Billingsley et al v. Citi Trends Inc
MEMORANDUM OPINION Signed by Judge Karon O Bowdre on 5/29/13. (SAC )
2013 May-29 AM 10:22
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
MARY BILLINGSLEY, FANNIE
THRASH, on behalf of themselves and
all other similarly situated,
CITI TRENDS, INC.,
This Fair Labor Standards Act case presents the court with a dilemma: enforce arbitration
agreements against Defendant Citi Trends Store Managers, who are potential opt-in Plaintiffs in
this collective action that were obtained during the conditional certification stage of this case and
gut the collective action mechanism Congress provided for the protection of employees or refuse
to enforce the arbitration agreements and run afoul of the federal policy favoring their
enforcement. Because of the particular events surrounding the roll-out of the arbitration
agreement in this case, as specifically discussed below, the court finds it cannot approve
employer conduct like that involved in this case specifically targeting only potential class
members during a critical juncture in this case with the definite goal of undercutting the
Congressional intent behind the collective action process. The court will DENY the Defendant's
motion to compel arbitration and preserve the viability of the collective action mechanism.
This matter comes before the court on the “Defendant’s Motion for Reconsideration of
the Court’s Oral Order Prohibiting Arbitration and to Compel Arbitration against Opt-ins who
are subject to Arbitration Agreements.” (Doc. 60). The Plaintiffs, Citi Trends Store Managers, in
this FLSA collective action claim that Citi Trends improperly designated the Store Managers as
exempt employees when they should have been designated as hourly employees and paid
overtime. The court conditionally certified the collective class on January 23, 2013 but has not
yet approved notice to Citi Trends Store Managers because of the Defendant’s motion to
Defendant Citi Trends, Inc. argues that this court’s ruling at the January 2013 hearing
that it could not seek to compel arbitration against those opt-in Plaintiffs who signed mandatory
arbitration agreements was an error of law. The Plaintiffs argue that the court’s ruling was
appropriate and necessary to correct Citi Trends’s wrongful action—intimidating its employees
into waiving their rights to join this lawsuit by signing mandatory arbitration agreements. On
April 19, 2013, the court granted the motion to reconsider its ruling and set an evidentiary
hearing to hear evidence surrounding presentment of the arbitration agreements to determine if
any coercion, duress, or intimidation occurred.
In its brief supporting its motion to reconsider and compel arbitration, Citi Trends argues
that the court has not made the requisite evidentiary finding to limit Citi Trends’s
communications with its employees and that the Agreement is enforceable under Georgia law.
The Plaintiffs responded, arguing that under its managerial responsibility for ensuring fair notice
to the class, the court has the duty and the responsibility to oversee the FLSA collective action;
to prohibit the kind of conduct that Citi Trends employed in this case; and to declare the
Agreements invalid as they impact this action. The court recognizes that these arguments create
two separate issues and will address the evidence presented at the hearing under both legal
theories because the court finds that they both apply to this case.
This motion exclusively concerns a very discrete moment in time when Citi Trends had
all of its then-employed Store Managers (“SMs”) sign the Citi Trends Arbitration Agreement
(“the Agreement”). (Doc. 47-6). Citi Trends presented the SMs with three documents at the time
it had the SMs sign the Agreement: the Store Manager Disclosure (doc. 47-2); the Store Manager
Declaration (doc. 47-4); and the Agreement. (Doc. 47-6). The pertinent portions of the
Agreements are set out below:
In consideration of the foregoing, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, you and the
Company agree as follows:
The Mutual Agreement to Arbitrate: Overview
Except for the claims set forth in the paragraph below, you are
required to arbitrate any and all disputes, claims, or controversies
(“claim”) against the Company that could be brought in a court
including, but not limited to, all claims arising out of your
employment and the cessation of employment, including any claim
that could have been presented to or could have been brought
before any court. This Agreement to arbitrate includes . . . the Fair
Labor Standards Act . . . . Likewise, the Company has a reciprocal
obligation to arbitrate any covered claim against you and also
agrees to be bound by the terms of this Agreement regarding any
matter covered herein. . . .
Class/Collective Action Waiver
This Agreement requires all claims to be pursued on an individual
basis only. You and the Company hereby waive all rights to (I)
commence, or be a party to, any class, representative or collective
claims or (ii) jointly bring any claim against each other with any
other person or entity. . . .
Severability and Related Issues
The Arbitrator, and not any federal, state or local court or agency,
shall have exclusive authority to resolve any dispute relating to the
interpretation, applicability, enforceability or formation of this
Agreement including, but not limited to, any claim that all or any
part of this Agreement is void or voidable . . . .
