Griffin v. Senior Living Properties, LLC d/b/a Lindale Healthcare Center

Filing 22

ORDER AND REASONS. IT IS ORDERED that Defendant's motion to compel arbitration (Rec. Doc. 18 ) is GRANTED; IT IS FURTHER ORDERED that the case is stayed and ADMINISTRATIVELY CLOSED. No later than thirty (30) days after the arbit rators final decision, either party may file a motion to reopen for good cause. The arbitrators decision shall be attached to any such motion. If the case is disposed of through arbitration, or any other means, Plaintiffs shall promptly file an appropriate motion to dismiss within 30 days of disposition. Failure to timely comply with this order may lead to sanctions, including dismissal of clams, without further notice. Signed by LAED Judge Ivan L.R. Lemelle on 8/29/2017. (rlf)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TEXAS
TYLER DIVISION
DARLENE GRIFFIN, ET AL

CIVIL ACTION

VERSUS

NO. 6:17-190

SENIOR LIVING PROPERTIES, LLC
d/b/a LINDALE HEALTHCARE CENTER

ORDER AND REASONS

Before the Court is “Defendant Senior Living Properties, LLC
D/B/A Lindale Healthcare Center’s Motion to Compel Arbitration and
Stay Proceedings.” Rec. Doc. 18. Plaintiff timely filed a response
memorandum. Rec. Doc. 19. Defendant then filed a reply memorandum.
Rec. Doc. 20. For the reasons discussed below,
IT IS ORDERED that the motion (Rec. Doc. 18) is GRANTED.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
This case arises out of alleged violations of the Fair Labor
Standards Act (“FLSA”). Rec. Doc. 1 at ¶ 1. Specifically, Darlene
Griffin (“Griffin”) worked for Senior Living Properties, LLC,
doing business as Lindale Healthcare Center (“Defendant”). Id. at
¶¶ 1-3. In her original complaint, Griffin alleged that Defendant
repeatedly violated FLSA Sections 6 and 7 by failing to pay her
and similarly situated employees for the hours worked and by
failing to pay her for overtime hours worked at a rate not less
than one and one-half times the regular hourly rate of pay. Id. at
1

¶

8.

She

accordingly

requested

liquidated

damages,

all

litigation

expenses/costs,

“her

equitable

unpaid

relief,

including

wages,

attorney

expert

witness

overtime,
fees,

and

fees

and

expenses.” Id. at ¶ 1.
On August 1, 2017, Plaintiff filed an amended complaint adding
Tara Kumpe (“Kumpe”) as a Plaintiff. Rec. Doc. 13 at ¶ 2.
Both Griffin and Kumpe signed arbitration agreements whereby
they agreed “to voluntarily promise and irrevocably agree (after
completing the facilities [sic] Problem Resolution Procedure) to
arbitrate any dispute or claim arising or related to employment .
. . .” Rec. Docs. 18-1 at 3; 18-2 at 3. The agreement further
provides that it applies to “claims by employee[s] against the
Company . . . including . . . [a]ny federal . . . laws . . .
providing for the collection or recovery of unpaid wages, minimum
wage or overtime pay, or prohibiting retaliation for making a wage
claim.” Id.
PARTIES’ CONTENTIONS
In response to Defendant’s motion to compel arbitration,
Plaintiffs

argue

(1)

Defendant

arbitration

by

failing

to

waived

timely

their

raise

the

right
issue;

to

compel

(2)

the

agreements contain a mediation provision and “[n]either party has
[the] right to compel arbitration when [the] agreement expressly
requires mediation as a precondition for requesting arbitration
and neither party has requested mediation”; and (3) the agreement
2

is unconscionable and therefore cannot be enforced. Rec. Doc. 19
at 3.
LAW AND ANALYSIS
“Arbitration is favored in the law.” Grigson v. Creative
Artists Agency, L.L.C., 210 F.3d 524, 526 (5th Cir. 2000) (citing
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
24-25 (1983)). Section 2 of the Federal Arbitration Act (“FAA”)
provides

that

evidencing

a

“[a]

written

transaction

provision
involving

in

any

commerce

.

