Supreme Court of the United States

Transcription

1 No IN THE Supreme Court of the United States SWIFT TRANSPORTATION CO., INC., INTERSTATE EQUIPMENT LEASING, INC., CHAD KILLIBREW, AND JERRY MOYES, v. Petitioners, VIRGINIA VAN DUSEN, JOHN DOE 1, AND JOSEPH SHEER, INDIVIDUALLY AND ON BEHALF OF ALL OTHER SIMILARLY SITUATED PERSONS, Respondents. ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT BRIEF FOR AMERICAN TRUCKING ASSOCIATIONS, INC., AS AMICUS CURIAE SUPPORTING PETITIONERS RICHARD PIANKA Counsel of Record ATA Litigation Center PRASAD SHARMA American Trucking Associations, Inc. 950 North Glebe Road Arlington, VA (703) rpianka@trucking.org Counsel for Amicus Curiae

2 TABLE OF CONTENTS TABLE OF AUTHORITIES... ii INTEREST OF THE AMICUS CURIAE...1 INTRODUCTION AND SUMMARY OF ARGUMENT...2 REASONS FOR GRANTING THE PETITION...4 I. Review Is Necessary Because the Ninth Circuit s Decision Allows Independent Contractors to Repudiate Their Agreements to Delegate Gateway Arbitration Questions to the Arbitrator....4 A. Independent Contractors Constitute an Essential Segment of the Trucking Industry....4 B. Motor Carriers and Independent Contractors Regularly Agree to Arbitrate Their Disputes....8 C. The Decision Below Upends the Well- Established Presumption in Favor of Arbitration II. Review Is Necessary Because the Ninth Circuit s Decision Renders the Merits of Common Disputes over Independent Contractor Status Inarbitrable A. The Decision Below Allows Owner- Operators to Nullify Their Arbitration Agreements in Disputes over Employment Status B. The Decision Below Will Deter the Use of Arbitration in the Trucking Industry CONCLUSION... 19

3 ii TABLE OF AUTHORITIES Cases: 14 Penn Plaza LLC v. Pyett, 556 U.S. 247 (2009)...9 Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995)... 9, 12, 17 American Trucking Associations, Inc. v. United States, 344 U.S. 298 (1953)...5 AT&T Mobility LLC v. Concepcion, 131 S. Ct (2011)... 2, 9 AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643 (1986) Boomer v. AT&T Corp., 309 F.3d 404 (7th Cir. 2002) Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006)... 10, 14 Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001)...2 CompuCredit Corp. v. Greenwood, 132 S. Ct. 665 (2012)... 10, 11 EEOC v. Waffle House, Inc., 534 U.S. 279 (2002) First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) Green v. Supershuttle International, Inc., 653 F.3d 766 (8th Cir. 2011)... 10

4 iii Green Tree Financial Corp. v. Randolph, 531 U.S. 79 (2000) Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) Mitsubishi Motors Corp. v. Soler Chrysler- Plymouth, Inc., 473 U.S. 614 (1985)... 9, 11, 12 Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (1983)... 10, 11 Preston v. Ferrer, 552 U.S. 346 (2008) Prima Paint Corp. v. Flood & Conklin Manufacturing Co., 388 U.S. 395 (1967) Rent-a-Center, West, Inc. v. Jackson, 130 S. Ct 2772 (2010)... 9, 15 Shanks v. Swift Transportation Co., 2008 U.S. Dist. LEXIS (S.D. Tex. June 19, 2008)...2 Southland Corp. v. Keating, 465 U.S. 1 (1984) Stolt-Nielsen S. A. v. AnimalFeeds Int l Corp., 559 U.S. 662 (2010)... 9, 16 Transamerican Freight Lines, Inc. v. Brada Miller Freight Systems, Inc., 423 U.S. 28 (1975)...6 Vaden v. Discover Bank, 556 U.S. 49 (2009)... 10

