CURTIS et al v. CONTRACT MANAGEMENT SERVICES LLC

Filing 42

ORDER ON DEFENDANT'S MOTION TO COMPEL ARBITRATION - denying 20 Motion to Compel Arbitration. By JUDGE NANCY TORRESEN. (mnw)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
ROBERT CURTIS, et al.,
Plaintiffs,
v.
CONTRACT MANAGEMENT
SERVICES,
Defendant.

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) Docket No. 1:15-cv-487-NT
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ORDER ON DEFENDANT’S MOTION TO COMPEL ARBITRATION
Before the Court is the Defendant’s motion to compel arbitration. (ECF No.
20). For the reasons stated below, the motion is DENIED.
BACKGROUND
The Plaintiffs in this matter are Robert Curtis and Robert Lowell. Both worked
as delivery drivers for an entity called Scholarship Storage, Inc., d/b/a Business as
Usual (“BAU”). Defendant Contractor Management Services, LLC (“CMS”) is an
Arizona company that markets itself as the “leading full-service firm for companies
utilizing Independent Contractors.” Compl. ¶¶ 9, 14 (ECF No. 1). The Complaint
alleges that:
BAU was a CMS client . . . . CMS developed the contracts that BAU used
to describe Plaintiffs and other drivers as independent contractors. CMS
processed all of BAU’s payroll checks, taking out deductions for
equipment drivers were required to lease or purchase, prescription
“insurance” premiums . . . , and fees . . . as payment to CMS for
processing each payroll check.
Compl. ¶ 15.

The Plaintiffs have settled a separate class action and collective action
asserting violations of the Fair Labor Standards Act and Maine wage and hour laws
against BAU. Curtis v. Business As Usual, No. 2:14-cv-303-NT, 2016 WL 3072247 (D.
Me. May 31, 2016). In this action, the Plaintiffs allege that CMS aided and abetted
BAU, was a joint employer with BAU, or engaged in a joint enterprise with BAU, and
that CMS is liable for:


overtime violations of the Fair Labor Standards Act, 29 U.S.C. § 216(b) (Count
I);



unpaid wages under the Maine Employment Practices Act, 26 M.R.S.A. § 629
(Count II);



overtime violations under the Maine Minimum Wage and Overtime Law, 26
M.R.S.A. § 661 et seq. (Count III);



violation of the Maine Employment Practices Act, 26 M.R.S.A. § 629 (Count
IV);



unjust enrichment/restitution (Count V); and



conversion for making deductions for insurance, leased equipment and check
processing (Count VI).
The Defendant has moved to compel arbitration pursuant to a “System

