Williams v. Waffle House Inc

Filing 16

ORDER AND REASONS granting 5 Motion to Dismiss Case and to Compel Arbitration. Signed by Judge Martin L.C. Feldman on 8/15/2012. (caa, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
BRANDY WILLIAMS

CIVIL ACTION

v.

NO. 12-950

WAFFLE HOUSE, INC.

SECTION "F"
ORDER AND REASONS

Before the Court is the defendant’s motion to dismiss or stay
proceedings and compel arbitration.

For the reasons that follow,

the motion to dismiss and compel arbitration is GRANTED.
Background
In May 2009 Brandy Williams was hired as a unit manager for
Waffle House’s store located at 9293 Highway 49 in Gulfport,
Mississippi.

When she started working, she signed an arbitration

agreement in which the parties agreed to resolve all disputes
through binding arbitration; the arbitration agreement provides:
2. Claims covered by this Agreement. That Waffle House
and I will resolve by arbitration all claims and
controversies (“claims”), past, present, or future,
whether or not arising out of my employment or
termination from employment, that I may have against
Waffle House or against its officers, directors,
employees or agents in their capacity as such or
otherwise, or that Waffle House may have against me. The
claims that are arbitrable...include, but are not limited
to, claims for wages or other compensation due under the
Fair Labor Standards Act or state law equivalent...claims
for violation of any federal, state or other governmental
law, statute, regulation or ordinance, except claims
excluded elsewhere in this Agreement.
The Agreement also provides: “Except as otherwise provided in this
1

Agreement, both Waffle House and I agree that neither of us shall
initiate or prosecute any lawsuit...in any way related to any claim
covered by this agreement.”

The Agreement further states in bold

capital letters: “I ACKNOWLEDGE THAT I HAVE CAREFULLY READ ALL 4
PAGES OF THIS AGREEMENT, THAT I UNDERSTAND ITS TERMS, AND THAT I
HAVE ENTERED INTO IT VOLUNTARILY.

I UNDERSTAND THAT BY SIGNING

THIS AGREEMENT, I AM GIVING UP MY RIGHT TO A JURY TRIAL.”

Williams

initialed her agreement below this statement; initialed the top of
each of the other three pages of the Agreement; and signed the
Agreement.

Ms. Williams and Waffle House chose Georgia law to

govern their Agreement.1
At some point Ms. Williams became dissatisfied with the number
of hours she worked and the lack of responsibility given to her
despite her “manager” title.

On April 13, 2012 Ms. Williams sued

Waffle House, alleging that Waffle House failed to pay her overtime
wages in violation of the Fair Labor Standards Act, 29 U.S.C. §
201.2

She claims that Waffle House directed her to keep track only
1

The Agreement provides:

[T]his Agreement shall be governed by and
interpreted in accordance with the laws of the
state of Georgia. If, however, a court of
competent jurisdiction or an arbitrator
subsequently determines that Georgia law does
not
apply...,
then,
alternatively,
the
Agreement shall be governed by...the laws of
the state of my residence.
2

Court

In her prayer for relief Williams requests that the
“recogniz[e] this proceeding as a collective action”;
2

of “productive” hours worked; she often worked 12-18 hour days six
days a week.

She also alleges that she was required to work more

than 40 hours per week but not paid overtime because Waffle House
improperly classified her as exempt from the FLSA.
Waffle House now seeks to compel arbitration in accordance
with the Agreement signed by the parties.
I.
The Federal Arbitration Act was enacted as a response to
judicial hostility to arbitration and it thus reinforced “the
fundamental principle that arbitration is a matter of contract.”
Rent-A-Center, West, Inc. v. Jackson, 130 S.Ct. 2772, 2776 (2010).
It “provides that pre-dispute arbitration agreements ‘shall be
valid, irrevocable, and enforceable, save upon such grounds as
exist at law or in equity for the revocation of any contract.’”
Carter v. Countrywide Credit Indus., 362 F.3d 294, 297 (5th Cir.
2004)(quoting 9 U.S.C. § 2).

“The FAA thereby places arbitration

agreements on an equal footing with other contracts,” the Supreme
Court has observed, “and requires courts to enforce them according
to their terms.”

Rent-A-Center, 130 S.Ct. at 2776.

“That is the

case even when the claims at issue are federal statutory claims,
unless the FAA’s mandate has been ‘overridden by a contrary
congressional command.’” CompuCredit Corp. V. Greenwood, 132 S.Ct.

however, only Ms. Williams has filed a Consent to Become a Party
Plaintiff.
3

665, 669 (2012)

Of course, arbitration agreements, “[l]ike other

contracts...may be invalidated by ‘generally applicable contract
defenses,

such

as

fraud,

duress,

or

unconscionability.’”

