Knight et al v. Rent-A-Center East Inc et al

Filing 25

ORDER granting 6 Motion to Dismiss; Motion to Compel Arbitration; Motion to Strike plaintiff's class and collective claims. Signed by the Honorable Mary G Lewis on 12/20/2013. (hcic, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
) Civil Action No.: 4:13-1734-MGL
)
)
)
)
Plaintiffs, )
)
OPINION AND ORDER
v.
)
)
Rent-A-Center East, Inc., and Rent-A- )
Center of Greenville,
)
)
Defendants. )
_______________________________ )

Christopher Knight, John McDowell,
Rony Mejia, Anthony Tentoff, and
Andre White,

This case arises out of an employment relationship between Plaintiffs Christopher
Knight, John McDowell, Rony Mejia, Anthony Tentoff and Andre White (“Plaintiffs”) and
Defendant Rent-A-Center East, Inc. and Rent-A-Center of Greenville1 (“Defendant”). In the
underlying matter, Defendant moves the court, under the Federal Arbitration Act (“FAA”),
9 U.S.C. § 1, et seq., for an order dismissing Plaintiffs’ claims, striking their class and
collective action claims and compelling Plaintiffs to arbitrate. (ECF No. 6). This court held
a hearing on Defendant’s motion on October 22, 2013. The court has subject matter
jurisdiction under 29 U.S.C. § 216(b) and 28 U.S.C. § 1331 (2012). Having considered the
motion and responses filed, the arguments of the parties and the applicable law, the court
grants the motion to dismiss, grants the motion to strike and grants the motion to compel
arbitration.

1

Defendant represents that Rent-A-Center of Greenville” does not exist and
asserts that the proper defendant is Rent-A-Center East, Inc.
1

BACKGROUND
Plaintiffs filed this wage and hour class and collective action against Defendant on
June 25, 2013, on behalf of themselves and all other similarly situated employees to
recover unpaid overtime wages as provided under the Fair Labor Standards Act (“FLSA”).
Plaintiffs seek declaratory relief, unpaid overtime wages, liquidated damages, attorney’s
fees and taxable costs pursuant to 29 U.S.C. § 216(b). On July 18, 2013, Defendant filed
the instant motion to dismiss, to strike class and collective action claims, and to compel
arbitration. (ECF No. 6).
Plaintiffs were full time employees of Defendant and worked at Defendant’s Rent-ACenter stores in Horry County, South Carolina. (ECF No. 1 at §§ 26 & 27).2 Plaintiffs
allege inter alia that they regularly worked in excess of forty hours per week without
receiving overtime compensation as required under the FLSA. (ECF No. 1 at ¶ 92).
Plaintiffs, upon being hired by Defendant, each entered into a “Mutual Agreement
to Arbitrate Claims” (”Arbitration Agreements”) in which Plaintiffs each agreed to arbitrate
all disputes with Defendant regarding their employment, including all statutory wage and
hour claims. (ECF No. 6-2 at 5-33). Defendant assert that since Plaintiffs FLSA wage and
hour claims are covered under the express terms of the Arbitration Agreement and the
Arbitration Agreement was signed by Plaintiffs, that Plaintiff’s claims must be submitted to
binding arbitration as set forth in the Arbitration Agreement.
Next, the Arbitration Agreements that Plaintiffs signed require arbitration of Plaintiffs’
claims against Defendant in an individual capacity, not on a class or collective basis. (ECF
6-2 at 6). Thus, Defendants argue that the court must strike Plaintiffs’ class claims and

2

On or around February of 2012, Plaintiff Rony Mejia was promoted to the store
manager position and received a salary.
2

compel them to arbitrate on an individual basis.
LEGAL STANDARD
The FAA mandates that written agreements to arbitrate disputes “shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or inequity for the
avoidance of any contract.” 9 U.S.C. § 2 (2012). “By its terms, the Act ‘leaves no place for
the exercise of discretion by a district court, but instead mandates that district courts shall
direct the parties to proceed to arbitration on issues as to which an arbitration agreement
has been signed.’” Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th
Cir.2000) (citing Dean Witter Reynolds Inc.v. Byrd, 470 U.S. 213, 218 (1985)). Accordingly,
a court’s role is limited to determining: (1) whether the parties agreed to arbitrate and, if so,
(2) whether the scope of that agreement to arbitrate encompasses the claims at issue. Id.
If the party seeking arbitration establishes these two factors, the court must compel
arbitration. 9 U.S.C. § 4.
DISCUSSION
Plaintiffs do not dispute that they each signed written Arbitration Agreements to
cover the claims in this lawsuit.