Resource Subscription” agreement (“SRS Agreement”) entered into between CMS
and each of the Plaintiffs. The SRS Agreements for the named Plaintiffs were
submitted with the Defendant’s motion to compel arbitration. SRS Agreement (ECF
Nos. 20-3 and 20-4). The Defendant asserts that each of the named Plaintiffs accessed
CMS’s online platform, opened the SRS Agreement, clicked through each page of it
and electronically signed the agreement. Aff. of Greg Stultz ¶¶ 5-8. (ECF No. 20-1).
Each SRS Agreement contains an identical arbitration provision that provides:
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If a dispute arises out of or relates to my relationship with CMS, this
Subscription, or a breach hereof, and if the dispute cannot be settled
through negotiation, I agree to resolve the dispute through binding
arbitration only as described in this section (hereafter “the Arbitration
Provision”).1
SRS Agreement 4. The Arbitration Provision also includes a provision entitled
“CLASS ACTION WAIVER” that states:
Both CMS and end user agree to bring any dispute in arbitration
on an individual basis only, and not on a class, collective, or
private attorney general representative basis. There will be no
right or authority for any dispute to be brought, heard or arbitrated as
a class, collective, representative or private attorney general action, or
as a member in any purported class, collective, representative or private
attorney general action, including without limitation pending but not
certified class actions (“Class Action Waiver”). Disputes regarding the
validity and enforceability of the Class Action Waiver may be resolved
only by a civil court of competent jurisdiction and not by an arbitrator.
In any case in which (1) the dispute is filed as a class, collective,
representative or private attorney general action and (2) a civil court of
competent jurisdiction finds all or part of the Class Action Waiver
unenforceable, the class, collective, representative and/or private
attorney general action to that extent must be litigated in a civil court
of competent jurisdiction, but the portion of the Class Action waiver that
is enforceable shall be enforced in arbitration.
SRS Agreement 5, section C. In addition to these and other sections, the Arbitration
Provision contains a “THIRTY-DAY OPT-OUT PERIOD” provision that provides:
If I do not want to be subject to this Arbitration Provision, I may opt out
of this Arbitration Provision by notifying CMS in writing of my desire to
opt out of this Arbitration Provision, which writing must be dated,
signed and submitted by U.S. Mail or hand delivery to Contractor
Management Services, LLC, Attn. Risk Management, 9197 W
Thunderbird Rd. Peoria, AZ 85381. In order to be effective, the writing
must clearly indicate my intent to opt out of this Arbitration Provision
The SRS Agreement goes on to itemize “Claims Covered by Arbitration Provision,” including:
“claims regarding any city, county, state or federal wage-hour law, . . . compensation, meal or rest
periods, expense reimbursement, . . . and claims arising under the . . . Fair Labor Standards Act, . . .
and state statutes, if any, addressing the same or similar subject matters, and all other similar federal
and state statutory and common law claims.” SRS Agreement 4, section (i) (ECF No. 20-3).
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and the envelope containing the signed writing must be post-marked
within 30 days of the date I sign this Subscription. My writing opting
out of this Arbitration Provision will be filed with a copy of this
Subscription and maintained by CMS. Should I not opt out of this
Arbitration Provision within the 30-day period, CMS and I will be bound
by the terms of this Arbitration Provision.
SRS Agreement 6, section G. The SRS Agreement further provides that “[i]n the event
that any portion of this Arbitration Provision is deemed unenforceable, the remainder
of this Arbitration Provision will be enforceable.” SRS Agreement 6, section H.
DISCUSSION
CMS contends that this case cannot proceed in court because it is “governed by
the Federal Arbitration Act.” Def.’s Mot. to Compel Arbitration 1 (ECF No. 20). The
Plaintiffs argue that the arbitration agreement is unenforceable because it conflicts
with the National Labor Relations Act (“NLRA”), 29 U.S.C. §§ 151-169, and because
it prohibits Plaintiffs from effectively vindicating their rights under the Fair Labor
Standards Act (“FLSA”), 29 U.S.C. §§ 201-219. Pls.’ Opp’n to Def.’s Mot. to Compel 410 (“Pls.’ Opp’n”) (ECF No. 24).
The Federal Arbitration Act (“FAA”) provides, in pertinent part:
A written provision in . . . a contract evidencing a transaction involving
commerce to settle by arbitration a controversy thereafter arising out of
such contract . . . shall be valid, irrevocable, and enforceable, save upon
grounds as exist at law or in equity for the revocation of any contract.
9 U.S.C. § 2. “The FAA was enacted in 1925 in response to widespread judicial
hostility to arbitration agreements.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333,
339 (2011). The statute embodies “both a liberal federal policy favoring arbitration,
and the fundamental principle that arbitration is a matter of contract[.]” Id. (citations
and quotations omitted). “Federal statutory claims are just as arbitrable as anything
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else, ‘unless the FAA’s mandate has been overridden by a contrary congressional
command.’ ” Lewis v. Epic Sys. Corp., 823 F.3d 1147, 1156 (7th Cir. 2016) (quoting
CompuCredit Corp. v. Greenwood, 132 S. Ct. 665, 669 (2012)). Moreover, the purpose
of Section 2 “is ‘to make arbitration agreements as enforceable as other contracts, but
not more so.’ ” Gaffers v. Kelly Servs., Inc., No. 16-10128, 2016 WL 4445428, at *5
(E.D. Mich. Aug. 24, 2016) (quoting Prima Paint Corp. v. Flood & Conklin Mfg. Co.,
388 U.S. 395, 404 n.12 (1967)). Thus, Section 2’s savings clause “permits agreements
to arbitrate to be invalidated by ‘generally applicable contract defenses, such as fraud,
duress, or unconscionability,’ but not by defenses that apply only to arbitration or
that derive their meaning from the fact that an agreement to arbitrate is at issue.”
Concepcion, 563 U.S. at 340 (quoting Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681,
687 (1996)). Illegality is a defense to enforcement under Section 2’s savings clause.
See Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444 (2006).
I.

Whether the Arbitration Agreement Is Enforceable
A.

