Green v. Fishbone Safety Solutions, Ltd. et al
Filing
93
ORDER that plaintiff's Motion to Reconsider, or to Certify to the Colorado Supreme Court, or to Certify for Interlocutory Appeal Docket No. 87 is DENIED. It is Further ORDERED that Defendant Fishbone Safety Solutions, Ltd.'s Motion to Compel Arbitration as to Charles Young Docket No. 73 is GRANTED in part and DENIED in part. It is further ORDERED that Defendants William S. Cain and BSC Interest, LLC's Conditional Motion to Compel Arbitration as to Michael Green and Char les Young Docket No. 83 is GRANTED. It is further ORDERED that Plaintiff's Motion for Approval of Hoffman-La Roche Notice Docket No. 62 is DENIED AS MOOT. It is further ORDERED that Defendant Noble Energy, Inc.'s Unopposed Motion to Stay Litigation Pending an Arbitration Determination and Resolution Docket No. 82 is DENIED. It is standard practice in this district for courts to administratively close, rather than stay, cases pending resolution of the parties' claims in arbitration. Accordingly, defendant's motion to stay will be denied and this case will be administratively closed, subject to reopening for good cause, pursuant to D.C.COLO.LCivR 41.2., by Judge Philip A. Brimmer on 3/19/2018. (evana, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 16-cv-01594-PAB-KMT
MICHAEL GREEN, on behalf of himself and all similarly situated persons,
Plaintiff,
v.
FISHBONE SAFETY SOLUTIONS, LTD., a Texas limited partnership,
WILLIAM S. CAIN,
BSC INTEREST, LLC, a Texas limited liability company, and
NOBLE ENERGY, INC., a Delaware corporation,
Defendants.
ORDER
This matter is before the Court on Plaintiff’s Motion for Approval of Hoffmann-La
Roche Notice [Docket No. 62], Defendant Fishbone Safety Solutions, Ltd.’s Motion to
Compel Arbitration as to Charles Young [Docket No. 73], Defendants William S. Cain
and BSC Interest, LLC’s Conditional Motion to Compel Arbitration as to Michael Green
and Charles Young [Docket No. 83], and plaintiff’s Motion to Reconsider, or to Certify to
the Colorado Supreme Court, or to Certify for Interlocutory Appeal [Docket No. 87].
The Court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1367.
I. BACKGROUND
This case arises out of plaintiff Michael Green’s employment as a safety advisor
for defendant Fishbone Safety Solutions, Ltd., a company that “provides safety
inspection services to oil companies . . . in various states.” Docket No. 6 at 3, ¶ 10.
Plaintiff1 alleges that defendants Fishbone Safety Solutions, Ltd. (“Fishbone”), William
S. Cain (“Cain”), BSC Interest, LLC (“BSC”), and Noble Energy, Inc. (“Noble”) violated
the Fair Labor Standards Act (“FLSA”) and state labor laws by failing to pay him and
other similarly situated individuals overtime. Id. at 7-10. Plaintiff seeks to hold
defendants jointly and severally liable on the basis that (1) Cain and BCS “own and
operate Fishbone Safety Solutions” and (2) Noble “contracted with Fishbone to provide
Safety Advisor services.” Id. at 2-3, ¶ 7.
Plaintiff filed his collective and class action complaint on June 22, 2016, Docket
No. 1, and his first amended complaint on August 5, 2016. Docket No. 6. On
December 9, 2016, Fishbone and Noble moved to compel arbitration. Docket No. 50. 2
On January 9, 2017, Charles Young filed a notice of consent to join the action. Docket
No. 58. Plaintiff subsequently moved for conditional collective action certification and
Hoffman-La Roche notice to a class of “all current and former workers who performed
safety advisor services for Defendant at any time from June 22, 2013 to present.”
Docket No. 62 at 5. On July 18, 2017, Fishbone filed a motion to compel arbitration as
to Young. Docket No. 73.
The Court granted Fishbone’s motion to compel as to Green on September 7,
2017. Docket No. 79. On September 11, 2017, BSC and Cain filed a motion to compel
1
“Plaintiff” will be used throughout this order to refer to Michael Green, the
named plaintiff in this lawsuit.
2
Defendants also moved to compel arbitration of claims asserted by opt-in
plaintiffs Mario Perez, Jr. and Charles Deville, who joined the lawsuit on November 10,
2016. See Docket No. 50; Docket No. 42 (notice of consent filings). Mr. Perez and Mr.
Deville have since withdrawn their consent and are no longer plaintiffs in this lawsuit.
Docket Nos. 55, 81.
2
arbitration as to Green and Young. Docket No. 83. BSC was dismissed from the
lawsuit on September 12, 2017, Docket No. 84, but the motion to compel, as asserted
by Cain, remains pending. On October 15, 2017, plaintiff filed a motion requesting that
the Court reconsider its September 7, 2017 order granting Fishbone and Noble’s
motion to compel. Docket No. 87. All of the pending motions are fully briefed and ripe
for disposition.
