Espinoza v. South Beach Associates, LLC et al

Filing 79

ORDER granting 68 Motion to Compel Arbitration. This case is stayed. The Clerk is directed to administratively close this case. Signed by Judge Robert N. Scola, Jr on 4/27/2021. See attached document for full details. (kpe)

United States District Court
for the
Southern District of Florida
Carlos H. Espinoza and all others
similarly situated, Plaintiffs,
v.
South Beach Associates LLC and
Stefano Fritella, Defendants.

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) Civil Action No. 20-22873-Civ-Scola
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Order Granting Motion to Compel Arbitration
Plaintiff Carlos H. Espinoza, through this Fair Labor Standards Act case,
seeks damages from Defendants South Beach Associates, LLC, and Stefano
Fritella for their failure to pay him overtime wages during his employment at
Social, a restaurant in Miami Beach, Florida. (Compl., ECF No. 1, 12–16.) In
response to the lawsuit, the Defendants filed a motion to compel arbitration,
seeking to compel arbitration and stay the case based on Espinoza’s alleged
execution of an employee-dispute-resolution agreement with South Beach.
(Defs.’ 1st Mot. to Compel, ECF No. 6.) In opposing the motion, Espinoza denied
ever signing an arbitration agreement or otherwise agreeing to arbitrate any
claims against the Defendants. (Pl.’s Resp. to 1st Mot., ECF No. ECF No. 11.) In
light of the parties’ disagreement on this point, the Court determined Espinoza
had raised a genuine issue of material fact concerning the formation of the
purported arbitration agreement and denied the Defendants’ motion to compel,
without prejudice. (Order, ECF No. 19.) In doing so, and after denying the
parties’ cross motions for summary judgment, the Court then held a one-day
bench trial on the sole issue of contract formation. After that bench trial, the
Court entered a verdict and order in favor of the Defendants, finding Espinoza
did sign the arbitration agreement and its associated acknowledgment form,
thus establishing the formation of a contract to arbitrate. (Verdict and Order,
ECF No. 65.) Consequently, the Defendants have now renewed their motion to
compel arbitration. (Defs.’ Renewed Mot., ECF No. 68.) Espinoza, however,
continues to resist arbitration. In response to the motion to compel, he
challenges, among other things, the provision of the arbitration agreement that
delegates the determination of enforceability of the arbitration agreement to the
arbitrator. (Pl.’s Resp. to Renewed Mot., ECF No. 70.) The Defendants have
timely replied, countering that Espinoza’s objections to this delegation provision
miss the mark. (Defs.’ Reply, ECF No. 77.) After careful review, the Court finds
Espinoza’s challenge to the delegation provision unavailing and, therefore,
grants the Defendants’ motion to compel arbitration. (ECF No. 68.)

Within the arbitration agreement at issue here is a delegation clause
under which the parties delegated to the arbitrator “exclusive authority to
resolve any jurisdictional and arbitration, scope, applicability, validity,
enforceability, or procedural requirements” of the arbitration agreement. (Arb.
Agmt. ¶6, Ex. 1 to Renewed Mot., ECF No. 68, 14.) In challenging this
provision, Espinoza argues the clause (1) does not clearly and unequivocally
show an agreement between the parties to “refer all ‘gateway’ matters to the
arbitrator concerning federal law based claims”; and (2) is unconscionable.
(Pl.’s Resp. at 4 (emphasis in original).) The Court does not find either argument
convincing.
As to Espinoza’s first argument, the Court agrees with the standard he
enunciates: indeed, “[c]ourts should not assume that the parties agreed to
arbitrate arbitrability unless there is clear and unmistakable evidence that they
did so.” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995)
(cleaned up). Where the Court parts ways with Espinoza, though, is regarding
his supposition that the parties’ agreement to arbitrate arbitrability is not clear
and unmistakable because of a choice-of-law provision, set forth in the
paragraph directly preceding the delegation clause: “The law applied by an
arbitrator will be the laws of the state of Florida, without regard for the conflicts
of laws principles thereof.” (Arb. Agmt. ¶5.) According to Espinoza, because of
this clause, the agreement to arbitrate extends only to state-law claims and,
therefore, necessarily precludes consideration of Espinoza’s federal wage
claims. (Pl.’s Resp. at 6.) Espinoza then reasons that, since the agreement
precludes arbitration of his federal claims, the delegation provision can’t
possibly delegate authority to the arbitrator to “decide enforceability issues as
to [f]ederal-law based claims.” (Id.) Espinoza’s analysis is flawed.
To begin with, the Court disagrees with Espinoza’s premise that the
governing-law provision precludes arbitration of his federal-wage claims. Simply
identifying a particular state’s law as the law to be applied by the arbitrator,
does not result in rights arising under federal law being summarily disregarded.
Atkinson v. Gen. Elec. Credit Corp., 866 F.2d 396, 398–99 (11th Cir. 1989)
(“[P]roviding that a contract is to be governed by state law does not signify the
inapplicability of federal law, for a fundamental principle in our system of
complex national polity mandates that the Constitution, laws, and treaties of
the United States are as much a part of the law of every State as its own local
laws and Constitution.”) (cleaned up). Espinoza has not supplied any law
supporting his theory that a boilerplate choice-of-law provision can somehow
bar an arbitrator from considering federal claims. This is especially so when the
agreement elsewhere pointedly identifies federal-wage claims under the FLSA as
being included in the “types of claims that are covered.” (Arb. Agmt. at 1; ECF
No. 68, 9.) Simply put, the parties’ choice-of-law provision here, identifying

