United States District Court, M.D. Alabama, Eastern Division
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For Nettie Chambers, Annie L. Adams, Johnny Allmond, Makeda Barnes, Kevin Bartlett, Adolphus Billingslea, Mattie Brown, Steve Cannon, Ernest Chappell, Jr., Lavelle Cox, Ruben Cox, Paul Cruz, John Dillard, Tracy Eden, Janice Ferrell, William Finley, Melvin Fredrick, Justin Greene, Geraldine Gunn, Eugene Hart, Jeremiah Heard, Jacqueline Hinson, Danita Jackson, Bobby Jones, Billy Kirk, Tiffany Lee, Jason Levi Lewis, Robert Moore, Jr., Dow Perry, Felicia Randolph, Latwanika Rhodes, Martha D. Rocha, Christopher Rogers, Gregory Rowell, Randy Ruffin, James M. Smith, Willie Frank Smith, Charles Tate, Debra Thomas, Lakecia Thomas, Keosha Traylor, James Vines, Michael Watson, Joann Yancey, Cassandra Young, Plaintiffs: David A Hughes, LEAD ATTORNEY, Hardin & Hughes, LLP, Tuscaloosa, AL; John Michael Segrest, LEAD ATTORNEY, The Segrest Law Firm, Tallassee, AL.
For Groome Transportation of Alabama, Inc., Harold V. Groome, Jr., Harold V. Groome, III, Christopher Groome, Defendants: David Lee Brown, Jr., LEAD ATTORNEY, Huie Fernambucq Stewart LLP - Bham, Birmingham, AL; Hugh Cannon Lawley, Martha Leach Thompson, LEAD ATTORNEYS, Huie Fernambucq Stewart LLP, Birmingham, AL.
MEMORANDUM OPINION AND ORDER
W. Keith Watkins, CHIEF UNITED STATES DISTRICT JUDGE.
Forty-five Plaintiffs bring this complaint against their former employer, alleging violations of the Workers' Adjustment and Retraining Notification Act, 29 U.S.C. § § 2101-09 (" WARN Act" ) and the Fair Labor Standards Act (" FLSA" ), 29 U.S.C. § § 201-19. In lieu of an answer, Defendant Groome Transportation of Alabama, Inc. (" Groome Transportation" ) filed a motion to compel arbitration. (Doc. # 8.) Groome Transportation argues that an arbitration agreement and the Federal Arbitration Act (" FAA" ), 9 U.S.C. § § 1-16 require Plaintiffs to submit their claims to binding arbitration rather than file suit. Plaintiffs oppose the motion. After careful consideration of the arguments of counsel, the relevant law, and the evidence, the court finds that, as to all but one Plaintiff, there exists a genuine dispute with respect to the " making" of an arbitration agreement. As to those forty-four Plaintiffs, this action will proceed to a bench trial pursuant to 9 U.S.C. § 4 regarding the making of agreements to arbitrate. As to Plaintiff Annie L. Adams, Groome Transportation's motion to compel arbitration is due to be granted.
II. JURISDICTION AND VENUE
Subject-matter jurisdiction is proper pursuant to 28 U.S.C. § 1331. Personal jurisdiction and venue are uncontested.
The forty-five Plaintiffs are former employees of Groome Transportation, which had contracted with Auburn University to provide shuttle bus services for its students. Plaintiffs worked as shuttle bus drivers, transporting students within Auburn's city limits and principally on Auburn University's campus, beginning prior to April 2012 and continuing until July 2013 when Groome Transportation closed its area plant. (Compl. ¶ 16.)
Until April 2012, Groome Transportation paid Plaintiffs at a rate of time-and-a-half for all hours worked over forty per week. However, in April 2012, Groome Transportation ceased paying its shuttle bus drivers overtime wages, even though the drivers continued to perform the same duties and work the same shifts with overtime hours. Plaintiffs allege that, at this time, Groome Transportation created a bogus shuttle service to the Atlanta, Georgia airport in an attempt to " create a loophole in the [FLSA] overtime laws" presumably under the motor-carrier exemption, see 29 U.S.C. § 213(b)(1). In October 2012, Groome Transportation drivers " staged a walk-out." (Pl. Cassandra Young Aff., at 2 (Doc. # 18-1).) As a result of the walk-out and concomitant pressure from Auburn University, Groome Transportation recommenced paying overtime wages in December 2012.