Id.

(citations omitted).
In implementing a “strong federal policy in favor of enforcing
arbitration agreements,” Dean Witter Reynolds, Inc. v. Byrd, 470
U.S. 213, 217 (1985); Moses H. Cone Mem. Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 24 (1983), the FAA requires district courts to
“compel arbitration of otherwise arbitrable claims, when a motion
to compel arbitration is made.” Sedco, Inc. v. Petroleos Mexicanos
Mexican Nat'l Oil Co., 767 F.2d 1140, 1147 (5th Cir. 1985).3
Because of the strong presumption in favor of arbitration, “a party
seeking to invalidate an arbitration agreement bears the burden of
establishing its invalidity.”

Carter, 362 F.3d at 297.

3

In implementing the substantive rule of Section 2,
Section 3 of the FAA provides:
If any suit or proceeding be brought in any of
the courts of the United States upon any issue
referable to arbitration. . . the court. . .
shall on application of one of the parties
stay the trial of the action until such
arbitration has been had in accordance with
the terms of the agreement. . . .
9 U.S.C. § 3.
Section 4 is also an implementing provision,
providing that a party aggrieved by the refusal of another to
arbitrate may petition the Court for an order compelling
arbitration; if the Court is satisfied that there is an arbitration
agreement and a failure to comply with it, the Court “shall make an
order directing the parties to proceed to arbitration in accordance
with the terms of the agreement.” 9 U.S.C. § 4 (emphasis added).
4

Courts undertake a two-step inquiry when considering motions
to compel arbitration.

Washington Mut. Finance Group v. Bailey,

364 F.3d 260, 263 (5th Cir. 2004).

The first step requires a

finding that the parties agreed to arbitrate the dispute at issue.
Id.

Second, upon such a finding, the Court must consider whether

any federal statute or policy renders the claims nonarbitrable.
Id.
The first determination requires two considerations: “(1)
whether there is a valid agreement to arbitrate between the
parties; and (2) whether the dispute in question falls within the
scope of that arbitration agreement.”

Webb v. Investacorp, Inc.,

89 F.3d 252, 257-58 (5th Cir. 1996).

While state law governs the

first consideration, “due regard must be given to the federal
policy favoring arbitration, and ambiguities as to the scope of the
arbitration

clause

arbitration.”

itself

must

be

resolved

in

favor

of

Id. at 258.
II.

Williams and Waffle House signed the Arbitration Agreement and
Williams’ FLSA claims for unpaid overtime wages fall squarely
within the scope of claims identified as arbitrable under the
parties’ Agreement.

Williams does not appear to dispute this.

Waffle House contends that the Arbitration Agreement between
it and Williams is valid and enforceable under Georgia law.
Court

agrees.

Under

Georgia

law,

5

a

valid

and

The

enforceable

arbitration

agreement

must

contain

acceptance, and consideration.

the

elements

of

offer,

See McBride v. Gamestop, Inc., No.

10-2376, 2011 WL 578821, at *2 (N.D. Ga. Feb. 8, 2011)(applying
Georgia law).

Here, Waffle House offered the Agreement as a

condition of its offer of employment and, by signing the Agreement,
Williams accepted the offer.

Also, the parties made mutual

promises to submit all disputes to binding arbitration, satisfying
the consideration element.

See Lambert v. Austin Ind., 544 F.3d

1192, 1195 (11th Cir. 2008).4
Thus, it cannot credibly be disputed that an agreement to
arbitrate exists and that the Agreement covers Williams’ FLSA
claims.

Williams,

however,

contends

that

the

Agreement

is

unenforceable due to mistake, inconsistency with the FLSA, and
unconscionability.

Because Williams’ arguments are not legally

supportable but instead grounded in an impermissible hostility to
arbitration, the Court disagrees.
Williams

first

contends

that

the

employment

contract

containing the Arbitration Agreement and collective action waiver
is unenforceable because she was mistaken as to the fundamental

4

Waffle House points out that the outcome under Louisiana
or Mississippi law is no different. See La.R.S. § 9:4202; Harris
v. JCPenney Co., Inc., No. 07-9675, 2008 WL 90038, at *2 (E.D. La.
Jan. 8, 2008)(applying Louisiana law and granting motion to compel
arbitration of employment dispute); Gatlin v. Sanderson Farms,
Inc., 953 So.2d 220, 222 (Miss. 2007)(analyzing the four corners of
a contract and effectuating the parties’ intent when expressed
clearly and unambiguously).
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nature of the employment contract.

