Hackler v. R.T. Moore Co., Inc.
Filing
28
OPINION AND ORDER granting in part and denying in part 18 defendant's Motion to Dismiss or, alternatively, Stay Proceedings and Compel Arbitration. Defendant's Motion to Dismiss is denied; defendant's Alternative Motion to Compel Arbitration is granted. The case is hereby stayed pending notification by the parties that arbitration has been completed and either the stay is due to be lifted or the case is due to be dismissed. See Opinion and Order for details. (AMB)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
JEREMIAH
HACKLER,
on
behalf of himself and those
similarly situated,
Plaintiff,
v.
Case No:
2:17-cv-262-FtM-29MRM
R.T. MOORE CO., INC., an
Indiana
profit
corporation,
Defendant.
OPINION AND ORDER
This matter comes before the Court on Defendant's Motion to
Dismiss
or,
alternatively,
Stay
Proceedings
Arbitration (Doc. #18) filed on July 3, 2017.
and
Compel
Plaintiff filed a
Response in Opposition (Doc. #24) on July 31, 2017, and defendant
filed a Reply (Doc. #27) on August 15, 2017.
For the reasons
set forth below, defendant’s motion to stay proceedings and
compel arbitration is granted and the motion to dismiss is denied.
I.
On June 12, 2017, plaintiff Jeremiah Hackler (Hackler) filed
a Collective Action Complaint under the Fair Labor Standards Act
on behalf of himself and other similarly-situated individuals
(Doc. #1) against defendant R.T. Moore Co., Inc. (Moore).
The
Complaint asserts that during plaintiff’s employment with Moore,
plaintiff was not paid overtime and minimum wage pay in accordance
with the Fair Labor Standards Act (FLSA).
(Id. ¶ 1.)
Hackler was employed with Moore as a plumber intermittently
from 2012 through 2015.
(Id. ¶ 35.)
In January 2015, after a
period of not being employed by Moore, Hackler resubmitted an
application for employment and was rehired.
(Doc. #18, ¶¶ 3-4.)
On January 15, 2015, plaintiff and Moore voluntarily entered into
an Agreement to Arbitrate Certain Disputes (the “Arbitration
Agreement”).
(Id. ¶ 5; Doc. #18-1.)
The Arbitration Agreement
outlines the process for resolving disputes between Moore and its
employees, and provides the following:
If any Dispute which is not resolved to your
satisfaction through informal means, and
either you or the Company wish to pursue the
matter further, the Dispute must be referred
to mandatory binding arbitration to be
administered by the American Arbitration
Association
in
accordance
with
its
Employment Arbitration Rules and Mediation
Procedures (“AAA Rules”) in effect at the
time of the initiation of the arbitration.
(Doc. #18-1, pp. 2-3.) 1
1
The Arbitration Agreement defines “Dispute” as “any claim
arising from, relating to, or having any relationship or
connection whatsoever with the Fair Labor Standards Act or any
state wage and hour statute or any other claim or cause of action
alleging you were improperly or insufficiently paid wages[.]”
(Doc. #18-1, p. 2.)
Whether the underlying claims fit within
the Arbitration Agreement’s definition of Dispute has not been
challenged by any of the parties.
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The Arbitration Agreement provides that a party with a
Dispute shall provide written notice to the other party within
six
months
of
the
accrual
of
any
claim.
(Id.
at
3.)
Specifically, the Arbitration Agreement states:
[A]ny party with a Dispute must give written
notice to the other party within six months
of the accrual of the claim; otherwise the
claim shall be void and deemed waived even
if there is a state or federal statute which
would have given more time to pursue the
claim.
(Id.)
The Arbitration Agreement also contains a waiver of the
right to bring and/or participate in a class (or collective)
action against Moore.
(Id. at 7.)
Specifically, the provision
provides:
To the fullest extent permitted by law, you
hereby waive any right to participate in a
class action or to bring any claim against
the Company as part of a class. Any Dispute
or proceeding shall be pursued on an
individual basis.
(Id.)
On April 13, 2015, Moore terminated plaintiff’s employment,
and on May 12, 2017, plaintiff brought the underlying Complaint
under the FLSA. (Doc. #1; Doc. #18, ¶¶ 11-12.)