II. ANALYSIS
The Court first considers plaintiff’s motion for reconsideration and then turns to
defendants’ motions to compel and plaintiff’s motion for conditional certification.
A. Motion for Reconsideration
The Federal Rules of Civil Procedure do not specifically provide for motions for
reconsideration. See Hatfield v. Bd. of County Comm’rs for Converse County, 52 F.3d
858, 861 (10th Cir. 1995). Instead, motions for reconsideration fall within a court’s
plenary power to revisit and amend interlocutory orders as justice requires. See
Paramount Pictures Corp. v. Thompson Theatres, Inc., 621 F.2d 1088, 1090 (10th Cir.
1980) (citing Fed. R. Civ. P. 54(b)); see also Houston Fearless Corp., 313 F.2d at 92.
However, in order to avoid the inefficiency which would attend the repeated
re-adjudication of interlocutory orders, judges in this district have imposed limits on their
broad discretion to revisit interlocutory orders. See, e.g., Montano v. Chao, No. 07-cv00735-EWN-KMT, 2008 WL 4427087, at *5-6 (D. Colo. Sept. 28, 2008) (a pplying Rule
60(b) analysis to the reconsideration of interlocutory order); United Fire & Cas. Co. v.
McCrerey & Roberts Constr. Co., No. 06-cv-00037-WYD-CBS, 2007 WL 1306484, at
3
*1-2 (D. Colo. May 3, 2007) (applying Rule 59(e) standard to the reconsideration of the
duty-to-defend order). Regardless of the analysis applied, the basic assessment tends
to be the same: courts consider whether new evidence or legal authority has emerged
or whether the prior ruling was clearly in error. Motions to reconsider are generally an
inappropriate vehicle to advance “new arguments, or supporting facts which were
available at the time of the original motion.” Servants of the Paraclete v. Does, 204
F.3d 1005, 1012 (10th Cir. 2000).
Plaintiff seeks reconsideration of the Court’s order compelling arbitration on two
grounds: (1) the Court clearly erred in finding that the unenforceable terms in the
parties’ arbitration agreement were severable from the agreement; and (2) the Court
clearly erred in holding that plaintiff was equitably estopped from litigating his claims
against Noble in court. Docket No. 87 at 3-8. As an alternative to reconsideration,
plaintiff requests that the Court certify certain questions of law to the Colorado Supreme
Court or allow plaintiff to file an interlocutory appeal pursuant to 28 U.S.C. § 1292(b).
Id. at 8-12.
1. Severability
In the earlier order, this Court held that the provisions in plaintiff’s arbitration
agreement requiring him to (1) make a request for arbitration within one year of the
challenged employment incident and (2) bear the costs of his legal representation were
unenforceable. Docket No. 79 at 7, 9. Nevertheless, the Court concluded that the
provisions could be severed from the arbitration agreement because they “[did] not
affect the primary purpose or object of the agreement, which [was] to submit
employment disputes to arbitration.” Id. at 11. Plaintiff challenges this determination on
4
two grounds. First, plaintiff argues that the Court’s conclusion flows from an “incorrect
premise” that it was plaintiff’s burden to prove that the unenforceable terms were not
severable. Docket No. 87 at 2-3. Second, plaintif f contends that the Court’s ultimate
holding on severability constituted clear error. Id. at 3-4.
In support of his first argument, plaintiff asserts that the Court improperly
imported the Federal Arbitration Act’s policy favoring arbitration into its analysis of a
state law issue by making it plaintiff’s burden to show that the parties did not intend to
allow severance of the unenforceable provisions. Id. at 2. However, plaintiff does not
cite any Colorado cases addressing which party bears the burden of demonstrating
severability when the unenforceable terms are contained within an arbitration
agreement governed by the FAA. See CapitalValue Advisors, LLC v. K2d, Inc., 321
P.3d 602, 605-608 (Colo. App. 2013) (applying severability analysis to performance
terms of debt financing agreement); John v. United Advert., Inc., 439 P.2d 53, 54-56
(Colo. 1968) (applying severability analysis to performance terms in contract governing
construction, installation, and maintenance of outdoor display signs); see also Fuller v.
Pep Boys – Manny, Moe & Jack of Delaware, Inc., 88 F. Supp. 2d 1158, 1162 (D. Colo.
2000) (noting, in analysis of whether unenforceable term was severable from arbitration
agreement, that “[f]ederal case law and statutory law clearly creates a presumption in
favor of arbitrability” and thus the court “must resolve all doubts in favor of arbitration”).
Even if plaintiff is correct that he did not bear the burden of demonstrating the
parties’ intent not to allow severance, he has failed to demonstrate that the Court
clearly erred in determining that the unenforceable provisions could be severed from
5
the parties’ arbitration agreement. It is true, as plaintiff points out, that a number of
courts in this circuit have relied on the absence of a savings clause to hold that
unenforceable terms were not severable from an arbitration agreement. See, e.g.,
Nesbitt v. FCNH, Inc., 74 F. Supp. 3d 1366, 1375 (D. Colo. 2014), aff’d, 811 F.3d 371
(10th Cir. 2016); Perez v. Hosp. Ventures-Denver, LLC, 245 F. Supp. 2d 1172, 1174 (D.
