Hickey et al v. Brinker Restaurant Corporation et al

Filing 45

ORDER granting 22 Motion to Compel Arbitration. Plaintiffs' putative class and collective action claims are DISMISSED WITH PREJUDICE. The parties are ORDERED to proceed to arbitration of plaintiffs' individual claims. All pending pretria l deadlines, the combined Final Pretrial Conference and Trial Preparation Conference set Friday, May 16, 2014, at 1:30 p.m., and the trial set to commence Monday, June 9, 2014, are VACATED. All pending motions are DENIED AS MOOT. This case is CLOSED. By Judge Robert E. Blackburn on 2/18/2014. (klyon, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Robert E. Blackburn
Civil Case No. 1:13-cv-00951-REB-BNB
SARAH M. HICKEY,
AMY M. GULDEN, and,
JAY A. RAGSDALE,
on behalf of themselves, individually, and on behalf of all others similarly situated,
Plaintiffs,
v.
BRINKER INTERNATIONAL PAYROLL COMPANY, L.P.,
Defendant.

ORDER GRANTING MOTION TO COMPEL ARBITRATION
Blackburn, J.
The matter before me is the Defendant’s Motion To Compel Arbitration of
Individual Claims and Dismiss Class Action Claims, Collective Action Claims and
Other Proceedings [#22],1 filed August 12, 2013. The issues implicated by the motion
are fully briefed, and oral argument would not aid in their resolution. I grant the motion
and dismiss this action.
I. JURISDICTION
I putatively have jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331
(federal question) and 1367 (supplemental jurisdiction).

1

“[#22]” is an example of the convention I use to identify the docket number assigned to a
specific paper by the court’s case management and electronic case filing system (CM/ECF). I use this
convention throughout this order.

II. STANDARD OF REVIEW
The decision whether to enforce an arbitration agreement involves a two-step
inquiry. First, I must determine whether the parties agreed to arbitrate the dispute.
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 626, 105 S.Ct.
3346, 3353, 87 L.Ed.2d 444 (1985); Williams v. Imhoff, 203 F.3d 758, 764 (10th Cir.
2000). I then must consider whether any statute or policy renders the claims
non-arbitrable. Mitsubishi Motors Corp., 105 S.Ct. at 3355; Williams, 203 F.3d at 764.
III. ANALYSIS
Plaintiffs are present and former banquet servers at defendant’s Maggiano’s
Little Italy Restaurants in Colorado. Plaintiffs claim defendant has failed to pay them all
tips to which they are entitled and has denied them meal and rest breaks required by
Colorado state law. They have filed claims under the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. § 216(b), the Colorado Wage Act, §8-4-101 et seq., C.R.S., and the
common law of Colorado.
Defendants have moved to dismiss the class and collective action claims and to
compel arbitration of the individual claims pursuant to two agreements which the named
plaintiffs signed in 2009 and 2012, respectively. The 2009 agreements provide in
relevant part:
Because of, among other things, the delay and expense
which result from the use of the court systems, any legal or
equitable claims or disputes arising out of or in connection
with employment, terms and conditions of employment, or
the termination of employment with [defendant] will be
resolved by binding arbitration instead of in a court of law or
equity. This agreement applies to all disputes involving
legally protected rights.
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(Def. Motion App., Exhs. 1-A, 2-A, & 3-A at 1 [#22], filed August 12, 2013.) In 2012,
each of the named plaintiffs executed a second arbitration agreement identical to the
2009 agreement with respect to the agreement to arbitrate, but providing further that the
employee “waive[d] the right to commence or be party to any representative, collective,
or class action” and that “[t]he arbitrator may not consolidate more than one person’s
claims and may not otherwise preside over any form of representative, collective, or
class proceeding.” (Id., Exhs. 1-B, 2-B, & 3-B at 1-2.) Defendant argues that these
agreements are valid and binding and thus preclude plaintiffs from seeking relief on
their individual claims other than in arbitration, and on their class and collective claims
at all.
Before considering plaintiffs’ arguments going to the validity of the arbitration
agreements themselves, I must address their suggestion that I should stay
determination of this matter pending resolution of charge against defendant before the
National Labor Relations Board (“NLRB”). After this lawsuit was filed, plaintiffs filed a
charge with the NLRB asserting that the 2012 agreements improperly infringe on their
right to engage in concerted activity under the National Labor Relations Act (“NLRA”),
29 U.S.C. § 151 et seq. For this proposition, they rely on the NLRB’s decision in In re
D.R. Horton, Inc., 357 NLRB No. 184, 2012 WL 36274 (N.L.R.B. Jan. 3, 2012), in
which the NLRB determined that
an agreement that precludes [employees] from filing joint,
class or collective claims addressing their wages, hours or
other working conditions against the employer in any forum,
arbitral or judicial . . . unlawfully restricts employees' [NLRA]
Section 7 right to engage in concerted action for mutual aid
or protection, notwithstanding the [FAA], which generally
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makes employment-related arbitration agreements judicially
enforceable.
Id., 2012 WL 36274 at *1.
Even at the time plaintiffs filed their response to the motion, the decision in In re
D.R. Horton had been rejected by every court that had considered it. See Richards v.
Ernst & Young, LLP, – F.3d – , 2013 WL 6405045 at *2 n.3 (9th Cir. 2013);
Sutherland v. Ernst & Young LLP, 726 F.3d 290, 297-98 n.8 (2nd Cir. 2013); Owen v.
Bristol Care, Inc., 702 F.3d 1050, 1055 (8th Cir. 2013).2 More importantly, however, the
decision now has been overruled outright. See D.R. Horton, Inc. v. N.L.R.B., 737 F.3d
344 (5th Cir. 2013).3 The United States Court of Appeals for the Fifth Circuit concluded
that the NLRB had failed to give proper weight to the equally important policies
informing the Federal Arbitration Act. See id. at 356 (“Deference to the Board cannot
be allowed to slip into a judicial inertia which results in the unauthorized assumption . . .
of major policy decisions properly made by Congress.”) (quoting NLRB v. Financial
Institutional. Employers of America, Local 1182, 475 U.S. 192, 202, 106 S.Ct. 1007,
1013, 89 L.Ed.2d 151 (1986) (internal quotation marks omitted)). After thoroughly
reviewing the language, history, and overriding purpose of the NLRA, id. at 357-62, the
court concluded that
2

