Cook v. Rent-A-Center, Inc. et al

Filing 24

MEMORANDUM AND ORDER signed by District Judge Morrison C. England, Jr. on 09/25/17 ORDERING that this case is STAYED until such time as the Supreme Court issues its decision in Ernst & Young LLP v. Morris. The parties are directed to notify the Cour t in writing within 14 days after that decision has been reached. Defendant's 7 Motion is consequently GRANTED to the extent it requests the above-referenced stay. Given the Court's decision to stay this matter, however, the remaining portions of said Motion, which ask the Court to dismiss and/or strike portions of the proceedings, are DENIED without prejudice to refiling once the stay in this case has been lifted. (Benson, A.)

Download PDF
1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 EASTERN DISTRICT OF CALIFORNIA 9 10 11 KUREEN COOK, individually, and on behalf of other members of the general public similarly situated, 12 13 14 15 16 17 Plaintiff, No. 2:17-cv-00048-MCE-EFB MEMORANDUM AND ORDER v. RENT-A-CENTER, INC., a Delaware corporation; RENT-A-CENTER WEST, INC., a Delaware corporation; RENT-ACENTER FRANCHISING INTERNATIONAL INC., a Texas corporation; and DOES 1 through 10, inclusive, 18 Defendants. 19 20 Plaintiff Kureen Cook (“Plaintiff”) alleges a nationwide collective action claim 21 against his former employer, Rent-A-Center (“RAC”),1 for overtime under the Fair Labor 22 Standards Act (“FLSA”), as well as numerous Rule 23 class action claims under 23 California law for alleged unpaid wages, unpaid overtime, unpaid meal and rest breaks, 24 unreimbursed business expenses, failure to compensate for split shifts, and penalties 25 arising from allegedly non-compliant wage statements under the California Labor Code 26 and California Business and Professions Code. 27 28 1 Plaintiff’s Complaint names three Rent-A-Center entities as Defendants: Rent-A-Center, Inc., Rent-A Center West, Inc. and Rent-A-Center Franchising International, Inc. All three entities will be collectively referred to as RAC in this Memorandum and Order unless otherwise noted. 1 1 RAC now moves to dismiss Plaintiff’s individual claims on grounds that under the 2 terms of an arbitration agreement reached with Plaintiff, Plaintiff agreed to arbitrate all 3 “past, present and future” disputes with RAC, including all claims for “wages and other 4 compensation due” and any statutory claims (the “Arbitration Agreement” or 5 “Agreement”). RAC further moves to strike Plaintiff’s collective and class action claims 6 on grounds that the Arbitration Agreement precludes such claims. Finally, and in the 7 alternative, since resolution of a case currently pending before the United States 8 Supreme Court may be dispositive of much of Plaintiff’s action in any event, RAC asks 9 the Court to stay the entire action if it is disinclined to simply enforce the terms of the 10 Arbitration Agreement. 11 As set forth below, the Court finds it appropriate to stay this action pending further 12 guidance from the Supreme Court. To the extent RAC’s motion requests a stay of these 13 proceedings, then, the motion is GRANTED. Given the stay that is hereby imposed, the 14 Court declines to address RAC’s motion to the extent it requests the striking of certain 15 matters and/or dismissal of the case. That portion of RAC’s motion is therefore DENIED 16 without prejudice to the refiling of the motion at such time as the Court’s stay of the case 17 is lifted.2 18 19 BACKGROUND 20 21 On or about July 30, 2013, at the inception of his employment with RAC, Plaintiff 22 executed the Arbitration Agreement that is the subject of this motion. Declaration of 23 Marc Tuckey (“Tuckey Decl.”), Ex. 1. That Agreement contains the following provision 24 requiring that all claims asserted by Plaintiff against RAC be arbitrated: 25 The Company and I mutually consent to the resolution by arbitration of all claims or controversies (“claims”), past, present or future, including without limitation, claims arising out of my application for employment, 26 27 2 28 Having determined that oral argument would not be of material assistance, the Court ordered this matter submitted on the briefs in accordance with E.D. Cal. Local Rule 230(g). 2 1 assignment/employment, and/or the termination of my assignment/employment that the Company may have against any of the following: (1) the Company, . . . (3) the Company’s parent, subsidiary , and affiliated entities.3 2 3 ****** 4 . . . The claims covered by this Agreement include, but are not limited to : . . . claims for wages or other compensation due . . . and claims for violation of any federal, state or other governmental law, statute, regulation, or ordinance . . . 