Colo. 2003). As stated in this Court’s prior order, however, the courts in those cases
did not rely on Colorado law or analyze the parties’ intent regarding severability.3 Under
Colorado law, “[t]he absence of a severability clause does not conclusively establish
that the parties did not intend that the Agreement be severable.” CapitalValue
Advisors, LLC, 321 P.3d at 607. Plaintiff acknowledges that “there may be a narrow
category of cases where a contract is divisible even in the absence of a severability
provision.” Docket No. 87 at 4. However, he argues that such cases involve other
indicia of the parties’ intent to allow severance, such as the existence of “multiple
standalone promises each with separate consideration” in the contract at issue. Id.
(citing CapitalValue Advisors, 321 P.3d at 607-08). But plaintiff cites no authority for
the proposition that the absence of a severability provision is determinative in cases
where the contract does not contain multiple standalone promises. Moreover, even if
plaintiff is correct that the unenforceable provisions in this case “would not be cohesive
bilateral agreements on their own,” Docket No. 87 at 4, he does not challenge the
3
As plaintiff argues, whether an unenforceable provision is severable from an
arbitration agreement is a matter of state, not federal, law. See Docket No. 87 at 3;
Kepas v. eBay, 412 F. App’x 40, 49-50 (10th Cir. 2010) (unpublished) (applying
California law to determine whether objectionable term in arbitration agreement was
severable).
6
Court’s determination that those provisions are collateral to “the primary purpose or
object of the agreement, which is to submit employment disputes to arbitration.” Docket
No. 79 at 11; see S. Wash. Assocs. v. Flanagan, 859 P.2d 217, 220 (Colo. App. 1992)
(rejecting argument that agreement to submit issue to arbitration was invalid due to
invalidity of portion of agreement governing judicial review “where that portion of the
arbitration agreement concerning the standard of appellate review [] [did] not . . . affect
the primary purpose or object of the agreement, which was, to submit the issue of the
deficiency to arbitration.”); cf. Kepas, 412 F. App’x at 50 (holding that unenforceable
provision governing arbitration costs could be severed from arbitration agreement
because provision was collateral to agreement’s primary purpose of “provid[ing] a
mechanism to resolve disputes” (internal quotation marks omitted)).
Plaintiff requests, at a minimum, that the Court “hold an evidentiary hearing as to
the parties’ intent.” Docket No. 87 at 5. But plaintif f has never before requested an
evidentiary hearing on the issue, and a motion for reconsideration is generally an
inappropriate vehicle for raising new arguments “available at the time of the original
motion.” Servants of the Paraclete, 204 F.3d at 1012.
The standard for reconsideration requires plaintiff to show that the Court clearly
erred in its initial ruling. Plaintiff has failed to make this showing. In requesting that this
Court certify questions to the Colorado Supreme Court, plaintiff admits that “Colorado
courts have yet to speak finally on the legal principles at issue here.” Docket No. 87 at
8. This acknowledgment alone weighs against a finding of clear error. Accordingly,
plaintiff’s motion for reconsideration is denied as to the issue of severance.
7
2. Equitable Estoppel
Plaintiff also argues that the Court clearly erred in holding that plaintiff is
equitably estopped from avoiding arbitration of his claims against Noble. Docket No. 87
at 5. In reaching its conclusion, this Court relied on Meister v. Stout, 353 P.3d 916, 918
(Colo. App. 2015), in which the Colorado Court of Appeals held that a “signatory to an
agreement containing an arbitration clause may be equitably estopped from avoiding
arbitration when he sues a nonsignatory on claims that (1) presume the existence of
that agreement or (2) allege interconnected and concerted misconduct between the
nonsignatory and one or more of the signatories related to that agreement.” See
Docket No. 79 at 13. This Court determined that the latter scenario applied in this case
because “plaintiff’s claims against Noble are intertwined [] with plaintiff’s contractual
relationship with Fishbone, which includes the arbitration agreement.” Id. at 14.
Plaintiff argues that the Court’s application of Meister was incorrect. According
to plaintiff, this case does not fall within the circumstances described in Meister
because plaintiff “does not rely on the terms of a written agreement containing an
arbitration provision” to assert his FLSA claims. Docket No. 87 at 6. Plaintiff further
contends that application of the equitable estoppel doctrine in this case would be
“inconsistent with the purposes of the . . . doctrine, which seeks to prevent a party from
using a contract as a sword without being bound by that same contract’s terms.”
Docket No. 91 at 4.