Class Action Waiver

CMS contends that the FAA mandates enforcement of the arbitration provision
including the class action waiver portion of the SRS agreement. Def.’s Mot. to Compel
Arbitration 6-8. The Plaintiffs claim that the class action waiver violates their right
to engage in collective activity under Section 7 of the NLRA. Pls.’ Opp’n 4-6.
Section 7 of the NLRA grants employees:
The right to self-organization, to form, join, or assist labor organizations,
to bargain collectively through representatives of their own choosing,
and to engage in other concerted activities for the purpose of collective
bargaining or other mutual aid or protection.
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29 U.S.C. § 157 (emphasis added). Section 8 of the NLRA makes it an unfair labor
practice for an employer “to interfere with, restrain, or coerce employees in the
exercise of the rights guaranteed in section 157.” 29 U.S.C. § 158. It has long been
established that “the filing of a labor related civil action by a group of employees is
ordinarily a concerted activity protected by § 7, unless the employees acted in bad
faith.” Leviton Mfg. Co., Inc. v. NLRB, 486 F.2d 686, 689 (1st Cir. 1973) (citations
omitted); see also Eastex, Inc. v. NLRB, 437 U.S. 556, 566 (1978).
In 2012, the issue of whether a class action waiver constituted a violation of
the NLRA came to the fore in a case before the National Labor Relations Board (the
“NLRB” or the “Board”). D. R. Horton, Inc., 357 NLRB 2277 (2012) (“Horton I”), enf.
denied 737 F.3d 344 (5th Cir. 2013). There, the NLRB held that conditioning
employment on the acceptance of an agreement containing a class or collective action
waiver violated the Section 8 of the NLRA. Id. at 2278.
Since Horton I, the circuit courts have split on the question. Reviewing the
NLRB’s decision in Horton I, the Fifth Circuit held that the NLRB gave inadequate
weight to the FAA and denied enforcement of the Board’s position that the class
action waiver violated the NLRA. D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir.
2013) (“Horton II”). The Fifth Circuit reiterated this holding in Murphy Oil v. NLRB,
808 F.3d 1013 (5th Cir. 2015).2 The Eighth and Second Circuits have reached similar
conclusions. See Cellular Sales of Missouri v. NLRB, 824 F.3d 772 (8th Cir. 2016);

Even after the Fifth Circuit refused to enforce the NLRB’s order in Horton II, the NLRB stuck
with its position. See Murphy Oil USA, Inc., 361 NLRB No. 72 (2014), enf. denied 808 F.3d 1013 (5th
Cir. 2015).
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Sunderland v. Ernst & Young, LLP, 726 F.3d 290 (2d Cir. 2013); see also Bekele v.
Lyft, Inc., No. 15-11650-FDS, 2016 WL 4203412 (D. Mass. Aug. 9, 2016).
The Seventh and Ninth Circuit have taken the position that a class or
concerted action waiver in an employment agreement violates the NLRA because it
interferes with a plaintiff’s substantive right to engage in collective activity. See
Morris v. Ernst & Young, LLP, No. 13-16599, 2016 WL 4433080 (9th Cir. Aug. 22,
2016) (vacating district court’s order compelling individual arbitration under an
employee agreement which contained a concerted action waiver); Lewis v. Epic
Systems Corp., 823 F.3d 1147 (7th Cir. 2016) (holding that an arbitration agreement
mandating individual arbitration violated Section 7 of the NLRA); see also Gaffers v.
Kelly Services, Inc., No. 16-10128, 2016 WL 4445428 (E.D. Mich. Aug. 24, 2016);
Tigges v. AM Pizza, Nos. 16-10136-WGY & 16-10474-WGY, 2016 WL 4076829 (D.
Mass. July 29, 2016); Totten v. Kellogg Brown & Root, LLC, 152 F. Supp. 3d 1243,
1254 (C.D. Cal. 2016).
The disagreement centers largely on whether Section 7’s right to engage in
collective activity is considered a substantive right or a procedural one. The Fifth
Circuit, in rejecting the NLRB’s conclusion, reasoned that a Rule 23 class action is a
procedural device used to bring substantive claims rather than a substantive right in
and of itself. Horton II, 737 F.3d at 357. It noted that there is no substantive right to
use class action procedures under other statutory schemes, including the ADEA and
the FLSA. Id. (citing cases). Since “[n]either the NLRA’s statutory text nor its
legislative history contains a congressional command against application of the FAA,”

