That headline sounds like the title of a new Transformers movie. But, alas, it is merely a reference to another discussion of the law. (curmudgeon in the gallery "What does the law have to do with workers' comp?" - I miss the Muppets too). The Supreme Court of the United States (SCOTUS) issued a decision recently in New Prime Inc., v. Oliveria, No. 17–340 (January 15, 2019). Not a workers' compensation case, but an employment case of significance. The decision illustrates adherence to the meaning of words. It also may provide guidance in the context of employment generally, independent contractors, and employees. It is noteworthy in that the court was unanimous, though Justice Ginsberg concurred and wrote a short opinion as to why.
The decision regards a relationship between a trucking company and a truck driver, memorialized in a written contract. The driver sued New Prime, claiming the agreement deprived him of appropriate wages, and asked the court to certify the case as a "class action," essentially allowing a single case to represent the interests of more than this one driver.
The written contract referred to the driver as "an independent contractor," and it required all disputes regarding the contract to be arbitrated rather than litigated. Arbitration is a form of alternative dispute resolution, in which the two disagreeing parties hire a private adjudicator(s) to hear the case and render a decision. The process limits various legal rights contractually. Less than a year ago, the SCOTUS noted the benefits of arbitration: "its speed and simplicity and inexpensiveness" in Epic Systems Corp. v. Lewis, No. 16–285 (May 21, 2018).
In Epic Systems, a five to four decision authored by Justice Gorsuch, the court concluded that the "Federal Arbitration Act generally requires courts to enforce arbitration agreements as written." That is, in most employment contracts such a clause will be given effect. The Court in Epic Systems was unpersuaded by arguments that the National Labor Relations Act contradicts that law or compels an outcome unfavorable to arbitration in employment contracts. Justice Ginsberg dissented there and wrote an opinion explaining her disagreement with the outcome and concern that the Court's decision left employees with claims "small, scarcely of a size warranting the expense of seeking redress alone," without a viable remedy. The dissent urged the legislative branch to act, and change the law in response to the Court's interpretation.
New Prime was also authored by Justice Gorsuch. Similarly, New Prime asked the Court to enforce the Federal Arbitration Act to compel arbitration. The driver/worker, however, contended that the Act was not applicable because its terms exempt certain contracts involving "transportation workers." New Prime contended that "'contracts of employment' referred only to contracts that establish an employer-employee relationship and not to contracts with independent contractors." Thus, its conclusion that the driver was not an "employee" would render the Arbitration Act seemingly moot as to exempting contracts from enforcing arbitration. The Court concluded that the fundamental issue was whether the driver was an employee or an independent contractor.
Justice Gorsuch noted that the Arbitration Act "does not extend to all private contracts." It applies to the contracts and agreements that fall within the definitions and parameters of that law. The Court also noted 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.” Presuming that a truck driver may engage in interstate commerce (the U.S. Supreme Court analyses have traditionally been very broad in defining connections to interstate commerce, see, Wickard v. Filburn, 317 U.S. 111 (1942); Katzenbach v. McClung, 379 U.S. 294 (1964); and Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241 (1964), the Court analyzed the content of the New Prime contract.
Thus, the real dispute in New Prime is whether the driver's contract as an "independent contractor" is or is not a "contract of employment." In deciding a threshold question of whether an arbitrator or court should decide that question, the Court reminded that it is "a ‘fundamental canon of statutory construction’ that words generally should be ‘interpreted as taking their ordinary . . . meaning . . . at the time Congress enacted the statute.’” The interpreters of the law, the courts, are to give meaning to the words used by legislators, the meaning those words had at the time they were chosen and used.
Explaining the importance of that maxim, the Court noted that "if judges could freely invest old statutory terms with new meanings, this Court would risk amending legislation" through interpretation. It noted specifically that people rely upon statutes, and such judicial amendment, assigning words new and unintended meanings, would upset the stability of the very people for whom laws exist. The predictability of the legal system is one of its great strengths. Thus, the Court turned to the analysis of the phrase "contract of employment" "at the time of the Act’s adoption in 1925."
