Fox v. Berry et al
MEMORANDUM OPINION (Order to follow as separate docket entry) re 6 MOTION to Dismiss and to Compel Arbitration filed by TPRSK, LLC, Kevin Berry. Signed by Honorable Robert D. Mariani on 9/8/21. (jam)
Case 3:20-cv-01998-RDM Document 8 Filed 09/08/21 Page 1 of 14
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
c/o-KMB PLUMBING & ELECTRICAL, INC. :
and TPRSK, LLC d/b/a KMB PLUMBING & :
On October 28, 2020, Plaintiff, Jacob Fox, brought suit against Defendants Kevin
Berry c/o KMB Plumbing & Electrical, Inc. and TPRSK, LLC d/b/a KMB Plumbing &
Electrical, Inc., alleging violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §
201, et seq., the Pennsylvania Minimum Wage Act, 43 P.S. § 333.101 et seq., and the
Pennsylvania Wage Payment and Collection Law, 43 P.S. § 260.1 et seq. Plaintiff's
Complaint alleges, inter alia, that he worked "from in and around November 2017 until in or
about March 2019 as an electrician for the Defendants." (Doc. 1, ~ 12). Plaintiff alleges
that he was "a non-exempt employee entitled to overtime compensation as required by
FLSA and Pennsylvania Wage laws." (Id. at~ 18). Plaintiff further alleges that at all
relevant times the Defendants paid him "straight time for all hours worked, even those in
excess of 40 in a workweek." (Id. at~ 19). He accordingly alleges that he was not
Case 3:20-cv-01998-RDM Document 8 Filed 09/08/21 Page 2 of 14
compensated at one and one-half times his regular rate of pay for all hours worked in
excess of 40 in a workweek. (Id. at 120). Plaintiff further alleges that his hourly rate was
increased to $18.00/hour in January of 2018; that he regularly worked at least 50 hours per
workweek and that the Defendants failed to pay him one and one-half times his regular rate
of pay for the hours he worked in excess of 40 hours in a workweek. (Id. at 1122-24).
Based on these allegations the Plaintiff asserts a claim for a violation of the FLSA in
Count I, a violation of the Pennsylvania requirement for the payment of overtime as set forth
in§ 333.104(c) of the Pennsylvania Minimum Wage Law in Count II, and a violation of the
Pennsylvania Wage Payment and Collection Law in Count Ill.
In response to the Plaintiff's Complaint, Defendants filed a "Motion to Compel
Arbitration and Stay Proceedings Pursuant to F.R.C.P. 12(b)(6)" on December 22, 2020.
(Doc. 6). Plaintiff filed his brief in opposition to the motion (Doc. 7) on January 5, 2021, and
Defendants did not file a Reply brief. Thus, Defendants' Motion is is now ripe for decision.
For the reasons that follow the Court will deny the Defendants' Motion to Compel
Arbitration without prejudice to its renewal through a motion under Fed. R. Civ. P. 56 which
may be filed after discovery is undertaken to fully develop the record with respect to the
existence of a valid agreement to arbitrate.
II. THE CONTENTIONS OF THE PARTIES
Defendant's Motion to Compel Arbitration alleges that the Plaintiff "is a former
independent contractor and also former employee of Defendants." (Doc. 6, 12). In
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addition, Defendants assert that Fox's employment is governed by a "Non-Compete and
Confidential Information Agreement" dated December 24, 2018, (id. at~ 6), which
Defendants attached to their Motion. Defendants assert that Fox "executed the Agreement
and agreed to its provisions." (Id. at~ 9). Defendants then assert a "valid Agreement to
arbitrate exists"; that the dispute falls within the scope of the arbitration agreement, and that
accordingly Plaintiff "must be compelled to arbitrate his employment claims with Defendants
pursuant to the Arbitration clause in the Agreement." (Id. at~~ 10-12).
The Non-Compete and Confidential Information Agreement attached to Defendants'
Motion to Compel Arbitration provides in§ VII, entitled "Arbitration of Disputes", as follows:
A. All disputes over the terms of this Agreement, or any other work-related
dispute between the parties, shall be submitted to arbitration in the event it is
not resolved among the parties within sixty (60) days from the date of
notification of the dispute.
B. Either party may request arbitration.
C. The arbitrator's decision shall be final and binding. Enforcement may be
sought through injunction proceedings in an appropriate Court of Common
Pleas. If the arbitration award calls for the payment of money, the award may
be filed as a judgment in the appropriate Court of Common Pleas.