5 iv Valdes v. Swift Transportation Co., 292 F. Supp. 2d 524 (S.D.N.Y. 2003)...2 Statutes: Federal Arbitration Act, 9 U.S.C. 1 et seq.... passim Y2K Act of 1999, Pub. L. No , 113 Stat U.S.C U.S.C U.S.C Other Authorities: 49 C.F.R C.F.R (a)...6 American Trucking Associations, American Trucking Trends 2013 (2013)... 18, 19 C.R. England Company History, company-information/company-history...8 Ex Parte No. MC 43 (Sub-No. 12), Leasing Rules Modifications, 47 Fed. Reg (Nov. 30, 1982)... 4, 5 H.R. Rep. No (1924)...8 H.R. Rep. No (1982)...9 OOIDA: Who We Are,

6 v Terrance Nguyen, Gauging the Owner-Operator Population, Fleet Owner (Dec. 13, 2004), available at news/ owner_operator_population_ Prime Inc. Company History, Philip J. Romero, The Economic Benefits of Preserving Independent Contracting (Sept. 2011), available at content/uploads/2012/04/final-romero- Report.pdf...7 Theodore St. Antoine, Mandatory Arbitration: Why It s Better Than It Looks, 41 U. Mich. J.L. Reform 783 (2008) Samuel Samaro & Sean Mack, How Independent are Owner-Operators, Journal of Commerce, Feb. 27, 2012, Stephen Ware, The Case for Enforcing Adhesive Arbitration Agreements With Particular Consideration of Class Actions and Arbitration Fees, 5 J. Am. Arb. 251 (2006) Rip Watson, Owner-Operators Make More Income, Freight-Rate Gains, Industry Expert Says, Transport Topics, Sept. 23, 2013,

7 INTEREST OF THE AMICUS CURIAE * Amicus American Trucking Associations, Inc. (ATA), is the national association of the trucking industry. Its direct membership includes approximately 2,000 trucking companies and in conjunction with 50 affiliated state trucking organizations, it represents over 30,000 motor carriers of every size, type, and class of motor carrier operation. The motor carriers represented by ATA haul a significant portion of the freight transported by truck in the United States and virtually all of them operate in interstate commerce among the States. ATA regularly represents the common interests of the trucking industry in courts throughout the nation, including this Court. Many of ATA s members who contract with owner-operators to haul freight for them enter into agreements to arbitrate disputes that may arise during the course of their business relationship. By agreeing to arbitrate, motor carriers and owneroperators alike avoid costly and lengthy litigation when disputes arise. Instead, they commit to rely on what both Congress and this Court have repeatedly endorsed as an efficient, fair, and less adversarial means of dispute resolution. And they do so in the expectation that the Federal Arbitration Act (FAA), * After timely notification, the parties consented to the filing of this brief, and their consent letters are on file with the Clerk. Pursuant to Rule 37.6, amicus states that no counsel for any party has authored this brief in whole or in part, and no person or entity, other than amicus, its members, or its counsel has made any monetary contributions intended to fund the preparation or submission of this brief.

8 2 1 U.S.C. 9 et seq., will require that those commitments be honored. Because much of the advantage of those arbitration agreements would be lost if the Ninth Circuit s decision were to go unreviewed, ATA has a strong interest in this case. INTRODUCTION AND SUMMARY OF ARGUMENT This Court has repeatedly explained that [t]he overarching purpose of the FAA * * * is to ensure the enforcement of arbitration agreements according to their terms. AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1748 (2011). Section 1 of the FAA, however, exempts contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce. 9 U.S.C. 1. That exception means that if motor carriers and their truck driver employees include an agreement to arbitrate disputes in their employment contracts, they cannot expect those agreements to be enforced under the FAA. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001) ( Section 1 exempts from the FAA only contracts of employment of transportation workers. ). 1 Nevertheless, arbitration and the FAA play an important role in other contractual relationships 1 In some cases, however, arbitration agreement in driver employment contracts may be enforceable as a matter of applicable state law. See, e.g., Shanks v. Swift Transp. Co., 2008 U.S. Dist. LEXIS 55063, *11 (S.D. Tex. June 19, 2008) (enforcing arbitration agreement in transportation employment contract under Texas law); Valdes v. Swift Transp. Co., 292 F. Supp. 2d 524, 530 (S.D.N.Y. 2003) (enforcing arbitration agreement in transportation employment contract under New York law).

