Geiger et al v. H&H Franchising Systems, Inc. et al
MEMORANDUM AND ORDER granting 55 Motion to Compel Arbitration as to all claims brought by Plaintiff Geiger and opt-in Plaintiffs Carmon and Moss, and this matter is STAYED as to those claims. Signed by Magistrate Judge David S. Cayer on 8/20/18. (tob)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CIVIL ACTION NO. 3:17-CV-00738-FDW-DSC
ROSEANN GEIGER et. al.,
H&H FRANCHISING SYSTEMS, INC.
MEMORANDUM AND ORDER
THIS MATTER is before the Court on Defendants Glenkat, Inc., Kathleen Holden and
Glenn Holden’s “Motion to Compel Arbitration and Dismiss or Stay Action” (document #55) and
the parties’ briefs and exhibits.
This matter has been referred to the undersigned Magistrate Judge pursuant to 28 U.S.C. §
636(b)(1) and this Motion is now ripe for the Court’s consideration.
The relevant facts are not in dispute. The Glenkat Defendants (Glenkat, Inc., Kathleen
Holden and Glenn Holden) are franchisees of Defendant H.H. Franchising Systems, Inc. (HH).
Defendants offer in-home, companion care services from their principal office in Huntersville,
North Carolina. Plaintiffs, including opt-in Plaintiffs Carmon and Moss, were employed by
Defendants as caregivers.
On December 24, 2017, Plaintiffs filed their Complaint, which as amended, alleges
violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201 et seq., and the North
Carolina Wage and Hour Act, N.C. Gen. Stat. §§ 95-25.1 et seq. Plaintiffs seek unpaid minimum
and overtime wages, as well as statutory penalties. Plaintiffs also seek to represent all similarly
situated employees through an FLSA collective action. Plaintiff Holley alleges a FLSA claim for
Plaintiff Geiger and opt-in Plaintiffs Carmon and Moss signed Employment Agreements with
the Glenkat Defendants.
Those agreements contained valid arbitration clauses, including
arbitration of FLSA claims and class action waivers. Plaintiff Holley did not agree to arbitrate or
waive her right to seek class relief.
On July 2, 2018, the Glenkat Defendants filed their “Motion to Compel Arbitration and
Dismiss or Stay Action.”
Plaintiffs do not dispute the validity or scope of the arbitration agreement or class action
waiver. Plaintiffs argue that Defendants delayed in compelling arbitration, instead “substantially
invok[ing] the judicial process” and waiving their right to arbitration. Document #60 at 6. They
also argue that Plaintiff Holley and Defendants never agreed to arbitration.
In its response, Defendant HH joins the Motion to Compel as a non-signatory beneficiary.
See Document #61; Long v. Silver, 248 F.3d 309, 315-16 (4th Cir. 2001) (arbitration compelled
for non-signatories of arbitration agreement where their claims “involved common questions of
law or fact” as arbitrable claims). Plaintiffs have pled all their claims against the Defendants
collectively with a single set of factual allegations.
In their reply brief, the Glenkat Defendants clarify that they are not seeking to compel
arbitration by Plaintiff Holley or any potential opt-in Plaintiff who did not sign an Employment
Agreement containing the arbitration clause and class action waiver.
Accordingly, the remaining issue is whether Defendants substantially invoked the judicial
process thereby waiving their right to arbitration.
The Federal Arbitration Act (“FAA”) establishes a policy favoring arbitration. The FAA
provides that arbitration clauses "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. The FAA
requires courts to stay proceedings and compel arbitration in the event of a refusal to comply with
a valid agreement to arbitrate. 9 U.S.C. § 3. The Supreme Court has described the FAA as “a
liberal federal policy favoring arbitration.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333,
339 (2011) (citation omitted). Furthermore, the Supreme Court has held that “courts must
rigorously enforce arbitration agreements according to their terms.” Am. Exp. Co. v. Italian Colors
Rest., 133 S. Ct. 2304, 2309 (2013) (internal quotation omitted). This Court must compel
arbitration if: “(i) the parties have entered into a valid agreement to arbitrate, and (ii) the dispute
in question falls within the scope of the arbitration agreement.” Chorley Enter., Inc. v. Dickey's
Barbecue Rest., Inc., 807 F.3d 553, 563 (4th Cir. 2015). In deciding whether the parties have an
enforceable agreement to arbitrate, courts apply state law principles governing the formation of
contracts. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995).
The Supreme Court has recently upheld class action waivers and arbitration agreements in
FLSA actions. Epic Systems Corp. v. Lewis, 584 U.S.____, No. 16-285 (May 21, 2018).