As an initial matter, plaintiff’s reliance on that portion of Meister indicating that a
signatory is only required to arbitrate his or her claims against a nonsignatory if he or
8
she “rel[ies] on the terms of a written agreement containing an arbitration provision”
ignores Meister’s subsequent statement that “[e]quitable estoppel is also available
under [the] second scenario when a signatory alleges substantially interdependent and
concerted misconduct by a nonsignatory and one or more signatories to the
agreement.” Meister, 353 P.3d at 921 (emphasis added). Thus, plaintiff fails to
acknowledge that there are two circumstances in which the second scenario justifying
equitable estoppel applies. See Santich v. VCG Holding Corp., No. 17-cv-00631-RMMEH, 2017 WL 4251944, at *10 (D. Colo. Sept. 26, 2017) (recog nizing that second
scenario in Meister contains “two subsets”: (1) “when the plaintiff relies on the terms of
a written agreement to assert his claims”; and (2) “when the plaintiff alleges
interconnected misconduct between the signatory and nonsignatory defendants and the
misconduct is intertwined with duties or obligations arising from the parties’ contract”).
Only the first circumstance requires that a signatory’s claims rely on the terms of the
parties’ written agreement. The second only requires that the alleged misconduct be
“intertwined” with the parties’ contractual duties and obligations. See Meister, 353 P.3d
at 921.
The Court determined that the second circumstance applied here because
plaintiff predicated his theory of liability regarding Noble on allegations that Fishbone
and Noble were essentially operating as one entity. See Docket No. 79 at 14; Docket
No. 6 at 3-4, ¶ 12 (alleging that “Fishbone/Noble refused to pay overtime to Plaintiff
because it classified him as an independent contractor”); see also Meister, 353 P.3d at
921-22 (finding “interconnected and concerted misconduct” where Meister’s allegations
9
referred collectively to “Defendants” and did not “assign[] alleged misconduct to any
defendant individually”). The Court thus concluded that plaintiff’s claims against Noble
were sufficiently “intertwined” with plaintiff and Fishbone’s contractual relationship to
justify equitable estoppel. Docket No. 79 at 14. Plaintiff therefore cannot show that the
Court “clearly erred” in its determination.
Plaintiff’s citations to non-Colorado cases do not alter this conclusion. At the
very least, defendants’ references to countervailing authority demonstrate that courts
disagree over the appropriate application of equitable estoppel principles to compel
arbitration of claims against nonsignatories. See, e.g., Dennis v. United Van Lines,
LLC, 2017 WL 5054709, at *4 (E.D. Mo. Nov. 1, 2017) (holding under Delaware law
that allegations that defendants engaged in concerted misconduct that resulted in
violations of the FLSA precluded plaintiff from avoiding arbitration of claims against
nonsignatory defendant); Bonner v. Mich. Logistics. Inc., 250 F. Supp. 3d 388, 397-98
(D. Ariz. 2017) (holding under Arizona law that plaintiff was equitably estopped from
avoiding arbitration against nonsignatory defendant where plaintiff had attempted to
hold defendants liable for FLSA violations under joint employer theory). Indeed, the
fact that the law is unsettled in this area – which plaintiff readily admits, see Docket No.
87 at 10 – weighs against a finding of clear error.
For these reasons, the Court concludes that it did not clearly err in compelling
arbitration of plaintiff’s claims against Noble.
3. Request for Certification or Interlocutory Appeal
As an alternative to reconsideration, plaintiff requests that the Court either certify
10
the legal questions presented in this case to the Colorado Suprem e Court or permit
plaintiff to file an interlocutory appeal pursuant to 28 U.S.C. § 1292(b). See Docket No.
87 at 8, 12. Such relief is discretionary and will not be granted in every case that raises
“an unsettled question of state law.” Armijo v. Ex Cam, Inc., 843 F.2d 406, 407 (10th
Cir. 1988) (discussing certification to state supreme court); see also Branzan Alt. Inv.
Fund, LLLP v. Bank of New York Mellon Trust Co., N.A., 14-cv-02513-REB-MJW, 2015
WL 6859996, at *1 (D. Colo. Nov. 9, 2015) (noting that, although district courts have
“discretion in determining whether to certify an order for interlocutory appeal under [§
1292(b)], certification should be reserved for rare and extraordinary cases” (internal
citations omitted)). Plaintiff does not explain why interlocutory appeal to the Tenth
Circuit would be appropriate in this case, given the fact that the disputed issues pertain
primarily – if not solely – to matters of state law. Nor would an appeal resolve the
parties’ dispute. Certification is also inappropriate because (1) the legal questions are
predicated on the existence of a specific set of facts, see Branzan, 2015 WL 6859996,
at *2 (noting that certification is inappropriate “when there is merely a dispute as to how
the law applies to the facts of a particular situation”); and (2) plaintiff did not raise the
issue of certification until after the Court ruled in defendants’ favor. See Armijo, 843
F.2d at 407 (noting, as grounds for denying certification request, that the “plaintiff did
not request certification until after the district court made a decision unfavorable to
her”).
Accordingly, plaintiff’s request for reconsideration of the Court’s prior order
compelling arbitration of plaintiff’s claims against defendants Fishbone and Noble, and
11
plaintiff’s alternative request for certification or interlocutory appeal, will be denied.
