Oliveira v. New Prime, Inc.

Filing 217

Chief Judge Patti B. Saris: MEMORANDUM AND ORDER entered.New Prime's motion to compel arbitration of the opt-in plaintiffs' claims (Docket No. 161 ) is DENIED.SO ORDERED.(Lara, Miguel)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
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DOMINIC OLIVEIRA,
Plaintiff,
v.
NEW PRIME, INC.,
Defendant.
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Civil Action
No. 15-10603-PBS

MEMORANDUM AND ORDER
December 9, 2019
This case involves a pay dispute between a trucking
corporation and former truck drivers. Plaintiff Dominic Oliveira
brought this proposed class and collective action in March 2015,
alleging that Defendant New Prime, Inc. (“New Prime”) violated
the Fair Labor Standards Act (FLSA), 29 U.S.C. § 216(b), and the
Missouri Minimum Wage Law, Mo. Rev. Stat. § 290, by failing to
pay its truck drivers minimum wage. Docket. Nos. 1, 33.
In June 2015, New Prime moved to compel arbitration of
Oliveira’s claims under the Federal Arbitration Act (FAA), but
did not press its claim under Missouri law. See Docket No. 3 at
4-8. This Court denied New Prime’s motion without prejudice and
ordered limited discovery on the applicability of the FAA to
this case. Docket No. 60. New Prime appealed to the First

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Circuit, lost, and then appealed to the Supreme Court, and lost
again. Now it wants a fourth bite of the arbitration apple.
Now, three and a half years after this case was filed, New
Prime moves under Missouri law to compel arbitration of the
claims of several plaintiffs who recently opted into this case
pursuant to the FLSA. New Prime argues that (1) it has not
waived its right to arbitration under Missouri law with respect
to the new opt-in plaintiffs (2) any state-law challenges to its
arbitration agreements 1 with the opt-in plaintiffs must be
resolved by an arbitrator, rather than this Court. Plaintiff
contests both assertions.
After hearing, the Court DENIES Defendant’s motion to
compel arbitration of the opt-in plaintiffs’ claims (Docket No.
161) because it has waived its right under Missouri law.
BACKGROUND
The following facts are taken from the First Amended
Complaint and attached exhibits, Docket No. 33, as well as this
Court’s previous opinion in this case, Oliveira v. New Prime,
Inc., 141 F. Supp. 3d 125 (D. Mass. 2015).
In March 2013, Oliveira entered New Prime’s “Paid
Apprenticeship” training program, which is advertised as an on-

1

Plaintiffs assert that the arbitration agreement is
unenforceable because it is a contract of adhesion and is
unconscionable.
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the-job training program for new truck drivers. Docket No. 33-2,
Docket No. 33-3. Apprentices obtain a Missouri Commercial
Driver’s License (CDL) permit, shadow New Prime drivers for
three to four weeks, take a CDL exam, drive 30,000 miles as a
New Prime company driver trainee, and attend an additional week
of orientation classes. Oliveira, 141 F. Supp. 3d at 128. The
drivers then choose to be classified as either company drivers
or independent contractors. Id.
In May 2013, when Oliveira returned from his trainee
driving, New Prime told Oliveira that he could make more money
if he became an independent contractor. Id. Oliveira then signed
a document titled “INDEPENDENT CONTRACTOR OPERATING AGREEMENT.”
Dkt. No. 36-1. The document contained an arbitration provision
that delegated questions of arbitrability to the arbitrator. 2