Additionally, in October 2012, around the time of the walk-out, Groome Transportation presented its employees with a
one-page Arbitration Agreement, which was added to the Personnel Policy Handbook. The Arbitration Clause and Agreement provides:
The parties agree that any dispute, controversy or claim arising out of or related to Employee's employment with Groome Transportation of Alabama, shall be submitted to and decided by binding arbitration in Richmond, Virginia. Arbitration shall be administered and conducted under the Mediation Rules by mediators of the American Arbitration Association (" AAA" ). The rules are available online at www.adr.org. You may also call the AAA at 1-800-778-7879 if there are any questions about the arbitration process. Discovery in any arbitration proceeding shall be conducted according to the American Arbitration Association Rules.
Arbitration Agreement (Ex. A to Doc. # 8).) The Arbitration Agreement also contains an acknowledgement with signature lines for the employee and a Groome Transportation official to sign. The acknowledgment provides:
This agreement to arbitrate is freely negotiated between Employee and Groome Transportation of Alabama, and is mutually entered into between the parties. Each party fully understands and agrees that they are giving up certain rights otherwise afforded to them by civil court actions, including but not limited to a jury trial.
The record does not reveal how many Plaintiffs signed the acknowledgement. Groome Transportation submits only one signed Arbitration Agreement, and that agreement bears the signature of Plaintiff Annie L. Adams, dated January 23, 2013. (Pl. Adams's Arbitration Agreement (Ex. A to Doc. # 8).) Plaintiffs, in turn, submit one affidavit from Plaintiff Cassandra Young, who says that she " refused to sign the arbitration agreement." (Young's Aff., at 2.) While Ms. Young further attests that " many [other] employees" also refused to sign, she does not identify which Plaintiffs, if any, are in the group of employees who did not sign an Arbitration Agreement. (Young's Aff., at 2.) On this record then, the facts known are that one Arbitration Agreement bears the signature of Annie L. Adams (who has not disputed the authenticity of the signature) and that one Plaintiff has refused to sign the agreement. The status of whether the remaining forty-three Plaintiffs signed or did not sign an Arbitration Agreement is unknown.
Groome Transportation's Regional Director, Kristie Holcombe, also attests that, " [a]s a condition of employment and/or continued employment, the Personnel Policy Handbook has contained a mutually binding arbitration agreement since October 19, 2012." (Holcombe's Aff., at ¶ 4 (Ex. 1 to Doc. # 8).) Groome Transportation has not submitted an excerpt from the Personnel Policy Handbook that contains a written provision indicating that continued employment equates acceptance of the Arbitration Agreement. (Holcombe's Aff., at ¶ 4.) It is unclear from Ms. Holcombe's affidavit how Groome Transportation notified its employees of this condition of employment. Ms. Young attests, though, that Groome Transportation officials orally informed her, that if she did not sign the Arbitration Agreement, her employment would be terminated. But she also says that, when she refused to sign the agreement, she was not fired. Ms. Young also attests that she is " not aware of any co-workers who were terminated for refusing to sign the arbitration agreement." (Young's Aff., at 2.)
Ms. Young, along with her co-Plaintiffs, continued to work for Groome Transportation until July 2013, when Groome Transportation
closed its Lee County facility. At that time, Plaintiffs' employment ended.
