NOTICE: This opinion is subject to
formal revision before publication in the preliminary print of the
United States Reports. Readers are requested to notify the Reporter
of Decisions, Supreme Court of the United States, Washington,
D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print
goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 17–340
_________________
NEW PRIME INC., PETITIONER
v. DOMINIC
OLIVEIRA
on writ of certiorari to the united states
court of appeals for the first circuit
[January 15, 2019]
Justice Gorsuch delivered the opinion of the
Court.
The Federal Arbitration Act requires courts to
enforce private arbitration agreements. But like most laws, this
one bears its qualifications. Among other things, §1 says that
“nothing herein” may be used to compel arbitration in disputes
involving the “contracts of employment” of certain transportation
workers. 9 U. S. C. §1. And that qualification has
sparked these questions: When a contract delegates questions of
arbitrability to an arbitrator, must a court leave disputes over
the application of §1’s exception for the arbitrator to resolve?
And does the term “contracts of employment” refer only to contracts
between employers and employees, or does it also reach contracts
with independent contractors? Because courts across the country
have disagreed on the answers to these questions, we took this case
to resolve them.
I
New Prime is an interstate trucking company
and Dominic Oliveira works as one of its drivers. But, at least on
paper, Mr. Oliveira isn’t an employee; the parties’ contracts label
him an independent contractor. Those agreements also instruct that
any disputes arising out of the parties’ relationship should be
resolved by an arbitrator—even disputes over the scope of the
arbitrator’s authority.
Eventually, of course, a dispute did arise. In a
class action lawsuit in federal court, Mr. Oliveira argued that New
Prime denies its drivers lawful wages. The company may call its
drivers independent contractors. But, Mr. Oliveira alleged, in
reality New Prime treats them as employees and fails to pay the
statutorily due minimum wage. In response to Mr. Oliveira’s
complaint, New Prime asked the court to invoke its statutory
authority under the Act and compel arbitration according to the
terms found in the parties’ agreements.
That request led to more than a little
litigation of its own. Even when the parties’ contracts mandate
arbitration, Mr. Oliveira observed, the Act doesn’t
always
authorize a court to enter an order compelling it. In particular,
§1 carves out from the Act’s coverage “contracts of employment of
. . . workers engaged in foreign or interstate commerce.”
And at least for purposes of this collateral dispute, Mr. Oliveira
submitted, it doesn’t matter whether you view him as an employee or
independent contractor. Either way, his agreement to drive trucks
for New Prime qualifies as a “contract[ ] of employment of
. . . [a] worker[ ] engaged in . . .
interstate commerce.” Accordingly, Mr. Oliveira argued, the Act
supplied the district court with no authority to compel arbitration
in this case.
Naturally, New Prime disagreed. Given the
extraordinary breadth of the parties’ arbitration agreement, the
company insisted that any question about §1’s application belonged
for the arbitrator alone to resolve. Alternatively and assuming a
court could address the question, New Prime contended that the term
“contracts of employment” refers only to contracts that establish
an employer-employee relationship. And because Mr. Oliveira is, in
fact as well as form, an independent contractor, the company
argued, §1’s exception doesn’t apply; the rest of the statute does;
and the district court was (once again) required to order
arbitration.
Ultimately, the district court and the First
Circuit sided with Mr. Oliveira. 857 F.3d 7 (2017). The court of
appeals held, first, that in disputes like this a court should
resolve whether the parties’ contract falls within the Act’s ambit
or §1’s exclusion before invoking the statute’s authority to order
arbitration. Second, the court of appeals held that §1’s exclusion
of certain “contracts of employment” removes from the Act’s
coverage not only employer-employee contracts but also contracts
involving independent contractors. So under any account of the
parties’ agreement in this case, the court held, it lacked
authority under the Act to order arbitration.
II
In approaching the first question for
ourselves, one thing becomes clear immediately. While a court’s
authority under the Arbitration Act to compel arbitration may be
considerable, it isn’t unconditional. If two parties agree to
arbitrate future disputes between them and one side later seeks to
evade the deal, §§3 and 4 of the Act often require a court to stay
litigation and compel arbitration “accord[ing to] the terms” of the
parties’ agreement. But this authority doesn’t extend to
all
private contracts, no matter how emphatically they may express a
preference for arbitration.
Instead, antecedent statutory provisions limit
the scope of the court’s powers under §§3 and 4. Section 2 provides
that the Act applies only when the parties’ agreement to arbitrate
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. Most relevant for our purposes, §1 warns
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.” Why this very
particular qualification? By the time it adopted the Arbitration
Act in 1925, Congress had already prescribed alternative employment
dispute resolution regimes for many transportation workers. And it
seems Congress “did not wish to unsettle” those arrangements in
favor of whatever arbitration procedures the parties’ private
contracts might happen to contemplate.