9 3 regularly entered into by motor carriers. In particular, many motor carriers frequently contract with independent businesses to haul cargo on their behalf. Often, motor carriers and their independent contractors will agree to arbitrate any disputes that arise between them (including, in some cases, the question whether a given dispute is arbitrable), with the expectation that the FAA will require them to honor those agreements. The Ninth Circuit s decision, however, gives independent contractors a get out of arbitration free card, and by doing so radically undermines the ability of the trucking industry to count on arbitration as an efficient alternative to litigation. For one thing, the decision below allows independent contractors to unilaterally repudiate their commitments to arbitrate gateway questions of arbitrability, simply by asserting that the Section 1 exemption applies to them. This alone is a serious enough violation of the national policy favoring arbitration to warrant this Court s review. But in independent contractor classification cases like this one, the damage is much greater. Here, the Section 1 gateway issue and the merits of the underlying dispute are virtually congruent: both the applicability of the Section 1 exemption and the bulk of the plaintiffs underlying substantive claims turn on whether they are independent contractors or employees. As a result, the Ninth Circuit s decision means that the trucking industry can never count on being able to arbitrate the merits of these frequently recurring issues. Even an arbitration agreement that turns out to have been valid when the court determines that plaintiffs are independent contractors and thus the Section 1 exemption does

10 4 not apply the parties will have been subject to the expense, delay, and complexity of litigation they had bargained to forgo, and there will be little or nothing left for the arbitrator to resolve. The predictable result of carving out a major category of disputes from the scope of the FAA will be a sharp decline in the use of arbitration in the trucking industry. After all, it would be irrational of motor carriers to bind themselves to what would effectively be a one-sided commitment. This in turn will hurt not just motor carriers, but independent contractors as well as the nation as a whole. Because the purpose of the FAA is to encourage arbitration not discourage it this Court s review is necessary. REASONS FOR GRANTING THE PETITION I. Review Is Necessary Because the Ninth Circuit s Decision Allows Independent Contractors to Repudiate Their Agreements to Delegate Gateway Arbitration Questions to the Arbitrator. A. Independent Contractors Constitute an Essential Segment of the Trucking Industry. 1. In the trucking industry, the use of owneroperators independent businesspersons who contract their services and lease their motor vehicle equipment to trucking companies pursuant to 49 U.S.C and related regulations set forth at 49 C.F.R. 376 is widespread and economically crucial. Their role in trucking operations has a history essentially as long as the industry itself. See Ex Parte No. MC 43 (Sub-No. 12), Leasing Rules Modifications, 47 Fed. Reg , (Nov. 30,

11 5 1982) ( Prior to the Motor Carrier Act of 1935, motor carriers regularly performed authorized operations in non-owned vehicles. To a large extent, ownership of these vehicles was vested in the persons who drove them, commonly referred to as owner-operators. ). Indeed, more than sixty years ago, this Court noted the trucking industry s extensive use of leased equipment supplied and operated by owner-operator truckers. Am. Trucking Ass ns, Inc. v. United States, 344 U.S. 298, 303 (1953) ( Carriers subject to [Interstate Commerce] Commission jurisdiction have increasingly turned to owner-operator truckers to satisfy their need for equipment as their service demands. ). Accurate, recent estimates of the number of independent contractors and owner-operators are difficult to obtain, but there is no question that they constitute a large segment of the industry. The Owner-Operator Independent Drivers Association (OOIDA) the international trade association representing independent owner-operators and professional drivers boasts over 150,000 members in the U.S. and Canada (see OOIDA: Who We Are, available at (last visited March 5, 2014). In the Census Bureau s 2002 Vehicle Inventory and Use Survey the most recent inventory of trucks nationwide there were approximately 390,000 owner-operators. See Terrance Nguyen, Gauging the Owner-Operator Population, Fleet Owner (Dec. 13, 2004), available at on_ (last visited March 5, 2014). 2. For trucking companies, independent contractors provide a number of advantages. Independent owner-operators often are mature,