Plaintiffs also do not dispute that the Arbitration

Agreements are governed by the FAA. Instead, Plaintiffs argue that they are not subject
to arbitration because Defendant’s arbitration policy is invalid as it requires a waiver of the
right to precede collectively in any forum, including arbitration, in violation of the National
Labor Relations Act (“NLRA”), 29 U.S.C. § 157 and Defendant reserves the right to not be
bound by the arbitration agreement making it invalid.
1. Whether the Arbitration Agreements Violates the NLRA
Plaintiffs argue that the Arbitration Agreements are invalid because they require a

3

waiver of the right to proceed collectively in any forum, including arbitration, in violation of
the NLRA. In support of their argument, Plaintiff rely on an NLRB decision, D.R. Horton,
Inc. and Michael Cuda, 357 NLRB No. 184 (Jan. 3, 2012). In the D.R. Horton decision,
the Board found that an employer's mandatory arbitration agreement that prohibited
employees from filing employment-related class actions violated Section 8(a)(1) of the
NLRA.
At the time of the hearing on Defendant’s Motion to Compel, the D.R Horton decision
was on appeal before the Fifth Circuit. On December 3, 2013,the United States Court of
Appeals for the Fifth Circuit issued its opinion in D.R. Horton, Inc. v. National Labor
Relations Board, 2013 U.S. App. LEXIS 24073 (5th Cir. Dec. 3, 2013). The Fifth Circuit
reversed the NLRB’s ruling that a class-waiver provision is unenforceable because it
violates employees’ Section 7 rights under the NLRA to engage in concerted activities. As
such, the NLRB’s decision that served as the basis for Plaintiffs’ attempts to avoid
arbitration and enforcement of the class-waiver provision has now been overruled.
The court next considers Plaintiffs’ argument that the Arbitration Agreements are not
enforceable because Defendant’s Co-Worker Handbook may provide a basis for Defendant
to modify or terminate the Arbitration Agreements.
II Whether Both Plaintiff and Defendants are Bound by the Arbitration Agreements
Plaintiff argues that because Defendant’s Co-Worker Handbook provides that the
policies and procedures in the handbook may be modified, revoked, suspended,
terminated, or changed and that this language provides a basis for Defendant to unilaterally
alter or terminate the stand-alone Arbitration Agreements that were entered into and signed
by each of the Plaintiffs and Defendant. The court makes no determination on the

4

enforceability of the Arbitration Agreements. The Arbitration Agreements clearly set forth
that “[t]he Arbitrator, and not any federal, state, or local court . . . shall have exclusive
authority to resolve any dispute relating to the . . . applicability, enforceability, or formation
of this Agreement . . . .” (ECF No. 6-2 at 7). The court notes that this identical clause was
upheld by the United States Supreme Court in the case of Rent-A-Center West, Inc. v.
Jackson, 130 S.Ct. 2772 (2010). The Supreme Court indicated that:
An agreement to arbitrate a gateway issue is simply an additional,
antecedent agreement the party seeking arbitration asks the federal court to
enforce, and the FAA operates on this additional arbitration agreement just
as it does on any other.
130 S. Ct. at 2777-2778.
Upon review, the court finds that parties have clearly assigned questions regarding
the enforceability of the Arbitration Agreement to an Arbitrator, and this court must enforce
this agreement like it would any other. Therefore, the court must compel arbitration of
Plaintiffs’ claims, notwithstanding their challenge to the enforceability of the Arbitration
Agreements.
CONCLUSION
For the foregoing reasons, the court grants Defendant’s motion to dismiss, grants
Defendant’s motion to compel arbitration and strikes Plaintiff’s class and collective claims.
IT IS SO ORDERED.
/s/Mary G. Lewis
United States District Judge
December 20, 2013
Florence, South Carolina

5