D. The costs of the arbitration shall be borne by both parties equally unless
the arbitrator assigns them to one party in his or her award .
F. The procedural rules of the American Arbitration Association shall apply.
G. Paragraph VIII.F. notwithstanding, each party is required to furnish the
other party with a witness and exhibit list fourteen (14) days prior to the
arbitration hearing. Failure to comply with this paragraph shall preclude the
admission of any evidence.
Case 3:20-cv-01998-RDM Document 8 Filed 09/08/21 Page 4 of 14
(Doc. 6-2 at 6).1
The Defendants in their Memorandum of Law in Support of their Motion to Compel
Arbitration and Stay Proceedings (Doc. 6-1) reassert that a valid contract has been entered
into by them with the Plaintiff and that the parties, in entering into that contract, also entered
into a valid agreement to arbitrate "all work-related disputes." Defendants quote the
"positive assurance test" set forth in AT&T Technologies v. Communications Workers of
America, 475 U.S. 643, 650 (1986) which provides that "[a]n order to arbitrate the particular
grievance should not be denied unless it may be said with positive assurance that the
arbitration clause is not susceptible of an interpretation that covers the asserted dispute."
(Doc. 6-1, at 6). Thus, Defendants argue Plaintiff's claims in the present action constitute
covered disputes under the arbitration provision set forth, supra, since the agreement
provides that "[a]II disputes over the terms of this Agreement, or any work-related dispute
between the parties, shall be submitted to arbitration in the event it is not resolved among
the parties within sixty (60) days from the date of notification of the dispute."2
In support of their position, Defendants rely upon Section 3 of the Federal Arbitration
Act, which provides:
If any suit or proceeding be brought in any of the courts of the United States
upon any issue referable to arbitration under an agreement in writing for such
Agreement in the above quoted§ VII omits any section designated as "E".
erroneously assert that Plaintiff asserted claims under Title VI I of the 1964 Civil
Rights Act and under 42 U.S.C. § 1981, but correctly assert that Plaintiff has set forth claims for violations
of the FLSA and the Pennsylvania overtime provisions of the Minimum Wage Law and the Pennsylvania
Wage Payment and Collection Law.
Case 3:20-cv-01998-RDM Document 8 Filed 09/08/21 Page 5 of 14
arbitration, the court in which such suit is pending, upon 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, providing the applicant for the stay is not in default in
proceeding with such arbitration.
(Doc. 6-1 at 7) (quoting 9 U.S.C. § 3).
Plaintiff, in his brief in opposition to Defendants' Motion to Compel, argues that
"courts should only compel arbitration in the absence of any genuine issue of fact
concerning the agreement to arbitrate." (Doc. 7, at 5). Plaintiff asserts that "[a] district
court, in weighing a motion to compel arbitration, generally reviews the motion under the
same standard as summary judgment motions." (Id.) (citing Bitton v. Healthcare Services
Group Inc., 2019 WL 415570 (E.D. Pa. 2019); Kirleis v. Dickie, McCamey & Chilcote, P.C.,
560 F.3d 156, 159 & n.3 (3d Cir. 2009)). Plaintiff thus states that "[a] court will compel
arbitration only when there is 'no genuine issue of fact concerning the formation of the
agreement' to arbitrate, and the court 'must consider all evidence provided by the party
opposing arbitration and draw all reasonable inferences in that party's favor."' (Id. at 5-6).
Citing to Kirleis, Plaintiff further asserts that in determining whether a valid arbitration
agreement exists, courts look to ordinary state-law principles of contract formation. (Id. at
6). Plaintiff argues that, in light of the case law cited, Defendants' motion must be denied
where "there are clearly more than sufficient disputes regarding the validity and applicability
of the arbitration agreement at issue . . .. " (Id. at 6).
Case 3:20-cv-01998-RDM Document 8 Filed 09/08/21 Page 6 of 14
Plaintiff additionally argues that the Motion to Compel Arbitration should be denied
because the "underlying contractual agreement containing the arbitration clause is void due
to failure of consideration." (Doc. 7, at 7).
In support of his position, Fox asserts factual contentions that are not pleaded in his
Complaint but which specifically deny that Defendants, as consideration for his entry into
the Agreement in question, was offered a promotion to sales manager. Accordingly, the
Plaintiff argues that the Defendants have not shown what the Plaintiff describes as a
"necessary element for contract formation", i.e. consideration. (Id. at 7-8).