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The arbitration provision reads:
GOVERNING LAW AND ARBITRATION. THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF MISSOURI. ANY
DISPUTES ARISING UNDER, ARISING OUT OF OR RELATING TO
THIS AGREEMENT, INCLUDING AN ALLEGATION OF BREACH
THEREOF, AND ANY DISPUTES ARISING OUT OF OR RELATING
TO THE RELATIONSHIP CREATED BY THE AGREEMENT, AND ANY
DISPUTES AS TO THE RIGHTS AND OBLIGATIONS OF THE
PARTIES, INCLUDING THE ARBITRABILITY OF DISPUTES
BETWEEN THE PARTIES, SHALL BE FULLY RESOLVED BY
ARBITRATION IN ACCORDANCE WITH MISSOURI’S ARBITRATION
ACT AND/OR THE FEDERAL ARBITRATION ACT. ANY
ARBITRATION BETWEEN THE PARTIES WILL BE GOVERNED BY
THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION (“THE RULES”). THE PARTIES
SPECIFICALLY AGREE THAT NO DISPUTE MAY BE JOINED WITH
THE DISPUTE OF ANOTHER AND AGREE THAT CLASS ACTIONS
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During his time as an independent contractor and later as a
New Prime company driver, New Prime made regular deductions from
Oliveira’s paycheck. Oliveira, 141 F. Supp. 3d at 129. These
deductions were ostensibly due to an advance of $200 per week
given to Oliveira during the apprentice program, lease payments
on Oliveira’s truck, and payments for other tools that New Prime
instructed Oliveira to buy. Id. at 128-29. On multiple
occasions, Oliveira’s weekly pay was negative after spending
dozens of hours on the road. Id. at 129.
Oliveira brought this class action in March 2015, arguing
that he and other New Prime drivers were not paid the minimum
wage under federal and state law. Docket No. 1. Oliveira
proposed the following definition for both a 216(b) collective
action under the FLSA and a Rule 23(b) class under Missouri law:
All current and former employees that drove for the
defendant, whether or not catagorized [sic] as
employees, trainees, or independent contractors who
were not compensated for all training time, paid by
the mile without regard to hours worked and/or had
improper deductions taken from their paychecks.

UNDER THIS ARBITRATION PROVISION ARE PROHIBITED . . .
THE PLACE OF THE ARBITRATION HEREIN SHALL BE
SPRINGFIELD, MISSOURI.
Docket No. 36-1 at 10. The agreement also states, immediately
before the signature line, “THIS CONTRACT CONTAINS A BINDING
ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.” Id.
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Docket No. 33 at 13-14. 3

In June 2015, New Prime filed a motion

to compel arbitration of Oliveira’s claims, or in the
alternative, to dismiss the suit for failure to state a claim.
Docket No. 24, Docket No. 35. New Prime’s arbitration-related
arguments were based entirely on federal law. See Docket No. 36
at 4-8. This Court denied New Prime’s motion in October 2015.
Oliveira, 141 F. Supp. 3d at 135. New Prime appealed the
decision to the First Circuit shortly thereafter. Docket No. 67.
The First Circuit affirmed this Court’s decision in May
2017. Docket No. 73; Oliveira v. New Prime, Inc., 857 F.3d 7, 24
(1st Cir. 2017). The First Circuit held that (1) the
“applicability of the FAA is a threshold question for the court
to determine before compelling arbitration under the Act,” and
(2) the provision of the FAA that exempts “contracts of
employment” of transportation workers from the Act’s coverage
applies to an agreement “that establishes or purports to
establish an independent-contractor relationship.” Id. at 9.
Thus, New Prime could not rely on the FAA to compel arbitration
of Oliveira’s claims.
New Prime appealed the First Circuit’s decision to the U.S.
Supreme Court in November 2017. Docket No. 110. While its
petition for certiorari was pending, New Prime moved in January

3

This class definition is taken from Oliveira’s amended
complaint, Docket No. 33, which was filed in June 2015.
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2018 to deny certification of Oliveira’s putative class. Docket
No. 118. In its motion, New Prime asserted that it had “not
waived its right to compel arbitration of the claims of putative
class members” under Missouri law, even if it had waived that
right with regard to Oliveira individually. Id. at 8. Once the
Supreme Court granted certiorari in February 2018, Docket No.
134, the district court proceeding was stayed prior to
resolution of the class certification issue. In January 2019,
the Supreme Court affirmed the First Circuit on both of its
holdings. New Prime Inc. v. Oliveira, 139 S. Ct. 532, 544
(2019).
Oliveira subsequently filed consent forms for ten opt-in
plaintiffs (“Plaintiffs”), pursuant to 29 U.S.C. § 216(b), in
April 2019 (Docket No. 154, Docket No. 155), and June 2019
(Docket No. 159, 160).

The opt-in plaintiffs had each signed

Operating Agreements with arbitration provisions similar to that
signed by Oliveira. Docket. Nos. 163-1 to 163-10. Many of the
contracts were signed at the end of the driver training period,
after each driver had gone through days or weeks of training
with New Prime. See, e.g., Docket No. 180-2 ¶ 2; Docket No. 1803 ¶ 2.
New Prime moved to compel arbitration of the opt-in
plaintiffs’ claims in August 2019. Docket No. 161. New Prime
sent Plaintiff’s counsel written demands to arbitrate the claims
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of the opt-in plaintiffs, which Plaintiff’s counsel declined.
Docket No. 162 at ¶ 3. New Prime further alleges that none of
the opt-in plaintiffs has been deposed, and no written discovery
has been served regarding the opt-in plaintiffs’ claims. Id. ¶
4. 4
DISCUSSION
The motion raises two questions for Court. First, has New
Prime waived its right to compel arbitration under the Missouri
Uniform Arbitration Act (MUAA) with regard to the opt-in
plaintiffs? Second, does the MUAA compel arbitration of the optin plaintiffs’ claims, including threshold questions of
arbitrability? Because I find that New Prime has waived its
right to compel arbitration under the MUAA, I do not reach the
second question.
I.