In additional to the consideration being a mutual Agreement to
arbitrate, the Company agrees to reimburse you for any
administrative filing fees the arbitration firm may impose on you to
initiate arbitration. As further consideration, the Company will pay
100% of the arbitration firm’s fees as well as the arbitrator’s fees
and expenses. To the extent permitted by applicable law, your
continued employment and/or your accepting employment
with the Company subsequent to this Agreement’s
implementation also shall constitute consideration and
acceptance by you of the terms and conditions set forth in this
Agreement. . . .
No Employment Agreement/ Employment At Will
The terms and conditions described in this Agreement are
not intended to, and shall not, create a contract of
employment for a specific duration of time. Employment
with the Company is at-will and voluntarily entered into
and both you and the Company are free to end that
relationship at any time, for any reason and with or without
Condition of Employment
It is a condition of your employment by the Company that
you agree to be bound by the terms of this agreement. . . .
I KNOWINGLY AND FREELY AGREE TO THIS MUTUAL
AGREEMENT TO ARBITRATE CLAIMS, WHICH OTHERWISE
COULD HAVE BEEN BROUGHT IN COURT. I AFFIRM THAT I HAVE
HAD SUFFICIENT TIME TO READ AND UNDERSTAND THE TERMS
OF THIS AGREEMENT AND THAT I HAVE BEEN ADVISED OF MY
RIGHT TO SEEK LEGAL COUNSEL REGARDING THE MEANING
AND EFFECT OF THIS AGREEMENT PRIOR TO SIGNING. BY
ISSUANCE OF THIS AGREEMENT, THE COMPANY AGREES TO BE
BOUND TO ITS TERMS WITHOUT ANY REQUIREMENT TO SIGN
(Doc. 47-6) (emphasis in original).
As the court has previously noted, the evidence in the form of sworn declarations and
affidavits submitted by the parties prior to the hearing on the motion for conditional certification
of the class created two contrasting and irreconcilable accounts of the communications and
atmosphere surrounding the SMs’ execution of the Agreement. Because of the hotly disputed
nature of the evidence, the court decided to hear testimony from both sides about what occurred
when the SMs met with a Citi Trends Human Resources Representative and a supposedly
independent third party to sign the Agreement and two other documents directly related to this
lawsuit: the Store Manager Disclosure and the Store Manager Declaration.
In the memorandum opinion denying the motion to strike and for entry of protective order
(doc. 51) and at the hearing on the motion for conditional certification of the class (doc. 55), the
court noted that it could not find that a clear record of misleading communication and
unabashedly deceptive activity existed so as to justify limiting Citi Trends’s communications
with its employees. Courts have usually only placed limitations on the enforceability of precertification (but post-litigation) communications when the court has held an evidentiary hearing
where a clear record was developed and specific findings were made or when the court relied on
only undisputed facts to make its ruling to invalidate opt-outs or arbitration agreements. See
Kleiner v. First Nat’l Bank of Atlanta, 751 F.2d 1193 (11th Cir. 1985); In re Currency
Conversion Fee Antitrust Litigation, 361 F. Supp. 2d 237 (S.D.N.Y. 2005); Williams v. Securitas
Security Serv. USA, Inc., 2011 U.S. Dist. LEXIS 75502 (E.D. Pa. 2011) (all limiting postlitigation communication between parties after a record finding of misleading or abusive
This high standard had not been met on the parties’ submission alone, and thus, the court
decided it needed to hold a hearing to determine if any coercion, duress, intimidation, or other
abusive conduct occurred at the time SMs were required to sign the Agreement. The question of
enforcement of or invalidation of the Agreement invokes a different standard than did the motion
to strike or to enter a protective order, which was the requested relief before the court previously.
(See Doc. 42).
At the evidentiary hearing on May 14 and 15, 2013, the court heard testimony from opt-in
Plaintiffs Roilisa Prevo and Katina Alfred, former Citi Trends SMs; Ivy Council, Executive Vice
President of Human Resources for Citi Trends; Rashad Luckett, Human Resources Coordinator
for Citi Trends; Vanessa Davis, Director of Human Resources for Citi Trends; and LaKesha
Wilkins, an “independent third party witness” hired by Citi Trends to sit in SM meetings with
Ms. Davis. The court will briefly summarize that testimony here but will also reference it as
needed in the discussion below.
Citi Trends devised and implemented its new ADR policy in the late spring and early
summer of 2012—shortly after it was served with the complaint on February 27, 2012 (doc. 6),
and after the court on May 16, 2012, set a scheduling conference for May 31, 2012. (Doc. 17).
