Sittner v. Country Club Inc et al

Filing 30

ORDER: Defendant's motions to dismiss plaintiff's amended complaint and to compel arbitration, or in the alternative stay litigation [ECF # 6 and ECF # 7 ] are GRANTED. Plaintiff's complaint [ECF # 1 ] is STA YED pending the outcome of the arbitration. The parties involved in the arbitration proceeding must complete arbitration within six months from the date of this Order. At the conclusion of six months from the date of this Order, the Clerk is instructed to lift the stay in this case, unless notified by the parties to lift the stay at an earlier date. Signed by the Honorable R. Bryan Harwell on 7/13/2016. (hcic, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
CANDACE SITTNER, on behalf of
herself and all others similarly situated,

)
)
)
Plaintiff,
)
)
v.
)
)
COUNTRY CLUB, INC. d/b/a THE
)
MASTERS CLUB; and MIKE KAP,
)
individually,
)
Defendants.
)
____________________________________)

Civil Action No.: 4:15-CV-05043-RBH

ORDER

This matter is before the Court after Defendant Country Club, Inc. filed its motion to
dismiss complaint and compel arbitration, or in the alternative, stay litigation. [ECF #6 and #7].1
Both parties have had the opportunity to extensively brief the issues raised in the motions, and
this Court has thoroughly considered all pleadings filed in this case.2
Factual Background and Procedural History
Plaintiff Candace Sittner (“Ms. Sittner”) brought this action on or about December 23,
2015, individually and as a collective action for unpaid minimum wages and unpaid overtime
wages, for liquidated damages, and for other relief under the Fair Labor Standards Acts of 1938,
as amended, 29 U.S.C. § 201, et seq. (the “FLSA”). [ECF #1]. Ms. Sittner also brings this action
pursuant to the South Carolina Payment of Wages Act, South Carolina Code Ann. § 41-10-10, et

1

It appears Defendant Country Club, Inc. filed the same motion raising the same issues twice. [ECF
#6 and #7]. Thus, this Court’s analysis will address both outstanding motions.

2

Under Local Civil Rule 7.09 (D.S.C.), “hearings on motions may be ordered by the Court in its discretion.
Unless so ordered, motions may be determined without a hearing.” Upon review of the briefs, the Court finds
that a hearing is not necessary.

seq. (The “SCPWA”). As alleged by Ms. Sittner, Defendant Country Club, Inc. d/b/a as The
Masters Club (“The Masters Club”) is a corporate entity organized under the laws of the state of
South Carolina and doing business in Horry County. [ECF #1, p. 2]. Defendant Kap is a citizen
and resident of Horry County, South Carolina, and an owner of The Masters Club. [ECF #1, p.
2]. In March 2014, The Masters Club hired Plaintiff to be a “shooter girl,” requiring her to
purchase alcohol from The Masters Club and sell that alcohol to its customers. [ECF #1, p. 4].
Plaintiff maintains she was classified as an independent contractor, but in reality she alleges she
was an employee of The Masters Club under the applicable legal standards. [ECF #1, p. 4]. She
further maintains that in March 2015, she was paid less than the statutory minimum wage owed
to her pursuant to the FLSA. She subsequently brought claims for failure to pay minimum wage,
failure to pay overtime wages, violations of the SCPWA, unlawful kickbacks, and retaliation. [ECF
#1]. In conjunction with her complaint, Plaintiff filed consents of two other employees to the
claims in the lawsuit. [ECF #1-2; ECF #1-3]. Plaintiff’s complaint alleges she is bringing her
claims on behalf of herself and others “similarly situated”. [ECF #1, p. 1].
On January 15, 2015, The Masters Club filed a motion to compel arbitration and a motion
to dismiss the complaint. [ECF #6; ECF #7]. The Masters Club argues that Ms. Sittner signed
an arbitration agreement wherein she agreed to bring the claims at issue in this lawsuit before an
arbitrator. [ECF #6, p. 2; ECF #7, p. 2]. Specifically, the agreement provides that, “[n]either THE
CLUB nor you can file a civil lawsuit in court against the other party relating to any covered
claims. If a party files a lawsuit in court to resolve claims subject to arbitration, both parties agree
that the court shall dismiss the lawsuit and require the claim to be resolved through arbitration.”
2