B. Motions to Compel Arbitration
Plaintiffs do not dispute that the Federal Arbitration Act (“FAA”) governs their
arbitration agreements. The FAA provides that “[a] written provision in any . . . contract
evidencing a transaction involving commerce to settle by arbitration a controversy
thereafter arising out of such contract or transaction, . . . shall be valid, irrevocable, 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 FAA “manifests a liberal federal policy favoring arbitration.” Comanche
Indian Tribe v. 49, L.L.C., 391 F.3d 1129, 1131 (10th Cir. 2004) (quoting Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991)). Consequently, the Court must
“resolve ‘any doubts concerning the scope of arbitrable issues . . . in favor of
arbitration.’” P & P Industries, Inc. v. Sutter Corp., 179 F.3d 861, 866 (10th Cir. 1999)
(quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25
(1983)). “In addition, this liberal policy ‘covers more than simply the substantive scope
of the arbitration clause,’ and ‘encompasses an expectation that [arbitration] procedures
will be binding.’” Id. (citation omitted).
However, “even in situations where both parties voluntarily agreed, at the outset
of their relationship, to arbitrate any claims that might arise between them,” the
agreement must still allow the parties to “effectively vindicate” their statutory rights.
Nesbitt v. FCNH, Inc., 811 F.3d 371, 378 (10th Cir. 2016). Under th e effective
vindication exception to the FAA, the Court may invalidate an arbitration agreement if
12
the agreement operates “as a prospective waiver of a party’s right to pursue statutory
remedies.” Am. Exp. Co. v. Italian Colors Rest., 133 S. Ct. 2304, 2310 (2013)
(emphasis in original) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
473 U.S. 614, 637 n.19 (1985)). W hile the FAA provides a presumption in favor of
arbitration, “an arbitration agreement that prohibits use of the judicial forum as a means
of resolving statutory claims must also provide for an effective and accessible
alternative forum.” Shankle v. B-G Maint. Mgmt. of Colorado, Inc., 163 F.3d 1230, 1234
(10th Cir. 1999).
Determining whether a dispute is subject to arbitration “is similar to summary
judgment practice.” Bellman v. i3Carbon, LLC, 563 F. App’x 608, 612 (10th Cir. 2014)
(unpublished) (quoting Hancock v. Am. Tel. & Tel. Co., 701 F.3d 1248, 1261 (10th Cir.
2012)). The party moving to compel arbitration must present “evidence sufficient to
demonstrate the existence of an enforceable agreement.” Id. The burden then shifts to
the nonmoving party “to raise a genuine dispute of material fact regarding the existence
of an agreement.” Id. If the nonmoving party seeks to invalidate an arbitration
agreement, he bears the burden of showing that the arbitration agreement prevents the
effective vindication of his rights. Nesbitt, 811 F.3d at 377-79.
1. Defendant Fishbone’s Motion to Compel Arbitration as to Charles
Young
The Court turns first to defendant Fishbone’s motion to compel arbitration of the
claims asserted by opt-in plaintiff Charles Young. Docket No. 73.
To meet its initial burden of showing that an enforceable arbitration agreement
exists, defendant has submitted a copy of its “Mutual Agreement to Arbitrate Claims,”
13
which Young signed on April 17, 2012. Docket No. 73-1. Defendant also advances the
same arguments that it asserted in its motion to compel arbitration as to Green –
namely, that (1) Young’s FLSA claims fall within the scope of his arbitration agreement;
(2) Young is required to arbitrate his disputes against nonsignatory defendants Cain
and Noble; and (3) Young’s claims must proceed in arbitration as an individual action.
Docket No. 73 at 2, 6-10.
In his three-page response, Young concedes that his claims are arbitrable under
current law. See Docket No. 77 at 2 n.1. However, Young urges the Court to stay
resolution of defendant’s motion to compel pending the Supreme Court’s decision in
N.L.R.B. v. Murphy Oil, 137 S. Ct. 809 (2017) (granting petition for writ of certiorari).
Young contends that, if the Supreme Court reverses the Fifth Circuit’s decision in
Murphy Oil v. N.L.R.B., USA, Inc., 808 F.3d 1013 (5th Cir. 2015), and holds that a
collective action ban in an arbitration agreement constitutes an “unfair labor practice”
under the National Labor Relations Act (“NLRA”), 29 U.S.C. §§ 157, 158(a)(1), his
arbitration agreement, which includes such a ban, will be unenforceable. Docket No. 77
at 1-2.
Whether or not the law is currently in flux on this issue, the Court declines to stay
its ruling on defendant’s motion to compel. Young has conceded that current law
requires arbitration of his claims against Fishbone. See Docket No. 77 at 2 n.1. If
courts were to stay proceedings every time there was a relevant case pending before
the Supreme Court or the Tenth Circuit, litigation would often be delayed months or
even years, resulting in prejudice to litigants and a significant backlog in the federal
docket.