5 6 7 8 9 Id. at Ex. 1, p. 1 Plaintiff worked as an hourly-paid, non-exempt, Customer Accounts Representative and Accounts Manager for RAC at various locations between July of 10 2013 and April of 2016. Pl.’s Compl., ¶ 6. After his employment with RAC ended, 11 Plaintiff instituted the present lawsuit in this Court despite the above-enumerated 12 arbitration provisions. 13 As indicated above, in addition to individual claims, Plaintiff also asserts collective 14 and class action claims on behalf of other similarly situated individuals. The Arbitration 15 Agreement, however, purports to expressly preclude such claims, stating as follows: 16 Class Action Waiver 17 There will be no right or authority for any dispute to be brought, heard, or arbitrated as a class action and/or as a collective action (“Class Action Waiver”). Nor shall the Arbitrator have any authority to hear or arbitrate any such dispute. 18 19 20 21 Id. at Ex. 1, p. 2. Given this provision of the Arbitration Agreement, RAC 1) moves to dismiss 22 Plaintiff’s individual claims as being brought by this lawsuit in contravention of the 23 Arbitration Agreement; 2) moves to strike Plaintiff’s collective and class action 24 allegations on grounds they are precluded by the Class Action Waiver; and 3) moves to 25 compel arbitration as to Plaintiff’s individual claims, only. 26 3 27 28 Rent-A-Center, Inc. is the parent company of Rent-A-Center West, Inc. Both companies do business as “Rent-A-Center”. Rent-A-Center Franchising International. Inc. is an affiliate of Rent-ACenter, Inc. See Tuckey Decl., ¶ 4. The Arbitration Agreement defines “Company” to include both RentA-Center-Inc. and “all parent, subsidiary, partners, divisions, and affiliated entities . . . “ Id. at Ex. 1, p. 1. 3 1 With respect to the Class Action Waiver, however, RAC recognizes that in 2 Morris v. Ernst & Young, 834 F.3d 975, 984 (9th Cir. 2016), the Ninth Circuit held that 3 class action waivers are unlawful if made a mandatory condition of employment. There 4 appears to be no dispute that Plaintiff’s execution of the Arbitration Agreement, and the 5 Class Action Waiver it contained, were indeed a mandatory condition of his employment. 6 Despite recognizing that Morris is controlling law in this Circuit, RAC nonetheless 7 alleges that Morris was wrongly decided. In support of its position, RAC points to the 8 fact that on January 13, 2017, the United States Supreme Court granted petitions for 9 certiorari in both Morris and in two related decisions from the Seventh and Fifth Circuits, 10 all of which address the enforceability of class action waivers. Ernst & Young LLP v. 11 Morris, 137 S. Ct. 809 (Jan. 13, 2017). While the Seventh Circuit case, Lewis v. Epic 12 Systems Corp., 823 F.3d 1147 (7th Cir. 2016), agreed with Morris, the Fifth Circuit’s 13 decision in Murphy Oil USA, Inc. v. N.L.R.B., 808 F.3d 1013 (5th Cir. 2015) did not, and 14 other cases decided by the Fifth, Eighth, and Second Circuits are in accord with Murphy. 15 See, e.g., D.R. Horton, Inc. v. N.L.R.B., 737 F.3d 344 (5th Cir. 2013); Cellular Sales of 16 Missouri, LLC v. N.L.R.B., 824 F.3d 772 (8th Cir. 2016); and Sutherland v. Ernst & 17 Young LLP, 726 F.3d 290 (2d Cir. 2013). Consequently, it would appear that by taking 18 the issue, the Supreme Court’s intention is to resolve the circuit split that has developed. 19 Given the uncertainty with respect to whether class action waivers are 20 enforceable, as an alternative to addressing this case on its merits RAC urges the Court 21 to stay this entire action pending direction from the Supreme Court. Because the Court 22 concludes that a stay is indicated under the circumstances, the analysis below focuses 23 on the propriety of a stay. 24 /// 25 /// 26 /// 27 /// 28 /// 4 1 STANDARD 2 3 Staying proceedings in the interest of judicial economy is a matter within the 4 Court’s inherent power to control the disposition of cases on its docket with a view 5 towards economy of time. Landis v. North Am. Co., 299 U.S. 248, 254 (1936); 6 Fernandez v. Obesity Research Inst., LLC., 2013 WL 4587005 at *6 (E.D. Cal. Aug. 28, 7 2013). In determining the propriety of such a stay, courts look to issues of judicial 8 economy and the prejudice to either party that may result if the stay is granted or denied. 9 CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). Whether to issue a stay in this 10 regard is a decision necessarily relegated to the court’s discretion. Nken v. Holder, 11 556 U.S. 418, 433-34 (2009). 12 Staying a case is appropriate where an imminent decision of the Supreme Court 13 will control and resolve issues presented in the action pending before this Court. See 14 Roman v. Northrop Grumman Corp., 2016 U.S. Dist. LEXIS 173022 at *7-8 (C.D. Cal. 15 Dec. 14, 2016) (court grants defendant’s opposed motion to stay proceedings on motion 16 to compel individual arbitration of class claims pending resolution by the Supreme Court 17 of Morris, supra); see also U.S. v. Deleon, 2016 U.S. Dist. LEXIS 99675, at *6-7 (E.D. 18 Cal. Jul. 29, 2016). 