12 6 experienced drivers who are both highly skilled, with proven safety records, and highly motivated. The availability of such owner-operators and their equipment (through leases to carriers with operating authority) enables motor carriers to save on equipment and capital costs, and provides the flexibility necessary to meet fluctuations in demand for trucking services. As the Court has explained, [d]emand for a motor carrier s services may fluctuate seasonally or day by day. Keeping expensive equipment operating at capacity, and avoiding the waste of resources attendant upon empty backruns and idleness, are necessary and continuing objectives. It is natural, therefore, that a carrier that finds itself short of equipment necessary to meet an immediate demand will seek the use of a vehicle not then required by another carrier for its operations, and the latter will be pleased to accommodate. Each is thereby advantaged. Transamerican Freight Lines, Inc. v. Brada Miller Freight Sys., 423 U.S. 28, 35 (1975). 2 Independent contracting is, in other words, crucial to the ability of 2 In Brada Miller, the Court referred to leasing arrangements between two carriers that is, firms with operating authority (certificates) under Federal law. See 49 C.F.R (a) (defining an [a]uthorized carrier as a person or persons authorized to engage in the transportation of property as a motor carrier under the provisions of 49 U.S.C and ). However, the same considerations apply equally in the many lease arrangements between an owner-operator who may or may not have his or her own operating authority and a carrier with such operating authority.

13 7 motor carriers to remain nimble and competitive in the face of inevitable fluctuation in the demand for their services. Motor carriers and the smooth functioning of the economy as a whole require the ability to ramp up capacity on particular routes or for particular shippers on short notice. Independent contractors can provide an economically viable means of maintaining that ability. 3. Independent contracting provides significant advantages to owner-operators as well. By successfully and skillfully managing operations, an independent contractor can grow his or her own business, whether by productively performing services him or herself, or by hiring employees to provide additional services. See, e.g., Philip J. Romero, The Economic Benefits of Preserving Independent Contracting 30 (Sept. 2011), available at Final-Romero-Report.pdf (last visited March 5, 2014). Owner-operators who drive their own trucks typically outearn similarly situated employee drivers by a significant margin: as one industry expert recently put it, the average owner-operator fares better than company driver counterparts, with a net income of $51,912 compared to about $40,000 per year for the same amount of work by an employee driver. Rip Watson, Owner-Operators Make More Income, Freight-Rate Gains, Industry Expert Says, Transport Topics, Sept. 23, 2013, at 12. But independent truckers have the opportunity to do far more than simply make more money by personally hauling freight. Because business start-up costs in the trucking industry are comparatively modest consisting principally of the cost of a power unit and various licensing and insurance fees

14 8 trucking provides independent contractors an affordable opportunity to start their own businesses. Entrepreneurial owner-operators can purchase additional trucks and trailers, and employ drivers and other staff to carry out and expand their business. Independent contracting in the trucking industry allows owner-operators to pursue their own version of the American dream, enabling them to be their own bosses, to nurture their own enterprises, and determine how much time they want to devote to work. Indeed, a number of today s largest trucking companies grew from just such single-truck operations. See, e.g., C.R. England Company History, (last visited March 5, 2014); Prime Inc. Company History, (last visited March 5, 2014). B. Motor Carriers and Independent Contractors Regularly Agree to Arbitrate Their Disputes. 1. Like any number of other businesses, motor carriers and the owner-operators they do business with frequently agree to arbitrate disputes that may arise between them in the course of their relationship. Motor carriers and independent contractors turn to arbitration because as Congress has repeatedly found arbitration allows parties to avoid the delays, expense, uncertainties, loss of control, adverse publicity, and animosities that frequently accompany litigation of business disputes. Y2K Act of 1999, Pub. L. No (a)(3)(B)(iv), 113 Stat. 185, 186; see also H.R. Rep. No , at 2 (1924) ( the costliness and delays of litigation * * * can be largely eliminated by