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the Fifth Circuit concluded that the class action waiver was enforceable as part of the
agreement between the parties. Id. at 361-62.
In contrast, the Seventh Circuit in Lewis pointed out that the right to engage
in collective action “lies at the heart of the restructuring of employer/employee
relationships that Congress meant to achieve” when it enacted the NLRA. Lewis, 823
F.3d at 1160. The Lewis court found support for this proposition in the structure of
the NLRA, reasoning that “Section 7 is the NLRA’s only substantive provision” and
that “[e]very other provision of the statute serves to enforce the rights Section 7
protects.” Id. The Seventh Circuit distinguished other statutory schemes, like the
ADEA and the FLSA, on the grounds that although those schemes “allow class or
collective actions, they do no guarantee collective process.” Id. at 1161. The Ninth
Circuit likewise found that Section 7 of the NLRA established substantive rights. It
reasoned that “[t]he text of the Act confirms the central role of § 7” because “that
section establishes the ‘Right of employees as to organization.’ ” Morris, 2016 WL
4433080, at *8 (quoting 29 U.S.C. § 157). Thus, “[w]ithout § 7, the Act’s entire
structure and policy flounder.” Id.
The distinction is critical because substantive rights cannot be waived in an
arbitration agreement. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473
U.S. 614, 628 (1985) (“By agreeing to arbitrate a statutory claim, a party does not
forgo the substantive rights afforded by the statute . . . .”). Having concluded that the
class action waivers were illegal under the NLRA, it was a short step for the Seventh
and Ninth Circuits to find that the waivers were unenforceable under the FAA’s

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savings clause. Lewis, 823 F.3d at 1159 (“Because the NLRA renders [the defendant’s]
arbitration provision illegal, the FAA does not mandate its enforcement.”); Morris,
2016 WL 4433080, at *8 (“[W]hen an arbitration contract professes to waive a
substantive federal right, the saving clause of the FAA prevents the enforcement of
that waiver.”).
I agree with the Seventh and Ninth Circuits. The First Circuit has held that
collective legal action by employees constitutes concerted activity under Section 7.3
See Leviton Mfg. Co. v. NLRB, 486 F.2d 686, 689 (1st Cir. 1973) (“[T]he filing of a
labor related civil action by a group of employees is ordinarily a concerted activity
protected by § 7, unless the employees acted in bad faith.”). The text and structure of
the NLRA demonstrate that the rights protected by Section 7 are substantive. Indeed,
the “very essence of labor right[s] under the . . . National Labor Relations Act is
collective action.” Tigges, 2016 WL 4076829, at *13 (quotations omitted). A provision
in an arbitration agreement that interferes with these substantive rights is unlawful.
See Morris, 2016 WL 4433080, at *9 (characterizing an arbitration provision that
waived a substantive right as “illegal” because “a ban on the pursuit of concerted
work-related legal claims interferes with a core, substantive right”). And the FAA’s

Even if “concerted activity” could be read as ambiguous when applied to collective legal action,
the NLRB’s “interpretations of ambiguous provisions of the NLRA are ‘entitled to judicial deference.’ ”
Lewis v. Epic Sys. Corp., 823 F.3d 1147, 1153 (7th Cir. 2016) (quoting Lechmere, Inc. v. NLRB, 502
U.S. 527, 536 (1992)). The NLRB has concluded that collective legal action by employees constitutes
“concerted activity.” Horton I, 357 NLRB at 2279 (“Clearly, an individual who files a class or collective
action regarding wages, hours or working conditions, whether in court or before an arbitrator, seeks
to initiate or induce group action and is engaged in conduct protected by Section 7.”). The NLRB’s
interpretation is “not only persuasive, but at the very least ‘reasonably defensible.’ ” Totten v. Kellogg
Brown & Root, LLC, 152 F. Supp. 3d 1243, 1258 (C.D. Cal. 2016) (quoting Sure–Tan, Inc. v. NLRB,
467 U.S. 883, 891 (1984)).
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savings clause prevents the enforcement of an unlawful provision. Lewis, 823 F.3d at
1157 (“Because the provision at issue is unlawful under Section 7 of the NLRA, it is
illegal, and meets the criteria of the FAA's saving clause for nonenforcement.”). Thus,
the class action waiver at issue here—which bars employees from exercising their
right to engage in collective action and requires all disputes to be brought “on an
individual basis only”—will not be enforced.4 SRS Agreement 5, section C.
B. Whether the Opt-Out Provision Saves the Class Action Waiver
Although I agree with the conclusion reached by the Seventh and Ninth
Circuits, I must go on to assess whether this case is nevertheless distinguishable on
the grounds that the SRS Agreement contained an opt-out provision. The Plaintiffs
must show that CMS’s inclusion of the class action waiver “interfere[d] with,
restrain[ed], or coerc[ed]” the Plaintiffs in the exercise of their rights under Section 7
to engage in concerted activities. 29 U.S.C. § 158. In this case, the opt-out provision
gave the Plaintiffs the right to completely erase the entire arbitration provision,
including the class action waiver.
In a case not cited by the parties in their briefs, the Ninth Circuit came to the
conclusion that the employer did not interfere with the employee’s Section 7 rights
because the contract contained a provision allowing the employee to opt out of the