On May 31, 2012, this court issued a Scheduling Order requiring the Plaintiffs to file their
motion for conditional certification of the class on or before July 31, 2012 with briefing to be
completed by September 10, 2012. (Doc. 18). Just a couple weeks after the Order, in mid-June,
Citi Trends began the process of rolling out its new Alternative Dispute Resolution (“ADR”)
plan, including the mandatory Agreement. Ms. Davis testified that as of mid-June she had
virtually completed the new employee handbook she was working on, which did not include an
ADR policy; she learned for the first time in mid-June that the updated handbook would include
the new ADR policy. Citi Trends, under the direction of Ms. Council, sent Ms. Davis, Mr.
Luckett, and other HR representatives to have two-on-one private meetings with SMs across the
country as early as June 30, 2012 to roll out the new ADR policy. The HR representatives met
with all SMs individually throughout the summer.
District Managers (“DMs”) told the SMs that they must attend the meetings that
concerned the issuance of a new employee handbook. DMs were only asked to sign the
Agreement if the HR Representatives happened to see them at the SM meetings, but Citi Trends
distributed the Agreement to DMs, other corporate employees, and store associates at a later date.
When the SMs arrived at the meetings, they were greeted by an HR Representative and
another individual, who Ms. Prevo claimed was never introduced to her and whom Ms. Alfred
identified as another Citi Trends corporate employee. The HR Representatives gave the SMs four
documents: the SM Disclosure, the Agreement, the SM Declaration, and a photocopied version
of a new employee handbook. The two-on-one private meetings took place in small, back rooms
in Citi Trends retail stores, the same places where interrogations or investigations of employees
occurred. The HR Representatives who met with the SMs played an advisory role in the
employment decisions of Citi Trends employees, and both Ms. Prevo and Ms. Alfred testified
that they believed the HR representatives conducting the meetings had authority to make
employment decisions about them, such as hiring and firing.
Ms. Alfred and Ms. Prevo testified that they signed the documents but came away from
those meetings having felt intimidated by the HR Representatives and pressured to sign the
Agreement or lose their jobs. The SMs were not given copies of the documents they signed at the
meeting or at anytime afterward, even if they specifically requested copies.
Although neither party raised the Severability clause of the Agreement as a bar to this
court’s enforcement of the Agreement, the court notes that it has the authority under the
Agreement to determine “the enforceability of the class/collective action waiver” under the
Agreement itself. (Doc. 47-6, at 2). The Agreement states
The Arbitrator, not any federal, state or local court or agency, shall have exclusive
authority to resolve any dispute relating to the interpretation, applicability,
enforceability or formation of this Agreement including, but not limited to, any claim
that all or any part of this Agreement is void or voidable. However, any
determination as to the enforceability of the class/ collective action waiver shall be
made solely by a court. If a court deems the class/collective action waiver unlawful,
then such action shall proceed forward in court as a collective, representative, or class
Id. (emphasis added).
By its terms, Georgia law controls the Agreement, and under Georgia law,
unconscionability, which could invalidate the agreement, is divided into two components:
procedurals and substantive.
‘Procedural unconscionability addresses the process of making the contract, while
substantive unconscionability looks to the contractual terms themselves.’ Factors
relevant to the procedural unconscionability inquiry include the bargaining power of
the parties, ‘the conspicuousness and comprehensibility of the contract language, the
oppressiveness of the terms, and the presence or absence of a meaningful choice.’ As
for substantive unconscionability, courts consider ‘the commercial reasonableness
of the contract terms, the purpose and effect of the terms, the allocation of the risks
between the parties, and similar public policy concerns.’
Jenkins v. First Am. Cash Advance of Georgia, LLC, 400 F.3d 868, 875-76 (11th Cir. 2005) (quoting
NEC Techs., Inc. v. Nelson, 478 S.E.2d 769, 771-72 (Ga. 1996)).
First, as to the bargaining power of the parties, Ms. Council summed it up at the hearing
when she stated, “It doesn’t apply here.” The court agrees: the SMs had absolutely no bargaining
power when Citi Trends presented the Agreements to them. Thus, the court will not spend much
time discussing it.
Conspicuousness and Comprehensibility of the Contract Terms
The second factor is the conspicuousness and comprehensibility of the contract language.
The court finds that the key components of the Agreement are indeed comprehensible and
conspicuous. The language itself is conspicuous and clear, particularly the provisions that are
most relevant to the issues at hand. The court heard much testimony and discussion about
paragraphs 5 and 7(f), both excerpted above. Those terms were conspicuous and comprehensible.