[ECF #6-1, p. 3; ECF #7-1, p. 3]. The arbitration agreement also provides that any “covered
claim” that you may have against the THE CLUB, its owners, directors, officer, managers,
employee or agents” must be submitted “exclusively to and determined exclusively by binding
arbitration under the Federal Arbitration Act, 9 U.S.C. § 1 et seq.” [ECF #6-1].3
Standard of Review
Defendant files its motion pursuant to 9 U.S.C. § 4 of the Federal Arbitration Act (“FAA”).
The parties appear to be in agreement that the currently-pending claim is subject to arbitration,
given that Plaintiff acknowledges signing the agreement. [ECF #17, p. 2]. Whether the parties have
agreed to arbitrate their disputes is a jurisdictional question. See Bhd of Ry. & S.S. Clerks v.
Norfolk S. Ry. Co., 143 F.2d 1015, 1017 (4th Cir. 1944). For the purposes of deciding a motion
to compel arbitration, the court may properly consider documents outside the pleadings. Joyner
v. GE Healthcare, No. 08-2563, 2009 WL 3063040 at *2 (D.S.C. Sept. 18, 2009).
Discussion
Here, Plaintiff has not denied the existence or validity of a valid arbitration agreement.
Likewise, Plaintiff argues that one of the two individuals who filed consents in this case, Emily
Samuels, is also subject to an arbitration agreement. In response to Defendant’s motion, Plaintiff’s
sole contention is that the motion to compel arbitration is premature because she intends to move
for class certification in this case in the future; therefore, this Court should defer any ruling on
3

Notably, only one Defendant is bringing the motion to dismiss complaint and compel arbitration,
or in the alternative stay litigation. Plaintiff has also alleged several claims against Defendant Kap,
as both owner of The Masters Club, and individual claims against Defendant Kap for retaliatory
acts and for failure to take steps to remedy unlawful conduct. [ECF #1, p. 10]. Neither party has
addressed whether the arbitration agreement in question covers the claims brought against
Defendant Kap.

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arbitration prior to the determination as to class certification. The issue thus raised before this
Court is whether the Court is required to defer ruling on an arbitration agreement that two
individuals executed until it has certified a class and provided notice to all putative class members
of this lawsuit. [ECF #18, p. 2]. Defendant argues that the arbitration agreement is valid and
enforceable at least as to the only named member of this lawsuit, and therefore Plaintiff must
arbitrate her claims. Plaintiff acknowledges she has not yet moved for conditional certification
in this case. [ECF #17, p. 1]. Accordingly, at this time there is no motion for class certification
before this Court. The issue of whether the three individuals who have currently been identified
in this lawsuit should have their claims tried as separate actions has not been briefed by the
parties in this case.
Defendant maintains these claims must be submitted to arbitration pursuant to a signed
agreement. Defendant’s argument is straightforward: Plaintiff signed an arbitration agreement
approximately fifteen months prior to filing this civil action requiring her to submit all covered
claims, including the claims before this Court. [ECF #6, pp. 1-2; ECF #7, pp. 1-2]. Plaintiff
acknowledges that approximately six months after working for Defendant, she signed the
arbitration agreement in question. [ECF #17, p. 2].

Likewise, Plaintiff does not dispute the

validity of her signature, or otherwise argue that the arbitration agreement is unenforceable.
Instead, Plaintiff points out that one of the individuals who has filed a consent pursuant to 29
U.S.C. § 216(b) in this case, Ms. Brittany Sloan, did not sign an arbitration agreement. This
assertion is apparently based on the fact that Defendant has not claimed Ms. Sloan signed an
arbitration agreement. [ECF #1-2, 1-3; ECF #17, p. 2]. The only other individual who has filed
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a consent a this time, Ms. Emily Samuels, apparently signed an arbitration agreement in October
2014, according to Plaintiff. [ECF #17, p. 2].
Plaintiff argues that a motion to compel arbitration is premature at this stage of litigation
because this case involves a potential class or collective action involving at least one individual
who may not have signed an arbitration agreement.

Plaintiff asserts this Court must certify the

class and distribute notices to putative class members prior to ruling on any motion to compel
arbitration or ruling on the enforceability of the arbitration agreement affecting some or all of the
putative class. [ECF #17, p. 2]. Defendant contends that this is not the law in this jurisdiction.
[ECF #18].
In the Fourth Circuit, a litigant may compel arbitration upon a showing that pursuant to
the FAA, there is (1) a dispute between the parties; (2) a written agreement that includes an
arbitration provision covering the dispute; (3) the relationship of the transaction to interstate or
foreign commerce; and (4) the failure, neglect or refusal of the defendant to arbitrate the dispute.
Adkins v. Labor Ready, Inc., 303 F.3d 496, 500-501 (4th Cir. 2002) (citing Whiteside v. Teltech
Corp., 940 F.2d 99, 102 (4th Cir. 1991)). In its motion, Defendant has alleged that all four
elements have been met in this case.