19 20 ANALYSIS 21 22 As indicated above, RAC urges the Court to dismiss Plaintiff’s individual claims 23 given his agreement to arbitrate those claims pursuant to the Arbitration Agreement, to 24 strike Plaintiff’s collective and class action allegations given the Class Action Waiver 25 contained in the Agreement, and to compel arbitration in accordance with the Arbitration 26 Agreement. In the alternative, however, RAC recognizes that the competing interests of 27 the parties and the Court may well justify staying these proceedings pending the 28 Supreme Court’s decision in Morris. In that case, the Ninth Circuit held that employers 5 1 may not require waiver of an employee’s right to bring class or collective action by way 2 of an arbitration agreement presented as a condition of employment, on grounds that 3 such waivers interfere with an employee’s right under the National Labor Relation Act to 4 engage in concerted activity. Therefore, the Ninth Circuit found class/collective action 5 waivers to be unenforceable. As indicated above, on January 13, 2017, the Supreme 6 Court granted certiorari as to Morris and the Fifth Circuit’s decision, Murphy Oil USA, Inc. 7 v. N.L.R.B., 808 F.3d 1013 (5th Cir. 2015) which came to just the opposite conclusion. 8 According to the parties, a decision from the Supreme Court is expected in early 2018. 9 As already indicated, it is within this Court’s inherent power to stay an action where an 10 imminent decision by the Supreme Court will be dispositive of issues pending in a case 11 before it. See Roman v. Northrop Grumman Corp., 2016 U.S. Dist. LEXIS 173022, at 12 *7-8. 13 The Court agrees that a stay is compelling under the circumstances of this case. 14 Despite Plaintiff’s individual claims, the gravamen of his lawsuit would appear to rest with 15 the viability of his collective and class action allegations. If the Supreme Court agrees 16 with the Fifth, Eighth, and Second Circuit decisions holding that class action waivers are 17 enforceable, and disagrees with the contrary position taken by the Ninth Circuit in Morris, 18 the collective and class action claims here will fail. As a practical matter, that 19 determination could well be dispositive of Plaintiff’s entire lawsuit. 20 Requiring the parties to go forward with litigation given the uncertainty in this 21 regard would waste the time and resources of both the parties and the Court. Engaging 22 in collective and class action discovery, not to mention handling disputes over 23 conditional certification, potential class members, and the merits of the collective/class 24 action allegations themselves, will require substantial effort on the part of all concerned, 25 efforts that may well be unnecessary depending on the Supreme Court’s ultimate 26 decision in Morris. Additionally, by forcing RAC to litigate this matter while the class 27 waiver issue is pending before the Supreme Court, would effectively deprive RAC of its 28 right under the Federal Arbitration Act to enforce its Arbitration Agreement as written. 6 1 Moreover, since a decision from the Supreme Court in this matter is anticipated 2 by sometime early next year, a stay to accommodate that decision would not be open- 3 ended and will likely be relatively short. Finally, particularly given the savings of time 4 and money that will result in refraining from litigation that may not be necessary 5 depending on the Supreme Court’s findings, it appears there will be no prejudice to 6 either party. While Plaintiff argues that it would be prejudiced by an indefinite stay, that 7 circumstance is not present here since it appears likely that a decision will be 8 forthcoming by early 2018. 9 10 Consequently, after considering the factors for and against a stay of these proceedings, the Court finds a stay to be proper at this time. 11 12 CONCLUSION 13 14 For all the foregoing reasons, the Court will stay this lawsuit until such time as the 15 Supreme Court issues its decision in Ernst & Young LLP v. Morris, 137 S. Ct. 809 16 (Jan. 13, 2017). The parties are directed to notify the Court in writing not more than 17 fourteen (14) days after that decision has been reached. 18 Defendant’s Motion (ECF No. 7) is consequently GRANTED to the extent it 19 requests the above-referenced stay. Given the Court’s decision to stay this matter, 20 however, the remaining portions of said Motion, which ask the Court to dismiss and/or 21 strike portions of the proceedings, are DENIED without prejudice to refiling once the stay 22 in this case has been lifted. 23 IT IS SO ORDERED. 24 Dated: September 25, 2017 25 26 27 28 7

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?