Taking that language in connection with the language in the Store Manager Disclosure that
declared that the Agreement is mandatory, the SMs to whom the Agreement was submitted
understood that the Agreement was a requirement of their employment. Ms. Council testified to
the fact that the Agreement was mandatory and binding. Ms. Davis also confirmed that
“mandatory” as used in the Disclosure and Agreement means “required.” Ms. Davis also
testified, as did Ms. Prevo and Ms. Alfred, that they understood that if a SM did not comply with
the required policy, the SM would be terminated.
However, the testimony was also clear that Citi Trends did not disclose to the SMs that
the company had decided to defer until after the resolution of this lawsuit any decision about the
effect on an SM’s employment if that SM refused to sign the Agreement. Without that disclosure,
the reasonable and logical conclusion for an SM to reach was the understanding that he or she
would be terminated from employment if he or she refused to sign the Agreement that was
presented by Citi Trends. Thus, the language was conspicuous and comprehensible, but a key
component in the understanding of the operation of that document was not disclosed to the SMs.
Oppressiveness of the Terms
The third factor that is relevant for consideration of whether the Agreement is
procedurally unconscionable is the oppressiveness of the terms of the Agreement. The court finds
that the terms on their face are not any more oppressive than the terms of most such arbitration
agreements found in the employment context. It does at least transfer the costs of arbitration from
the employee or from a joint obligation to the employer. However, the Agreement cannot be
taken out of the context in which it was executed.
In this case, the SMs were ordered by their supervisors, DMs, to attend a meeting with a
Citi Trends Human Resources representative. The meeting was held, not in a group setting as
was generally done, and in fact done in 2009 with the roll-out of the new employee handbooks,
but in a private two-on-one setting. Such a setting, according to Ms. Alfred and confirmed by Ms.
Davis, was the kind of private meeting that was generally used in an interrogation or
investigation of a Citi Trends employee. The HR Representatives conducting the meetings were
the very people whom the SMs would contact regarding employment issues of employees under
their supervision. They were also the very people that DMs would consult about employment
decisions concerning SMs. The presentation to the SMs of a mandatory arbitration agreement by
an HR representatives with reasonably perceived authority over an SM’s employment in a small
room normally reserved for interrogation infuses the entire process with oppressiveness.
Although Ms. Council testified that HR representatives are only involved as advisors in
employment decisions, in this context, the court finds that it was reasonable that SMs would
assume that these HR representatives had involvement or at least participation in decisions
affecting their employment. The court finds that this belief was reasonable in light of the
testimony of Ms. Alfred and Ms. Prevo. Both opt-in Plaintiffs testified that they believed HR had
control over their employment based on the HR representatives’ involvement in employment
decisions. Most notably, none of the documents presented to the SMs said that HR did not have
control over the SMs’ employment, nor did Ms. Council instruct the HR representatives to advise
the SMs that they did not have any involvement in employment decisions.
Presence or Absence of Meaningful Choice
The fourth factor to consider is the presence or absence of meaningful choice. The
Agreement itself gave SMs no meaningful choice. The sections excerpted above clearly state that
the Agreement is a condition of employment and that the employee agrees to be bound by the
Agreement.1 No dispute exists that Citi Trends never told SMs they did not have to sign the
Agreement: not through the HR Representatives; not in the Disclosure; not in the Agreement
itself. Ms. Davis’s testimony confirmed that a reasonable reading of the documents presented to
the SMs would lead them to conclude that their continued employment was conditioned on
signing the Agreement. That is, if SMs did not sign the mandatory, i.e., required, Agreement,
they would lose their jobs.
Some might argue that paragraph 5 could be read as binding employees simply by
accepting continued employment, even if they do not sign the agreement. The court does not rule
on that contention but merely points out that this is an arguable interpretation of the Agreement.
In considering the procedural unconscionability of the Agreement, the court will add a
fifth factor to those considered by Georgia courts because it is particularly relevant here: the
context under which the Agreement was procured. The court finds to be highly coercive that the
two-on-one meetings were conducted by an HR Representative, who the SMs reasonably
perceived to be involved in the employment decision-making process because SMs had to
discuss employment decisions with them. The Agreement was presented for the SMs’ signature
in an interrogation-like setting; both Ms. Alfred and Ms. Davis testified that one-on-one private
meetings in a back room were the way Citi Trends usually conducted interrogations or
investigations. These facts support the likelihood that SMs in fact felt intimidated, coerced, and
that they had no choice but to sign the agreement and give up any right to participate in this
collective action or be terminated.
Another aspect of the context surrounding the signing of the agreement which supports a
finding of procedural unconscionability is that the ADR plan was rolled out in the summer of
2012, four months after Citi Trends was served in this lawsuit. The court notes that in Ms.
