(Pl. Resp. at 22-23; Pl. Supp. Br. I, Doc. 30 at 2) ("Delegation provisions do not empower arbitrators to determine 'whether the district court has the authority to act under the FAA—specifically, the authority under § 4 to compel the parties to arbitration'") (quoting Oliveira v. New Prime, Inc., 857 F.3d 7, 14 (1st Cir. 2017) aff'd 139 S. Ct. 532 (2019)).
Id. at *7 (citing Phelps, 569 F.3d at 1135-36). Plaintiffs argue that the law was not settled on whether the Court or an arbitrator should decide the applicability of a § 1 exemption or whether independent contractors fall under the § 1 exemption of the FAA. OnTrac does not dispute that the issue was not settled. Dkt. #38 at 5 ("OnTrac responded that a stay was improper because Plaintiffs could have argued, in this Court or on appeal, that the FAA exempted independent contractor agreements, especially as the question remained unsettled in this Circuit."); see also Oliveira v. New Prime, Inc., 857 F.3d 7, 12-13, 18 (1st Cir. 2017). New Prime, therefore, "did not upset or overturn a settled legal principle."
There is some disagreement among the courts of appeals on this issue. See Oliveira v. New Prime, Inc., 857 F.3d 7, 12-15 (1st Cir. 2017) (following the Ninth Circuit's approach, but noting that the Eighth Circuit reached the opposite conclusion in Green v. Supershuttle Int'l, Inc., 653 F.3d 766 (8th Cir. 2011)), cert. granted, 138 S. Ct. 1164 (2018). Postmates therefore argues that "Van Dusen is not sound precedent" and was "wrongly decided."
However, the Magistrate Judge did not act "contrary to law" in declining to rule on the issue preclusion argument at the time because she had discretion to deny the motion to compel without prejudice. See Oliveira v. New Prime, Inc., 857 F.3d 7, 12, 24 (1st Cir. 2017) ; 28 U.S.C. 636(b)(1)(A). Khath did not renew his argument for issue preclusion in his opposition to Midland's Renewed Motion to Compel.
"[T]he critical first step in any statutory-interpretation inquiry" is to "closely examine the statutory text." Oliveira v. New Prime, Inc., 857 F.3d 7, 19 (1st Cir. 2017), aff'd, ––– U.S. ––––, 139 S. Ct. 532, 202 L.Ed.2d 536 (2019). We give the phrases or words Congress did not specifically define within PROMESA their "ordinary meaning." Id.
We agree that it was proper to assess the FAA's applicability in the first instance. But no binding precedent requires district courts to ignore arbitrability under state law when the applicability of § 1 is uncertain. That sequencing question was asked, but not answered by the First Circuit in New Prime . Oliveira v. New Prime, Inc. , 857 F.3d 7, 24 (1st Cir. 2017), aff'd , ––– U.S. ––––, 139 S. Ct. 532, 202 L.Ed.2d 536 (2019). And the Supreme Court in New Prime did not discuss, let alone decide, the matter.
In Oliveira v. New Prime, Inc. , the First Circuit assumed, without deciding, that truck drivers engaged in interstate commerce fell within the scope of the residual clause. 857 F.3d 7, 17 (1st Cir. 2017) ("Prime does not dispute that Oliveira, whose work for Prime included driving a truck across state lines, is a ‘transportation worker’ within the meaning of the § 1 exemption, as interpreted by Circuit City . Thus, we have no need to definitively decide that issue."). Unlike truck drivers engaged in interstate commerce, however, Plaintiff does not carry goods across state lines.
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.
Therefore, where the MLA applies, § 16 of the FAA does not, and we lack any source of appellate jurisdiction. See, e.g., Oliveira v. New Prime, Inc., 857 F.3d 7, 24 (1st Cir. 2017) ("Because the contract in this case is within the § 1 exemption, the FAA does not apply, and we consequently lack jurisdiction under 9 U.S.C. § 16(a)(1)(B) — the only conceivable basis for our jurisdiction over this interlocutory appeal."), aff'd, 586 U.S. 105, 139 S.Ct. 532, 202 L.Ed.2d 536 (2019); Int'l Bhd. of Teamsters Loc. Union No. 50 v. Kienstra Precast, LLC, 702 F.3d 954, 958 (7th Cir. 2012) (dismissing appeal for lack of appellate jurisdiction where district court correctly held that contract was excluded from the FAA by § 1). The district court properly decided the question of whether the MLA overruled the FAA, properly determined that that the MLA did override the FAA, and correctly found that the MLA applied to the timeshare loan in this case.
Indeed, as the First Circuit noted before the Court's grant of certiorari, "because the parties do not dispute that [plaintiff] is a transportation worker under § 1, [it] need not address whether an LLC or other corporate entity can itself qualify as a transportation worker." Oliveira v. New Prime, Inc., 857 F.3d 7, 17 (1st Cir. 2017), aff'd, 586 U.S. 105, 139 S. Ct. 532, 202 L.Ed.2d 536 (2019). Although the Supreme Court has not addressed the exact questions here, it has provided us with significant guidance.