KROAT v. Pizza Hut of Maryland, Inc. et al

Filing 10

MEMORANDUM AND ORDER granting 8 Motion to Dismiss or in the Alternative Stay and Compel Arbitration; directing the parties will proceed to arbitration; dismissing Plaintiff's complaint; closing case. Signed by Judge Richard D. Bennett on 2/27/2018. (dass, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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JOHN W. KROAT,
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Plaintiff,

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v.

Civil Action No.: RDB-17-2035
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PIZZA HUT OF MARYLAND, INC.,
et al.,
Defendants.
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MEMORANDUM ORDER

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Plaintiff John W. Kroat (“Plaintiff” or “Kroat”) filed this action against Defendants
Pizza Hut of Maryland, Inc., Jack Merrill, and Marty Pridgeon (collectively, “Defendants”)
alleging failure to properly pay wages under the Fair Labor Standards Act (“FLSA”), 29
U.S.C. § 201, et seq., the Maryland Wage and Hour Law (“MWHL”), Md. Code Ann., Lab. &
Empl. § 3-401, et seq., and the Maryland Wage Payment and Collection Law, Md. Code Ann.,
Lab. & Empl., § 3-501, et seq. (“MWPCL”). (Compl., ECF No. 1.) On November 13, 2017,
Defendants’ filed a Motion to Dismiss or in the Alternative Stay and Compel Arbitration
(ECF No. 8.) Plaintiff does not dispute that his claims are subject to arbitration. (ECF No.
9-1.) For the reasons set forth in the parties’ submissions and briefly summarized herein,
Defendants’ Motion to Dismiss or in the Alternative Stay and Compel Arbitration (ECF No.
8) is GRANTED. Specifically, the parties will proceed to arbitration and Plaintiff’s
Complaint is DISMISSED.