In addition, Fox argues that the Agreement containing the provision for arbitration of
work-related disputes is void due to "procedural unconscionability." (Id. at 8) . The Plaintiff
argues that "Defendants induced Plaintiff into executing the Agreement without disclosing
the entirety of the Agreement to him, most importantly, the section of the Agreement
containing the arbitration clause was not given to Plaintiff for review and Defendants did not
give Plaintiff the opportunity to review the documents presented to him." (Id. at 8)
Plaintiff, in support of his unconscionability argument, further argues that he was
"given an incomplete document to sign that did not include the challenged arbitration clause
that he was told he needed to sign in order to work." (Id. at 9). Plaintiff also argues that the
agreement attached to Defendants' Motion asserts in the very first paragraph thereof that it
consists of four pages and that each page has a "spot" for the parties to initial which Plaintiff
asserts are patently incorrect assertions on review of the document itself, which consists of
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eight pages and contains no page-by-page provision for initialing by the parties. Plaintiff
concludes by arguing that "it is clear that Plaintiff was given an incomplete agreement to
sign , that Defendants took steps to conceal the entirety of the agreement to obtain Plaintiff's
assent, and improperly pressured Plaintiff to sign the agreement without reviewing it by
telling him it was paperwork required for him to continue working." (Id. at 10).
Plaintiff concludes his brief by contending that he has presented "the requisite factual
disputes regarding the validity of the underlying arbitration agreement at issue in order to
defeat Defendants' motion." (Doc. 7, at 10).
In Guidotti v. Legal Helpers Debt Resolution, L.L.C. , 716 F.3d 764 (3d Cir. 2013), the
Third Circuit clarified the standards to be applied to motions to compel arbitration,
specifically explaining the circumstances when District Courts should apply the standard for
a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) and when the District Courts should
apply the summary judgment standard of Fed. R. Civ. P. 56. The Court began by
acknowledging the long-standing rule that arbitration is a matter of contract between the
parties and that "a judicial mandate to arbitrate must be predicated upon the parties'
consent." Guidotti, 716 F.3d at 771 (citing Par-Knit Mills, Inc. v. Stockbridge Fabrics Co.,
Ltd. , 636 F.2d. 51, 54 (3d. Cir. 1980)). Further, the Circuit Court noted that the Federal
Arbitration Act, 9 U.S.C. § 1, et seq., while providing for the enforcement of a contract to
arbitrate, "requires that a court shall be satisfied that the making of the agreement for
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arbitration ... is not an issue before it orders arbitration." Id. (internal quotation marks
omitted). The Court also noted that, in accordance with Par-Knit Mills, "the party who is
contesting the making of the agreement has the right to have the issue presented to a jury."
The Guidotti Court then explained the circumstances in which a motion to compel
arbitration may be addressed through a motion made pursuant to Rule 12(b)(6) as well as
when the matter should be resolved pursuant to Rule 56. The Court succinctly explained
the appropriate use of these Rules in determining the arbitrability of a dispute as follows:
To summarize, when it is apparent, based on "the face of a complaint, and
documents relied upon in the complaint," that certain of a party's claims "are
subject to an enforceable arbitration clause, a motion to compel arbitration
should be considered under a Rule 12(b)(6) standard without discovery's
delay." [Somerset Consulting, LLC v. United Capital Lenders, LLC, 832
F.Supp.2d 474, 482 (E.D.Pa. 2011 )]. But if the complaint and its supporting
documents are unclear regarding the agreement to arbitrate, or if the plaintiff
has responded to a motion to compel arbitration with additional facts sufficient
to place the agreement to arbitrate in issue, then "the parties should be
entitled to discovery on the question of arbitrability before a court entertains
further briefing on [the] question." Id. After limited discovery, the court may
entertain a renewed motion to compel arbitration, this time judging the motion
under a summary judgment standard. In the event that summary judgment is
not warranted because "the party opposing arbitration can demonstrate, by
means of citations to the record ," that there is "a genuine dispute as to the
enforceability of the arbitration clause," the "court may then proceed
summarily to a trial regarding 'the making of the arbitration agreement or the
failure , neglect, or refusal to perform the same,' as Section 4 of the FAA
envisions." Id. (quoting 9 U.S.C. § 4).
