as in the example, “I’d like to thank my parents, Ayn Rand and God.”  Are Ayn Rand and God the writer’s parents, or are they being thanked in addition to his or her parents?  Without the serial comma, it is impossible to know.

Similarly, this case, O’Connor v. Oakhurst Dairy, arose “[f]or want of a comma” in the Maine law exempting from overtime compensation employees involved in the “canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of” various perishable goods.  Without the controversial serial comma after “shipment,” the court found it unclear whether the exemption was meant to apply to one category of employees (i.e., those who pack goods, whether for shipment or for distribution) or two (i.e., those who pack goods for shipment, and those who distribute the goods).  Because the plaintiff drivers admittedly distributed goods, but claimed they did not pack goods or engage in any of the other activities specified in the exemption, their case could only proceed if the First Circuit reversed the district court’s ruling that the exemption encompassed both packers and distributors.

In an opinion that should appeal to grammar aficionados everywhere, the First Circuit extensively analyzed the language of the statute in light of “certain linguistic conventions,” or “canons,” including: (i) the rule against surplusage, which states that no word in a statute should be treated as unnecessary; (ii) the convention of using a conjunction before the last item on a list; (iii) the parallel usage convention, which requires words performing the same grammatical function to be presented in the same form; and (iv) the use of the serial comma itself, which the Maine Legislative Drafting Manual generally disfavors, except when its omission may cause the sort of ambiguity presented here.  After engaging in this analysis, and proving unable to determine the law’s clear meaning from the statutory text or its legislative history, the court reversed the district court and held it must “adopt the delivery drivers’ reading of the ambiguous phrase . . . , as that reading furthers the broad remedial purpose of the overtime law, which is to provide overtime pay protection to employees.”

While many commentators have viewed this opinion as an ode to, in the court’s words, “the clarifying virtues of serial commas,” ultimately that is a mere subset of the three broader lessons presented by this case, principles that should prove helpful to anyone who communicates via the written word—that is, all of us.

Lesson One — Say What You Mean

Given the context of this case, the first lesson presented by the court’s analysis was likely aimed primarily at the Maine Legislature, which drafted the ambiguous statute at issue. However, it is advice that all writers would be wise to follow—avoid ambiguity.  Whether drafting a statute, a brief, an employment policy, an email, or a Tweet, use language and punctuation (including the serial comma, where necessary) deliberately, to ensure that you actually write what you intend to say.  Review the grammar rules you may have ignored since middle school, and revise your writing as frequently as necessary, to guard against any accidental ambiguities like the one in the Maine wage and hour law.  Especially for attorneys, words are our primary weapons, and it is crucial that we wield them wisely.

Lesson Two — Remember Your Goal

The second piece of advice that arises from this case is somewhat related to the first—always keep the underlying purpose of a piece of writing in mind. Much as courts seek to effectuate the legislative intent of a statute, parties to a dispute should focus on what, specifically, they are trying to accomplish.  The delivery drivers in this case did not win because of a missing comma; they won because the extra compensation they sought was consistent with the broad remedial purpose of Maine’s wage and hour law.  As an advocate, you will be more likely to succeed if you can find a way to align the outcome you or your clients seek with the societal or legislative purpose the court is seeking to advance.

Lesson Three — Be Consistent (a.k.a., Don’t Be Your Own Worst Enemy)

The third lesson drawn from this case, despite being relegated to a seemingly insignificant footnote, may be the most important—make sure all of your messaging is consistent. In this case, the dairy company argued that the statutory exemption should be read as applying to both employees involved in “packing [goods] for shipment” and employees involved in “distribution” of the goods, because “shipment” and “distribution” are synonyms, and unless “packing for shipment” and “distribution” constituted two separate exempt activities, the statute would be redundant.  The court may have been more receptive to this argument, if it hadn’t noticed that the company’s “own internal organization chart seems to treat [shipment and distribution] as if they are separate activities,” significantly undercutting the company’s argument that the two terms were synonymous and redundant.  The company probably never considered the fact that its own organizational chart could be used against it, but any such inconsistency in a party’s messaging, even in a seemingly unrelated context like an org chart, may ultimately prove fatal to a contradictory legal claim the party seeks to assert sometime in the future.  Accordingly, especially for corporate entities, it is crucial to keep a single consistent and coherent viewpoint in mind when drafting any sort of company messaging, to prevent any inconsistencies from being used against the company at a later date.

Conclusion — It’s Not About the Comma

Contrary to the extensive media coverage of the “comma case,” this case offers a far broader lesson than “always use a serial comma.” Instead, the First Circuit’s opinion presents three fundamental principles that should apply in every context where the written word may prove determinative.  In essence, the opinion is a dissertation on the virtues of clarity in writing—a lesson that may cost Oakhurst Dairy up to $10 million, but which has been made available to the rest of us, free of charge.