On April 2, 2014, Plaintiffs filed this action against Groome Transportation and three of its corporate officers. The Complaint contains two counts. In Count One, which alleges violations of the FLSA, Plaintiffs contend that from approximately April 1, 2012, to November 30, 2012, Groome Transportation did not adequately compensate them for hours worked in excess of forty hours per week. See 29 U.S.C. § 207(a)(1) (requiring that employees who work in excess of forty hours per week be compensated " at a rate not less than one and one-half times the regular rate at which he is employed" ). Plaintiffs seek unpaid overtime wages in a collective action under the FLSA. In Count Two, Plaintiffs bring a claim under the WARN Act, individually and as representatives of a proposed class, alleging that Groome Transportation failed to give the minimum sixty-day written notice to its employees as required by the WARN Act. Plaintiffs seek all relief available under the WARN Act, including sixty days back pay. Plaintiffs further demand a jury trial as to Count One. But Groome Transportation contends that court litigation of Plaintiffs' claims is not an option and that Plaintiffs must submit their claims to arbitration.
IV. STANDARD OF REVIEW
Pursuant to the FAA, a written arbitration provision in a " contract evidencing a transaction involving commerce" is " valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. If a party is " aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement," it may petition a federal district court " for an order directing that such arbitration proceed in the manner provided for in [the] agreement." 9 U.S.C. § 4. When addressing a § 4 motion, the district court must determine whether there is a binding agreement to arbitrate and, if so, whether the nonmovant has breached its obligation to arbitrate under that agreement. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 22 n.27, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) (citing 9 U.S.C. § § 4, 6).
The court can consider evidence outside of the pleadings for purposes of a motion to compel arbitration. The Eleventh Circuit has countenanced the use of the summary judgment standard to resolve a motion to compel arbitration. See Johnson v. Keybank Nat'l Assoc., 754 F.3d 1290, 1294 (11th Cir. 2014) (describing an order compelling arbitration as " summary-judgment-like" ; it is " 'in effect a summary disposition of the issue of whether or not there has been a meeting of the minds on the agreement to arbitrate'" ) (quoting Magnolia Capital Advisors, Inc. v. Bear Stearns & Co., 272 F.App'x 782, 785-86 (11th Cir. 2008) (per curiam)).
The FAA evinces a " liberal federal policy favoring arbitration agreements." Hill v. Rent-A-Center, Inc., 398 F.3d 1286, 1288 (11th Cir. 2005) (quoting Moses, 460 U.S. at 24); see also Picard v. Credit Solutions, Inc., 564 F.3d 1249, 1253 (11th Cir. 2009) (" The FAA creates a strong federal policy in favor of arbitration." ). " [A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone, 460 U.S. at 24-25. Accordingly, courts " rigorously enforce" arbitration agreements. Klay v. Pacificare Health Sys., Inc., 389 F.3d 1191, 1200 (11th Cir. 2004). The FAA provides that " upon any issue referable to arbitration under an agreement in writing for such arbitration," and " upon being satisfied that the issue involved in such suit or proceeding is referable
to arbitration under such an agreement," the court " shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement." 9 U.S.C. § 3.
The motion to compel arbitration, as briefed by the parties, raises four issues: (1) whether the Arbitration Agreement is a written agreement involving interstate commerce as required by 9 U.S.C. § 2; (2) whether the Arbitration Agreement is unenforceable for lack of mutual assent or because it is unconscionable; (3) whether the scope of the Arbitration Agreement, assuming that it is binding, covers federal statutory claims or claims predicated on conduct that preexists the making of the Arbitration Agreement; and (4) whether the parties agreed that the arbitrator would decide the first four issues.
Issues one, two, and three are relevant to whether the " making of the agreement for arbitration" is " in issue" such that a trial is necessary under 9 U.S.C. § 4. These issues are presumptively for the court to decide, unless there is an " agreement to the contrary between the contracting parties." Grigsby & Assocs., Inc. v. M Sec. Inv., 664 F.3d 1350, 1352 (11th Cir. 2011) (explaining that the Supreme Court has " noted two questions that are presumptively for the courts: 'whether the parties are bound by a given arbitration clause' and 'whether an arbitration clause in a concededly binding contract applies to a particular type of controversy.'" (quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002)). These issues will be referred to as issues of arbitrability. See Howsam, 537 U.S. at 83 (" The question whether the parties have submitted a particular dispute to arbitration, i.e., the question of arbitrability, is an issue for judicial determination unless the parties clearly and unmistakably provide otherwise." (quotation marks, alterations, and citation omitted)). The fourth issue focuses on which forum -- judicial or arbitral -- is the appropriate forum for resolution of issues one, two, and three. The fourth issue necessarily must be addressed first. Because the fourth issue resolves in favor of a judicial determination of the issues of arbitrability, this opinion also addresses issues one, two, and three.