Indeed, Plaintiff acknowledges signing the arbitration

agreement, and she does not otherwise dispute the existence of a valid agreement on any other
grounds. A review of the arbitration agreement reveals that it appears to cover the claims in
question because the “covered claims” include FLSA actions and common law actions regulating
employment termination, misappropriation, and the law of contract. [ECF #7-1]. The FAA requires
that the commerce involved in the contract be interstate or foreign. Soil Remediation Co. v. Nu5

Way Environmental, Inc., 323 S.C. 454 (1996) (citing Timms v. Greene, 310 S.C. 469, 427 S.E.2d
642 (1993), overruled on other grounds). “Commerce” is further defined in the FAA as
“commerce among the several States or with foreign nations....” 9 U.S.C. § 1; see also Mathews
v. Fluor Corp., 312 S.C. 404, 407 (1994) (“Commerce, as defined in the Act [FAA], evidences
transactions involving interstate or foreign commerce.”). Plaintiff alleges within her complaint that
Defendant was engaged in interstate commerce or in the production of goods for commerce
pursuant to the FLSA. [ECF #1, p. 5]. Finally, the fact that Defendant has filed this motion
evidences a willingness to arbitrate these claims. Plaintiff has not contested any of these elements
concerning the existence of a valid arbitration agreement, nor does she contest the enforceability
of the agreement. Accordingly, this Court finds that a valid and enforceable arbitration agreement
exists between Plaintiff and The Masters Club.
Plaintiff cites to a series of cases she believes reveal that courts in other jurisdictions have
agreed to provide notice to all putative class members and let putative class members opt-in to
a case prior to ruling on the enforceability of an arbitration agreement. [ECF #17, p. 1]. However,
a close review of these cases does not support Plaintiff’s argument as it relates to the facts in this
case. In D’Antuono v. C&G of Groton, Inc., No. 3:11-cv-33, 2011 WL 5878045 (D. Conn. Nov.
23, 2011), the contested issue was whether Plaintiff met the standard of showing that there were
“other employees similarly situated” under 29 U.S.C. § 216(b) to provide notice to these potential
opt-in plaintiffs. The district court in that case had already made a prior finding that an arbitration
agreement was enforceable as to two of the three plaintiffs who had signed the arbitration
agreement and had closed the case as to those two plaintiffs, as they were required to arbitrate
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their claims. D’Antuono, 2011 WL 5878045 at *2.
The D’Antuono Court considered what effect the prior finding of an enforceable arbitration
agreement as to some plaintiffs had on future opt-in plaintiffs and determined that some courts
were willing to authorize notice before considering whether certain opt-in plaintiffs would also be
subject to an arbitration agreement. Id. Still, in D’Antuono the court had already determined that
the plaintiff was subject to a valid arbitration agreement, prior to providing notice to the potential
class members. Therefore, some plaintiffs were pursuing claims in arbitration, while at least one
plaintiff was pursuing claims in federal court.4 Here, Plaintiff is likely not a proper representative
for a potential class action because she is subject to arbitration. Further, unlike D’Antuono, there
is currently no motion for notice to potential class members or motion for conditional certification
before this Court.
Likewise, in Sealy v. Keiser Sch., Inc., No. 11-61426-CIV, 2011 WL 7641238 (S.D. Fla.
Nov. 8, 2011), the procedural posture of the parties is distinguishable from the present case. At
issue was whether the Plaintiff met the “similarly situated” requirement in 29 U.S.C. § 216.
Several plaintiffs had already opted in to the lawsuit prior to the plaintiff filing a motion to notify
other potential class members. As one of several arguments opposing the motion, Defendant
argued that a majority of its employees signed arbitration agreements; therefore, Plaintiff could not
meet the “similarly situated” requirement under 29 U.S.C. § 216. Sealy, 2011 WL 7641238, at *3.

4

The D’Antuono Court determined that the existence of other arbitration agreements was immaterial to the
issue of class certification. Noting that it was unusual to have previously determined that two of the
plaintiffs were subject to valid arbitration agreements, the D’Antuono Court concluded that determination
does not automatically apply to other individuals. Thus, the applicability of the enforceability of some
arbitration agreements determined on an individual basis should not prevent class certification. Id. at * 4.

