United States: What's Ahead At The Supreme Court?

Last Updated: December 28 2018
Article by John B. Lewis

There are at least four cases now before the U.S. Supreme Court that may be of significant interest to employers. Three were argued in October 2018, and certiorari was granted in the last case on Dec. 10.

The Three Cases Already Argued

The three cases argued all involve arbitration. The first, New Prime Inc. v. Oliveira, No. 17-340, was argued on Oct. 3, 2018. The issues presented were:

Whether a dispute over applicability of the Federal Arbitration Act's (FAA's) Section 1 exemption is an arbitrability issue that must be resolved in arbitration pursuant to a valid delegation clause; and (2) whether the FAA's Section 1 exemption, which applies on its face only to "contracts of employment," is inapplicable to independent contractor agreements.

Section 1 of the FAA excludes from the act's coverage "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1.

This case is significant because of its potential impact on the arbitration of disputes with independent contractors in the trucking business. (We addressed the background of the case in our Feb. 28, 2018, blog article.) Petitioner New Prime Inc. argued that the scope of the Section 1 exemption should be resolved by an arbitrator based upon a valid delegation clause in the arbitration agreement. On the other hand, Dominic Oliveira argued that the court must resolve whether the FAA even applies before using it to compel arbitration. Both parties agreed that the term "contracts of employment" should be given its ordinary meaning from 1925, when the FAA was enacted. The sides, however, disagreed on the proper meaning of the term.

During oral argument on Oct. 3, several of the justices seemed to struggle with the meaning of contracts of employment and whether the use of the term "workers" broadened the scope of the provision beyond the employee/employer relationship. Indeed, Oliveira maintained that when the FAA was passed, contracts of employment merely referred to agreements to perform work, not a master-servant relationship.

Interestingly, counsel for Oliveira also stated that workers, not businesses, would fall within the exemption. In other words, "Did the parties contemplate that the person with whom they agreed would personally perform the work?" (Transcript at 42). But, counsel for New Prime pointed out that the independent contractor agreement at issue involved a limited liability company that Oliveira had created, not an individual.

The opinion in New Prime, which should be decided by mid-2019, will be of interest because of its exploration of the history of the FAA and the 1925 meaning of contracts of employment and workers. The firm filed an amicus brief in New Prime.

The next case, Lamps Plus Inc. v. Vareda, No. 17-988, was argued on Oct. 29, 2018. It raised the question of:

Whether the FAA forecloses a state-law interpretation of an arbitration agreement that would authorize class arbitration based solely on general language commonly used in arbitration agreements (emphasis added).

In Lamps Plus, the district court had denied the company's motion to compel individual arbitration and ordered class arbitration. A divided Ninth Circuit panel affirmed, despite the fact that the arbitration agreement never mentioned class arbitration but instead inferred mutual assent to aggregate arbitration from standard agreement language. See 701 F. App'x 670 (9th Cir. Aug. 3, 2017).

During oral argument, the familiar divide between the liberal and conservative justices re-emerged. Justice Kagan asked questions directed to the contract language that required the parties to use arbitration "in lieu of any and all lawsuits or other civil proceedings." On the other end of the spectrum, Chief Justice Roberts commented:

[T]he FAA is not a suicide pact. So, if the FAA says enforce the contract according to its terms, but one of the terms . . . is fundamentally inconsistent with arbitration itself, then, presumably, the FAA would preclude that term.

Amid the strong views of the justices also lurked the less colorful issue of the Court's jurisdiction over the dispute. Does the text of the FAA authorize a party to appeal an order compelling arbitration but not the type that the party initially sought?

So, while the resulting opinion may be of less consequence because of the extensive use of class action waivers, it could also signal a return to pro-arbitration opinions from the Court.

The third arbitration case before the Court is Henry Schein Inc. v. Archer and White Sales Inc., No. 17-1272, which was also argued on Oct. 29. It involved claimed antitrust violations and presented the issue of:

Whether the FAA permits a court to decline to enforce an agreement delegating questions of arbitrability to an arbitrator if the court concludes the claim of arbitrability is "wholly groundless."

The Fifth Circuit had premised its decision in Henry Schein, 878 F.3d 488 (2017), on the earlier opinion in Douglas v. Regions Bank, 757 F.3d 460, 463-64 (5th Cir. 2014), which held:

[i]f an 'assertion of arbitrability [is] wholly groundless,' the court need not submit the issue of arbitrability to the arbitrator.

Continuing, the Court of Appeals in Douglas stated, "[W]here there is no such plausible argument, 'the district court may decide the "gateway" issue of arbitrability despite a valid delegation clause.'"

At the Supreme Court, the justices initially aired their diverse views on whether courts or arbitrators should decide whether arbitration is available. But when counsel for respondent began to present the position of Archer and White Sales Inc., things changed. Justices on both sides of the political spectrum seemed to signal their concerns with ambiguous exceptions that would limit the enforceability of arbitration agreements.

It's always dangerous to handicap a decision based on oral argument, but the "wholly groundless" exception does not appear to have much sympathy among the justices.

The Next Chapter

Finally, on Dec. 10, the Court agreed to hear Kisor v. Wilke, No. 18-15, in which the petitioner, a Marine veteran, sought disability benefits for his post-traumatic stress disorder (PTSD) that arose from his military service. Based on the meaning of the term "relevant" contained in 38 C.F.R. § 3.156(c)(1), the Veterans Affairs Department denied him benefits. The Court of Appeals for the Federal Circuit ultimately affirmed and denied rehearing en banc, with three judges dissenting.

The Supreme Court took the case only on the first question presented by petitioner – whether the Court should overrule Auer v. Robbins, 519 U.S. 452 (1997), and Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945). Both decisions directed courts to defer to an administrative agency's reasonable interpretation of its own ambiguous regulation.

Auer deference has been a concern from some business groups and academics as well as for justices Neil Gorsuch and Brett Kavanaugh. Indeed, Chief Justice John Roberts and Justice Clarence Thomas have also expressed misgivings regarding the administrative edifice that deference has created.

The Kisor case will give the Supreme Court the opportunity to rule on which entity should decide what an ambiguous law means – the courts or executive agencies. Thus, Kisor could have great significance and signal a continuing examination of deference.

The Bottom Line:

Three of the four cases now before the Supreme Court could have a significant impact on the enforcement of arbitration agreements, particularly in the trucking industry. The fourth could be the first step in the Court's re-examination of deference to administrative agencies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Practice Guides
by Mondaq Advice Centers
Relevancy Powered by MondaqAI
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions