Delock et al v. Securitas Security Services USA Inc et al
ORDER granting in part and denying in part 58 Motion for Leave to Appeal. Signed by Judge D. P. Marshall Jr. on 8/1/12. (kpr)
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
DAVID DELOCK; ALISHA MEREDITH;
ERIC MOTLEY; STEPHEN CARLSON;
DEBORAH GOLDHORN; JOHNNY
BROWN; BOBBY WALKER; TIMOTHY
PIERCE; BRIAN PEASE; CHRIS
WILSON; NICHOLE LEDFORD; and
BRIAN HATHAWAY, all individually
and on behalf of others similarly situated
SECURITAS SECURITY SERVICES USA,
INC.; and SECURITAS SERVICES, INC.
In its March Order, Document No. 57, the Court left open the issues
raised by In re D.R. Horton, Inc., 357 N.L.R.B. No. 184 (3 Jan. 2012). The Court
has continued to study the parties' briefs and the cases. The question is
whether, in light of Horton, the parties' class-action waiver is enforceable.
1. Severability. The Court made a mistake about severability in its
March Order. Document No. 57, at 10. First, immediately after the bold-faced
sentence prohibiting class or collective proceedings, the parties' agreement
says this: uNotwithstanding any other clause contained in this Agreement,
the preceding sentence shall not be severable from this Agreement in any case
in which the dispute to be arbitrated is brought as a class, collective or
Document No. 57, at 15.
The Court missed the
agreement's you-can't-sever-this provision.
Moreover, the general severability clause, on which the Court relied, has
a deeper legal meaning than the Court discerned. "In the event any portion
of this Agreement is deemed unenforceable, the remainder of this Agreement
will be enforceable. If the Class Action Waiver is deemed to be unenforceable,
the Company and the Employee agree that this Agreement is otherwise silent
as to any party's ability to bring a class, collective or representative action in
arbitration." Document No. 57, at 15. The parties' fall-back position-agreed
silence- means they made no agreement to have a class or collective action
in arbitration. Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp.,_ U.S._,__,
130 S. Ct. 1758, 1775-76 (2010). Class or collective arbitration is thus simply
not a possibility under the parties' agreement.
That brings the
enforceability issue front and center.
2. Jurisdiction. Securitas pauses on jurisdiction. Rightly so. The Court
agrees that it has jurisdiction to consider and decide the National Labor
Relations Act issue raised by Delock' s argument from the Horton decision.
This is a collateral issue in Delock' s lawsuit alleging thatSecuritas violated the
Fair Labor Standards Act. Connell Constr. Co. v. Plumbers and Steamfitters Local
Union No. 100, 421 U.S. 616, 626 (1975); ABF Freight System, Inc. v. Int'l
Brotherhood ofTeamsters, 645 F.3d 954, 964-65 (8th Cir. 2011).
3. Horton. Until recently, it seemed settled law that an employee's
statutory right to pursue a wage claim as part of a collective action, 29 U.S.C.
§ 216(b), could be waived in favor of individual arbitration. The Courts of
Appeals that had considered this issue had so held. Caley v. Gulfstream
Aerospace Corp., 428 F.3d 1359, 1378 (11th Cir. 2005); Carter v. Countrywide
Credit Industries, Inc., 362 F.3d 294,298 (5th Cir. 2004); Adkins v. Labor Ready,
Inc., 303 F.3d 496,503 (4th Cir. 2002).* These FLSA cases harmonized with the
Supreme Court's many pro-arbitration decisions during the last two decades.
In Gilmer v. Interstate/Johnson Lane Corp., for example, the Court upheld
an agreement that sent an age-discrimination claim to arbitration. 500 U.S. 20
(1991). The Court rejected the argument that the absence in arbitration of the
*Two other circuits came to the same conclusion in unpublished
opinions whose precedential value is cloudy. Vilches v. The Travelers
Companies, Inc., 413 F. App'x 487,494 n.4 (3d Cir. 2011); Horenstein v.
Mortgage Market, Inc., 9 F. App'x 618,619 (9th Cir. 2001).
collective proceedings allowed by the ADEA frustrated the statute's purpose,
and thus undermined the agreement to arbitrate individually. 500 U.S. at 32.
Some of this was dictum. The Gilmer arbitration agreement was silent about
collective proceedings; the applicable New York Stock Exchange rules
allowed them; and, as the Court noted, the EEOC could still pursue agediscrimination claims on a class basis. 500 U.S. at 23, 32. But the Court's
considered words- no legal problem was presented even if arbitration
eliminated the possibility for an employee to pursue a collective action of a
statutory claim- carry some weight, even if not part of the Court's holding.
United States v. Skoien, 614 F.3d 638, 641 (7th Cir. 2010) (Easterbrook, J.).
More recent decisions, in a variety of contexts, confirm the Supreme
Court's solicitude for arbitration on whatever terms the parties have agreed.
In 14 Penn Plaza LLC v. Pyett, the Court enforced a collective bargaining
agreement provision requiring arbitration of age-discrimination claims. 556
U.S. 247 (2009). In Stolt-Nielsen, drawing on the foundational principle that
the Federal Arbitration Act makes the process a matter of consent, the Court
concluded "that parties may specify with whom they choose to arbitrate their
U.S. at _ , 130 S. Ct. at 1774 (emphasis original). Class
S. Ct. at 1775. In Concepcion, the Court held that the FAA preempted a
unconscionable contractual terms. AT&T Mobility LLC v. Concepcion,_ U.S.
_ , 131 S. Ct. 1740 (2011).
All this precedent makes the law's trend
Then came Horton. It began as a dispute alleging misclassification
under the Fair Labor Standards Act. The employee and the employer had an
agreement requiring arbitration on an individual basis of all employmentrelated disputes and barring collective proceedings. After the company
refused to recognize a notice of collective arbitration, the employee filed a
charge with the National Labor Relations Board. The employee prevailed.
The National Labor Relations Act protects employees' right "to engage in ..
. concerted activities for the purpose of collective bargaining or other mutual
aid or protection[.]" 29 U.S.C. § 157. Proceeding collectively, either in court
or in arbitration, the Board concluded, is concerted activity. Therefore,
"employers may not compel employees to waive their NLRA right to
collectively pursue litigation of employment claims in all forums, arbitral and
judicial." 357 N.L.R.B. No. 184, at *16 (emphasis original).
The two sitting NLRB members concluded that no conflict existed
between the National Labor Relations Act and the Federal Arbitration Act in
these circumstances. 357 N.L.R.B. No. 184, at *10-*16. First, there was no
employee/ employer agreements, not just arbitration agreements.
Concepcion,_ U.S. at_, 131 S. Ct. at 1746-47. Second, concerted action is
a substantive right under the NLRA, not a matter of procedure; and precedent
holds that an arbitration agreement may not require a party to give up a
substantive statutory right. Gilmer, 500 U.S. at 26. Third, nothing in the FAA
suggests that it requires enforcing an arbitration agreement that is
inconsistent with the NLRA. 357 N.L.R.B. No. 184, at *14-*15. Finally, the
Board concluded that, if the two statutes conflict, the Norris-LaGuardia Act
requires the FAA to yield. 357 N.L.R.B. No. 184, at *16. In explaining its
reasoning, the Board considered Gilmer, Pyett, Stolt-Nielsen, and Concepcion.
It did not have the benefit of CompuCredit Corp. v. Greenwood,_ U.S._, 132
S. Ct. 665 (2012), which came down about a week after the Board's decision.
The company has petitioned the Fifth Circuit for review of the Board's
decision. D.R. Horton, Inc. v. National Labor Relations Board, No. 12-60031 (5th
Cir. filed 13 January 2012). The case is in mid-briefing. No Court of Appeals
has yet spoken on the matter. The District Courts have divided. Compare, e.g.,
Jassov.MoneyMartExpress,Inc.,No.11-CV-5500YGR,2012WL 1309171 (N.D.
Cal. 13 Apr. 2012), and De Oliveira v. Citicorp North America, Inc., No. 8:12-cv251-T-26TGW, 2012 WL 1831230 (M.D. Fla. 18 May 2012) (both declining to
follow Horton), with, e.g., Owen v. Bristol Care, Inc., No.11-04258-CV-FJG,2012
WL 1192005 (W.D. Mo. 28 Feb. 2012), and Herrington v. Waterstone Mortg.
Corp., No. 11-cv-779-bbc, 2012 WL 1242318 (W.D. Wis. 16 Mar. 2012) (both
The Board's construction of the National Labor Relations Act u is entitled
to considerable deference and must be upheld if it is reasonable and
consistent with the policies of the Act." St. John's Mercy Health Systems v.
N.L.R.B., 436 F.3d 843, 846 (8th Cir. 2006) (quotation and citation omitted).
But the reason for the law ceasing, the law itself must cease: the Board has no
special competence or experience in interpreting the Federal Arbitration Act.
And this Court is "not obligated to defer to [the Board's] interpretation of
Supreme Court precedent under Chevron or any other principle." New York
New York, LLC v. N.L.R.B., 313 F.3d 585, 590 (D.C. Cir. 2002) (quotation
omitted); see also N.L.R.B. v. Bildisco and Bildisco, 465 U.S. 513,529 n.9 (1984).
The Federal Arbitration Act's core provision speaks in broad terms.
A written provision in any maritime transaction or a contract
evidencing a transaction involving commerce to settle by
arbitration a controversy thereafter arising out of such contract or
transaction, or the refusal to perform the whole or any part
thereof, or an agreement in writing to submit to arbitration an
existing controversy arising out of such a contract, transaction, or
refusal, shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any
9 U.S.C. § 2. This and companion provisions" manifest a liberal federal policy
favoring arbitration agreements." Gilmer, 500 U.S. at 25 (internal quotation
omitted). Section 2 requires this Court to enforce the parties' agreement to
arbitrate" according to [its] terms[,]" CompuCredit, _U.S. at_, 132 S. Ct.
at 669, absent some good legal reason that would undermine any similar
contract. Among the kind of terms that enjoy presumptive validity is the
collective-action waiver in the Delock/ Securitas agreement: it prescribes with
whom the parties will arbitrate. Stolt-Nielsen, _
U.S. at _ , 130 S. Ct. at
1774. The FAA governs "even when the claims at issue are federal statutory
claims, unless the FAA's mandate has been overridden by a contrary
congressional command." CompuCredit, _
U.S. at _ , 132 S. Ct. at 669
(internal quotation omitted).
If the competing statute was the Fair Labor Standards Act, the Fifth
Circuit's persuasive decision in Carter would undermine Delock' s attack on
the arbitration agreement. First, FLSA claims are subject to arbitration.
Nothing in the FLSA' s text or legislative history indicates that Congress
excepted those claims from the FAA's mandate. 362 F.3d at 297-98. Second,
collective proceedings under FLSA are a matter of procedure, not substance.
The Fifth Circuit's reasoning on this point merits quotation.
[W]e reject the Carter Appellants' claim that their inability to
proceed collectively deprives them of substantive rights available
under the FLSA. The Supreme Court rejected similar arguments
concerning the ADEA in Gilmer, despite the fact that the ADEA,
like the FLSA, explicitly provides for class action suits. 500 U.S.
at 32, 111 S. Ct. 1647. What is more, the provision for class actions
in the ADEA is the FLSA class action provision, which the ADEA
expressly adopts. 29 U.S.C. § 626(b). Accordingly, Gilmer's
conclusion in this respect applies with equal force to FLSA claims.
Carter, 362 F.3d at 298 (emphasis original). In terms of Delock's underlying
statutory claim under the FLSA, the FAA's mandate should prevail.
But the contrary congressional command Delock asserts is in the
National Labor Relations Act, not the FLSA. It is the other-concertedactivities part of the NLRA' s § 7.
Right of employees as to organization, collective
Employees shall have the right to self-organization, to form, join,
or assist labor organizations, to bargain collectively through
representatives of their own choosing, and to engage in other
concerted activities for the purpose of collective bargaining or other
mutual aid or protection, and shall also have the right to refrain
from any or all of such activities except to the extent that such
right may be affected by an agreement requiring membership in
a labor organization as a condition of employment as authorized
in section 158(a)(3) of this title.
29 U.S.C. § 157 (emphasis added). When employees band together to assert
FLSA claims, the Board concluded in Horton, they are pursuing concerted
activities for mutual aid and protection, which the NLRA protects. 357
N.L.R.B. No. 184, at *1.
This conclusion is a reasonable reading of the statute.
And it is
consistent with settled law. As the Eighth Circuit recently observed, "a
lawsuit filed in good faith by a group of employees to achieve more favorable
terms or conditions of employment is 'concerted activity' under § 7 of the
National Labor Relations Act." Brady v. National Football League, 644 F.3d 661,
673 (8th Cir. 2011) (emphasis original). The Court therefore defers and
follows the Board's reading on this point. St. John'sMercy Health Systems, 436
F.3d at 846.
The Court declines to endorse, however, the Board's application of the
Federal Arbitration Act or its reading of the precedent applying that Act. The
NLRA, as interpreted in Horton, conflicts with the FAA, as interpreted by the
Supreme Court. The Board says employees covered by the NLRA must have
some forum-in arbitration or in court-to pursue collective claims about
their employment. 357 N.L.R.B. No. 184, at *16. A fair reading of the FAA
and the precedents, on the other hand, requires this Court to enforce the
DelockjSecuritas agreement to arbitrate all employment-related disputes
individually, not collectively. E.g., Stolt-Nielsen,_ U.S. at_, 130 S. Ct. at
1774. The Gilmer, Concepcion line of cases provides the analytic framework for
addressing this statutory collision.
Falling back to either an express repeal by the Norris-LaGuardia Act or
an implied repeal by the National Labor Relations Act does not resolve the
collision. Cf Horton, 357 N.L.R.B. No. 184, at*14, *16 n.26. Though Congress
first enacted the FAA in 1925, it reenacted the statute in 1947 -after passing
the Norris-LaGuardia Act and reenacting the NLRA. Federal Arbitration Act,
ch. 213, 43 Stat. 883 (1925); Norris-LaGuardia Act, ch. 90, 47 Stat. 70 (1932);
National Labor Relations Act, ch. 120, 61 Stat. 136 (1947); Federal Arbitration
Act, ch. 392, 61 Stat. 670 (1947). The terms of§ 2 of the Federal Arbitration Act
have never varied.
The Board stumbled on the statutory history by
concluding that the FAA had to give way because of when Congress had
enacted these statutes.
CompuCredit instructs that there must be a "contrary congressional
command" to override the FAA's mandate._ U.S. at_, 132 S. Ct. at 669
(quotation omitted). Gilmer speaks of looking for a congressional "intention
to preclude a waiver of judicial remedies for the statutory rights at issue." 500
U.S. at 26 (quotation omitted).
"If such an intention exists, it will be
discoverable in the text of the [NLRA], its legislative history, or an inherent
conflict between arbitration and the [NLRA' s] underlying purposes." Ibid.
There are two important threshold points: Delock must make this showing;
and "a healthy regard for the federal policy favoring arbitration[,]" must
inform the inquiry. 500 U.S. at 26 (quotation omitted).
The NLRA' s text contains no command that is contrary to enforcing the
The Act's protection of concerted activities does not
guarantee an unwaivable right to proceed as a group in either litigation or
arbitration. The Age Discrimination in Employment Act and the Fair Labor
Standards Act offer employees collective actions. But this option was an
insufficient statutory command. Gilmer, 500 U.S. at 32. Statutory references
to having causes of action, filing in court, allowing suits, and even pursuing
class actions are insufficient commands too. CompuCredit,_ U.S. at_, 132
S. Ct. at 670-71. The NLRA's text, even with the uncontroversial gloss that
group litigation is concerted activity,likewise gives an insufficient command
against the FAA.
The parties having made no argument from the NLRA' s legislative
history, the Court moves to the conflict of statutory purposes. Gilmer, 500 U.S.
at 26. It exists. There is no doubt that, as the Board said, the NLRA's core
protects the right to engage in collective action about workplace conditions.
Horton, 357 N.L.R.B. No. 184, at *4. There is likewise no doubt about the
strong federal policy favoring arbitration on the terms agreed, a policy given
full voice in recent precedent. E.g., Stolt-Nielsen,_ U.S. at_, 130 S. Ct. at
1773-75. For several reasons, the Court concludes that the NLRA bends to the
First, while the Board said its decision did not favor litigation over
arbitration, in practice it would. Collective arbitration can no more be
manufactured by the Board than it can by the California Supreme Court.
U.S. at_, 131 S. Ct. at 1750-51. While the United States
Supreme Court left open the possibility of consensual class arbitration, it
strongly criticized that process. _U.S. at_, 131 S. Ct. at 1750-53. In the
beginning and the end, arbitration is a matter of consent.
employees proceeding collectively will be in court absent agreement all
around to have class arbitration. And that agreement cannot be mandated.
U.S. at _ , 130 S. Ct. at 1773-75. Horton's result, then,
would be more collective litigation and less arbitration. This result is at odds
with the "emphatic federal policy in favor of arbitral dispute resolution."
KPMG LLP v. Cocchi, _
U.S. _ , _ , 132 S. Ct. 23, 25 (2011) (quotation
Second, adopting the Board's reasoning would lead to a patchwork. An
employee and an employer can agree to resolve the employee's statutory
claims in arbitration. Gilmer, 500 U.S. at 35. A union can make the same
bargain for all its employee members. Pyett, 556 U.S. at 251. But whatever an
individual and his or her employer may have agreed, if two or more
employees jointly pursue a statutory claim, Horton's concerted-action
rationale would require that the matter proceed collectively. This quilt of
possibilities introduces uncertainty and complexity. And it would treat
similarly situated individuals differently without adequate reason.
Third, though the Board said that the impact of its decision would be
small, the Court respectfully disagrees. Pick any kind of employment-related
claim: race discrimination, unpaid wages, sex discrimination. Under the
Horton rationale, no agreement to resolve the claim in arbitration on an
individual basis can be enforced if two or more employees assert the claim in
concert. That would be a sweeping change in the law.
Delock has not demonstrated that the National Labor Relations Act's
protection of concerted activities overrides the FAA's mandate to enforce his
arbitration agreement with Securitas. CompuCredit, _U.S. at_, 132 S. Ct.
at 669; Gilmer, 500 U.S. at 26. This conclusion best advances the "liberal
federal policy favoring arbitration" and the "fundamental principle that
arbitration is a matter of contract[.]" Concepcion,_ U.S. at_, 131 S. Ct. at
1745 (quotation omitted).
Applying CompuCredit and Gilmer, the FAA
prevails in the conflict with the NLRA. The Delock/Securitas arbitration
agreement-including the class-action waiver-is enforceable.
4. Interlocutory Appeal. Delock seeks to pursue one. Securitas resists.
Under 28 U.S. C. § 1292(b), one aspect of the case merits interlocutory review,
another does not. Union County, Iowa v. Piper ]affray & Co., 525 F.3d 643, 646
(8th Cir. 2008).
The contract-formation issues decided a few months ago are
commonplace. The Court sees no substantial ground for a difference of
opinion about the governing Arkansas law.
The Court's earlier Order
provides important background; it lays out the essential undisputed facts and
incorporates the parties' arbitration agreement. But certifying the Order for
appeal now would not "materially advance the ultimate termination of the
litigation." Union County, 525 F.3d at 646. The formation issues decided in
the Court's March 2012 Order, Document No. 57, therefore do not merit
That Horton makes the enforceability of the parties' arbitration
agreement a complicated question does not satisfy § 1292(b). The statute
was not intended merely to provide review of difficult rulings in hard
Union County, 525 F.3d at 646 (quotation omitted). The lack of
guiding precedent from the Court of Appeals is likewise insufficient, though
novelty weighs in the balance.
525 F.3d at 646, 647.
A motion for
certification must be granted sparingly, and the movant bears the heavy
burden of demonstrating that the case is an exceptional one in which
immediateappealis warranted." VVhitev. Nix,43 F.3d 374,376 (8th Cir. 1994).
Guided by the statutory factors, the Court exercises its discretion to certify
First, the enforceability of the parties' arbitration agreement
notwithstanding Horton presents a controlling question of law. No facts are
disputed. The efficacy of the class-action waiver is not a discretionary
decision. Cf Control Data Corp. v. Int'l Business Machines Corp., 421 F.2d 323,
326 (8th Cir. 1970). It is a pure legal question of statutory construction
informed by precedent: how should the conflict between the National Labor
Relations Act and the Federal Arbitration Act raised by Horton and by the
parties' arbitration agreement be resolved? As well expressed by Judge
Posner, this is the kind of question within§ 1292(b)'s reach. "The idea was
that if a case turned on a pure question of law, something the court of appeals
could decide quickly and cleanly without having to study the record, the
court should be enabled to do so without having to wait till the end of the
case." Ahrenholz v. Board of Trustees of University of Illinois, 219 F.3d 674,677
(7th Cir. 2000).
This question is controlling. If this Court has answered correctly, then
the guards' FLSA claims belong in arbitration, where they will be handled one
by one. If this Court has answered incorrectly, then the guards' claims belong
in court, with the opportunities for certification, notice, and opt-in by fellow
employees. No danger exists for a advisory opinion on a question that cannot
yet be asked with clarity. Cf Control Data Corp., 421 F.2d at 326-27. The
enforceability question is controlling because it can "head off protracted,
costly litigation" about where the parties' dispute belongs and how it will be
resolved. Ahrenholz, 219 F.3d at 677.
Second, there is a substantial ground for difference of opinion about the
enforceability of the parties' arbitration agreement. The National Labor
Relations Board has concluded that this kind of collective-action-waiving
contract is unenforceable under the NLRA. From Gilmer to Concepcion to
CompuCredit, the Supreme Court has applied the Federal Arbitration Act
broadly, enforcing agreements in a variety of contexts pursuant to the strong
federal policy favoring arbitration. After Horton, district courts have reached
different conclusions about the enforceability of arbitration agreements like
the one between Delock and Securitas. See supra at p. 7. There is no u dearth
of cases[.]" Cf Union County, 525 F.3d at 647. There are plenty of cases; and
they sharply conflict.
Third, the statute asks whether an immediate appeal "may materially
advance the ultimate termination of the litigation[.]" 28 U.S.C. § 1292(b).
Resolution of the controlling and contested issue of law "must promise to
speed up the litigation." Ahrenholz, 219F.3d at675 (emphasis original). It does.
If this Court is mistaken about enforceability, then after these twelve
guards' claims have been arbitrated individually, and after those awards have
been confirmed (or not, as may be), 9 U.S.C. § 9, and after the Court of
Appeals reverses and returns the case for adjudication as a collective action,
9 U.S.C. § 16(a), the parties will have to start over. That long road would
waste everyone's scarce resources.
True, if this Court has decided
enforceability correctly, the time and cost of appeal will be incurred sooner
rather than later. But class waivers are now ubiquitous in employmentrelated agreements. And getting definitive guidance from a Court of Appeals'
decision would help resolve this case, like cases, and would bring more
certainty into the marketplace.
Securitas argues that an immediate appeal will frustrate the strong proarbitration federal policy. At the margin, yes. But the FAA allows for this
possibility. The Act recognizes the propriety of an interlocutory appeal of an
order compelling arbitration if § 1292(b) is satisfied. 9 U.S.C. § 16(b). All
material things considered, the Court concludes that an interlocutory appeal
holds promise for speeding up this litigation.
The Court confirms its earlier ruling staying this case and compelling
arbitration. Motion, Document No. 58, granted in part and denied in part. The
Court certifies that this "order involves a controlling question of law as to
which there is substantial ground for difference of opinion and that an
immediate appeal from [this] order may materially advance the ultimate
termination of [this] litigation[.]" 28 U.S.C. § 1292(b). The Court stays the
initiation of arbitration until31 October 2012- so Delock can seek permission
to take an interlocutory appeal, Securitas can respond, and the Court of
Appeals can exercise its informed discretion under the statute. The parties
should keep this Court informed about developments in the higher Court. If
the Court of Appeals permits the interlocutory appeal, then the stay of
arbitration shall be extended automatically until the Eighth Circuit issues its
D.P. Marshall Jr.
United States District Judge
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