14
Having determined that a stay is inappropriate, the Court finds that Young’s
claims against Fishbone must proceed as an individual action in arbitration. Young’s
arbitration agreement states that it “cover[s] all claims Employee may have against the
Company or that the Company may have against Employee,” including, but not limited
to “claims for unpaid or minimum wages, overtime wages, liquidated damages or other
compensation or benefits due, whether claimed under the Fair Labor Standards Act
(“FLSA”), the Texas Minimum Wage Act or any other federal, state or local law . . . .”
Docket No. 73-1 at 3. Based on this language, the Court finds that Young’s FLSA
claims against Fishbone are expressly encompassed within the parties’ agreement and
thus subject to arbitration.
The Court further concludes that Young is barred from proceeding by way of
class arbitration. In its prior order, the Court determined that the arbitration agreement
signed by Green did not authorize class arbitration. Docket No. 79 at 16-17. The
evidence of the parties’ intent to bar class arbitration in regard to Young is even more
compelling. In contrast to Green’s agreement, Young’s agreement contains an express
waiver of the parties’ rights to assert claims on a collective or class action basis. The
waiver provision states:
THE EMPLOYEE AND THE COMPANY AGREE THAT EACH MAY
BRING CLAIMS AGAINST THE OTHER ONLY IN THEIR INDIVIDUAL
CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY
PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. Further,
unless both Employee and the Company agree otherwise, the arbitrator
may not consolidate more than one person’s claims, may not authorize
notice to potential claimants, may not authorize a collective action under
the FLSA or any other law, may not authorize a class action and may not
otherwise preside over any other form of a representative or class
proceeding. If this specific provision is found to be unenforceable, then
the entirety of this arbitration provision shall be null and void.
15
Docket No. 73-1 at 4, ¶ 5. As noted above, plaintiff concedes that this provision is
enforceable under Fifth Circuit precedent. Docket No. 77 at 2 n.1; see also Murphy Oil
USA, Inc., 808 F.3d at 1015-16 (affirming prior holding that “an employer does not
engage in unfair labor practices [under the NLRA] by maintaining and enforcing an
arbitration agreement prohibiting employee class or collective actions and requiring
employment-related claims to be resolved through individual arbitration”). Courts in the
Tenth Circuit have also adopted the Fifth Circuit’s rule. See, e.g., Arnold v. Grill, 2016
WL 10607164, at *3-4 (N.D. Okla. Nov. 2, 2016); Pollard v. ETS PC, Inc., 186 F. Supp.
3d 1166, 1179-88 (D. Colo. 2016). 4 In light of plaintiff’s concession and existing case
law, the Court finds that the collective action waiver is enforceable and that Young is
required to resolve his claims against Fishbone through individual arbitration.
The Court declines, however, to compel arbitration of Young claims against
Noble and Cain. Because Young never worked for Noble, there is no basis for him to
assert claims against the company. Docket No. 73-1 at 2, ¶ 3. The Court declines to
order arbitration of nonexistent claims. An order compelling arbitration of Young’s
claims against Cain would also be inappropriate, given that Cain did not join Fishbone’s
motion to compel. Fishbone’s request to compel arbitration of Young’s claims against
Noble and Cain is therefore denied.
4
Although plaintiff appears to concede that Fifth Circuit law governs the
arbitrability of his claims against Fishbone, it is not clear why that would be the case,
given that this suit was filed in Colorado.
16
2. Defendant Cain’s Motion to Compel as to Green and Young 5
On September 11, 2017, BSC and Cain moved to compel arbitration as to Green
and Young on the same grounds previously asserted by Fishbone and Noble. Docket
No. 83 at 3.
a. Green
Cain asserts that Green is required to resolve his claims against Cain through
individual arbitration because (1) Green’s claims against Fishbone/Noble and Cain are
“sufficiently intertwined, such that Green is bound to arbitrate” against all defendants,
and (2) Green’s arbitration agreement does not authorize class arbitration. Docket No.
83 at 4, 6. Green responds that the arbitration ag reement is unenforceable because it
prevents him from effectively vindicating his rights. Docket No. 85 at 3. He further
contends that he is not required to proceed against Cain by way of individual arbitration
because Cain was not a signatory to the arbitration agreement and the plain language
of the agreement permits class arbitration. Id. at 7-10.
The Court finds that its prior order granting Fishbone’s motion to compel, Docket
No. 79, is dispositive of (1) the unenforceability of the arbitration agreement under the
effective vindication exception, and (2) the availability of class arbitration. In its order,
the Court determined that the provisions of the arbitration agreement pertaining to the
costs of legal representation and the one-year filing requirement – though
unenforceable – were severable from the agreement. Docket No. 79 at 7, 9, 12. The
5
This motion was filed jointly by BSC and Cain before BSC’s dismissal from the
lawsuit on September 12, 2017. Docket No. 84. Because BSC is no long er a party in
this action, the Court will consider the motion only as it relates to plaintiff’s claims
against Cain.