A. The Appropriate Forum -- Judicial or Arbitral -- for Deciding the Issue of Arbitrability
A threshold issue raised by Groome Transportation is whether the court or the arbitrator should resolve Plaintiffs' arguments pertaining to the issues of arbitrability. Groome Transportation contends that the parties " have agreed to abide by the provisions of the AAA [American Arbitration Association]" and that, therefore, " the arbitrator has jurisdiction to decide whether the arbitration agreement applies."  (Doc. # 21, at 12.)
In First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995), the Supreme Court addressed the standard for assessing " who -- the court or the arbitrator -- has the primary authority to decide whether a party has agreed to arbitrate." Id. at 942. The Court explained:
When deciding whether the parties agreed to arbitrate a certain matter (including arbitrability), courts generally (though with a qualification we discuss below) should apply ordinary state-law principles that govern the formation of contracts. The relevant state law here, for example, would require the court to see whether the parties objectively revealed an intent to submit the arbitrability issue to arbitration. This Court, however, has (as we just said) added an important qualification, applicable when courts decide whether a party has agreed that arbitrators should decide arbitrability: Courts should not assume that the parties agreed to arbitrate arbitrability unless there is " clea[r] and unmistakabl[e]" evidence that they did so. In this manner the law treats silence or ambiguity about the question " who (primarily) should decide arbitrability" differently from the way it treats silence or ambiguity about the question " whether a particular merits-related dispute is arbitrable because it is within the scope of a valid arbitration agreement" -- for in respect to this latter question the law reverses the presumption.
But, this difference in treatment is understandable. The latter question arises when the parties have a contract that provides for arbitration of some issues. In such circumstances, the parties likely gave at least some thought to the scope of arbitration. And, given the law's permissive policies in respect to arbitration, one can understand why the law would insist upon clarity before concluding that the parties did not want to arbitrate a related matter. On the other hand, the former question -- the " who (primarily) should decide arbitrability" question -- is rather arcane. A party often might not focus upon that question or upon the significance of having arbitrators decide the scope of their own powers. And, given the principle that a party can be forced to arbitrate only those issues it specifically has agreed to submit to arbitration, one can understand why courts might hesitate to interpret silence or ambiguity on the " who should decide arbitrability" point as giving the arbitrators that power, for doing so might too often force unwilling parties to arbitrate a matter they reasonably would have thought a judge, not an arbitrator, would decide.
Id. at 944-45.
Parties may delegate, therefore, the authority to rule on gateway arbitrability issues to the arbitrator without running afoul of the FAA or case law. See Johnson, 754 F.3d at 1291 (" Arbitration-friendly federal law recognizes 'delegation clauses' that direct an arbitrator to decide the validity of an arbitration agreement." ). And " [c]ourts should enforce valid delegation provisions as long as there is 'clear and unmistakable' evidence that that the parties manifested their intent to arbitrate a gateway question." Given v. M& T Bank Corp., 674 F.3d 1252, 1255 (11th Cir. 2012) (quoting Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 69 n.1, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010)). As the Eleventh Circuit has explained, " this rule makes imminent sense, for in the absence of 'clear and unmistakable evidence' that the parties intended the arbitrator to rule on the validity of the arbitration itself, the arbitrator would lack authority to invalidate the very contract from which he derives his authority to begin with." Terminix Int'l Co., LP v. Palmer Ranch Ltd. P'ship, 432 F.3d 1327, 1331 (11th Cir. 2005).
Groome Transportation contends that Terminix controls and requires a finding that the arbitrability question itself is for ...