.
to

.

contract

settle

by

arbitration a controversy thereafter arising out of such contract
or transaction . . . 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. § 2.1
According to the courts, § 2 “is a congressional declaration
of

a

liberal

federal

policy

favoring

arbitration

agreements,

notwithstanding any state substantive or procedural policies to
the contrary.” Moses H. Cone Mem’l Hosp., 460 U.S. at 24 (citing
§ 2). It was “Congress’s clear intent . . . to move the parties to
an arbitrable dispute out of court and into arbitration as quickly
and

easily

as

possible.”

Id.

at

1

22.

Essentially,

the

FAA

Thus, as a threshold matter, the FAA applies where the transaction at issue
involves commerce. See, e.g. New Orleans Cold Storage & Warehouse Co., Ltd. v.
Grenzebach Corp., No. 15-6642, 2016 WL 279012, at *4 (E.D. La. Jan. 22, 2016)
(noting that “[t]he Fifth Circuit has held that ‘[c]itizens of different states
engaged in performance of contractual operations in one of those states are
engaged in a contract involving commerce under the FAA.’”) (quoting Mesa
Operating Ltd. P’ship v. La. Intrastate Gas Corp., 797 F.2d 238, 243 (5th Cir.
1986) (citing § 2)). Here, the parties do not dispute this threshold issue.

3

“establishes

that,

as

a

matter

of

federal

law,

any

doubts

concerning the scope of arbitrable issues should be resolved in
favor of arbitration” (id. at 24-25) and “where the contract
contains

an

arbitration

clause,

there

is

a

presumption

of

arbitrability” (Tittle v. Enron Corp., 463 F.3d 410, 418 (5th Cir.
2006) (quoting AT&T Techs., Inc. v. Commc’ns Workers of Am., 475
U.S. 643, 650 (1986)) (citing Primerica Life Ins. Co. v. Brown,
304 F.3d 469, 471 (5th Cir. 2002) (noting that any doubts regarding
arbitrability should be resolved in favor of arbitration) (citing
Southland Corp. v. Keating, 465 U.S. 1, 10 (1984)))).
Nonetheless, § 2 contains a savings clause that provides that
an agreement to arbitrate is “enforceable, save upon such grounds
as exist at law or in equity for the revocation of any contract.”
§ 2 (emphasis added). Accordingly, to determine if the parties
agreed to arbitrate, the court should consider “(1) whether a valid
agreement to arbitrate between the parties exist; and (2) whether
the dispute in question falls within the scope of that arbitration
agreement.” Pennzoil Expl. & Prod. Co. v. Ramco Energy Ltd., 139
F.3d 1061, 1065 (5th Cir. 1998) (citing Webb v. Investacorp, Inc.,
89 F.3d 252, 258 (5th Cir. 1996); In re Hornbeck Offshore (1984)
Corp.,

981

F.2d

752,

754

(5th

Cir.

1993);

Midwest

Mech.

Contractors, Inc. v. Commonwealth Constr. Co., 801 F.2d 748, 750
(5th Cir. 1986)); see also Jones v. Haliburton Co., 583 F.3d 228,

4

233-34 (5th Cir. 2009) (citations omitted).2 “If both questions
are answered in the affirmative, our court then asks whether ‘any
federal statute or policy renders the claims nonarbitrable.’”
Jones, 583 F.3d at 234 (citations omitted).
If