Legal Standard
Under Missouri law, the right to arbitration may be waived.

Reis v. Peabody Coal Co., 935 S.W.2d 625, 630 (Mo. Ct. App.
1996). “A party waives its right to arbitrate if it (1) had
knowledge of the existing right to arbitrate, (2) acted
inconsistently with that right, and (3) prejudiced the party

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After New Prime filed its motion to compel arbitration, the
Plaintiffs moved to certify a collective action for their 29
U.S.C. § 216(b) claims and a Rule 23 class action for their
Missouri state law claims. Docket No. 176, Docket No. 198. That
motion has not yet been decided.
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opposing arbitration.” Mueller v. Hopkins & Howard, P.C., 5
S.W.3d 182, 187 (Mo. Ct. App. 1999). There is a “strong
presumption” against waiver, and any doubts “must be resolved in
favor of arbitration.” Id.
The party seeking waiver bears the burden of establishing
prejudice. Id. Prejudice is determined on a case-by-case basis.
Id. Prejudice results when a party “substantially invokes the
judicial process to the detriment or prejudice of the other
party.” Major Cadillac, Inc. v. Gen. Motors Corp., 280 S.W.3d
717, 723 (Mo. Ct. App. 2009). Missouri courts have identified
several indicators of prejudice, such as when a party “loses a
motion on the merits and then attempts to invoke arbitration, or
when a party postpones invoking arbitration, causing his
adversary to incur unnecessary delay or expense.” Mueller, 5
S.W.3d at 187; see also Major Cadillac, 280 S.W.3d at 723
(explaining that prejudice can be found “when a party’s time and
funds are expended because that party has not received the
benefits of arbitration: efficient and low-cost resolution of
disputes” (citation omitted)). Prejudice can also “result from
lost evidence, duplication of efforts, use of discovery methods
unavailable in arbitration, or litigation of substantial issues
going to the merits.” Nettleton v. Edward D. Jones & Co., 904
S.W.2d 409, 411 (Mo. Ct. App. 1995). Delay alone does not
establish prejudice, but “delay and the moving party’s trial8

oriented activity are material factors in assessing prejudice.”
Gentry v. Orkin, LLC, 490 S.W.3d 784, 789 (Mo. Ct. App. 2016)
(citation omitted).
Missouri law does not specify a bright-line rule, either in
terms of litigation stage or time expended, as to when a party
waives its right to compel arbitration. See, e.g., Major
Cadillac, 280 S.W.3d at 723 (finding waiver where defendant
filed and spent eight months litigating motion to remove and
motion to dismiss); Reis, 935 S.W.2d at 631 (finding that
defendant acted inconsistently with the right to arbitrate by,
inter alia, seeking arbitration after two years of unsuccessful
litigation of its motion for dismissal or summary judgment and
related appeal) (“[It] was not until [the defendant] had
unsuccessfully exhausted its pretrial maneuvers, that it
attempted to invoke arbitration”).
II.

Parties’ Arguments

The parties do not contest that New Prime had knowledge of
its alleged right to arbitrate, thereby satisfying the first
prong of the waiver test. The parties disagree as to the second
and third prongs: whether New Prime’s actions were inconsistent
with the right to arbitrate, and whether those actions
prejudiced the opt-in plaintiffs. Docket No. 161 at 13-15;
Docket No. 180 at 1, 16-20.

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A. Inconsistency
New Prime argues that it acted consistently with the right
to arbitrate, because it could not have moved to compel
arbitration of the opt-in plaintiffs’ claims until they became
parties to this action. Docket No. 161 at 13. The MUAA provides
for a motion to compel arbitration only against an “opposing
party” who has “refus[ed] to arbitrate.” Mo. Rev. Stat.
§ 435.355(1). New Prime argues that the opt-in plaintiffs did
not become parties to this action for FLSA purposes until April
and June 2019, when their written consent was filed with the
court. See 29 U.S.C. § 216(b) (“[N]o employee shall be a party
to any such action unless he gives consent in writing . . . .”).
Thus, New Prime alleges that it could not have moved to compel
arbitration of these plaintiffs’ claims sooner. New Prime also
argues that proposed class members in an uncertified class are
not yet parties to the action for purposes of the Rule 23 class
action.