Even if In re D.R. Horton had not been expressly overruled, at the very least I would find and
conclude that this case falls outside of the holding of that decision because it does not preclude an
employee from filing a collective claim or charge with a governmental administrative agency, such as the
NLRB. See Owen, 702 F.3d at 1053-54 (arbitration agreement falls outside parameters of In re D.R.
Horton where it "does not preclude an employee from filing a complaint with an administrative agency
such as the Department of Labor (which has jurisdiction over FLSA claims, see 29 U.S.C. § 204)" nor
prevent “any of these agencies from investigating and, if necessary, filing suit on behalf of a class of
employees").
3

Which fact plaintiffs’ counsel, as officers of the court, failed to bring to my attention themselves.

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[t]he NLRA should not be understood to contain a
congressional command overriding application of the FAA.
The burden is with the party opposing arbitration, and here
the Board has not shown that the NLRA's language,
legislative history, or purpose support finding the necessary
congressional command. Because the Board's interpretation
does not fall within the FAA's “saving clause,” and because
the NLRA does not contain a congressional command
exempting the statute from application of the FAA, the
Mutual Arbitration Agreement must be enforced according to
its terms.
Id. at 362 (internal citation omitted). Given the recent morbidity of In re D.R. Horton,
the outcome of plaintiffs’ charge before the NLRB thus seems a foregone conclusion. I
perceive no justification for staying my resolution of the matters inherent to the instant
motion and proceed to consider plaintiffs’ substantive arguments in contravention of
arbitration and dismissal.
Plaintiffs argue first that the arbitration agreements are unenforceable because
they require plaintiffs to bear the costs of arbitration. Courts generally agree that
placing the cost burden of arbitration on an employee may render an arbitration
agreement unenforceable, at least under certain circumstances. See Shankle v. B-G
Maintenance Management of Colorado, Inc., 163 F.3d 1230 (10th Cir. 1999). See
also Bradford v. Rockwell Semiconductor Systems, Inc., 238 F.3d 549 (4th Cir.
2001); Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d 1 (1st Cir.
1999); Paladino v. Avnet Computer Technologies, Inc., 134 F.3d 1054 (11th Cir.
1998); Cole v. Burns International Security Services, 105 F.3d 1465 (D.C. Cir.1997).
Nevertheless, there are at least two problems with plaintiffs’ arguments. First,
and even assuming arguendo that the appropriate standard is as categorical as