15 9 agreements for arbitration, if arbitration agreements are made valid and enforceable ); H.R. Rep. No , at 13 (1982) (arbitration is cheaper and faster than litigation, has simpler procedural and evidentiary rules, minimizes hostility, and is more flexible in regard to scheduling ). This Court, too, has consistently recognized that the simplicity, informality, and expedition of arbitration makes it an attractive alternative to litigation. Mitsubishi Motors Corp. v. Soler Chrysler- Plymouth, Inc., 473 U.S. 614, 628 (1985). See also, e.g., Concepcion, 131 S. Ct. at 1749 ( the informality of arbitral proceedings * * * reduc[es] the cost and increas[es] the speed of dispute resolution ); Stolt- Nielsen S. A. v. AnimalFeeds Int l Corp., 559 U.S. 662, 685 (2010) ( the benefits of private dispute resolution include lower costs and greater efficiency and speed ); 14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 257 (2009) ( Parties generally favor arbitration precisely because of the economics of dispute resolution. ); Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 280 (1995) (arbitration is a less expensive alternative to litigation ). 2. In some cases, the parties may further agree to arbitrate any questions that may arise as to whether a particular dispute is arbitrable a gateway question whose suitability for resolution in the arbitral forum this Court most recently endorsed in Rent-a-Center, West, Inc. v. Jackson, 130 S. Ct 2772 (2010). Such delegations are valid and enforceable so long as they are clear and unmistakable. Id. at 2777 n.1. Delegating gateway issues can further the FAA s goal of mov[ing] the parties to an arbitrable dispute out of court and into arbitration as quickly and easily as possible.

16 10 Preston v. Ferrer, 552 U.S. 346, 357 (2008) (quoting Moses H. Cone Mem l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 22 (1983)). As the Eighth Circuit recognized when it confronted the precise question presented here, whether the exception articulated in Section 1 of the FAA applies in a given case is just such a gateway issue that the parties can agree to let the arbitrator decide. See Green v. Supershuttle Int l, Inc., 653 F.3d 766, 769 (8th Cir. 2011) ( Application of the FAA s transportation worker exemption is a threshold question of arbitrability which [p]arties can agree to have arbitrators decide. ). C. The Decision Below Upends the Well- Established Presumption in Favor of Arbitration. The Ninth Circuit, by contrast, reached the opposite conclusion, holding that the parties clear, undisputed agreement to arbitrate gateway issues did not encompass the Section 1 determination. 1. In doing so, it effectively ignored this Court s frequent admonition that the FAA establishes a national policy favoring arbitration when the parties contract for that mode of dispute resolution. Preston, 552 U.S. at 349 (citing Southland Corp. v. Keating, 465 U.S. 1, 10 (1984)). See also, e.g., CompuCredit Corp. v. Greenwood, 132 S. Ct. 665, 669 (2012) (FAA establishes a liberal federal policy favoring arbitration agreements ) (internal quotation marks omitted); Vaden v. Discover Bank, 556 U.S. 49, 58 (2009) (quoting Preston); Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006) (FAA embodies the national policy favoring arbitration ); EEOC v. Waffle House, Inc., 534 U.S. 279, 289 (2002) (FAA manifest[s] a liberal federal policy favoring arbitration agreements ) (internal