Council’s declaration, she stated:
Over the last few years, Citi Trends has experienced rapid growth and expansion
in both the number of locations it operated and the number of people it employs.
As a result of this growth and well before the store manager wage and hour
lawsuit was filed - as a means of reigning [sic] in and better anticipating legal
expenditures- the company began evaluating possible company-wide alternative
dispute resolution programs . . . . While this evaluation process was ongoing, the
present store manager wage and hour lawsuit was filed.
(Doc. 47-1) (emphasis added). The court finds it particularly telling that Ms. Davis, whose job it
was to update the handbook, testified that no one discussed including an ADR policy in the new
handbook until mid-June 2012, when the handbook revision on which she was working had
already virtually been completed, and only two weeks before the Agreements were presented to
all SMs in a blitzkrieg fashion.
The timing of Citi Trends’s roll-out of the Agreements becomes even more significant in
view of the events in this litigation. The court held a scheduling conference in this case on May
31, 2012 and after receiving input from counsel, entered a preliminary scheduling order in midJune. (Doc. 18). The June 14, 2012 Order provided, among other things, that the Plaintiffs were
to file their motion for conditional certification and court-approved notice on or before July 31,
2012, and that the Defendant was to submit its response with any supporting evidence on or
before August 30, 2012. On a consent motion to allow the Plaintiffs an extension of time in
which to file their motion for conditional certification, the court extended the time the Plaintiffs
had to file the motion until August 2, 2013. (Doc 22). The court specifically notes these dates
because it was only after the court held the scheduling conference discussing when the Plaintiffs’
motion for conditional certification would be filed that the Defendant began the process of
modifying its handbook to include the ADR procedure and to then roll out the ADR plan— not
to all of its employees but only to SMs who were potential members of the class involved in this
Also, a cursory review of the exhibits that the Defendant filed in opposition to the motion
for conditional certification of the class reflected that the earliest meeting with a SM occurred on
June 30, 2012. (Doc. 34-13). The court finds the timing of the roll-out of the ADR policy
targeting only SMs was more than just a coincidence, more than just the usual process of
updating and rolling out a new employee handbook.
Several other factors in addition to the suspicious timing of the ADR roll-out support the
court’s finding that the ADR roll-out was a hurried reaction specifically targeted at curtailing this
litigation. The employee handbooks that were distributed at the SM meetings were photocopied
as opposed to the printed versions that were normally distributed to Citi Trends employees when
the company issued a new employee handbook. Citi Trends presented the SMs printed versions
of the new handbook sometime later and required the SMs to sign for them at that time, like all
other Citi Trends employees. However, the SMs were not required to sign for the photocopied
handbooks at the two-on-one meetings that were purportedly set up to discuss the new handbook.
Additionally, the DMs were only presented with the Agreement and photocopied version of the
updated handbook if the HR representative happened to see them when they were conducting the
SM meetings. Citi Trends distributed the Agreement to the DMs and other Citi Trends
employees at a later date. These and other facts that are discussed throughout the opinion point to
a finding that Citi Trends rolled out the ADR policy and accompanying Agreement when it did
and how it did in direct response to this lawsuit and in a concerted effort to derail the collective
aspect of it.
Another aspect of the context surrounding the signing of the agreement that supports a
finding of procedural unconscionability is that the documents themselves demonstrate that the
Agreement was a mandatary condition of employment and binding on the SMs. Notably, though,
no one told the SMs that the company had already decided to defer, until after the resolution of
this lawsuit, any decision about the employment status of any SM who refused to sign the
Agreement. The court must consider that Citi Trends specifically withheld from the SMs that
refusal to sign the Agreement would not immediately result in any adverse employment action.
The language of the Agreement itself stated that it was a condition of employment and
without knowing that the company would not immediately terminate an SM’s employment if he
or she did not sign or that a decision would be deferred pending the outcome of this lawsuit, one
can reasonably infer that Citi Trends anticipated that the SMs would feel just the kind of pressure
and coercion that Ms. Prevo and Ms. Alfred testified forced them to sign the Agreement. The
court believes that if Citi Trends’s failure to disclose this crucial information to the SMs does
not qualify as deceit, it certainly borders on it.
This misleading lack of communication by Citi Trends factors into the overall context in
which Citi Trends presented the Agreement to its SMs and is one of many factors that leads the
court to conclude that procedural unconscionability is rampant within the presentment of the
Agreement and the procurement of the SMs’ signatures on it.
Under Georgia law, the court must make a finding of both procedural unconscionability
and substantive unconscionability to invalidate the Agreements. Having determined that the
Agreement is replete with procedural unconscionability, the court will now address whether it is
also substantively unconscionable.