Circuit City Stores,
Inc. v.
Adams,
532 U.S.
105, 121 (2001).
Given the statute’s terms and sequencing, we
agree with the First Circuit that a court should decide for itself
whether §1’s “contracts of employment” exclusion applies before
ordering arbitration. After all, to invoke its statutory powers
under §§3 and 4 to stay litigation and compel arbitration according
to a contract’s terms, a court must first know whether the contract
itself falls within or beyond the boundaries of §§1 and 2. The
parties’ private agreement may be crystal clear and require
arbitration of every question under the sun, but that does not
necessarily mean the Act authorizes a court to stay litigation and
send the parties to an arbitral forum.
Nothing in our holding on this score should come
as a surprise. We’ve long stressed the significance of the
statute’s sequencing. In
Bernhardt v.
Polygraphic Co. of
America,
350 U.S.
198, 201–202 (1956), we recognized that “Sections 1, 2, and 3
[and 4] are integral parts of a whole. . . .
[Sections] 1 and 2 define the field in which Congress was
legislating,” and §§3 and 4 apply only to contracts covered by
those provisions. In
Circuit City, we acknowledged that
“Section 1 exempts from the [Act] . . . contracts of
employment of transportation workers.” 532 U. S., at 119. And
in
Southland Corp. v.
Keating,
465 U.S.
1, 10–11, and n. 5 (1984), we noted that “the
enforceability of arbitration provisions” under §§3 and 4 depends
on whether those provisions are “part of a written maritime
contract or a contract ‘evidencing a transaction involving
commerce’ ” under §2—which, in turn, depends on the
application of §1’s exception for certain “contracts of
employment.”
To be sure, New Prime resists this
straightforward understanding. The company argues that an
arbitrator should resolve any dispute over §1’s application because
of the “delegation clause” in the parties’ contract and what is
sometimes called the “severability principle.” A delegation clause
gives an arbitrator authority to decide even the initial question
whether the parties’ dispute is subject to arbitration.
Rent-A-Center,
West,
Inc. v.
Jackson,
561 U.S.
63, 68–69 (2010). And under the severability principle, we
treat a challenge to the validity of an arbitration agreement (or a
delegation clause) separately from a challenge to the validity of
the entire contract in which it appears.
Id., at 70–71.
Unless a party specifically challenges the validity of the
agreement to arbitrate, both sides may be required to take all
their disputes—including disputes about the validity of their
broader contract—to arbitration.
Ibid. Applying these
principles to this case, New Prime notes that Mr. Oliveira has not
specifically challenged the parties’ delegation clause and submits
that any controversy should therefore proceed only and immediately
before an arbitrator.
But all this overlooks the necessarily
antecedent statutory inquiry we’ve just discussed. A delegation
clause is merely a specialized type of arbitration agreement, and
the Act “operates on this additional arbitration agreement just as
it does on any other.”
Id., at 70. So a court may use §§3
and 4 to enforce a delegation clause only if the clause appears in
a “written provision in . . . a contract evidencing a
transaction involving commerce” consistent with §2. And only if the
contract in which the clause appears doesn’t trigger §1’s
“contracts of employment” exception. In exactly the same way, 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. We acknowledged as much some time ago,
explaining that, before invoking the severability principle, a
court should “determine[ ] that the contract in question is
within the coverage of the Arbitration Act.”
Prima Paint
Corp. v.
Flood & Conklin Mfg. Co.,
388 U.S.
395, 402 (1967).
III
That takes us to the second question: Did the
First Circuit correctly resolve the merits of the §1 challenge in
this case? Recall that §1 excludes from the Act’s compass
“contracts of employment of . . . workers engaged in
. . . interstate commerce.” Happily, everyone before us
agrees that Mr. Oliveira qualifies as a “worker[ ] engaged in
. . . interstate commerce.” For purposes of this appeal,
too, Mr. Oliveira is willing to assume (but not grant) that his
contracts with New Prime establish only an independent contractor
relationship.
With that, the disputed question comes into
clear view: What does the term “contracts of employment” mean? If
it refers only to contracts that reflect an employer-employee
relationship, then §1’s exception is irrelevant and a court is free
to order arbitration, just as New Prime urges. But if the term
also encompasses contracts that require an independent
contractor to perform work, then the exception takes hold and a
court lacks authority under the Act to order arbitration, exactly
as Mr. Oliveira argues.
A
In taking up this question, we bear an
important caution in mind. “[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. ___, ___ (2018)
(slip op., at 9) (quoting
Perrin v.
United States,
444 U.S.
37, 42 (1979)). See also
Sandifer v.
United States
Steel Corp., 571 U.S. 220, 227 (2014). After all, if judges
could freely invest old statutory terms with new meanings, we would
risk amending legislation outside the “single, finely wrought and
exhaustively considered, procedure” the Constitution commands.