[T]he heavy presumption of arbitrability requires that when the scope of the
arbitration clause is open to question, a court must decide the question in favor of
arbitration. Thus, we may not deny a party's request to arbitrate an issue unless it
may be said with positive assurance that the arbitration clause is not susceptible of
an interpretation that covers the asserted dispute.
Long, 248 F.3d at 315-16 (internal citations omitted).
The court must compel arbitration even if the disputed claims are exempted from
arbitration or otherwise considered non-arbitrable under state law. Perry v. Thomas, 482 U.S. 483,
489 (1987) (state statute that required litigants to be provided a judicial forum for resolving wage
disputes “must give way” to Congress’ intent to provide for enforcement of arbitration
agreements); Am. Gen. Life & Accident Ins. Co. v. Wood, 429 F.3d 83, 90 (4th Cir. 2005) (FAA
preempts state law barring arbitration of certain claims).
On the other hand, “arbitration is a matter of contract and a party cannot be required to
submit to arbitration any dispute which he has not agreed so to submit.” United Steelworkers v.
Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (1960). See also AT & T Technologies, Inc.
v. Communications Workers, 475 U.S. 643, 648 (1986); Johnson v. Circuit City Stores, Inc., 148
F.3d 373, 377 (4th Cir. 1998); Arrants v. Buck, 130 F.3d 636, 640 (4th Cir. 1997).
A party has impliedly waived its contractual right to arbitration if, by its delay or actions
inconsistent with arbitration, another party is prejudiced by the order compelling arbitration.
Maxum Foundations, Inc. v. Salus Corp., 779 F. 2d 974, 981 (4th Cir. 1985); Cyclone Roofing
Co. v. David M. LaFave Co., 312 N.C. 224, 321 (N.C. 1984). When the party seeking arbitration
has substantially invoked the judicial process to the other party’s detriment or prejudice, courts
will find a waiver of the right to compel arbitration. MicroStrategy, Inc. v. Lauricia, 268 F.3d 244,
249 (4th Cir. 2001); Maxum Foundations, Inc., 779 F.2d at 981. The decision is within the Court’s
discretion and is based upon the specific facts of the case. Id. “The circumstances giving rise to
statutory default are limited and, in light of the federal policy favoring arbitration, are not to be
lightly inferred.” Maxum, 779 F.2d at 981. Courts in other circuits have considered three factors
in determining prejudice: whether discovery has occurred on arbitrable claims, the time and
expense incurred defending against dispositive motions, and the moving party’s failure to timely
assert its right to arbitrate. JS Barkats, PLLC v. BE, Inc., 2013 WL 44919 (S.D.N.Y. 2013) (five
month delay insufficient to create prejudice where no discovery occurred and no dispositive
motions were filed) (citing Republic Inc. Co. v PAICO Receivables, LLC, 383 F.3d 341, 346 (5th
The Court concludes that Defendants are entitled to an order compelling arbitration.
Defendants have shown that Plaintiff Geiger and opt-in Plaintiffs Carmon and Moss entered into
a valid agreement to arbitrate and waived their right to pursue a class action. Epic Systems Corp.,
584 U.S. at ____. No discovery has occurred. The Glenkat Defendants moved to compel
arbitration less than four months after Plaintiffs amended their Complaint. Although the Glenkat
Defendants filed a Motion to Dismiss, Plaintiff Holley’s claims are not arbitrable and accordingly
her claims were subject to the Motion. Plaintiffs have failed to overcome the well established
policy favoring arbitration.
The Court has discretion to dismiss an action where all the issues raised are arbitrable. The
more common practice is to stay the action or those claims pending the outcome of arbitration in
order to provide a convenient forum for confirmation of any ensuing arbitration award.
U.S.C. § 3 (“a stay is mandatory upon a showing that the opposing party has commenced suit upon
any issue referable to arbitration....); 9 U.S.C. § 9 (“any party to the arbitration may apply to the
court so specified for an order confirming the award, and thereupon the court must grant such an
is order unless the award vacated”).
For those reasons and the other reasons stated in Defendants’ briefs, their Motion to
Compel Arbitration is granted as to all claims brought by Plaintiff Geiger and opt-in Plaintiffs
Carmon and Moss.
NOW THEREFORE IT IS HEREBY ORDERED:
1. Defendants’ “Motion to Compel Arbitration and Dismiss or Stay Action” (document
#55) is GRANTED as to all claims brought by Plaintiff Geiger and opt-in Plaintiffs
Carmon and Moss, and this matter is STAYED as to those claims. Plaintiff Geiger and
opt-in Plaintiffs Carmon and Moss and Defendants shall arbitrate those claims as
provided in their Employment Agreements.
2. The Clerk is directed to send copies of this Order to counsel of record and to the
Honorable Frank D. Whitney.
Signed: August 20, 2018
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