Docket No. 161 at 14.

New Prime further notes that its August 2017 answer to
Oliveira’s complaint raised the issue of arbitration under
Missouri law. Docket No. 117 at 15. New Prime’s January 2018
motion to deny class certification also argued that New Prime
had “not waived its right to compel arbitration of the claims of
putative class members” under Missouri law, even if it had
waived that right with regard to Oliveira. Docket No. 118 at 8.
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In response, Plaintiffs cite New Prime’s August 2015 reply
brief stating that New Prime sought to invoke arbitration under
the FAA, rather than the MUAA, Docket No. 51, and New Prime’s
December 2017 Supreme Court reply brief, which stated “[New]
Prime has not moved to compel arbitration of respondent’s claims
under Missouri law —- and respondent is well aware that [New]
Prime has no intention of doing so in this case.” Docket No.
180-9 at 19.
B. Prejudice
New Prime further argues that the opt-in plaintiffs have
not borne their burden of establishing prejudice. New Prime
claims that none of the opt-in plaintiffs has incurred any
expense since joining this lawsuit in mid-2019, particularly as
no discovery has been conducted regarding the opt-in plaintiffs
in particular. Docket No. 161 at 13-14. The Plaintiffs respond
that they have been prejudiced by the passage of time, which
makes “discovery . . . harder to obtain and class and collective
members harder to reach.” Dkt. 180 at 19.
III. Analysis
New Prime has waived its right to compel arbitration of the optin plaintiffs’ claims under the MUAA. New Prime’s actions (1)
were inconsistent with the right to arbitrate and (2) prejudiced
the opt-in plaintiffs.

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A. Inconsistency
New Prime had notice from the start of this case that it
was being pursued as a putative class and collective action, and
that it had the potential right to compel arbitration under both
federal and state law. See Docket No. 1; Docket No. 117 at 15.
Nevertheless, New Prime “substantially invoke[d] the litigation
machinery” by pursuing the federal path for two years before
moving to compel arbitration under the MUAA. Major Cadillac, 280
S.W.3d at 723. New Prime filed a motion to compel arbitration or
dismiss the amended complaint in July 2015 but failed to raise
any MUAA-related arguments. New Prime also filed motions to stay
this case pending appeal, and pursued appeals in the First
Circuit and the Supreme Court. Plaintiff argues these actions
are all inconsistent with New Prime’s right to pursue
arbitration under the MUAA.
While Missouri courts have not ruled on whether the right
to arbitration can be waived with regard to putative class or
collective action members, several other courts have answered in
the affirmative where a defendant delayed in presenting the
arbitration issue for tactical advantage. See Gunn v. NPC
Int’l., Inc., 625 Fed. App’x 261, 265-67 (6th Cir. 2015)
(finding waiver in putative FLSA collective action where
defendant moved to compel arbitration after unfavorable rulings
and the court found it was “employing dilatory tactics”);
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Kingsbury v. U.S. Greenfiber, LLC, No. 08-cv-00151, 2012 WL
2775022, at *6-7 (C.D. Cal. June 29, 2012) (finding waiver in
putative Rule 23 class action where defendant “conscious[ly]”
sought judicial judgment on certain legal questions before
moving to compel arbitration); see also Prowant v. Fed. Nat’l
Mortgage Ass’n, 255 F.Supp.3d 1291, 1298, 1301 (N.D. Ga. 2017)
(finding waiver in putative FLSA collective action where
defendant moved to compel arbitration of opt-in plaintiffs’
claims after receiving an unfavorable ruling).
New Prime relies heavily on the Eleventh Circuit’s decision
in Gutierrez v. Wells Fargo, which held that it would have been
“jurisdictionally impossible” for the district court to rule on
a motion to compel arbitration before a class was certified,
such that the defendant’s failure to so move could not be viewed
as evidence of waiver. 889 F.3d 1230, 1237-1239 (11th Cir.
2018). Importantly, the defendant in Gutierrez specifically
preserved its right to compel arbitration as to unnamed putative
class members before a motion to dismiss was decided. Id. The
Eleventh Circuit highlighted this fact, holding that “the key
ingredient in the waiver analysis is fair notice to the opposing
party and the District Court of a party’s arbitration rights and
its intent to exercise them. If the court and the opposing party
have such notice at an early stage in litigation, they can