Guidotti, 716 F.3d at 776.
Case 3:20-cv-01998-RDM Document 8 Filed 09/08/21 Page 9 of 14
The principles set forth in Guidotti for determining whether an agreement to arbitrate
a dispute has been entered into by the parties have been uniformly followed. Thus, in Singh
v. Uber Technologies, Inc., 939 F.3d 210 (3d Cir. 2019), the Court reiterated the rules for
determining the appropriate standard - the motion to dismiss standard or the summary
judgment standard - to be utilized in determining whether a party's claims are subject to
We held [in Guidotti] that the motion to dismiss standard applies to a motion
to compel arbitration where a party's claims are subject to an enforceable
arbitration clause - that is, where the existence of a valid agreement to
arbitrate between the parties is apparent from the face of the complaint or
incorporated documents. But if the complaint and its supporting documents
are unclear as to whether the parties agreed to arbitrate, or if the plaintiff has
responded to a motion to compel arbitration with additional facts sufficient to
place the agreement in dispute, a restricted inquiry into factual issues [is]
necessary. The motion to compel arbitration is judged under a summary
judgment standard if it is renewed after this inquiry.
939 F.3d. at 216 (internal citations and quotation marks omitted).
Similarly, in In re Rotavirus Vaccines Antitrust Litigation, the Third Circuit ruled that
the District Court, in denying Defendant Merck's motion to compel individual arbitration and
stay proceedings of a putative anti-trust class action lawsuit, properly declined under
Guidotti to apply the Rule 12(b)(6) standard "because it is not apparent from the Complaint
that Plaintiffs' claims are subject to the PBG Contracts' arbitration provisions." 789 F. App'x.
934, 937 (3d Cir. 2019). However, the Court of Appeals added that the District Court
"should have allowed the parties to engage in limited discovery before applying the
summary judgment standard." Id. at 938. The Court thus concluded that "[b]ecause
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arbitrability is not apparent on the face of the Complaint, limited discovery on the issue of
arbitrability is appropriate, after which Merck may file a renewed motion to compel
District Courts which have been confronted with motions to compel arbitration have
also strictly adhered to the standards adopted in Guidotti. See e.g. , Dotson v. At/. Credit &
Fin. , Inc., 2019 WL 5394837 (D.N.J. 2019) (adopting Magistrate Judge's Report and
Recommendation and denying motion to compel arbitration where "Plaintiff's complaint
does not reference the agreement containing the arbitration provision and arbitrability
between the parties is ambiguous on the face of the Complaint and the documents relied
upon therein." See also, Zirpoli v. Midland Funding LLC, 2021 WL 2826720 (M .D. Pa.
2021) (Court having previously denied motion to compel arbitration without prejudice where
it was not apparent from the face of the complaint that plaintiff's claims were subject to a
valid and enforceable arbitration agreement and ordered limited discovery, thereafter denied
a renewed motion to compel arbitration because defendant lacked privity with plaintiff in the
absence of a valid assignment to plaintiff).
The two-step analysis set forth in Guidotti for determining the validity of a motion to
compel arbitration was also employed by the District Court in Hrapczynski v. Brist/econe,
Inc., 2021 WL 3209852 (E.D. Pa. 2021). There, Defendant Bristlecone offered to employ
the plaintiff as a Project Manager as set forth in a two-page Employment Agreement which
included an arbitration provision. Plaintiff brought an action alleging Defendant Bristlecone
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violated the ADEA, ADA, Title VII, and PHRA, and Bristlecone filed a motion to compel
arbitration and to dismiss plaintiff's complaint under Rule 12(b)(6). The District Court
determined that the Rule 12(b)(6) standard applied to Bristlecone's motion to compel
arbitration because Bristlecone relied "solely on the Complaint and the arbitration provision
contained in the parties' Employment Agreement. " Id. at *4. The Court then found the
Employment Agreement and the arbitration agreement within it to be valid "because
Hrapzynski accepted the terms and conditions of the Employment Agreement by signing the
Agreement and working for Bristlecone for nearly seven years." Id.
Here, the Defendants' Motion to Compel Arbitration cannot be decided under the
motion to dismiss standard of Rule 12(b)(6). First, it is not apparent on the face of Plaintiff's
Complaint that the Plaintiff's claims "are subject to an enforceable arbitration clause",
Guidotti, supra, at 776. Indeed, Plaintiff's Complaint contains no reference whatsoever to
an employment agreement and arbitration provision generally or to the "Non-Compete and
Confidential Information Agreement" (Doc. 6-2) which Defendants submitted in support of
their Motion to Compel Arbitration .
