Supreme Court Update: New Prime, Inc. v. Oliveira (No. 17-340), Stokeling v. United States (No. 17-5554)

January 18, 2019 Supreme Court Update

Greetings, Court Fans!

Two more decisions to report this week, including the first 5-4 split of the term, along with a whopping eight cert grants.

Last week, we estimated that the Court’s opinion in Schein v. Archer & White Sales (2019) was about its one billionth decision addressing the scope of arbitration agreements under the Federal Arbitration Act (“FAA”). Well, make it a billion and one. Despite covering a familiar subject area, however, this week’s decision in New Prime, Inc. v. Oliveira (No. 17-340) stands out as a rare (and unanimous) victory for arbitration opponents, as the Court strictly construed an exception to the FAA for certain types of employment contracts. 

New Prime is an interstate trucking company and Dominic Oliveira is one of its truckers. Oliveira’s contract with New Prime labels him an “independent contractor”—not an “employee.” But Oliveira said that this classification was wrong. In a class action complaint, Oliveira alleged that he and his fellow truck drivers are really employees, and that New Prime has failed to pay them the required minimum wage. New Prime moved to compel arbitration, pointing to a provision in its contract with drivers, which states that any disputes arising out of the parties’ relationship should be resolved by an arbitrator and includes a so-called “delegation clause” giving the arbitrator the authority to decide whether a dispute is arbitrable in the first place. As you’ll recall from our discussion of Schein last week, the Court has held that contracts may delegate arbitrability questions to the arbitrator. But Oliveira argued that in this case the entire contract was outside the scope of arbitration, pointing to a provision of the FAA stating that the statute does not apply to “contracts of employment of . . . seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” New Prime responded that whether the FAA applies was a question for the arbitrator to decide in the first instance and that, in any case, Oliveira’s contract was not a “contract of employment” because he’s an independent contractor, not an employee. The District Court sided with Oliveira and the First Circuit affirmed.

In an opinion written by Justice Gorsuch, the Supreme Court unanimously agreed with the lower courts. (Justice Kavanagh did not participate.) Gorsuch needed only a few pages to dispense with New Prime’s first argument. Although FAA §§ 3 and 4 generally require a court to stay litigation and compel arbitration “accord[ing to] the terms” of the parties’ agreement, this is not always so because “antecedent statutory provisions limit the scope of the court’s powers under §§ 3 and 4.” Namely, FAA § 1 makes clear that “nothing” in the FAA “shall apply” to “contracts of employment of . . . seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” It is for a Court—not an arbitrator—to “decide for itself whether § 1’s ‘contracts of employment’ exclusion applies before ordering arbitration.” The existence of a delegation clause didn’t change this analysis. After all, “[a] delegation clause is merely a specialized type of arbitration agreement, and the [FAA] operates on this additional arbitration just as it does on any other.” So while a contract can delegate to arbitrators the question whether particular disputes are arbitrable, the predicate question of whether the contract itself is subject to the FAA is a question for the courts. (Although Justice Gorsuch didn’t mention it, this distinction explains the difference between this week’s unanimous arbitration decision and last week’s.)

Addressing the second argument—whether § 1’s exception is actually triggered in this case—required a bit more analysis. Conveniently, everyone agreed for purposes of the appeal that Oliveira is a “worker[] engaged in . . . interstate commerce” and an independent contractor. The question, then, was whether the term “contracts of employment” refers only to employer-employee relationships (in which case the exception doesn’t apply), or if it also encompass contracts that require an independent contractor to perform work (in which case the exception would apply). Justice Gorsuch answered this question by examining what the term “contracts of employment” meant at the time the FAA was enacted, in 1925. After surveying Prohibition-era dictionaries, legal authorities, court opinions, and statutes, Gorsuch concluded that, “as dominantly understood in 1925, a contract of employment did not necessarily imply the existence of an employer-employee or master-servant relationship.” Indeed, “most people” in 1925 “would have understood § 1 to exclude not only agreements between employers and employees but also agreements that require independent contractors to perform work.” And so Oliveira’s agreement with New Prime falls within § 1’s exception, and the lower courts were right that the FAA did not provide authority to order arbitration.

Although she joined Justice Gorsuch’s opinion in full, Justice Ginsburg penned a brief solo concurrence making clear that she doesn’t always think that statutory language must be interpreted using old dictionaries. While she agreed that “[l]ooking to the period of enactment to gauge statutory meaning ordinarily fosters fidelity to the regime Congress established,” Ginsburg stressed that sometimes Congress “may design legislation to govern changing times and circumstances” and there are circumstances when “words in statutes can enlarge or contract their scope as other changes, in law or in the world, require their application to new instances or make old applications anachronistic.”

Just as New Prime stands out as a rare win for arbitration opponents, the Court’s decision in Stokeling v. United States (No. 17-5554) stands out as a rare win proponents of the Armed Career Criminal Act (“ACCA”), the oft-maligned statute that (among other things) imposes a mandatory minimum 15-year prison term on defendants convicted of being a felon in possession of a firearm after having three previous convictions “for a violent felony.” The statute defines “violent felony” as “any crime punishable by imprisonment for a term exceeding one year” that “(i) has as an element the use, attempted use, or threatened use of physical force against the person of another; or (ii) is burglary, arson, or extortion, involves the use of explosives, or otherwise involves conduct that presents a serious potential risk of physical injury to another.” In Johnson v. United States (2015), the Supreme Court struck down the so-called “residual clause” (“otherwise involves conduct that presents a serious potential risk of physical injury”), but there have continued to be many cases addressing what counts as burglary, arson, or extortion under (ii)—like this term’s decision in United States v. Stitt (2018) and the just-granted Quarles v. Unites States, infra—and how much “physical force” is necessary for a conviction to qualify as a crime of violence under the “elements clause.” In another case called Johnson v. United States (2010), the Court held that  “physical force” means not just any force, but “violent force—that is, force capable of causing physical pain or injury to another person.” In Stokeling, which was argued the same day as Stitt, the Court addressed whether robbery under Florida law, which requires “resistance by the victim that is overcome by the physical force of the offender,” involves sufficient “physical force” to qualify as a crime of violence under the ACCA.