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manage the litigation with this contingency in mind.” Id. at
1236.
The instant case is distinguishable from Gutierrez. New
Prime did not attempt to preserve the issue of Missouri state
law until August 2017, more than two years after litigation had
commenced and after both the district and circuit court had
ruled on New Prime’s motion to compel arbitration or dismiss.
Here, the key indication of waiver is not New Prime’s failure to
file a motion to compel arbitration. Rather, the finding of
waiver is based upon New Prime’s repeated affirmations that it
would not seek to compel arbitration under the MUAA in this
case, coupled with its years-long pursuit of appeals on the
applicability of the FAA. See id. at 1236 (“[T]he key ingredient
in the waiver analysis is fair notice to the opposing party and
the District Court of a party’s arbitration rights and its
intent to exercise them.”).
B. Prejudice
The parties disagree as to whether the prejudice analysis
should reflect New Prime’s actions with respect to the opt-in
plaintiffs only, or whether the Court may consider the prejudice
suffered by the Plaintiffs as a group. The opt-in plaintiffs
argue that they have suffered prejudice individually, because
the passage of four years of litigation in this case has raised
“the risk that discovery will be harder to obtain and class and
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collective members harder to reach.” Docket No. 180 at 19. 5
Moreover, putative class members may be forced to eventually
shoulder attorney’s fees for litigating this case to the Supreme
Court.
New Prime’s actions prior to April 2019 with respect to the
named plaintiff are relevant to the waiver inquiry because they
caused delay to the unnamed plaintiffs. See Gunn, 625 Fed. App’x
at 267 (holding that the prejudicial “effects of [the
Defendant’s] failure to timely raise arbitration – in
unnecessary delay and expense – is effectively the same for all
plaintiffs, irrespective of when they opted in,” where
plaintiffs were represented by the same counsel before the same
judge and “assert[ed] claims for violations of FLSA rights
pursuant to the same uniform policies”); Kingsbury, 2012 WL
2775022, at *6-7 (explaining that the defendant’s precertification conduct prejudiced unnamed members of the class,
because the named plaintiff and “his lawyers were attempting to

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The Plaintiffs claim they have suffered prejudice because their
arbitration agreements contain a one-year limitation provision,
which New Prime might seek to invoke in an arbitration. Docket
No. 215 at 11. Missouri law renders such limitations periods
“null and void.” See Mo. Rev. Stat. § 431.030 (“All parts of any
contract or agreement hereafter made or entered into which
either directly or indirectly limit or tend to limit the time in
which any suit or action may be instituted, shall be null and
void.”). During hearing on this motion, New Prime waived its
right to assert the limitation provision against the opt-in
plaintiffs.
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vindicate not only [the named plaintiff’s] interests but also
the interests of other unrepresented class members”).
New Prime spent more than four years litigating a threshold
issue regarding arbitration under the FAA. A timely motion to
compel arbitration under the MUAA could have saved the
Plaintiffs, including the opt-in plaintiffs, and the Court
unnecessary time and expense. But New Prime chose not to invoke
the MUAA until it faced a potential loss on the FAA issue in the
Supreme Court. Meanwhile, the drivers - who may have earned
negative weekly pay due to improper deductions - have not
received relief. The Plaintiffs have suffered prejudice in this
case.
This result is consistent with the purpose of the waiver
doctrine. Declining to find waiver in this case would create a
loophole for defendants who seek to compel arbitration in a
putative class or collective action. Defendants could choose one
statute, such as the FAA or a state arbitration statute, to
compel action against named plaintiffs, and then – and only if
they lose – have the chutzpah to invoke the other statute years
later. This situation denies parties the benefit of arbitration:
the “efficient and low-cost resolution of disputes.” Major
Cadillac, 280 S.W.3d at 723. Defendant’s conduct reflects
dilatory litigation tactics at their worst, by preventing the

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timely resolution of an important dispute about the payment of
minimum wages.
Accordingly, Plaintiffs have established that New Prime
acted inconsistently with regard to its right to arbitrate and
that Plaintiffs were prejudiced as a result. New Prime has
waived its right to compel arbitration of the Plaintiffs’ claims
under the MUAA.
ORDER
New Prime’s motion to compel arbitration of the opt-in
plaintiffs’ claims (Docket No. 161) is DENIED.

SO ORDERED.
/s/ PATTI B. SARIS
Hon. Patti B. Saris
Chief United States District Judge

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