17 11 quotation marks omitted); Green Tree Fin. Corp. v. Randolph, 531 U.S. 79, 91 (2000) (FAA establishes a liberal federal policy favoring arbitration agreements ); Moses H. Cone, 460 U.S. at 24 (FAA is a congressional declaration of a liberal federal policy favoring arbitration agreements ). It follows from this well-established national policy that questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration. Moses H. Cone, 460 U.S. at 24. In particular, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, even when the problem at hand is a defense to arbitrability. Mitsubishi Motors, 473 U.S. at 626 (internal quotation marks omitted). 2. The decision below turns the presumption in favor of arbitration on its head. The Ninth Circuit itself concluded that the question presented in this case was a close one. Pet. App. 27a. ATA respectfully disagrees with that characterization, but even if it were correct the congressional policy embodied in the FAA requires that courts decide close questions of arbitrability in favor of arbitration. As Justice Sotomayor recently put it, when the parties arguments [are] in equipoise, the Court s precedents require that the party seeking arbitration prevail. CompuCredit, 132 S. Ct. at 675 (Sotomayor, J., concurring). 3. The upshot of the Ninth Circuit s decision is that owner-operators like the plaintiffs in this case can take advantage of their agreements to arbitrate their gateway arbitrability disputes with motor carriers when it suits them, but can repudiate them when it does not, simply by alleging that they are

18 12 transportation employees rather than independent contractors. That in itself represents a substantial diminishment of the parties bargain. As this very case illustrates, even gateway questions of arbitrability are often sufficiently complex that they would likely require considerable time and expense to resolve them in court. See Pet. App. 18a. That time and expense might well be minimized by the simplicity, informality, and expedition of arbitration, Mitsubishi Motors, 473 U.S. at 628, if the parties were to be held to their agreement. It would certainly frustrate the unmistakably clear congressional purpose of the FAA that the arbitration procedure, when selected by the parties to a contract, be speedy and not subject to delay and obstruction in the courts. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 (1967). Indeed, the result of the Ninth Circuit s decision is to effectively breed[] litigation from a statute that seeks to avoid it. Allied-Bruce, 513 U.S. at 275. That serious interference with congressional policy alone would warrant this Court s review. But as we explain below, loss of the ability to arbitrate gateway questions is only the tip of the iceberg here. II. Review Is Necessary Because the Ninth Circuit s Decision Renders the Merits of Common Disputes over Independent Contractor Status Inarbitrable. Although the holding of the decision below was, on its face, limited to refusing to enforce agreements to allow an arbitrator to decide whether the FAA Section 1 exception applies, the practical effects of that holding go much further in this case, and in

19 13 cases like it involving disputes over independent contractor status. As the Ninth Circuit recognized, the resolution of the Section 1 gateway issue in this case will require resolving the merits of the underlying dispute as well. Pet. App. 27a. The implications of this are twofold. First, it means that disputes over whether or not an owneroperator is an employee are, in effect, categorically inarbitrable, and thus when the merits of the underlying dispute turn on that question, the parties lose the value of their entire arbitration agreement not just the value of the agreement to arbitrate gateway issues. Second, by rendering arbitration agreements between owner-operators and motor carriers dramatically less valuable, the decision below ensures that they will be adopted less widely in the trucking industry. This, in turn, will have predictable negative consequences not just for the federal policy favoring arbitration and for motor carriers, but for owner-operators themselves, and for the greater economy. A. The Decision Below Allows Owner- Operators to Nullify Their Arbitration Agreements in Disputes over Employment Status. The decision below in theory allows owneroperators to unilaterally escape only their commitment to arbitrate gateway questions of arbitrability simply by asserting that they are transportation employees covered by the Section 1 exception. But here, the resolution of that gateway question coincides almost completely with the question at the heart of the dispute s merits. As the plaintiffs themselves admit, [t]he issue of whether an employer/employee relationship exists * * * is not