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plaintiffs suggest, the agreements do not contain a cost-splitting provision. The 2012
agreements provide that
[e]ach party is entitled to representation by an attorney
throughout the arbitration proceedings at their own expense.
Each party shall bear their own fees and expenses unless
otherwise awarded by the arbitrator in a final, written
decision.
(Def. Motion App., Exhs. 1-B, 2-B, & 3-B.) Taken in context, this provision plainly
requires each party to bear the costs and expenses of its own legal representation, not
the other costs of arbitration. The agreements are silent as to who should bear these
types of costs, and mere “silence with respect to such matters does not render the
agreement unenforceable." Green Tree Financial Corp. – Alabama v. Randolph, 531
U.S. 79, 82, 121 S.Ct. 513, 517, 148 L.Ed.2d 373 (2000).
Second, plaintiffs have not sustained their burden to prove that the costs of
arbitration are prohibitive.4 See id., 121 S.Ct. at 522. In determining whether “the
existence of large arbitration costs could preclude a litigant . . . from effectively
vindicating her federal statutory rights in the arbitral forum," the court must consider
both the employee’s personal finances and the actual costs involved. See id. at 522 &
n.6. In their response brief, plaintiffs note that the agreements provide that if the parties
cannot agree on an arbitrator, then one is to be chosen by the American Arbitration
Association. Purporting to have conducted a survey of local arbitrators, plaintiffs aver
that
The Judicial Arbitrator Group AG requires a $4,000 deposit
4

Plaintiffs’ reliance on the Tenth Circuit’s decision in Shankle for the suggestion that they need
not demonstrate their inability to actually pay the fees is insupportable.

6

for every day or arbitration scheduled. The hourly fee for
arbitrators is between $330 to $390, which is the joint
obligation of the parties. Even AAA arbitrators charge
between $200 and $400 per hour. Moreover, the filing fee is
$975. There is a separate administrative fee of $150 that
each party must pay for each hearing day. There is also a
separate charge for room rental.
(Plf. Resp. at 6 (footnotes omitted).)5
Not only is this assertion based on nothing more than rank hearsay, it is entirely
speculative. These putative fees will become relevant only if the parties fail to agree to
an arbitrator.6 Plaintiffs have offered nothing to suggest that there is no reasonably
priced arbitrator to whom they could agree to resolve this dispute, much less that they
have conferred with defendant to attempt to reach agreement on the matter. Moreover,
defendant expressly has agreed to pay arbitration costs up to $3.000 for each individual
named plaintiff. Given these circumstances, I find that the agreements are not invalid
on this basis.
Plaintiffs contend also that the arbitration agreements are illusory because
defendant reserved the right to unilaterally amend them. Dumais v. American Gold
Corp., 299 F.3d 1216, 1219 (10th Cir. 2002) ("[A]n arbitration agreement allowing one
party the unfettered right to alter the arbitration agreement's existence or its scope is
illusory."). The facts are to the contrary, however. Although defendant reserved the

5

Plaintiffs further assert that “a party making a demand for treatment of a claim, counterclaim, or
additional claim as a collective action arbitration will be subject to the administrative fees of $3,350 for the
initial fee and an additional $1,250 incurred when the case goes to a first hearing.” This argument, of
course, begs the question whether plaintiffs have any right to pursue class or collective action claims in
arbitration under the agreements.
6

Moreover, as defendant notes, AAA rules require the employer to pay the arbitrator’s fees and
expenses, the filing fee, the daily administrative fee, and any room rental fee. (See Def. Reply App., Exh.
A at 24-25 [#40], filed October 7, 2013.)

7

right to amend or terminate the agreements, its right was not “unfettered,” as it could do
so only on ten days notice to employees. Such restrictions on the employer’s right to
alter the terms of the employment contract are valid and render the agreements nonillusory. See Hardin v. First Cash Financial Services, Inc., 465 F.3d 470, 479 (10th
Cir. 2006); Lumuenemo v. Citigroup, Inc., 2009 WL 371901 at *5 (D. Colo. Feb. 12,
2009).
Lastly, plaintiffs maintain that, at the very least, they should be permitted to
pursue class and collective action claims arising before the 2012 arbitration agreements
were executed because the 2009 agreements did not expressly bar class and collective
action claims. I am unpersuaded. The mere silence of the 2009 agreements on this
issue cannot be read to require defendant to submit to arbitration of class or collective
action claims. Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 559 U.S. 662,
684, 130 S.Ct. 1758, 1775, 176 L.Ed.2d 605 (2010) (“[A] party may not be compelled
under the FAA to submit to class arbitration unless there is a contractual basis for
concluding that the party agreed to do so.”).7 Nor can plaintiffs pursue such claims in a

7

As the Court explained,
An implicit agreement to authorize class-action arbitration, however, is
not a term that the arbitrator may infer solely from the fact of the parties'
agreement to arbitrate. This is so because class-action arbitration
changes the nature of arbitration to such a degree that it cannot be
presumed the parties consented to it by simply agreeing to submit their
disputes to an arbitrator. In bilateral arbitration, parties forgo the
procedural rigor and appellate review of the courts in order to realize the
benefits of private dispute resolution: lower costs, greater efficiency and
speed, and the ability to choose expert adjudicators to resolve
specialized disputes. But the relative benefits of class-action arbitration
are much less assured, giving reason to doubt the parties' mutual
consent to resolve disputes through class-wide arbitration.