INS v.
Chadha,
462 U.S.
919, 951 (1983). We would risk, too, upsetting reliance
interests in the settled meaning of a statute. Cf. 2B N. Singer
& J. Singer, Sutherland on Statutes and Statutory Construction
§56A:3 (rev. 7th ed. 2012). Of course, statutes may sometimes refer
to an external source of law and fairly warn readers that they must
abide that external source of law, later amendments and
modifications included.
Id., §51:8 (discussing the reference
canon). But nothing like that exists here. Nor has anyone suggested
any other appropriate reason that might allow us to depart from the
original meaning of the statute at hand.
That, we think, holds the key to the case. To
many lawyerly ears today, the term “contracts of employment” might
call to mind only agreements between employers and employees (or
what the common law sometimes called masters and servants).
Suggestively, at least one recently published law dictionary
defines the word “employment” to mean “the relationship between
master and servant.” Black’s Law Dictionary 641 (10th ed. 2014).
But this modern intuition isn’t easily squared with evidence of the
term’s meaning at the time of the Act’s adoption in 1925. At that
time, a “contract of employment” usually meant nothing more than an
agreement to perform work. As a result, most people then would have
understood §1 to exclude not only agreements between employers and
employees but also agreements that require independent contractors
to perform work.
What’s the evidence to support this conclusion?
It turns out that in 1925 the term “contract of employment” wasn’t
defined in any of the (many) popular or legal dictionaries the
parties cite to us. And surely that’s a first hint the phrase
wasn’t then a term of art bearing some specialized meaning. It
turns out, too, that the dictionaries of the era consistently
afforded the word “employment” a broad construction, broader than
may be often found in dictionaries today. Back then, dictionaries
tended to treat “employment” more or less as a synonym for “work.”
Nor did they distinguish between different kinds of work or
workers: All work was treated as employment, whether or not the
common law criteria for a master-servant relationship happened to
be satisfied.[
1]
What the dictionaries suggest, legal authorities
confirm. This Court’s early 20th-century cases used the phrase
“contract of employment” to describe work agreements involving
independent contractors.[
2]
Many state court cases did the same.[
3] So did a variety of federal statutes.[
4] And state statutes too.[
5] We see here no evidence that a “contract
of employment” necessarily signaled a formal employer-employee or
master-servant relationship.
More confirmation yet comes from a neighboring
term in the statutory text. Recall that the Act excludes from its
coverage “contracts of employment of . . . any
. . . class of
workers engaged in foreign or
interstate commerce.” 9 U. S. C. §1 (emphasis added).
Notice Congress didn’t use the word “employees” or “servants,” the
natural choices if the term “contracts of employment” addressed
them alone. Instead, Congress spoke of “workers,” a term that
everyone agrees easily embraces independent contractors. That word
choice may not mean everything, but it does supply further evidence
still that Congress used the term “contracts of employment” in a
broad sense to capture any contract for the performance of
work by
workers.
B
What does New Prime have to say about the case
building against it? Mainly, it seeks to shift the debate from the
term “contracts of employment” to the word “employee.” Today, the
company emphasizes, the law often distinguishes between employees
and independent contractors. Employees are generally understood as
those who work “in the service of another person (the employer)
under an express or implied contract of hire, under which the
employer has the right to control the details of work perform-
ance.” Black’s Law Dictionary, at 639. Meanwhile, independent
contractors are sometimes described as those “entrusted to
undertake a specific project but who [are] left free to do the
assigned work and to choose the method for accomplishing it.”
Id., at 888. New Prime argues that, by 1925, the words
“employee” and “independent contractor” had already assumed these
distinct meanings.[
6] And given
that, the company contends, the phrase “contracts of
employment” should be understood to refer only to
relationships between
employers and employees.
Unsurprisingly, Mr. Oliveira disagrees. He
replies that, while the term “employment” dates back many
centuries, the word “employee” only made its first appearance in
English in the 1800s. See Oxford English Dictionary (3d ed., Mar.
2014), www.oed.com/view/Entry/61374 (all Internet materials as last
visited Jan. 9, 2019). At that time, the word from which it
derived, “employ,” simply meant to “apply (a thing) to some
definite purpose.” 3 J. Murray, A New English Dictionary on
Historical Principles 129 (1891). And even in 1910, Black’s Law
Dictionary reported that the term “employee” had only “become
somewhat naturalized in our language.” Black’s Law Dictionary 421
(2d ed. 1910).
Still, the parties do share some common ground.