Commercial Reasonableness of the Terms
The first factor to consider is the commercial reasonableness of the contract terms. As
previously discussed, on the face of the agreement, the terms themselves are reasonable.
However, this factor is only one of four for the court to consider.
Purpose and Effect of the Terms
The second factor for the court to consider is the purpose and effect of the terms of the
Agreement. Ms. Prevo testified that Ms. Davis told her in the SM meeting that the Agreement
was for the protection of Citi Trends, who had been sued in this lawsuit. Regardless of whether
Ms. Davis actually made that statement, the documents themselves reflect that the purpose and
effect of the terms of the Agreement were designed to protect Citi Trends in this lawsuit.
Paragraph 7(f) of the Agreement specifically states that the Agreement is a condition of
employment, and paragraph 7(e) emphasizes that the SM’s employment is at will. The inclusion
of these provisions emphasizes the perception that the SMs had no choice but to sign the
agreement if they wanted to keep their jobs. As stated in the SM Disclosure, an SM signing the
Agreement specifically precluded a SM from opting-in to this lawsuit.
The rolling out of the ADR plan in the summer of 2012 that coincided with the court’s
issuance of a scheduling order in this case and the rushed nature of the distribution of the
photocopied handbooks only to SMs supports the finding that the handbook itself was a pretext
for presenting the Agreement to the SMs to derail their participation in this lawsuit. These facts
demonstrate that the purpose and effect of the terms of the Agreement presented to the SMs in
the context in which it was presented was to interfere with and preclude the SMs’ participation in
this collective action.
Allocation of Risk Between the Parties
The third factor for the court to consider in determining whether the Agreement is
substantively unconscionable is the allocation of risk between the parties. The benefits to Citi
Trends here are obvious. The Agreement was specifically designed to protect Citi Trends. Its
timing was calculated to reduce or eliminate the number of collective action opt-in Plaintiffs in
this case. The risks for Citi Trends are de minimis, if any. On the other hand, the SMs had to
choose, to the best of their knowledge, between signing the Agreement and keeping their jobs or
refusing to sign, participating in this lawsuit, and being terminated. Conversely from Citi
Trends, the benefit to SMs of signing the Agreement was de minimis, if any.
Public Policy Concerns
The fourth and most critical factor for the court to consider in determining whether the
Agreement is substantively unconscionable is the existence of any public policy concerns
surrounding the Agreement. Again, the context surrounding the presentment of the Agreement
plays a key role in the court’s analysis. The SM meetings took place four months after this
lawsuit was filed, around the same time the court issued a scheduling order, and in the midst of
the Plaintiffs’ preparing to file their motion for conditional certification of the class and the
issuance of court-approved notice.
The Agreement, Disclosure, and SM Declaration were presented in a way that could be
perceived as, and in the court’s opinion were designed to be, intimidating and coercive. The
documents were presented by people who were known to the SMs to play a role, even if only an
advisory role, in employment decisions at Citi Tends. The documents disclosed that the
Agreement was mandatory, and the testimony of both Ms. Council and Ms. Davis confirmed that
the Agreement was in fact mandatory, which by all the witness’ understanding means “required.”
Citi Trends essentially forced its SMs to choose between their jobs and their right to participate
in this collective action before they even received approved notice of their opportunity to do so.
The biggest public policy concern that the court has to consider about actions of Citi
Trends, however, is the effect of the Defendant’s efforts on the purpose of an FLSA collective
action. The court’s decision on this issue is bigger than this one case, and that concern is what
has plagued the court about this situation from the first mention of the Agreement. The purposes
of the FLSA and its collective action procedure factor into the court’s decision on this motion.
Congress passed the FLSA during the Great Depression to protect workers from
overbearing practices of employers with greatly unequal bargaining power over them. See Roland
Elec. Co. v. Walling, 326 U.S. 657, 668 n. 5 (1946) (“The Bill was introduced May 24, 1937,
[and] . . . accompanied by a Presidential message by Franklin D. Roosevelt . . . .‘to protect the
fundamental interests of free labor and a free people we propose that only goods which have been
produced under conditions which meet the minimum standards of free labor shall be admitted to
interstate commerce. Goods produced under conditions which do not meet rudimentary standards
of decency should be contraband and ought not to be allowed to pollute the channels of interstate
trade.’”) (quoting 81 Cong. Rec. 4960, 4961). To further that purpose, § 216(b) of the FLSA
authorizes an employee to file suit for and on behalf of himself and others similarly situated. See
29 U.S.C. § 216(b). Those employees who wish to join the lawsuit must give written consent or
opt-in to the lawsuit, but they only know that they can do so once court-approved notice has been
sent to them. See id.