20 14 only central to the question of exemption from arbitration, it is also a central element of all [but one] of [their] substantive claims. Pet. App. 48a (first alteration in original). Thus, once a court is done resolving the gateway issue, there is little if anything remaining for the arbitrator to decide even in cases where the arbitration agreement turns out to be enforceable. By the time a court determines that an owner-operator is in fact an independent contractor and that the arbitration agreement should therefore be enforced the parties will already have undergone the burden and expense of litigating the merits of the case, and will have irretrievably lost the more efficient dispute resolution they had bargained for. In other words, the Ninth Circuit s rule once again turns the presumption in favor of arbitration on its head. If disputes over the gateway Section 1 question could never be arbitrated even when they are congruent with the underlying dispute, that would permit[] a court to deny effect to an arbitration provision in a contract that the court later finds to be perfectly enforceable, in order to protect against the possibility that an arbitration agreement that may turn out to be invalid might be enforced. Buckeye, 546 U.S. at On the other hand, if parties can be held to their agreements to arbitrate Section 1 gateway issues, valid arbitration agreements will always be enforced, at the price of sometimes holding parties to an agreement to arbitrate gateway issues that may turn out to have been invalid. The presumption in favor of arbitration requires the latter course. This conundrum (such as it is) is presented any time parties agree to arbitrate

21 15 questions of arbitrability. The Ninth Circuit s answer cannot be squared with the well-settled fact that clear delegations of arbitrability issues to the arbitrator are enforceable. See, e.g., Rent-a-Center 130 S. Ct. at 2777; Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002); First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995); AT&T Techs., Inc. v. Commc ns Workers of Am., 475 U.S. 643, 649 (1986). Indeed, even the dissent in Rent-a- Center recognized that the national policy favoring arbitration outweighs the interest in preserving a judicial forum for questions of arbitrability when those questions are as here so bound up with the merits of the dispute as to constitute the entire ball game. Rent-a-Center, 130 S. Ct. at 2788 (Breyer, J., dissenting) (internal quotation marks and citations omitted). The Ninth Circuit s approach, on the contrary, ensures that all valid agreements to arbitrate this kind of dispute can be nullified whenever an owner-operator so wishes. Given the pervasive role of owner-operators in the trucking industry, see Part I.A, supra, this congruence between gateway issues and merits issues is no rarity. Disputes over the employment status of owner-operators are distressingly common occurrences for ATA s members and the trucking industry in general. See, e.g., Samuel Samaro & Sean Mack, How Independent are Owner-Operators, Journal of Commerce, Feb. 27, 2012, at 26 (noting that an increasing number of trucking companies face driver misclassification claims, and that [c]lass-action lawsuits against some companies have resulted in million-dollar settlements ). The certainty that the consequences of the Ninth Circuit s error will frequently recur in high-stakes

22 16 cases make this Court s review particularly important. B. The Decision Below Will Deter the Use of Arbitration in the Trucking Industry. 1. If motor carriers cannot expect that their bargains to arbitrate disputes with owner-operators will be enforced, it is inevitable that they will be less likely to enter into them in the first place. After all, arbitration agreements represent a mutual tradeoff: parties forgo the procedural rigor and appellate review of the courts in order to realize the benefits of private dispute resolution: lower costs, greater efficiency and speed, and the ability to choose expert adjudicators to resolve specialized disputes. Stolt- Nielsen, 559 U.S. at 624. Parties enter into binding pre-dispute arbitration agreements because they believe, ex ante, that the benefits of arbitration are likely to exceed the loss of the full trappings of litigation. But as this case illustrates, a party s afterthe-fact calculus might well change. If the rule is that motor carriers must always be held to their predispute arbitration agreements to arbitrate while owner-operators could decide on a case by case basis whether arbitration or court suits them better, it would be utterly irrational for motor carriers to enter into such one-sided agreements. 2. The deleterious impact of this rule on the federal policy favoring arbitration, and on the motor carriers who wish to avail themselves of the benefits of arbitration, is obvious. Perhaps less obvious though no less real are the negative consequences it would have on owner-operators. It is clear from their unwillingness to honor their arbitration agreements that the plaintiffs in this case have calculated that they would be better off in court than