They agree that the word “employee” eventually came into wide
circulation and came to denote those who work for a wage at the
direction of another. They agree, too, that all this came to pass
in part because the word “employee” didn’t suffer from the same
“historical baggage” of the older common law term “servant,” and
because it proved useful when drafting legislation to regulate
burgeoning industries and their labor forces in the early 20th
century.[
7] The parties even
agree that the development of the term “employee” may have come to
influence and narrow our understanding of the word “employment” in
comparatively recent years and may be why today it might signify to
some a “relationship between master and servant.”[
8]
But if the parties’ extended etymological debate
persuades us of anything, it is that care is called for. The words
“employee” and “employment” may share a common root and an
intertwined history. But they also developed at different times and
in at least some different ways. The only question in this case
concerns the meaning of the term “contracts of
employment”
in 1925. And, whatever the word “employee” may have meant at that
time, and however it may have later influenced the meaning of
“employment,” the evidence before us remains that, as dominantly
understood in 1925, a contract of
employment did not
necessarily imply the existence of an employer-employee or
master-servant relationship.
When New Prime finally turns its attention to
the term in dispute, it directs us to
Coppage v.
Kansas,
236 U.S.
1, 13 (1915). There and in other cases like it, New Prime
notes, courts sometimes used the phrase “contracts of employment”
to describe what today we’d recognize as agreements between
employers and employees. But this proves little. No one doubts that
employer-employee agreements to perform work qualified as
“contracts of employment” in 1925—and documenting that fact does
nothing to negate the possibility that “contracts of employment”
also embraced agreements by independent contractors to
perform work. Coming a bit closer to the mark, New Prime eventually
cites a handful of early 20th-century legal materials that seem to
use the term “contracts of employment” to refer
exclusively
to employer-employee agreements.[
9] But from the record amassed before us, these
authorities appear to represent at most the vanguard, not the main
body, of contemporaneous usage.
New Prime’s effort to explain away the statute’s
suggestive use of the term “worker” proves no more compelling. The
company reminds us that the statute excludes “contracts of
employment” for “seamen” and “railroad employees” as well as other
transportation workers. And because “seamen” and “railroad
employees” included
only employees in 1925, the company
reasons, we should understand “any other class of workers engaged
in . . . interstate commerce” to bear a similar
construction. But this argument rests on a precarious premise. At
the time of the Act’s passage, shipboard surgeons who tended
injured sailors were considered “seamen” though they likely served
in an independent contractor capacity.[
10] Even the term “railroad employees” may have swept
more broadly at the time of the Act’s passage than might seem
obvious today. In 1922, for example, the Railroad Labor Board
interpreted the word “employee” in the Transportation Act of 1920
to refer to anyone “engaged in the customary work directly
contributory to the operation of the railroads.”[
11] And the Erdman Act, a statute enacted
to address disruptive railroad strikes at the end of the 19th
century, seems to evince an equally broad understanding of
“railroad employees.”[
12]
Unable to squeeze more from the statute’s text,
New Prime is left to appeal to its policy. This Court has said that
Congress adopted the Arbitration Act in an effort to counteract
judicial hostility to arbitration and establish “a liberal federal
policy favoring arbitration agreements.”
Moses H. Cone Memorial
Hospital v.
Mercury Constr. Corp.,
460 U.S.
1, 24 (1983). To abide that policy, New Prime suggests, we must
order arbitration according to the terms of the parties’ agreement.
But often and by design it is “hard-fought compromise[ ],” not
cold logic, that supplies the solvent needed for a bill to survive
the legislative process.
Board of Governors,
FRS v.
Dimension Financial Corp.,
474 U.S.
361, 374 (1986). If courts felt free to pave over bumpy
statutory texts in the name of more expeditiously advancing a
policy goal, we would risk failing to “tak[e] . . .
account of” legislative compromises essential to a law’s passage
and, in that way, thwart rather than honor “the effectuation of
congressional intent.”
Ibid. By respecting the
qualifications of §1 today, we “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 (1970).
Finally, and stretching in a different direction
entirely, New Prime invites us to look beyond the Act. Even if the
statute doesn’t supply judges with the power to compel arbitration
in this case, the company says we should order it anyway because
courts always enjoy the inherent authority to stay litigation in
favor of an alternative dispute resolution mechanism of the
parties’ choosing. That, though, is an argument we decline to
tangle with. The courts below did not address it and we granted
certiorari only to resolve existing confusion about the application
of the Arbitration Act, not to explore other potential avenues for
reaching a destination it does not.
*
When Congress enacted the Arbitration Act in
1925, the term “contracts of employment” referred to agreements to
perform work. No less than those who came before him, Mr. Oliveira
is entitled to the benefit of that same understanding today.
Accordingly, his agreement with New Prime falls within §1’s
exception, the court of appeals was correct that it lacked
authority under the Act to order arbitration, and the judgment
is
Affirmed.
Justice Kavanaugh took no part in the
consideration or decision of this case.
Comments
Be the first to comment
Leave a Comment