In analyzing dictionary definitions from that time, the Court concluded they "tended to treat 'employment' more or less as a synonym for 'work.'” Its research did not support that '''contract of employment'” necessarily signaled a formal employer-employee relationship" as opposed to an independent contractor relationship. In reaching that conclusion, the Court found support in Congress' use of other words surrounding that term, such as "workers," rather than "employees" specifically. That conclusion may be of interest in the context of a system labeled "workers" not "employees' compensation" in various jurisdictions?
The Court rejected the contention that when the Act was passed that "'employee' and 'independent contractor' had already assumed distinct meanings." It concluded that the specific "employee" has a relationship to the term "employment,” but that the scope of "employment" in 1925 was not specific to, limited to, employees as opposed to other workers. It conceded that "contract of employment" certainly referred to employer/employee relationships, but concluded that did not mean it could not refer to more. This argument of New Prime is important. It is essentially similar to arguing that various court cases perhaps interpreted that "vehicle" includes cars, and that therefore that should be all that "vehicle" includes. But, the Court's conclusion is essentially that those authorities confirm cars are vehicles, but that does not foreclose that "vehicle" might nonetheless equally include trucks, bicycles, or skateboards.
In rejecting the arguments of New Prime, the Court acquiesced in the contention that the Arbitration Act may not be a model of legislative drafting. But, it concluded "courts, however, are not free to pave over bumpy statutory texts in the name of more expeditiously advancing a policy goal(s)," such as "speed and simplicity and inexpensiveness." The Court stressed that the role of Courts is instead to "respect" the action that Congress takes, to interpret the law Congress did pass. And, that interpretation should be based upon the plain meaning of the words and phrases that the people's elected representative chose to use.
Justice Ginsberg, who dissented along with three others in Epic Systems, concurred in New Prime. In New Prime, She did not call upon Congress to address and adjust the "bumpy statutory texts," or provide better clarity or definition. She wrote to reiterate that “[W]ords generally should be ‘interpreted as taking their ordinary . . . meaning . . . at the time Congress enacted the statute,’” as the unanimous Court held. However, she cautioned that Congress may "design legislation to govern changing times and circumstances." Therefore, she reminds, Congress may, when selecting a particular term, "authorize courts to oversee a term’s ‘dynamic potential.’”
Therefore, while agreeing with the outcome in New Prime based upon a strict reading of the actual words and their meaning, she contends that generally a "statute should be construed not technically and restrictively, but flexibly to effectuate its remedial purposes.” There may be critics who read this dissent as essentially "When it leads to the outcome I want, stick to the actual words and when the actual words fail to reach the result I want, then let's be flexible and get to my preferred outcome instead," as she would have in Epic Systems.
The two cases, the two outcomes, and the writings of Justice Ginsberg in each provide insight into the Court and the interpretation of statutes. There are those who perceive that adjudicators too often arrive at outcomes or conclusions and then craft an explanation to justify that outcome. In other words, they pre-determine the destination and then back-track to develop the route. Instead, it is more appropriate to analyze the evidence and the law and allow them to dictate the outcome. That is, to follow the evidence and law, the route, and arrive at the destination to which they lead.
It is worthy of note that the New York Times was less than complimentary of Justice Gorsuch and the Court's "more conservative justices" when reporting on Epic Systems. It quoted the perspective of a single law professor concluding Justice Gorsuch “appears to have put his cards on the table as firmly in favor of allowing class actions to be stamped out through arbitration agreements.” Perhaps, instead, Justice Gorsuch instead is "firmly in favor" of following the law, as written by the people's elected representatives? That may be the real lesson of New Prime.
When one does follow the law, there will be instances in which arbitration is mandated (Epic Systems) and others when it is not (New Prime); not because of some visceral feeling or sentiment about arbitration, but because of what the legislators wrote. In the interest of separation of powers, the people's elected representatives' laws should be respected by the courts. In the interest of people being able to rely upon the law and plan their business and personal interactions, the plain meaning of laws should be respected by the courts.
There may be times when those statutes are not clear. There may be times when those statutes are contradicted or superseded by other statutes or constitutional constraints. But, absent those exigencies, perhaps it is more appropriate for courts to respect the legislative function, follow the law and evidence, and consistently go where they lead?