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Defendants filed the pending Motion to Compel Arbitration (ECF No. 8) pursuant
to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq. A party seeking to apply the FAA
must demonstrate four elements: “‘(1) the existence of a dispute between the parties, (2) a
written agreement that includes an arbitration provision which purports to cover the dispute,
(3) the relationship of the transaction, which is evidenced by the agreement, to interstate or
foreign commerce, and (4) the failure, neglect or refusal of the defendant to arbitrate the
dispute.’” Galloway v. Santander Consumer USA, Inc., 819 F.3d 79, 84 (4th Cir. 2016) (quoting
Rota–McLarty v. Santander Consumer USA, Inc., 700 F.3d 690, 696 n.6 (4th Cir. 2012)). The
standard of review on a Motion to Compel Arbitration pursuant to the FAA is “‘akin to the
burden on summary judgment.’” Galloway, 819 F.3d at 85 (quoting Chorley Enterprises, Inc. v.
Dickey’s Barbecue Restaurants, Inc., 807 F.3d 553, 564 (4th Cir. 2015)). Therefore, motions to
compel arbitration “shall [be] grant[ed] … if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a); Rose v. New Day Financial, LLC, 816 F.Supp.2d 245, 251-52 (D.
Md. 2011).
During his employment, Kroat entered into an agreement requiring that any
employment-related disputes be resolved via binding arbitration. (ECF No. 8-3.) Defendants
first argue that this Court should dismiss the Complaint without compelling arbitration
“[b]ecause Kroat has failed to request arbitration.” (ECF No. 8-1 at 4.) However, the emails
attached to Plaintiff’s Response in Opposition show that the parties engaged in preliminary
discussions including Plaintiff’s proffer that the parties stipulate that the case should proceed
to arbitration. (ECF Nos. 9-2, 9-3.) Further, Defendants subsequently concede that “[e]ach
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of the four elements necessary to support an order compelling arbitration pursuant to the
FAA is present here.” (ECF No. 8-1 at 6.) Defendants alternatively argue that if arbitration is
compelled, this Court should stay this case. As explained below, dismissal is still the
appropriate remedy when all claims in an action are arbitrable.
The remedies available to a party moving to compel arbitration are limited to a stay or
dismissal of the action. In Hooters v. Am., Inc. v. Phillips, 173 F.3d 933, 937 (4th Cir. 1999), the
United States Court of Appeals for the Fourth Circuit recognized that “[w]hen a valid
agreement to arbitrate exists between the parties and covers the matter in dispute, the FAA
commands the federal courts to stay any ongoing judicial proceedings, 9 U.S.C. § 3, and to
compel arbitration, id. § 4.” Subsequently, the Fourth Circuit stated that “[n]otwithstanding
the terms of [9 U.S.C.] § 3, however, dismissal is a proper remedy when all of the issues
presented in a lawsuit are arbitrable.” Choice Hotels Int’l, Inc. v. BSR Tropicana Resort, Inc., 252
F.3d 707, 709-10 (4th Cir. 2001); see also Wheeling Hosp., Inc. v. Health Plan of the Upper Ohio
Valley, Inc., 683 F.3d 577, 584 (4th Cir. 2012) (quoting Choice Hotels for the proposition that
“dismissal is a proper remedy when all of the issues presented in a lawsuit are arbitrable”).
The Fourth Circuit later addressed the apparent tension between Hooters and Choice Hotels:
There may be some tension between our decision in Hooters—indicating that a
stay is required when the arbitration agreement “covers the matter in
dispute”—and Choice Hotels—sanctioning dismissal “when all of the issues
presented . . . are arbitrable.” Our sister circuits are divided on whether a
district court has discretion to dismiss rather than stay an action subject to
arbitration. Compare Cont'l Cas. Co. v. Am. Nat’l Ins. Co., 417 F.3d 727, 732 n. 7
(7th Cir. 2005) (“[T]he proper course of action when a party seeks to invoke
an arbitration clause is to stay the proceedings pending arbitration rather than
to dismiss outright.”), with Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161,
1164 (5th Cir.1992) (“The weight of authority clearly supports dismissal of the
case when all of the issues raised in the district court must be submitted to
arbitration.”). We need not resolve this disagreement because, even
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under Choice Hotels, dismissal is not appropriate where, as here, the issues are
not all subject to arbitration.
Aggarao v. MOL Ship Mgt. Co., Ltd., 675 F.3d 355, 376 n.18 (4th Cir. 2012). While the Fourth
Circuit has yet to “resolve this disagreement,” Noohi v. Toll Bros., Inc., 708 F.3d 599, 605 n. 2
(4th Cir. 2013), this Court has recognized that “district courts within the Fourth Circuit have
continued to find dismissal appropriate.” Owen v. CBRE, Inc., No. PWG-16-773, 2016 WL
7033973, at *1 n. 2 (D. Md. Dec. 2, 2016) (citations omitted); see also Thomas v. Progressive
Leasing, No. RDB-17-1249, 2017 WL 4805235 (D. Md. Oct. 25, 2017); Bey v. Midland Credit
Mgmt., Inc., No. GJH-15-1329, 2016 WL 1226648, at *5 (D. Md. Mar. 23, 2016)); SC&H
Grp., Inc. v. Altus Grp. U.S., Inc., No. WMN-16-1037, 2016 WL 3743055, at *4 (D. Md. July
13, 2016).
Given that Plaintiff agreed to arbitrate any employment-related disputes, all of the
present claims are arbitrable and dismissal is appropriate. Accordingly, IT IS HEREBY
ORDERED this 27th day of February, 2018, that Defendants’ Motion to Dismiss or in the
Alternative Stay and Compel Arbitration (ECF No. 8) is GRANTED, the parties will
proceed to arbitration, and Plaintiff’s Complaint is DISMISSED; and it is FURTHER
HEREBY ORDERED that the Clerk of this Court is instructed to CLOSE THIS CASE.
_____/s/_____________________
Richard D. Bennett
United States District Judge

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