Defendant now
moves to dismiss or, alternatively, to stay the proceedings and
compel
Hackler
to
arbitrate
his
claims,
asserting
that
the
binding Arbitration Agreement prevents Hackler from participating
in this lawsuit.
(Doc. #18.)
Specifically, Moore asserts that:
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(i) Hackler failed to submit his FLSA claims to final and binding
arbitration prior to filing a lawsuit against Moore in federal
court; (ii) Hackler failed to provide Moore with a minimum of six
months’ notice of accrual of Hackler’s claim against Moore and
therefore Hackler’s claim is void and waived; and (iii) Hackler
improperly brought a collective action against Moore. (Id. ¶ 13.)
Hackler filed a Response in Opposition only challenging the
provision requiring written notice within six months of the
accrual of plaintiff’s claim.
(Doc. #24, p. 7.)
Hackler asserts
this provision is unenforceable because it violates the FLSA by
extinguishing
the
substantive
right
to
recovery
otherwise
afforded under the FLSA, and asks the Court to deem the notice
provision invalid and sever it from the Arbitration Agreement.
(Id.)
II.
The Federal Arbitration Act (FAA) “creates a strong federal
policy in favor of arbitration.”
Picard v. Credit Sols., Inc.,
564 F.3d 1249, 1253 (11th Cir. 2009).
The FAA provides:
A written provision in . . . 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
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upon such grounds as exist at law or in
equity for the revocation of any contract.
9 U.S.C. § 2.
Under the FAA, “upon being satisfied that the
issue
in
involved
such
suit
or
proceeding
is
referable
to
arbitration” under an agreement, a district court “shall on
application of one of the parties stay the trial of the action
until such arbitration” has occurred.
9 U.S.C. § 3.
Here,
plaintiff is not denying that he has agreed to arbitrate disputes
such as this one pursuant to the Arbitration Agreement (Doc.
#24), and there is no doubt that the Arbitration Agreement is
subject to the FAA.
Upon a finding that claims are subject to
arbitration, the matter should be stayed, and not dismissed,
pending arbitration. Bender v. A.G. Edwards & Sons, Inc., 971
F.2d 698, 699 (11th Cir. 1992).
Therefore, defendant’s motion
to dismiss will be denied.
What
plaintiff
does
challenge
is
the
provision
in
the
Arbitration Agreement that requires him to provide notice within
six months of the accrual date of his claim or suffer the loss
of the claim.
(Doc. #24.)
Plaintiff asserts that this provision
effectively shortens the statute of limitations for his FLSA
claims and precludes him from bringing claims for FLSA violations
that he would otherwise be entitled to bring in the district
court.
This in turn circumvents the purpose of the FLSA and
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operates as an unlawful cap on damages recoverable under the
FLSA.
(Id. at 3.)
The lawfulness of this notice requirement is a matter for
the court to determine.
924 (11th Cir. 2015).
Wiand v. Schneiderman, 778 F.3d 917,
“Ordinarily, when one party challenges
the validity of an arbitration clause on the ground that it
contains unenforceable remedial restrictions, the court must
first determine whether those remedial restrictions are, in fact,
unenforceable—either because they defeat the remedial purpose of
another federal statute . . . under generally applicable state
contract law.”
Terminix Int’l Co., LP v. Palmer Ranch Ltd.
P’ship, 432 F.3d 1327, 1331 (11th Cir. 2005).
If “some or all
of its provisions are not enforceable, then the court must
determine whether the unenforceable provisions are severable.”
Id.
from
Determining whether the unenforceable provision is severable
the
arbitration
clause
applicable state contract law.
requires
examination
of
the
Id.
A. Enforceability under the FLSA
The Supreme Court has said that “even claims arising under
a statute designed to further important social policies may be
arbitrated
because
‘so
long
as
the
prospective
litigant
effectively may vindicate [his or her] statutory cause of action
in the arbitral forum,’ the statute serves its functions.” Green
Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 90 (2000).
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See
also Paladino v. Avnet Comput. Techs., Inc., 134 F.3d 1054, 1062
(11th Cir. 1998) (Cox, J., concurring) (“But the arbitrability
of such claims rests on the assumption that the arbitration clause
permits
relief
omitted)).
equivalent
to
court
remedies.”
(citation
“[B]y agreeing to arbitrate a statutory claim, a
party does not forgo the substantive rights afforded by the
statute; it only submits to their resolution in an arbitral,
rather than a judicial, forum.”