17
Court further concluded that the arbitration agreement did not authorize class
arbitration. Id. at 17. Because Cain moves to compel arbitration on the basis of the
same arbitration agreement, these prior holdings apply.
The Court’s order is also determinative of Cain’s ability to compel arbitration of
Green’s claims. Cain was not a signatory to the arbitration agreement between Green
and Fishbone. However, Green asserts liability against Cain under the theory that Cain
“own[s] and operate[s] Fishbone Safety Solutions, Ltd. and, therefore, [is] jointly and
severally liable for the violations alleged.” Docket No. 6 at 2-3, ¶ 7. This Court
previously concluded, on the basis of similar allegations treating Fishbone and Noble as
a single entity, that Green’s claims against Noble were sufficiently “intertwined” with his
employment relationship with Fishbone for plaintiff to be equitably estopped from
avoiding arbitration as to Noble, even though Noble was not a signatory to the
arbitration agreement. Docket No. 79 at 14; see also Meister, 353 P.3d at 921
(requiring arbitration of claims against non-signatories when “a signatory alleges
substantially interdependent and concerted misconduct . . . . that is intertwined with
duties or obligations arising from the underlying contract” (internal citations omitted)).
The same reasoning applies here. Green does not assert separate claim s against
Cain. Instead, Cain’s liability is predicated entirely on Green’s employment relationship
with Fishbone and Cain’s position as owner/operator of Fishbone. Under these
circumstances, the Court finds that the doctrine of equitable estoppel precludes Green
from avoiding arbitration as to Cain. 6
6
Plaintiff does not assert any arguments in opposition to Cain’s motion to compel
that were not raised with respect to Noble. Instead, plaintiff contends that the Court
18
Additionally, Green’s claims against Cain must proceed by way of individual
arbitration. This Court previously concluded that Green’s arbitration agreement with
Fishbone does not authorize class arbitration. Docket No. 79 at 16-17. Because the
same agreement governs the arbitrability of Green’s claims against Cain, the Court’s
prior holding is determinative.
b. Young
Cain also moves to compel arbitration of Young’s claims on the basis of Young’s
arbitration agreement with Fishbone. See Docket No. 83 at 4-6. Cain asserts two
grounds for its motion: (1) Young’s agreement expressly requires arbitration of claims
against Fishbone’s “partners, parents and subsidiaries and af filiated companies”; and
(2) Young’s claims against Cain are sufficiently intertwined with his claims against
Fishbone that he should be equitably estopped from pursuing his claims against Cain in
court. Id. at 4-5.
As an initial matter, the Court notes that Young’s arbitration agreement differs
from Green’s in two important respects. First, the arbitration agreement expressly
encompasses disputes arising between Young and Fishbone’s “partners, parents and
subsidiaries and affiliated companies.” Docket No. 73-1 at 3. Second, the agreement
is presumably governed by Texas law, as Texas is both the state in which the
agreement was signed and the state in which Young worked for Fishbone. Docket No.
73-1 at 2, ¶ 3; see also Docket No. 83 at 5 (citing Texas law); Wood Brothers Homes,
Inc. v. Walker Adjustment Bureau, 601 P.2d 1369, 1372 (Colo. 1979) (adopting
erred in its prior ruling as to Noble. See Docket No. 85 at 7-8.
19
Restatement (Second) conflict of law rules for contract actions under which dispute is
governed by the substantive law of the state having the “most significant relationship” to
the issues).
Taking these differences into account, the Court finds that Young is required to
arbitrate his claims against Cain, but for different reasons than the ones stated in the
Court’s prior order granting Fishbone’s motion to compel Green’s claims against Noble.
In contrast to Colorado law, Texas law is clear that courts may not compel arbitration
against non-signatories “based solely on substantially interdependent and concerted
misconduct.” In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 188-90 (Tex. 2007).
However, the Texas Supreme Court has stated that “parties to an arbitration agreement
may not evade arbitration through artful pleading, such as by naming individual agents
of the party to the arbitration clause and suing them in their individual capacity.” Id. at
188; see also Covington v. Aban Offshore Ltd., 650 F.3d 556, 560 (5th Cir. 2011)
(discussing Texas case law holding that “a signatory plaintiff cannot avoid its agreement
to arbitrate disputes simply by bringing . . . claims against the nonsignatory officers,
agents, or affiliates of the other signatory to the contract.” (internal quotation marks and
brackets omitted)).
Plaintiffs in this case assert that Cain is “jointly and severally liable” for
Fishbone’s wage violations on the basis that Cain is managing member of BSC, which
is a general partner of Fishbone. Docket No. 6 at 2-3, ¶ 7; Docket No. 73-1 at 2, ¶ 2.
Accordingly, Young’s claims against Cain are “in substance” claims against Fishbone.
