Rager v. Pecos Valley Pizza, Inc. et al

Filing 21

MEMORANDUM OPINION AND ORDER by Chief District Judge William P. Johnson GRANTING IN PART AND DENYING IN PART 11 Defendants Motion to Compel Arbitration and Dismiss Suit. (mag)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
WILLIAM RAGER, individually and on
Behalf of all other similarly situated,
Plaintiff,
v.

No. 18-CV-571-WPJ

PECOS VALLEY PIZZA, INC.,
and BRIAN BAILEY
Defendants.
MEMORANDUM OPINION AND ORDER
GRANTING AND DENYING IN PART DEFENDANTS’ MOTION TO COMPEL
ARBITRATION AND DISMISS SUIT [DOC. 11]
THIS MATTER comes before the Court on Defendants’ Motion to Compel Arbitration
and Dismiss Suit. [Doc. 11, filed August 20, 2018]. Upon reviewing the parties’ briefs and the
applicable law, the motion is GRANTED in part and DENIED in part.
BACKGROUND
Plaintiff William Rager filed suit in this Court against Defendant Pecos Valley Pizza, Inc.,
and Defendant Brian Bailey for violations of the Fair Labor Standards Act of 1938, U.S.C. §§ 201,
et seq., and the New Mexico Wage Law NMSA 1978, § 50-4-21. Plaintiff signed an Arbitration
Agreement with Defendant Pecos Valley Pizza, Inc. Pursuant to that Arbitration Agreement,
Defendants seek to compel arbitration, to dismiss the present lawsuit, and an award of attorneys’
fees.
STANDRAD
Under Section 4 of the Federal Arbitration Act (“FAA”), “[a] party aggrieved by the
alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration

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may petition any United States district court [. . .] for an order directing that such arbitration
proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. The FAA provides that a
written agreement requiring arbitration of controversies arising out of a contract “evidencing a
transaction involving commerce [. . .] shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Section 2 of
the FAA creates a substantive rule applicable in state as well as federal courts. Southland Corp. v.
Keating, 465 U.S. 1, 16 (1984).
In enacting the FAA, “Congress intended to foreclose state legislative attempts to undercut
the enforceability of arbitration agreements.” Perry v. Thomas, 482 U.S. 483, 489 (1987) (citation
and internal quotation marks omitted). There is a clear federal policy of requiring arbitration unless
the agreement to arbitrate is not part of a contract evidencing (1) interstate commerce or (2) is
revocable upon such grounds as exist at law or (3) in equity for the revocation of any contract. See
9 U.S.C. § 2. Further, the Supreme Court has emphasized the “fundamental principle that
arbitration is a matter of contract[.]” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011)
(internal citation and quotation marks omitted). “In line with these principles, courts must place
arbitration agreements on an equal footing with other contracts, [. . .] and enforce them according
to their terms.” Id. (internal citation and quotation marks omitted). To be enforceable, an arbitration
agreement must be validly formed pursuant to state contract law. See Salazar v. Citadel Commc'ns
Corp., 2004-NMSC-013, ¶ 8, 135 N.M. 447 (“To determine whether the agreement to arbitrate is
valid, courts look to general state contract law . . . .”). “[T]he terms of the arbitration agreement
are to be interpreted by the rules of contract law” and that “courts will apply the plain meaning of
contract language as written in interpreting terms of a contract[.]” Christmas v. Cimarron Realty
Co., 1982-NMSC-079, ¶ 8, 98 N.M. 330, 648 P.2d 788, 790. It is the party seeking judicial

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enforcement of an arbitration agreement who bears the burden of persuasion. THI of New Mexico
at Hobbs Center, LLC v. Patton, Civ. No. 11-537 (LH/CG), 2012 WL 112216, *6 (D.N.M. Jan. 3,
2012) (citation omitted).
DISCUSSION
I.

Arbitration Agreement
The parties do not dispute that there is an enforceable arbitration agreement, or that the

matter should not proceed to arbitration. Defendants submitted the instant motion despite
Plaintiff’s statement that the motion would not be opposed so long as the matter was stayed.
Defendants want the action dismissed as they argue that all the claims would go to arbitration.
[Doc. 18 at 3 (citing Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992)].
“[U]pon being satisfied that the issue involved in such suit or proceeding is referable to
arbitration under such an agreement, 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. The Tenth Circuit holds that when one of the parties petitions the Court to stay an
action pending compulsory arbitration, the mandatory language of Section 3 is binding, and it is
error for the Court to dismiss the action. See Adair Bus Sales, Inc. v. Blue Bird Corp., 25 F.3d 953,
955 (10th Cir. 1994); cf. Armijo v. Prudential Ins. of Am., 72 F.3d 793, 797 (10th Cir. 1995)
(holding that when the party seeking to compel arbitration requests the court for dismissal, and
there is no evidence in the record of any party requesting a stay, it is not error for the district court
to dismiss the case). In his response, Plaintiff has made an unequivocal application to the Court
for a stay of proceedings until arbitration has been resolved. Therefore, the proceedings will be
stayed until arbitration takes place in accordance with the terms of the Arbitration Agreement.

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II.

Dismissal of Court Action Provision of Arbitration Agreement
Having determined that there is an enforceable arbitration agreement because neither party

disputes that one does not exist, the Court next addresses Defendants’ request for attorneys’ fees.
Defendants pray this Court for an award of attorneys’ fees pursuant to the Dismissal of Court
Action provision of the Arbitration Agreement that prevents a party from pursuing a covered claim
in court. The provision states:
If either party pursues a covered claim against the other in a court proceeding, the
filing party agrees that the responding party shall be entitled to a dismissal, stay
and/or injunctive relief regarding such action, and recovery of all costs and
attorneys’ fees related to such court action or proceeding.
[Doc. 11.1 at 5]. The Court will not award attorneys’ fees for the mere filing of this proceeding
because Defendants have not shouldered their burden and have not demonstrated that the provision
requiring the payment of attorneys’ fees for filing a court action applies for this proceeding. Both
parties seek to have the case arbitrated, and therefore neither party is “pursuing a claim” in court.
Therefore, the Court determines that the plain language of the Arbitration Agreement is clear, and
this provision does not apply at this instance because neither party is pursuing a covered claim in
a court proceeding.
CONCLUSION
IT IS THEREFORE ORDERED that Defendants’ Motion to Compel Arbitration and
Dismiss Suit, [Doc. 11, filed August 20, 2018], is GRANTED in part and DENIED in part as
follows:
1. Defendants’ request to compel arbitration is GRANTED;
2. Plaintiff is ordered to arbitrate his claims against Defendants’ according to the terms of
the Arbitration Agreement in accordance with this Memorandum Opinion and Order;
3. The attorneys’ fees award request by Defendants is DENIED;
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4. This case is STAYED until arbitration has been resolved;
5. IT IS FINALLY ORDERED that the parties’ must jointly notify this Court when
Arbitration has been completed, and if any final disposition occurred.

________________________________________
CHIEF UNITED STATES DISTRICT JUDGE

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