Unfortunately, little legislative history exists to aid district courts in managing an FLSA
collective action. See Maddox v. Knowledge Learning Corp., 499 F. Supp. 2d 1338, 1341 (N.D.
Ga. 2007) (“Unfortunately, Section 216(b) gives little guidance as to the exact nature of a
‘collective action’ or the appropriate procedure for gathering the necessary written consents.”);
Sperling v. Hoffmann-LaRoche, Inc., 118 F.R.D. 392 (D.N.J. 1988) (finding statute and
legislative history “wholly silent” on issue of notice and court involvement), aff’d in part and
dismissed in part, 862 F.2d 439 (3rd Cir. 1988), aff'’d, 493 U.S. 165 (1989); Shushan v.
University of Colorado, 132 F.R.D. 263, 266 (D. Colo. 1990) (finding statute “vague” and
legislative history “equally unilluminating”).
The Supreme Court, however, in Hoffman-LaRoche, Inc. v. Sperling stated the purposes
of an FLSA collective action, and the Eleventh Circuit re-stated these purposes in the seminal
case of Morgan v. Family Dollar:
Addressing whether Plaintiffs’ claims could be tried fairly as a collective action
also requires looking to the purposes of § 216(b) actions under the FLSA: (1)
reducing the burden on plaintiffs through the pooling of resources, and (2)
efficiently resolving common issues of law and fact that arise from the same
illegal conduct. See Hoffmann-La Roche, Inc. v. Sperling, 493 U.S. 165, 170, 110
S.Ct. 482, 107 L.Ed.2d 480 (1989) (noting a collective action affords plaintiffs the
“advantage of lower individual costs to vindicate rights by the pooling of
resources” and “[t]he judicial system benefits by efficient resolution in one
proceeding of common issues of law and fact”).
Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1264 (11th Cir. 2008). Such goals cannot
be met without the district court managing the process of notification and joinder of additional
parties. This court must consider these public policy purposes as a backdrop to every decision
made in an FLSA collective action.
In this case, the court finds that such goals are defeated if the court approves actions
taken by defendants, such as those taken by Citi Trends in this case, that are designed and used to
prevent employees from vindicating their rights in an FLSA collective action. The court wishes
to make clear that it is not addressing a pre-lawsuit or pre-employment arbitration agreement
between an employer and employee that would preclude participation in a collective action.
Instead, this ruling only addresses the Agreement in this case that was presented to the
specifically-targeted potential class of employees in the specific manner that gave those potential
opt-in Plaintiffs no meaningful choice or known opportunity to refuse to sign without the fear of
termination in a setting that was ripe for and calculated to produce perceived intimidation or
coercion and when its very purpose and effect was to preclude participation in this lawsuit.
For these reasons, the court finds that the Agreement at issue in this case reeks of both
procedural and substantive unconscionability in the context in which it was presented and
obtained. The Agreement cannot and will not be enforced against Ms. Prevo, Ms. Alfred, or Ms.
Cunningham, and the court will DENY Citi Trends’s motion to compel arbitration against them.
In making this decision, the court notes that it found the testimony presented by the Defendant,
specifically that from Ms. Council and Ms. Davis, particularly enlightening. In addition to the
language of the documents themselves, the court finds that the concurrent timing of the ADR
roll-out and the Plaintiffs’ preparation of the motion for conditional certification and court
approved notice, and the manner in which the Agreement was presented weigh in favor of
invalidating the Agreement as it relates to the SMs who were presented the Agreement during its
initial roll-out in the summer of 2012.
The court truly believes it would be a derogation of the court’s responsibility if it were to
approve employer conduct like that in this case that specifically undercuts the Congressional
intent behind creating the FLSA collective action process for aggrieved employees, and the court
does not take such action lightly.
Managerial Discretion over FLSA Collective Action
The court also agrees with the Plaintiffs that the court has managerial responsibilities that
provide at least alternative grounds for its ruling. Under Hoffman-La Roche, this court “has a
managerial responsibility to oversee the joinder of additional parties” to assure that a FLSA
collective action is run “in an efficient and proper way.” Hoffman-La Roche, Inc., 493 U.S. at
171. “[D]istrict courts are empowered with relatively broad discretion to limit communications
between parties and putative class members,” but defendant employers are not “categorically
forbidden from communicating with prospective opt-in plaintiffs.” Longcrier v. HL-A Co., 595 F.
Supp. 2d 1218, 1225 (S.D. Ala. 2008) (citing Kleiner v. First Nat’l Bank of Atlanta, 751 F.2d
1193, 1201-03) (11th Cir. 1985)).