In re Merrill, 235 S.W.3d at 190. To allow Young to litigate his claims against Cain
would thus enable him to “evade arbitration through artful pleading.” Id. at 188; see also
20
In re Hawthorne Townhomes, L.P., 282 S.W.3d 131, 139 (Tex. App. 2009) (citing In re
Merrill and holding that purchaser of home could not “avoid enforcement of the
arbitration agreement by suing the signatory’s general partner and its agents,” where
the claims against the defendants all arose out of “the design or construction of the
home and the sale of the home, all of which [were] subject to arbitration”).
Moreover, Young’s arbitration agreement expressly applies to disputes with
Fishbone’s “partners, parents and subsidiaries and af filiated companies.” Docket No.
73-1 at 3. In In re Hawthorne Townhomes, L.P., the Texas Court of Appeals held,
based on similar contract language, that the general partner of one of the signatories to
an arbitration agreement was an “intended third-party beneficiary” of the agreement and
thus entitled to compel arbitration. 282 S.W.3d at 139. Applying this reasoning here,
BSC – and Cain, as an agent of BSC – are entitled to compel arbitration as the thirdparty beneficiaries of Young’s agreement with Fishbone. See id. (holding that general
partner and agents of general partner were entitled to enforce arbitration agreement
under third-party beneficiary theory).
For these reasons, the Court finds that Young’s claims against Cain are subject
to arbitration.
C. Motion for Approval of Hoffman-La Roche Notice
Denial of a motion for conditional certification on mootness grounds is
appropriate when a court has determined that all claims asserted in the action are
subject to arbitration. See Beery v. Quest Diagnostics, Inc., 2013 WL 3441792, at *3
(D.N.J. July 8, 2013) (holding that court lacked jurisdiction over collective action after
21
claims of named plaintiffs were dismissed); Dixon v. NBCUniversal Media, LLC, 947 F.
Supp. 2d 390, 405-06 (S.D.N.Y. 2013) (denying motion for conditional certification as
moot where “the only plaintiff to opt-in to [the] lawsuit . . . [had] agreed to arbitrate her
FLSA claims, and ha[d] waived the right to bring a collective action with regard to those
claims”); cf. Genesis Healthcare Corp. v. Symczyk, 569 U.S. 66, 73-75, 78-79 (2013)
(holding that FLSA collective action became moot when named plaintiff’s individual
claim became moot prior to conditional certification “because [plaintiff] lacked any
personal interest in representing others in [the] action”). Given the Court’s resolution of
defendants’ motions to compel, all the claims asserted in this action are subject to
arbitration. Plaintiff’s motion for conditional certification, Docket No. 62, is therefore
moot.
III. ADMINISTRATIVE CLOSURE
Following the Court’s order on defendants Fishbone and Noble’s motion to
compel arbitration as to Green, Noble filed an Unopposed Motion to Stay Litigation
Pending an Arbitration Determination and Resolution [Docket No. 82]. It is standard
practice in this district for courts to administratively close, rather than stay, cases
pending resolution of the parties’ claims in arbitration. See, e.g., Cochlear Ltd. v.
Oticon Med. AB, No. 16-cv-01700-PAB-KMT, 2017 WL 4251927, at *4 (D. Colo. Sept.
25, 2017) (denying motion to stay but administratively closing case pending resolution
of claims through arbitration); see also Quinn v. CGR, 828 F.2d 1463, 1465 & n.2 (10th
Cir. 1987) (describing administrative closure as “the practical equivalent of a stay”).
Accordingly, defendant’s motion to stay will be denied and this case will be
22
administratively closed, subject to reopening for good cause, pursuant to
D.C.COLO.LCivR 41.2.
IV. CONCLUSION
For the foregoing reasons, it is
ORDERED that plaintiff’s Motion to Reconsider, or to Certify to the Colorado
Supreme Court, or to Certify for Interlocutory Appeal [Docket No. 87] is DENIED. It is
further
ORDERED that Defendant Fishbone Safety Solutions, Ltd.’s Motion to Compel
Arbitration as to Charles Young [Docket No. 73] is GRANTED in part and DENIED in
part. It is further
ORDERED that Defendants William S. Cain and BSC Interest, LLC’s Conditional
Motion to Compel Arbitration as to Michael Green and Charles Young [Docket No. 83]
is GRANTED. It is further
ORDERED that Plaintiff’s Motion for Approval of Hoffman-La Roche Notice
[Docket No. 62] is DENIED AS MOOT. It is further
ORDERED that Defendant Noble Energy, Inc.’s Unopposed Motion to Stay
Litigation Pending an Arbitration Determination and Resolution [Docket No. 82] is
DENIED. It is further
ORDERED that this case shall be administratively closed, subject to reopening
by any party upon a showing of good cause, pursuant to D.C.COLO.LCivR 41.2. It is
further
ORDERED that, not later than twenty days after the completion of the arbitration
23
proceeding, the parties shall file a status report advising the Court whether they believe
the case should be reopened for good cause for any further proceedings in this Court or
whether the case may be dismissed.
DATED March 19, 2018.
BY THE COURT:
s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge
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