Gilmer v. Interstate/Johnson
Lane Corp., 500 U.S. 20, 26 (1991) (citation omitted).
Courts routinely emphasize the importance of the protections
afforded by the FLSA.
E.g., Douglas v. Xerox Bus. Servs., LLC,
875 F.3d 884, 887 (9th Cir. 2017); Morrison v. County of Fairfax,
826 F.3d 758, 761 (4th Cir. 2016).
The Supreme Court has stated:
The legislative history of the Fair Labor
Standards Act shows an intent on the part of
Congress to protect certain groups of the
population
from
substandard
wages
and
excessive
hours
which
endangered
the
national health and well-being and the free
flow of goods in interstate commerce. The
statute was a recognition of the fact that
due to the unequal bargaining power as
between employer and employee, certain
segments of the population required federal
compulsory legislation to prevent private
contracts on their part which endangered
national health and efficiency and as a
result the free movement of goods in
interstate commerce.
To accomplish this
purpose standards of minimum wages and
maximum hours were provided.
Neither
petitioner nor respondent suggests that the
right to the basic statutory minimum wage
could be waived by any employee subject to
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the Act. No one can doubt but that to allow
waiver of statutory wages by agreement would
nullify the purposes of the Act.
Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 706 (1945) (footnotes
omitted).
The Eleventh Circuit goes as far as requiring the
district court’s approval of settlements covering FLSA claims
prior to the settlement becoming final in order to protect the
rights of the employees.
Lynn’s Food Stores, Inc. v. United
States, 679 F.2d 1350, 1353-54 (11th Cir. 1982).
The FLSA provides for a two-year statute of limitations
period for violations, and a three-year statute of limitations
for instances of willful violations.
29 U.S.C. § 255(a).
A
claimant’s claim accrues each time an employer issues a deficient
paycheck.
Knight v. Columbus, 19 F.3d 579, 581 (11th Cir. 1994).
Thus, the statute of limitations period has a direct correlation
to the amount of recovery that an employee is entitled to obtain,
and has been described as being both procedural and substantive.
Mazurkiewicz v. Clayton Homes, Inc., 971 F. Supp. 2d 682, 690-91
(S.D.
Tex.
2013).
For
example,
limiting
the
statute
of
limitations from two or three years to six months reduces the
potential recovery to 25% or 16-2/3% percent, respectively, of
what could otherwise be recoverable if the action is brought in
a district court.
Most courts that have examined provisions in arbitration
agreements
that
contractually
shorten
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the
FLSA
statute
of
limitations period have found them to be contrary to the FLSA and
unenforceable.
Boaz v. FedEx Customer Info. Servs., Inc., 725
F.3d 603, 606-07 (6th Cir. 2013) (holding that the six-month
limitations provision in the employment agreement operated as a
waiver
of
her
FLSA
claim
and
was
therefore
invalid);
Mazurkiewicz, 971 F. Supp. 2d at 686, 689-91 (finding that
shortening of FLSA statute of limitations to six months limited
plaintiff’s
substantive
right
to
recover
and
was
therefore
unreasonable and unenforceable); Taylor v. Am. Income Life Ins.
Co., No. 1:13CV31, 2013 WL 2087359, at *3 (N.D. Ohio May 14,
2013) (finding that a 30-day statute of limitations period “all
but
eliminates
[the
FLSA]
statute-of-limitations
period
practically eviscerates an employee’s right to relief”);
and
Pruiett
v. W. End Rests., LLC, No. 3:11-00747, 2011 WL 5520969, at *5
(M.D. Tenn. Nov. 14, 2011) (finding that “shortening the statute
of
limitations
for
an
FLSA
claim
necessarily
precludes
a
successful plaintiff from receiving full compensatory recovery
under the statute”).
The Court agrees with these cases.
In its motion, defendant cites to Sanders v. Comcast Cable
Holdings, LLC, No. 3:07-cv-918-J-33HTS, 2008 WL 150479, at *1
(M.D. Fla. Jan. 14, 2008) for the proposition that a contractual
provision shortening the applicable statute of limitations is not
contrary to public policy.
(Doc. #18, p. 9.)
That case,
however, does not deal with claims brought under the FLSA which,
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as the Court pointed out, Congress enacted in order to provide
special protections to employees.