The Supreme Court has held that district courts “may not exercise the power [to limit
communication] without a specific record showing by the moving party of the particular abuses
by which it is threatened” and must give “explicit consideration to the narrowest possible relief
which would protect the respective parties.” Gulf Oil Co. v. Bernard, 452 U.S. 89, 102 (1981)
(emphasis added) (citation omitted). “[A]n order limiting communications between parties and
potential class members should be based on a clear record and specific findings that reflect a
weighing of the need for a limitation and the potential interference with the rights of the parties.”
Id. at 101 (emphasis added). Although the Gulf Oil standard applies for parties seeking a
protective order, the court finds it useful as guidance in a situation like this one: where the
abusive communication has already occurred without the court’s knowledge and the court must
remedy the effect of such abusive communication.
This court specifically ruled in its previous memorandum opinion on the Plaintiffs’
motion to strike that it did not find that a “clear record of ‘misleading communication’ and
‘unabashedly deceptive activity’” existed. (Doc. 47, at 10 (quoting Longcrier, 595 F. Supp. 2d at
1228). This court did express concern over the “environment in which the Store Managers signed
the mandatory arbitration agreements waiving their right to opt-in to the case” and recognized
that “a unilateral communication scheme . . . is rife with potential for coercion.” (Doc. 47, at
10); Kleiner, 751 F.2d at 1202.
After the evidentiary hearing, the court does find such a showing. As previously
discussed, the court now has the evidence it lacked when simply reviewing the parties’
submissions. After hearing testimony presented by both parties, the court finds not only a
potential for abuse but a record of abuse on the part of Citi Trends in targeting potential class
members and procuring the signatures of its SMs on the Agreements. The court need not repeat
the testimony it cited for the conclusion that the arbitration agreement is both substantively and
procedurally unconscionable; that same evidence informs the court’s ruling that Citi Trends’s
action went too far and that the court must take corrective measures to ensure that the conduct of
Citi Trends does not thwart the purposes of the FLSA collective action process.
Therefore, under both contractual unconscionability and the managerial responsibility to
oversee joinder of plaintiffs in collective actions, the court finds that the Agreement should not
be enforced against opt-ins Katina Alfred, Roilisa Prevo, and Diedra Cunningham as Citi Trends
seeks, and the court will DENY the Defendant’s motion to compel them to submit their claims to
As to other SMs who signed agreements during the ADR roll-out that the court has found
to have been designed and implemented to derail the collective action process and presented in a
fashion that was replete with deceit and intimidation and devoid of any true choice, something
must be done to protect the integrity of the process. The court has a responsibility and a duty to
ensure the fair and proper joinder of all SMs who may wish to opt-in to this lawsuit despite
having signed the Agreement that they thought was a condition of their continued employment.
The court had originally thought that the notice to potential class members should allow
for anyone who wanted to opt-in to provide an affidavit about whether intimidation or coercion
caused them to sign the Agreement. But now, after hearing testimony, especially from the
Defendant’s own witnesses, the court finds that such an affidavit is unnecessary. The evidence
presented in the hearing convinced the court that the purpose of the Agreement and rolling it out
in the hurried and coercive fashion previously discussed was to protect Citi Trends and
circumvent the court’s oversight of the collective action mechanism. The appropriate remedy for
such conduct must go further than the court was prepared to go.
The only way the court knows to protect the public policy behind the FLSA collective
action process from being decimated by practices such as those employed by Citi Trends is to
rule that the Agreement cannot be enforced against any Citi Trends SM who signed the
Agreement during the summer of 2012 while employed as a SM and who wants to opt-in to this
lawsuit, and the notice so shall state. Any SM who signed the Agreement as a part of the hiring
process after the completion of the ADR roll-out in approximately September 2010 and not in a
private two-on-one meeting conducted as part of the roll-out shall still be subject to the terms of
the Agreement. This ruling does not affect the enforceability of the Agreement in any other
context, nor does it in anyway reflect on the enforceability of a similar mandatory arbitration
agreement obtained by an employer prior to the filing of an FLSA collective action.
In accordance with its oral ruling at the hearing on May 15, 2013, the court will DENY
the Defendant’s motion to compel arbitration and will rule that the Agreement is not enforceable
for any Citi Trends SM who signed the Agreement during the ADR roll-out from approximately
June to September 2012 as it pertains to participation in this case. The court will file an order
simultaneously to this effect.
DONE and ORDERED this 29th day of May, 2013.
KARON OWEN BOWDRE
UNITED STATES DISTRICT JUDGE
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