Florida law as the law to be applied by the arbitrator, does not bar the
application of federal law.
As to Espinoza’s second argument, even if the governing-law provision did
somehow strip federal claims from the parties’ agreement to arbitrate, Espinoza
provides no support for why this would render the delegation clause itself
unconscionable. Instead, Espinoza’s unconscionability arguments are all
directed towards the arbitration agreement as a whole. That is, Espinoza argues
that the delegation clause is unconscionable because the governing-law
provision deprives him of seeking remedies for his FLSA claims. (E.g., Pl.’s Reply
at 6 n. 7.) But this is not an attack on the conscionability of the delegation
clause; but, rather, the arbitration agreement in general. Thus, although
Espinoza says he “specifically challenges the delegation provision,” what he is
really contesting is the scope of the arbitration agreement and the arbitrator’s
jurisdiction over Espinoza’s FLSA claims. And these issues, in turn, are “clearly
and unmistakably” reserved for the arbitrator’s determination: “The Arbitrator
shall have exclusive authority to resolve any jurisdictional and arbitration,
scope, applicability, validity, enforceability, or procedural requirements of the
[arbitration agreement]” (Arb. Agmt. ¶ 6, ECF No. 68, 14). See Parnell v.
CashCall, Inc., 804 F.3d 1142, 1148 (11th Cir. 2015) (finding that a definition of
“Dispute” that included “any issue concerning the validity, enforceability, or
scope of this loan or the Arbitration agreement” “unambiguously commits to the
arbitrator the power to determine the enforceability of the agreement to
arbitrate”).) Accordingly, Espinoza’s challenges must be determined by the
arbitrator and not the Court. Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 72
(2010) (holding that, unless a delegation provision is “challenged . . .
specifically,” courts “must treat it as valid . . . and must enforce it . . . , leaving
any challenge to the validity of the [a]greement as a whole for the arbitrator”).
Because the Court finds that the delegation provision in the parties’
arbitration agreement “clearly and unmistakably” commits the issue of
arbitrability to the arbitrator, the Court declines to consider Espinoza’s other
challenges to the jurisdiction, scope, and enforceability of the agreement. The
Court notes that, along with their motion to compel arbitration, the Defendants
have also requested that the Court stay these proceedings pending arbitration.
Under section 3 of the Federal Arbitration Act, “the court . . . shall on
application of one of the parties stay the trial.” 9 U.S.C. § 3 (emphasis added).
The Court thus finds a stay here mandatory. Further, even if the Court had
discretion in choosing between dismissal or a stay, it would opt for a stay in
this case. In the event the arbitrator in this case were to determine that the
arbitration agreement here is invalid or inapplicable to any of the parties’
disputes, this case would not be over and therefore dismissal would be

premature. Accordingly, the Court grants the Defendants’ motion to compel
(ECF No. 68). 1
As such, the Court orders the parties to submit their dispute to
arbitration. This case is stayed pending arbitration and the Court orders the
Plaintiff to advise the Court once the arbitration is terminated or the claims at
issue are otherwise resolved. In the meantime, the Clerk is directed to
administratively close this case.
Done and ordered at Miami, Florida, on April 27, 2021.
________________________________
Robert N. Scola, Jr.
United States District Judge

1 In the final sentence of their motion, the Defendants “further request that the Court award
them the attorney’s fees they have incurred in having to file th[e] renewed motion.” (Defs.’
Renewed Mot. at 7.) The Court denies the request: it is procedurally improper as well as lacking
any cited substantive support.