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The Sealy Court allowed for notice without analyzing or otherwise providing any guidance with
respect to the fact that some future class members may be subject to an arbitration agreement. Id.
at *3-4.
In Ali v. Sugarland Petroleum, No. 4:09-cv-0170, 2009 WL 5173508 (S.D. Tex. Dec. 22,
2009), the plaintiff sought class notice to potential class members. The defendants raised the fact
that it was the potential class members who were not yet involved in the lawsuit who allegedly
signed arbitration agreements as an argument against providing notice to these potential plaintiffs
of the pending lawsuit. The Court determined that it would make this determination of whether
those potential plaintiffs would have to arbitrate their potential claims upon the close of discovery.
Id. at *4.
Finally, in Whittington v. Taco Bell of America, Inc., No. 10-cv-01884, 2011 WL 1772401
(D. Col. 2011), the district court was again considering whether defendants could seek judicial
enforcement of an arbitration provision executed by certain members of the putative class. The
District Court of Colorado explained: “[t]he named plaintiff is the only plaintiff before the court
at this time. By filing this suit, she has chosen a judicial rather than arbitral forum to resolve her
dispute with defendants and defendants properly could seek to compel arbitration as to plaintiff
pursuant to 9 U.S.C. § 4.” Whittington, 2011 WL 1772401, at *5 (emphasis added). Indeed, the
district court explained that defendants had not satisfied their burden to present evidence of an
enforceable agreement as to plaintiff because they did not provide an agreement executed by the
plaintiff. In this case, not only has Defendant produced a copy of the agreement, but also Plaintiff
acknowledges its existence.
8

This Court finds instructive the analysis found in Adkins v. Labor Ready, Inc., 303 F.3d
496 (4th Cir. 2002). In Adkins, The Fourth Circuit Court of Appeals affirmed a district court’s
granting of a motion to compel arbitration where a plaintiff filed a class action lawsuit alleging
violations of the FLSA and state law wage claims. The Adkins plaintiff brought his suit as a
proposed FLSA class action, and he filed sixty-three consent forms from current and former
employees who wished to join the action. Id. at 499. The defendant filed a motion to compel
arbitration and stay proceedings, based on an arbitration agreement signed by the named plaintiff
and the sixty-three individuals who signed consent forms. Id. The defendant argued successfully
to the district court that it had a valid arbitration agreement that covered plaintiff’s claims and
should therefore be enforced. Id. at 500. In affirming the district court’s granting of the motion,
the Fourth Circuit Court of Appeals reasoned that the FAA requires a court to stay “any suit or
proceeding” that is pending arbitration of any issues “referable to arbitration under an agreement
in writing for such arbitration.” Id. at 500; 9 U.S.C. § 3. The Fourth Circuit also made clear that
FLSA claims may be properly resolved in arbitration proceedings, provided a valid arbitration
agreement. Adkins, 303 F.3d at 506.
A district court is required to stay litigation where a valid arbitration agreement exists
between the parties and the issues in the case are covered by the arbitration agreement. Id. The
Fourth Circuit in Adkins did not directly address what effect the ruling had on the sixty-three
individuals who filed consents, but it made clear that if a plaintiff entered into a valid arbitration
agreement and the claims brought forth in the lawsuit are covered by the agreement, then the court
was required to submit those claims arbitration, regardless of whether other individuals received
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notice of the lawsuit, who may have valid arguments against arbitrating their claims. Here, it
appears from the pleadings that of the two individuals who filed consents, at least one may have
signed an arbitration agreement.

Certainly, Plaintiff acknowledges that she has signed an

arbitration agreement; therefore, regardless of whether a class is later certified, she is subject to
the arbitration provision.

The question of whether either of the two individuals who filed

consents, Ms. Samuels and Ms. Sloan, will also be compelled to arbitration is not before the Court
at this time.
Conclusion
The Court has thoroughly reviewed the entire record, including the pleadings, Defendant’s
motion to dismiss, Plaintiff’s response to the motion, Defendant’s reply, and the applicable law.
For the reasons stated above, Defendant’s motions to dismiss plaintiff’s amended complaint and
to compel arbitration, or in the alternative stay litigation [ECF #6 and ECF #7] are GRANTED.
Plaintiff’s complaint [ECF #1] is STAYED pending the outcome of the arbitration.5 The parties
involved in the arbitration proceeding must complete arbitration within six months from the date
of this Order. At the conclusion of six months from the date of this Order, the Clerk is instructed
to lift the stay in this case, unless notified by the parties to lift the stay at an earlier date.

5

9 U.S.C. § 3 provides for a stay of proceedings in federal district courts when an issue in the proceeding is
referable to arbitration. The Court has the discretion to dismiss the claim in its entirety if the Court finds
the entire claim is covered by an arbitration agreement and no further controversies exists between the
parties. Burke v. Resurgent Capital Services, L.P., No. 6:06-0282, 2006 W L 1302448, at *5 (D.S.C. May

10, 2006). Here, only one Defendant has sought to compel arbitration against the named Plaintiff.
Plaintiff’s alleged claims against Defendant Kap, as well as alleged claims involving the individuals who
filed consents pursuant to 29 U.S.C. § 216(b) remain outstanding. Accordingly, this Court is staying these
proceedings pursuant to 9 U.S.C. § 3.

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IT IS SO ORDERED.
Florence, South Carolina
July 13, 2016

s/ R. Bryan Harwell
R. Bryan Harwell
United States District Judge

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