Sullivan v. PJ United Inc et al

Filing 21

MEMORANDUM OPINION. Signed by Judge L Scott Coogler on 09/10/2013. (MSN)

FILED
2013 Sep-10 PM 03:10
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
WESTERN DIVISION
JAMES SULLIVAN,
Plaintiff;
vs.
PJ UNITED, INC. and DOUGLAS
STEPHENS,
Defendants.

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7:13-cv-1275-LSC

MEMORANDUM OF OPINION
Before the Court is Defendants’ motion to stay the trial of the pending action
until completion of arbitration on a single claimant basis. (Doc. 10.) The issues have
been fully briefed and are ripe for review. For the reasons stated below, Defendants’
motion is due to be granted in part and denied in part.
I.

Background
Plaintiff filed the above-entitled action, alleging violations of his rights under

the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201, et seq. (Doc. 1.) Defendants
moved to stay trial of the action pending the results of arbitration. (Doc. 10.)
Defendants produced a copy of an arbitration agreement requiring arbitration of most

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legal claims and containing a statement that Plaintiff agrees to submit his claims to
arbitration as an individual, not a collective, claim.1
II.

Analysis
The parties agree that Sullivan’s claims should be submitted to binding

arbitration. The only source of disagreement is whether the provision barring any
collective action is a matter for this Court or a matter for the arbitrator. The Court
determines that interpretation of the collective action waiver provision is a question
for the arbitrator.
The Federal Arbitration Act provides that arbitration agreements involving
interstate commerce are generally valid and enforceable, “save upon such grounds as
exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The
Supreme Court has interpreted this provision to be a “congressional declaration of a
liberal federal policy favoring arbitration agreements.” Moses H. Cone Mem’l. Hosp.
v. Mercury Construction Corp., 460 U.S. 1, 24, 103 S. Ct. 927, 941 (1983). However,
there is an exception to this presumption favoring arbitration when there is a question
of “arbitrability.” Questions of arbitrability are presumptively decided by the courts

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The arbitration agreement states that claims for benefits under a program providing its own
arbitration procedure, statutory workers compensation claims, and unemployment insurance claims
are the “only claims or disputes not subject to arbitration.” (Doc. 10-1 at 8.)
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and not arbitrators. AT&T Techs., Inc. v. Commc’ns. Workers of Am., 475 U.S. 643, 649,
106 S. Ct. 1415, 1418 (1986).
The Court has construed arbitrability to include “narrow circumstance[s]
where contracting parties would likely have expected a court to have decided the
gateway matter.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S. Ct.
588, 592 (2002). Neither the Supreme Court nor the Eleventh Circuit has determined
whether a collective action waiver is an arbitrability issue. See Oxford Health Plans
LLC v. Sutter, 133 S. Ct. 2064, 2068 n. 2 (2013); see also S. Commc’ns. Servs., Inc. v.
Thomas, 720 F.3d 1352, 1359 n. 6 (11th Cir. 2013).
Arbitrability issues for the court traditionally arise when parties disagree on
whether an arbitration clause is enforceable against them. See First Options of Chicago,
Inc. v. Kaplan, 514 U.S. 938, 947, 115 S. Ct. 1920, 1925 (1995) (finding that courts had
power to determine arbitrability when party argued they were not subject to arbitration
agreement because they did not sign it); see also John Wiley & Sons, Inc. v. Livingston,
376 U.S. 543, 546-547, 84 S. Ct. 909, 912-913 (1964) (determining that court must
decide whether arbitration provision in collective bargaining agreement survived a
subsequent merger). The parties here agree that there is an enforceable arbitration
agreement because Plaintiff has agreed to submit his claims to arbitration.

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Thus, the arbitrator must decide whether the collective action waiver applies
in this case. “Once it is determined...that the parties are obligated to submit the
subject matter of a dispute to arbitration, ‘procedural’ questions which grow out of
the dispute and bear on its final disposition should be left to the arbitrator.” John
Wiley & Sons, Inc., 376 U.S. at 557, 84 S. Ct. at 918. The collective action waiver in
this agreement becomes a procedural issue where the arbitrator must decide how the
claims are to proceed through the arbitration system. See Green Tree Fin. Corp. v.
Bazzle, 539 U.S. 444, 452-453, 123 S. Ct. 2402, 2407 (2003).
This Court must limit its decision to “such issues as are essential to defining
the nature of the forum in which a dispute will be decided.” Musnick v. King Motor Co.
of Fort Lauderdale, 325 F.3d 1255, 1261 (11th Cir. 2003) (internal quotations omitted).
When the parties agree that the underlying claim should be resolved in arbitration, it
is the better procedure for the arbitrator to rule on any additional issues. See Pedcor
Mgmt. Co. Welfare Benefit Plan v. Nations Pers. of Texas, Inc., 343 F.3d 355, 360 (5th
Cir. 2003) (“[I]f the arbitration provision clearly did forbid class arbitration, then the
arbitrators could-and under Green Tree should-make this call without any prior
analysis by a court.”).
Defendants contend that denial of this motion will deprive it of its contractual

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rights. However, both arbitrators and the courts share the burden of protecting the
contractual rights of the parties. Stolt-Nielsen, S.A. v. Animalfeeds Int’l Corp., 559 U.S.
662, 682, 130 S. Ct. 1758, 1773-1774 (2010). Both parties receive the benefit of their
bargain by having the case submitted to arbitration where Defendants may ask the
arbitrator to enforce the collective action waiver, and the arbitrator is well-positioned
to evaluate the contract, the arguments of the parties, and decide the issue. In making
its decision, the Court is not casting doubt on the validity of the collective action
waiver provision. Instead, it is merely determining that arbitration is the appropriate
forum to enforce that provision. See Pedcor, 343 F.3d at 360.
Finally, the Court notes that nothing in the arbitration agreement rebuts the
presumption that the arbitrator is to decide the collective action waiver. The waiver
itself neither states that the Court must decide its applicability nor indicates that it is
an arbitrability question. Moreover, the agreement expressly conveys jurisdiction to
the arbitrator “to hear and rule on pre-hearing disputes.” (Doc. 10-1 at 8.) This
provides the arbitrator with an opportunity to resolve procedural questions such as the
availability of class arbitration in light of the waiver clause. Thus, the waiver provision
should be interpreted by the arbitrator.
III. Conclusion

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For the reasons stated above, Defendants’ motion to stay trial pending
arbitration is due to be granted. However, the Court will deny Defendants’ motion
insofar as Defendants request that the Court order Plaintiff to pursue arbitration only
on a single claimant basis.
A separate order will be entered.
Done this 10th day of September 2013.

L. SCOTT COOGLER
UNITED STATES DISTRICT JUDGE
174256

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