23 17 before an arbitrator presumably, they (or their lawyers) believe that the prospect of obtaining significant damages on behalf of a class makes it worthwhile for them to incur the expense of litigation and forgo the expediency of arbitration. But as a general matter, arbitration increases access to justice for countless small businesspersons who cannot afford the typical costs of litigating commercial disputes. Thus, whether or not the plaintiffs afterthe-fact calculus is correct in this particular instance, it would surely be different for different owner-operators, and under different circumstances. For owner-operators faced with individual disputes with a motor carrier, arbitration may well be the only realistic opportunity to vindicate their claims. As this Court has observed, arbitration s advantages often would seem helpful to individuals * * * who need a less expensive alternative to litigation. Allied-Bruce, 513 U.S. at 280. Without recourse to arbitration, the typical consumer who has only a small damages claim (who seeks, say, the value of only a defective refrigerator or television set) is left without any remedy but a court remedy, the costs and delays of which could eat up the value of an eventual small recovery. Id. at 281. The same would be true of any number of inherently individualized disputes that regularly arise between motor carriers and owner-operators say, a payment dispute over a few thousand dollars. Such a claim (unless it was low enough to be resolved in small claims court) might be too small for an owner-operator to pursue in a potentially long, expensive lawsuit, even if he or she is confident of ultimately prevailing. But such a dispute might very well be worth resolving in arbitration, where the

24 18 reduced procedural and evidentiary burdens mean a party can pursue a claim more efficiently and expeditiously than they could in court depending on the circumstances, perhaps without the expense of a lawyer at all. In short, for many owner-operators it looks like arbitration or nothing. Theodore St. Antoine, Mandatory Arbitration: Why It s Better Than It Looks, 41 U. Mich. J.L. Reform 783, 792 (2008). If the Ninth Circuit s decision is allowed to stand, the inevitable result will be that any number of meritorious claims that could have been costeffectively resolved in arbitration will instead go by the wayside. 3. Finally, the disincentive to arbitration created by the Ninth Circuit s decision is a losing proposition for the country as a whole. Arbitration permits a business to resolve disputes more cheaply, and those cost-saving benefits * * * are reflected in a lower cost of doing business that in competition are passed along to customers. Boomer v. AT&T Corp., 309 F.3d 404, 419 (7th Cir. 2002) (internal quotation marks and citation omitted); see also Stephen Ware, The Case for Enforcing Adhesive Arbitration Agreements With Particular Consideration of Class Actions and Arbitration Fees, 5 J. Am. Arb. 251, (2006) (arbitration lower[s] [businesses ] dispute-resolution costs, and this benefit to business[] is also a benefit to consumers because whatever lowers costs to businesses tends over time to lower prices to consumers ). Given the pervasive role of trucking in delivering the goods on which the nation and its economy depends, this is, cumulatively, no trivial consideration. See, e.g., American Trucking Associations, American Trucking

25 19 Trends 2013 v (2013) (in 2012, U.S. motor carriers hauled $642.1 billion in gross freight revenues * * *, representing 80.7% of the nation s freight bill, and 68.5% of total domestic tonnage shipped ). * * * * * All of these predictable results amount to a serious impediment to the national policy of favoring the use of arbitration to efficiently resolve disputes, and thus urgently warrant this Court s review. CONCLUSION For the foregoing reasons, and those stated in the petition for writ of certiorari, the Court should grant the writ. Respectfully submitted. RICHARD PIANKA Counsel of Record ATA Litigation Center PRASAD SHARMA American Trucking Associations, Inc. 950 North Glebe Road Arlington, VA (703) rpianka@trucking.org MARCH 2014