As the Ninth Circuit explained in Morris, “[a]t its heart, this is a labor law case, not an
arbitration case.” 2016 WL 4433080, at *10. In other words, the flaw in the SRS Agreement is not that
it requires employees to arbitrate disputes. The illegality defense is not limited to arbitration. The
problem lies in the SRS Agreement’s bar on concerted activity. The SRS Agreement “would face the
same NLRA troubles if [CMS] required its employees to use only courts, or only rolls of the dice or
tarot cards, to resolve workplace disputes—so long as the exclusive forum provision is coupled with a
restriction on concerted activity in that forum.” Id.
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arbitration agreement. Johnmohammadi v. Bloomingdale’s, Inc., 755 F.3d 1072,
1075-76 (9th Cir. 2014). Johnmohammadi brought a class action suit seeking to
recover unpaid overtime wages, and Bloomingdale’s moved to compel arbitration.
When Johnmohammadi was hired as a sales associate, she was given a set of
documents describing Bloomingdale’s dispute resolution program. Those documents
contained an arbitration requirement and a class action waiver. The documents also
included an opt-out option that, like the one at issue here, required the employee to
return a form to the employer within 30 days if the employee wanted to opt out of the
terms of the arbitration agreement. Johnmohammadi did not opt out.
Like the Plaintiffs here, Johnmohammadi argued that the class action waiver
was unenforceable because it interfered with her rights under Section 7 of the NLRA
to engage in collective action. The Ninth Circuit decided it did not need to reach that
question, finding that there was no evidence that Bloomingdale’s interfered with,
restrained, or coerced her in the exercise of her right to file a class action. In making
those findings, the court stated that “Bloomingdale’s gave her the option of
participating in its dispute resolution program, which would require her to arbitrate
any employment-related disputes on an individual basis . . . . If she wanted to retain
th[e] [right to file a class action], nothing stopped her from opting out of the
arbitration agreement.” Id.; see also Morris, 2016 WL 4433080, at *4 n.4 (citing
Johnmohammadi for the proposition that no NLRA violation exists if the employee
could have opted out of the dispute resolution agreement); Bruster v. Uber
Technologies Inc., No. 15-2653, 2016 WL 4086786, at *3 (N.D. Ohio, Aug. 2, 2016)

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(“Lewis analyzed and invalidated a mandatory arbitration provision . . . . In this case,
the Uber agreement allowed drivers like Plaintiff to opt-out of the arbitration
provisions within thirty days of signing up to drive with Uber . . . . [The agreement
therefore] does not impinge on any NLRA rights Plaintiff has, if any, because Plaintiff
Bruster could have opted out of arbitration.”).
However, a district court within the First Circuit, in an opinion published at
the end of July, rejected Johnmohammadi and held that an opt-out provision should
not save a class action waiver in an employment contract. Tigges, 2016 WL 4076829,
at *12-13. In Tigges, Judge Young discussed the fact that “the NLRB has itself ruled
that arbitration agreements with employees that contain opt-out agreements still
violate the NLRA.” Id. at *15 (citing On Assignment Staffing Servs., Inc., 362 NLRB
No. 189 (Aug. 27, 2015), rev’d per curiam, On Assignment Staffing Servs., Inc., No.
15-60642, 2016 WL 3685206 (5th Cir. June 6, 2016)).5
The employment agreement in On Assignment shares a number of similar
provisions with the SRS Agreement. It requires disputes to be resolved only by an
arbitrator, contains a class action waiver, and has an opt-out clause, albeit with a
ten-day deadline. On Assignment, 362 NLRB No. 189, at *3. The NLRB concluded
that the agreement interfered with the employee’s Section 7 right to engage in
concerted activity and stated:
While [On Assignment’s] employees may retain their Section 7 rights by
following the prescribed opt-out procedure, Section 8(a)(1)’s reach is not
limited to employer conduct that completely prevents the exercise of
On Assignment’s reversal by the Fifth Circuit was a foregone conclusion based on its position
in Horton II.
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Section 7 rights. Instead, the long-established test is whether the
employer’s conduct reasonably tends to interfere with the free exercise of
employee rights under the Act.
On Assignment, 362 NLRB No. 189, at *5. The NLRB found that the agreement
interfered with the employees’ Section 7 rights in two ways. First, the NLRB
determined that the employer burdened its employees’ exercise of their Section 7
rights by requiring them to take affirmative steps within the allotted time in order to
retain their rights. Id. 6 The NLRB noted:
A rule requiring employees to obtain their employer’s permission to
engage in protected concerted activity is unlawful, even if the rule does
not absolutely prohibit such activity and regardless of whether the rule
is actually enforced. Even a rule requiring only advance notice that an
employee will engage in protected concerted activity is an impediment
to the exercise of Section 7 rights.
Id. at *6 (internal citations omitted).
Second, the NLRB took issue with the requirement that an employee wishing
to exercise his opt out rights was required to go on record with the employer or
prospectively waive them forever.
The Board has long held that an “employee is entitled to keep from his
employer his views concerning unions, so that the employee may
exercise a full and free choice on the point, uninfluenced by the
employer’s knowledge or suspicion about those views and the possible
reaction toward the employee that his views may stimulate in the
employer.”
Id. at *6 (citation omitted).