She says that, at the time she

was hired, Waffle House knowingly misrepresented to her that she
would

be

a

manager

responsibilities

when,

in

associated

fact,

with

a

she

was

not

management-level

given

the

position.

Thus, Williams urges the Court to void the Agreement on the ground
of her unilateral mistake.
Williams’ suggestion sounds more in fraud to the extent that
she suggests that Waffle House knowingly duped her into signing an
employment

contract

with

an

arbitration

representing that she would be a manager.

provision

by

falsely

But Williams’ argument

that she signed the Agreement “under the mistaken impression that
she was taking a managerial role with corresponding managerial
responsibilities” does not undermine the enforceability of the
Arbitration Agreement.

Indeed even a case she invokes in her

papers confirms that her argument has no merit:
allegation

of

fraud

goes

specifically

to

the

“Only if the
making

of

the

agreement to arbitrate must a district court address the merits of
the fraud claim.”

Bank One, N.A. v. Coates, 125 F. Supp. 2d 819,

829 (S.D. Miss. 2001).
Williams’

other

challenges

to

the

enforceability

Arbitration Agreement are likewise without merit.

of

the

She argues that

the arbitration clause and collective action waiver deprive her of
the right to exercise her rights under the FLSA.

But she cites no

support for this assertion and fails to credibly distinguish case

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literature on point.

See Gilmer v. Interstate/Johnson Lane Corp.,

500 U.S. 20 (1991); Carter v. Countrywide Credit Indus., Inc., 362
F.3d 294, 298 (5th Cir. 2004)(rejecting argument that an inability
to proceed collectively deprives plaintiffs of substantive rights
under the FLSA and also rejecting argument that FLSA claims are not
subject

to

individually

executed

pre-dispute

arbitration

agreements).
Her

final

argument

that

the

Arbitration

Agreement

unconscionable under Mississippi law is also without merit.

is

Under

Mississippi law, a contract can be procedurally or substantively
unconscionable.

Substantive unconscionability may exist “when the

terms of the contract are of such an oppressive character as to be
unconscionable.”

Russell v. Performance Toyota, Inc., 826 So.2d

719, 725 (Miss. 2002).

“Procedural unconscionability,” on the

other hand, “may be proved by showing ‘a lack of knowledge, lack of
voluntariness, inconspicuous print, the use of complex legalistic
language, disparity in sophistication or bargaining power of the
parties and/or a lack of opportunity to study the contract and
inquire about the contract terms.”

Id.

Williams contends that she had no real bargaining power and
the arbitration clause prevents her from asserting her FLSA claim
in

federal

court.

insinuations
unconscionable.

that

But

her

arguments

arbitration

Not so.

are

agreements

nothing
are

more

than

inherently

See Bank One, N.A. v. Coates, 125 F.

8

Supp. 2d 819, 830 (S.D. Miss. 2001)(citation omitted)(“arbitration
agreements

are

not

inherently

unconscionable...;

the

party

resisting arbitration must show that the particular arbitration
provision is unconcionable”).

Williams fails to demonstrate how

the terms of the Agreement, which requires both Williams and Waffle
House

to

submit

any

dispute

to

arbitration,

are

oppressive.

Williams likewise fails to suggest how the disparity in bargaining
power rendered the Agreement unconscionable; she could have refused
to sign the Agreement and pursued employment elsewhere.
Russell, 826 So.2d

at 726.

See

Furthermore, if the Court were to

accept Williams’ argument, then no arbitration agreement between a
company and an individual would ever be upheld.

Williams falls

well short of establishing unconscionability of the Arbitration
Agreement.
Williams has pointed to no statute or policy, and this Court
is aware of none, that would render her FLSA claims nonarbitrable.
Consequently, the FAA requires this Court to grant the defendant’s
motion to compel arbitration.
Whether to stay or dismiss a case in which the claims are
subject to arbitration is generally within the district court’s
discretion.

Apache Bohai Corp., LDC v. Texaco China, B.V., 330

F.3d 307, 311 n.9 (5th Cir. 2003).

Where, as here, all of the

issues raised in this Court must be submitted to arbitration, “the
weight of authority clearly supports dismissal.”

9

Alford v. Dean

Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992)(citations
omitted)(Section 3 “was not intended to limit dismissal of a case
under the proper circumstances”).

The Court finds that dismissal

rather than a stay is appropriate.
Accordingly, IT IS ORDERED: that the defendant’s motion to
dismiss proceedings and compel arbitration is GRANTED.
New Orleans, Louisiana, August 15, 2012

______________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE

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