By a unique 5-4 lineup, the Supreme Court held that Florida robbery is a crime of violence because force sufficient to overcome a victim’s resistance amounts to violent physical force for ACCA purposes. Justice Thomas wrote for the majority, joined by Justices Alito, Gorsuch, Kavanaugh, and . . . Breyer. He began with a review of the statutory history behind the ACCA. As originally enacted, it prescribed a sentence enhancement for individuals with three prior convictions “for robbery or burglary,” and defined robbery as an unlawful taking “by force or violence.” The statute was later amended to substitute an expanded elements clause covering any offense that has as an element the use of physical force. Justice Thomas reasoned that, by replacing robbery with a clause that has “force” as its touchstone, Congress intended to retain the same common-law definition that undergirded the definition of robbery in the original ACCA. Thomas acknowledged that the 2010 Johnson decision held that the common-law understanding of the force necessary to commit battery—which would include the “slightest offensive touching”—was different from the definition of force in the ACCA. But that minimal force is different from the kind of force necessary to overcome resistance by a victim, as necessary to constitute common-law robbery. He insisted that the degree of force necessary to overcome physical resistance is inherently “violent” in the sense contemplated by Johnson—that is, force capable of causing physical pain or injury to another person.  Therefore, because Stokeling’s robbery offense required force sufficient to overcome physical resistance, it qualified as a violent felony under the ACCA.

Justice Sotomayor dissented, joined by the Chief, Ginsburg, and Kagan. In an opinion twice as long as Thomas’s, she rejected the idea that Congress intended to adopt a common-law “minimal force” definition in the ACCA and accused the majority of honoring Johnson only “in the breach.” Quoting at length from Justice Scalia’s opinion in Johnson, Justice Sotomayor stressed “in the context of a statute delineating ‘violent felonies,’ the phrase ‘physical force’ signifies a degree of force that is ‘violent,’ ‘substantial,’ and ‘strong’.” Florida robbery, by contrast, requires only force sufficient to overcome victim resistances, which “can mean essentially nor force at all.” While Justice Sotomayor acknowledged that “[t]he crime most people think of when they think of ‘robbery’ is a serious one,” she reasoned that “[t]hat is all the more reason . . . that this Court should not allow a dilution of the term in state law to drive the expansion of a federal statute targeted at violent recidivists.”

Finally, the Court took a big step toward filling up the remainder of its OT2018 docket with eight new cert grants, including yet another addressing the ACCA:

  • Quarles v. United States (No. 17-778) presents a classic 1L Criminal Law question. The traditional definition of burglary is unlawfully entering a dwelling with the intent to commit a felony. Quarles asks whether, for purposes of the ACCA’s generic burglary definition, the defendant must have intended to commit a felony at the time of entry, or if it’s enough if he forms the intent to commit the crime only after he is inside the house?
  • Rehaif v. United States (No. 17-9560) concerns the interplay of two federal criminal statutes: 18 U.S.C. § 922(g)(5)(A) and 18 U.S.C. § 924(a)(2). Section 922(g)(5)(A) makes it unlawful for an alien in the United States illegally to possess a firearm. Section 924(a)(2) makes it a crime to “knowingly” violate Section 922(g). In prosecutions under Section 924(a)(2) for knowingly violating Section 922(g), must the government prove only that the defendant knowingly possessed a firearm, or must it also show that the defendant knew he was in the United States illegally?
  • Parker Drilling Management Services v. Newton (No. 18-389) asks whether state wage and hour laws apply to workers on drilling platforms on the outer Continental Shelf. Buried in that question is a methodological issue about when the Outer Continental Shelf Lands Act displaces otherwise applicable state laws.
  • North Carolina Department of Revenue v. Kaestner Family Trust (No. 18-457) asks whether the Due Process Clause prohibit states from taxing out-of-state trusts whose beneficiaries are state residents. Five states (this issue is litigated almost exclusively in state court) have concluded that it does, while four states have held it does not. Given the substantial amount of income that flows through trusts ($120 billion in 2014), the case will be closely watched by trust beneficiaries, the states that want tax revenue, and the lawyers of both.
  • Food Marketing Institute v. Argus Leader Media (No. 18-481) addresses a circuit split on the meaning of the term “confidential” under the Freedom of Information Act. Specifically, does a provision of FOIA that protects from disclosure “confidential” commercial or financial information in the government’s possession require the government to withhold any commercial or financial information that is non-public? Or must the person or entity opposing disclosure show that disclosure of the non-public information will cause some competitive harm?
  • McDonough v. Smith (No. 18-485) asks whether the statute of limitations for a Section 1983 claim alleging that prosecutors fabricated evidence begins to run when the defendant is cleared of wrongdoing or when the defendant knew or should have known that the evidence was fabricated.
  • Fort Bend County v. Davis (No. 18-525) aims to answer a long-standing circuit split in Title VII: Is Title VII’s requirement that plaintiffs exhaust claims of employment discrimination with the EEOC a jurisdictional prerequisite to bringing suit in federal court (as three circuits have held) or is it waivable (as eight others have held)?
  • And last, but not least, Mitchell v. Wisconsin (No. 18-6210) will decide whether a Wisconsin statute authorizing police officers to draw blood from unconscious drivers without a warrant violates the Fourth Amendment.

That’s all for now. Have a great weekend!

Tadhg and Dave