Therefore, the Court finds
Sanders to be inapplicable to the case at hand. 2
The Court finds that the six-month notice provision in the
Arbitration Agreement precludes plaintiff from vindicating his
rights set forth under the FLSA and is therefore unenforceable.
The notice provision interferes with substantive rights under the
FLSA
by
precluding
plaintiff
from
recovering
what
he
would
potentially otherwise be able to recover would he have brought
his claim in the district court.
Since this notice provision is unenforceable, the Court must
now look to Florida law to determine whether it is severable
pursuant to the severability clause in the Arbitration Agreement.
For the reasons set forth below, the Court concludes that it is
severable.
B. Severability of the Unenforceable Provision
Courts
looks
to
state
law
in
determining
whether
the
unenforceable provision should be severed from an arbitration
agreement
and
the
remainder
enforced,
or
whether
the
unenforceable provision renders the entire arbitration agreement
2
Defendant also cites to the Eleventh Circuit’s decision in
Maxcess, Inc. v. Lucent Techs., Inc., 433 F.3d 1337 (11th Cir.
2005) for the same proposition. (Doc. #18, p. 9.) However the
Court in Maxcess also did not deal with claims brought under the
FLSA.
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unenforceable.
(11th
Cir.
Jackson v. Cintas Corp., 425 F.3d 1313, 1317
2005).
The
Arbitration
Agreement
contains
the
following severability provision:
The terms and conditions of this Agreement
are
severable.
The
invalidity
or
unenforceability of any provision shall not
affect
the
application
of
any
other
provision. Where possible, consistent with
the purpose [sic] this agreement, any
otherwise invalid or unenforceable provision
of this Agreement may be reformed and, as
reformed, enforced.
If any provision of this Agreement shall be
found to be in conflict with a required
provision of applicable law by any court of
competent jurisdiction or the arbitrator,
the conflicting provision of this Agreement
shall be modified automatically to comply
with the provision of applicable law.
(Doc. #18-1, p. 8.)
Under Florida law “a bilateral contract is severable where
the illegal portion of the contract does not go to the essence,
and where, with the illegal portion eliminated, there still
remains of the contract valid legal promises on one side which
are wholly supported by valid legal promises on the other.”
Gessa v. Manor Care of Fla., Inc., 86 So. 3d 484, 490 (Fla. 2011)
(alteration in original).
Here,
the
Court
finds
that
the
notice
provision
that
purports to shorten the statute of limitations for FLSA claims
does not go to the essence of the contract.
The Arbitration
Agreement is focused around providing an efficient alternative
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method of resolving disputes surrounding plaintiff’s employment.
The notice provision is merely an ancillary procedural agreement
that
is
not
essential
Arbitration Agreement.
to
the
overarching
purpose
of
the
Without the notice provision, there still
exists a valid contract.
Therefore, the Court severs the notice
provision shortening the statute of limitations period in FLSA
claims from the Arbitration Agreement, and enforces the remainder
of the Arbitration Agreement. 3
Accordingly, defendant’s Motion to Dismiss is denied.
The
alternative Motion to Stay Proceedings and Compel Arbitration is
granted.
individual
The Court compels the parties to arbitrate plaintiff’s
claims,
and
stays
these
proceedings
pending
the
outcome of the arbitration.
Accordingly, it is hereby
ORDERED AND ADJUDGED:
1.
Defendant's Motion to Dismiss is DENIED.
2.
Defendant’s Alternative Motion to Compel Arbitration
(Doc. #18) is GRANTED.
3
The defendant also raises that the collective action waiver
in the Arbitration Agreement is enforceable. (Doc. #18, pp. 1012.)
The plaintiff has not responded to this argument. (Doc.
#24.) Although the plaintiff has not responded, it is clear that
the Eleventh Circuit holds that collective action waivers of FLSA
claims are valid and enforceable.
Walthour v. Chipio Windshield
Repair, LLC, 745 F.3d 1326, 1334-36 (11th Cir. 2014). Therefore,
only plaintiff’s individual claims will proceed to arbitration.
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3.
The case is hereby STAYED pending notification by the
parties that arbitration has been completed and either the stay
is due to be lifted or the case is due to be dismissed.
DONE and ORDERED at Fort Myers, Florida, this __21st__ day
of December, 2017.
Copies:
Counsel of Record
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