Stolt-Nielsen S.A., 130 S.Ct. at 1775-76 (internal citations omitted)

8

judicial forum, as plaintiffs manifested their acceptance of the modifications enacted in
the 2012 agreements by continuing their employment with knowledge of the
modification. See Frymire v. Ampex Corp., 61 F.3d 757, 769-70 (10th Cir. 1995), cert.
dismissed, 116 S.Ct. 1588 (1996).8 The 2012 agreements therefore superseded the
2009 agreements and are controlling here.
I therefore find that the arbitration agreements are not invalid. Plaintiffs do not
argue that their claims in this lawsuit do not fall within the exceedingly broad scope of
the arbitration provision contained therein, nor could they. (See Def. Motion App., Exh.
1-B, 2-B, & 3-B at 1 [#22], filed August 12, 2013 (providing agreement to arbitrate “any
legal or equitable claims or disputes arising out of or in connection with the employment,
terms and condition of employment, or the termination of employment.”).) The motion to
compel arbitration of the individual claims thus should be granted, as should the motion
to dismiss the putative class and collective action claims.
Defendant asks that I dismiss this action entirely, rather than simply issue a stay.
See 9 U.S.C. § 3 (“If any suit or proceeding be brought in any of the courts of the United
States upon any issue referable to arbitration under an agreement in writing for such
arbitration, the court in which the suit is pending . . . shall on application of one of the
parties stay the trial of the action . . .”). Despite the seemingly mandatory language of
section 3, the majority of federal courts hold that a case may be dismissed, rather than
stayed, when all claims therein are arbitrable. See, e.g., Choice Hotels International,

8

Plaintiffs’ notations on the 2012 agreements that they were required to sign as a condition of
continued employment thus is unavailing and merely reaffirms their legal position in light of their decision
to continue working with knowledge of the proposed alteration in the terms of their employment.

9

Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707, 709-10 (4th Cir. 2001); Green v.
Ameritech Corp., 200 F.3d 967, 973 (6th Cir. 2000); Fedmet Corp. v. M/V BUYALYK,
194 F.3d 674, 678 (5th Cir. 1999); Bercovitch v. Baldwin School, Inc., 133 F.3d 151,
156 & n.21 (1st Cir. 1998); Sparling v. Hoffman Construction Co., 864 F.2d 635, 638
(9th Cir. 1988); Black and Veatch International Co. v. Wartsila NSD North America,
Inc., 1998 WL 953966 at *4 (D. Kan. Dec. 17, 1998). But see Lloyd v. Hovensa, LLC,
369 F.3d 263, 269-71 (3rd Cir. 2004). Although the Tenth Circuit has not addressed this
issue directly, it has intimated that a district court may dismiss when all claims are
arbitrable and the movant specifically requests dismissal rather than a stay. See
Armijo v. Prudential Insurance Co. v. America, 72 F.3d 793, 796-97 (10th Cir. 1995).
These two prerequisites for dismissal are satisfied here. I therefore concur that
dismissal of this case is proper.
THEREFORE, IT IS ORDERED as follows:
1. That Defendant’s Motion To Compel Arbitration of Individual Claims and
Dismiss Class Action Claims, Collective Action Claims and Other Proceedings
[#22], filed August 12, 2013, is GRANTED;
2. That plaintiffs’ putative class and collective action claims are DISMISSED
WITH PREJUDICE;
3. That the parties are ORDERED to proceed to arbitration of plaintiffs’ individual
claims;
4. That all pending pretrial deadlines, the combined Final Pretrial Conference
and Trial Preparation Conference set Friday, May 16, 2014, at 1:30 p.m., and the trial

10

set to commence Monday, June 9, 2014, are VACATED;
5. That all pending motions are DENIED AS MOOT; and
6. That this case is CLOSED
Dated February 18, 2014, at Denver, Colorado.
BY THE COURT:

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