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As is true in the SRS agreement, the employees of On Assignment had to send by mail or handdeliver a signed and dated notice of their intention to opt out within the requisite period. “Even
employees who wish to retain their Section 7 rights will lose them unless they correctly follow the
specified procedures.” On Assignment Staffing Servs., Inc., 362 NLRB No. 189, at *5 (Aug. 27, 2015).

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The NLRB’s decision on opt-out provisions is entitled to judicial deference.
Because the NLRB is charged with administering the NLRA, see Lechmere, Inc. v.
NLRB, 502 U.S. 527, 536 (1992), and because Congress did not directly address
whether a class action waiver with an opt-out provision constitutes “interference”
under Section 8, the NLRB’s decision on this point is entitled to deference under the
Chevron doctrine as long as it is based on a permissible construction of the NLRA.
See Chevron, U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837, 844-45 (1984).
Like Judge Young, I find that the NLRB’s interpretation of the NLRA on this issue
to be not only “permissible” but “eminently reasonable.” Tigges, 2016 WL 4076829, at
*16. Accordingly, I will defer to the NLRB’s interpretation. See NLRB v. Hilliard
Development Corp., 187 F.3d 133, 140 (1st Cir. 1999) (“If . . . the statute is ambiguous
or silent with respect to a specific issue, we will defer to the Board’s interpretation so
long as that interpretation is a ‘permissible’ one.” (quoting Chevron, 467 U.S. at 843)).
The question of remedy remains. The SRS Agreement provides that:
In any case in which (1) the dispute is filed as a class, collective,
representative or private attorney general action and (2) a civil court of
competent jurisdiction finds all or part of the Class Action Waiver
unenforceable, the class, collective, representative and/or private
attorney general action to that extent must be litigated in a civil court
of competent jurisdiction, but the portion of the Class Action Wavier that
is enforceable shall be enforced in arbitration.
SRS Agreement 5, section C (emphasis added). Because I find that the class action
waiver provision in the SRS Agreement is unenforceable, at least at this stage of the
litigation, the case will proceed in this court. Given my conclusion, there is no need
to reach the Plaintiffs’ effective vindication or scope arguments.

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One final point must be made. In order for the Plaintiffs to fall within the
protection of the NLRA, they must be employees. Because the Complaint asserts that
CMS acted as a joint employer of the Plaintiffs, Compl. ¶ 16, I assume for the sake of
this motion that the employer/employee relationship exists. However, even the
Plaintiffs acknowledge that CMS is in an unusual position in this litigation.7 Should
the Plaintiffs fail to establish CMS as a joint employer, then the question of the
legality of the class action waiver may need to be readdressed.
CONCLUSION
In sum, I find that the class action wavier is unenforceable under the NLRA.
For the reasons stated above, the Court DENIES the Defendant’s Motion to Compel
Arbitration.
SO ORDERED.
/s/ Nancy Torresen
United States Chief District Judge
Dated this 29th day of September, 2016.

At oral argument, Plaintiffs’ counsel suggested that there was no direct employer/employee
relationship between CMS and the Plaintiffs. See Tr. of Proceedings at 4-7 (ECF No. 37).
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