Rather, Fox has responded to Defendants' Motion to Compel Arbitration "with
additional facts sufficient to place the agreement to arbitrate in issue," Guidotti, supra, at
776. Specifically, the Plaintiff, in his brief in opposition to Defendants' Motion to Compel
Arbitration, argues that the Defendants have not shown that a valid contract was entered
into by Plaintiff with Defendants, asserting that Defendants' "factual averments as they
Case 3:20-cv-01998-RDM Document 8 Filed 09/08/21 Page 12 of 14
relate to consideration are fundamentally false, as Plaintiff was never offered a promotion to
Sales Manager and never accepted such a position." (Doc. 7 at 7). Plaintiff goes so far as
to argue that Defendants' arguments regarding the existence of consideration for the NonCompete and Confidential Information Agreement were erroneously asserted by the
Defendant, having been borrowed "from a similar but separate lawsuit involving individuals
not a party to the present suit." (Id.) . Plaintiff flatly asserts that he was employed as an
electrician at all times relevant to his Complaint.
Further, Plaintiff asserts that he was induced to execute the Non-Compete and
Confidential Information Agreement by Defendant who failed to disclose the entirety of the
Agreement to him, and in particular, the provision requiring the arbitration of "all workrelated claims." Thus, Plaintiff argues that he was "given an incomplete document to sign
that did not include the challenged arbitration clause that he was told he needed to sign in
order to work." (Id. at 9). Fox buttresses this argument by asserting that the first paragraph
of the Agreement in question notes that the Agreement consists of four pages and that each
page has a provision for initialing by the parties. Instead, Plaintiff argues, the agreement
produced by the Defendants consists of seven pages with no provision on each page for
initialing by the parties. In essence, Plaintiff alleges that he was fraudulently induced to
enter into an agreement which was incomplete in its text such that the agreement to
arbitrate was concealed from him.
Case 3:20-cv-01998-RDM Document 8 Filed 09/08/21 Page 13 of 14
In such circumstances, it is the case that "the plaintiff has responded to a motion to
compel arbitration with additional facts sufficient to place the agreement to arbitrate in
issue." Guidotti, 716 F.3d. at 776. Accordingly, Guidotti instructs that "the parties should be
entitled to discovery on the question of arbitrability before a court entertains further briefing
on [the] question ." Id. Thereafter:
After limited discovery, the court may entertain a renewed motion to compel
arbitration, this time judging the motion under a summary judgment standard.
In the event that summary judgment is not warranted because the party
opposing arbitration can demonstrate, by means of citations to the record that
there is a genuine dispute as to the enforceability of the arbitration clause, the
court may then proceed summarily to a trial regarding the making of the
arbitration agreement or the failure, neglect or refusal to perform the same, as
Section 4 of the FAA envisions.
Id. (internal quotation marks omitted) .
For the afore-stated reasons, the Defendants' Motion to Compel Arbitration (Doc. 6)
will be denied without prejudice subject to renewal upon completion of the limited discovery
which the Court will order in connection with this matter as to the issue of whether a valid
agreement to arbitrate was entered into by the parties.
With respect to the limited discovery which shall be ordered, the parties shall confer
and provide the Court with a joint case management plan which shall propose deadlines for
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the completion of the limited discovery contemplated by this Memorandum Opinion and for
the submission of motions by either party for summary judgment pursuant to Rule 56. 3
A separate Order follows.
The procedure outlined in this opinion for the resolution of this dispute should not be unfamiliar to
Defendants and Defendants' counsel. In Benjamin v. KMB Plumbing & Electrical, Inc., 2020 WL 3963774
(M.D. Pa. 2020), Defendants' Motion to Compel Arbitration through the vehicle of a motion to dismiss was
denied in circumstances similar to those present in this case. Subsequently in that case, Defendants'
renewed motion to compel arbitration and stay proceedings was granted after the required limited
discovery. See Benjamin v. KMB Plumbing & Electrical, Inc., 2021 WL 2473845. Remarkably, neither
party to this case saw fit to cite to Benjamin, even where the initial decision requiring limited discovery was
decided on July 13, 2020, well before the Defendants' motion to compel arbitration was filed in the present
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