a

court

is

satisfied

that

a

dispute

is

subject

to

arbitration pursuant to a written arbitration agreement, the court
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.
A. DID DEFENDANT WAIVE THE RIGHT TO COMPEL ARBITRATION?
Parties may waive their right to arbitrate a dispute by “[1]
substantially invok[ing] the judicial process [2] to the detriment
or prejudice of the other party.” Nicholas v. KBR, Inc., 565 F.3d
904, 907 (5th Cir. 2009) (quoting Miller Brewing Co. v. Fort Worth
Distrib. Co., 781 F.2d 494, 496-97 (5th Cir. 1986)). A party may
“invoke the judicial process” by “initially pursuing litigation of
claims then reversing course and attempting to arbitrate those
claims” or by otherwise taking “some overt act in Court that
evinces

a

desire

to

resolve

the

arbitrable

dispute

through

litigation rather than arbitration.” Id. (quoting Gulf Guar. Life

2

As to the first prong, courts “apply ‘ordinary contract principles.’” WillDrill Res., Inc. v. Samson Res. Co., 352 F.3d 211, 214 (5th Cir. 2003) (quoting
Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069, 1073, opinion supplemented
on denial of reh’g,, 303 F.3d 570 (5th Cir. 2002)); see also Webb, 89 F.3d at
258. As to the second prong, neither party argues that Plaintiffs’ FLSA claims
do not fall within the scope of the arbitration agreement.

5

Ins. Co. v. Conn. Gen. Life Ins. Co., 304 F.3d 476, 484 (5th Cir.
2002)). A party is prejudiced by such an invocation if it resulted
“in delay, extra expense, and/or damage to his legal position.”
Cochran v. Nabors Drilling Techs. USA Inc., No. 16-1633, 2017 WL
2427794, at *2 (W.D. La. June 2, 2017) (citing In re Mirant Corp.,
613 F.3d 584, 591 (5th Cir. 2010)). Three factors “are particularly
relevant to the prejudice determination:

(1) whether discovery

occurred relating to arbitrable claims; (2) the time and expense
incurred in defending against a motion for summary judgment; and
(3) a party’s failure to timely assert its right to arbitrate.”
Petroleum Pipe Americas Corp. v. Jindal Saw, Ltd., 575 F.3d 476,
480 (5th Cir. 2009) (quotation marks omitted) (citing Republic
Ins. Co. v. PAICO Receivables, LLC, 383 F.3d 341, 346 (5th Cir.
2004)).
Plaintiffs argue that Defendant waived the right to compel
arbitration by failing to raise the issue prior to filing its
motion to dismiss and answer and otherwise participating in this
Court’s scheduling conference. Rec. Doc. 19 at 1-3. Defendant
responds that its motion to dismiss did not seek a ruling on the
merits and that they filed the instant motion and an amended answer
on August 7, 2017, approximately one week after Plaintiffs amended
the complaint to add Krumpe on July 31, 2017. Rec. Doc. 20 at 2.
Defendant did not pursue this litigation or otherwise take
some action that evinced an intent to resolve the dispute in court
6

rather than through arbitration. Defendant merely acted to defend
itself. Even though judicial resources could have been saved had
Defendant first moved to compel arbitration, the Court cannot find
compelling evidence that Defendant “invoked” the judicial process.
As soon as Defendant discovered the arbitrability of this dispute,
it filed the instant motion. Plus, “[d]elay by itself ‘falls far
short’ of establishing a waiver.” Tristar Fin. Ins. Agency, Inc.
v. Equicredit Corp. of Am., 97 F. App’x 462, 465 (5th Cir. 2004)
(quoting Texaco Expl. & Prod. Co. v. AmClyde Engineered Prod. Co.,
243 F.3d 906, 912 (5th Cir. 2001)).
Further, Plaintiffs fail to argue that they were prejudiced
by

Defendant’s

participation

in

this

litigation.

Defendant,

however, argues that (1) there has been no delay; (2) Plaintiffs
have not incurred any extra expense; (3) Plaintiffs’ legal position
has

not

been

damaged;

(4)

except

for

the

mandatory

initial

disclosures, there has been no discovery; and (5) it has not moved
for summary judgment. Rec. Doc. 20 at 3-4. While there was a short
delay and Plaintiffs did have to respond to Defendant’s motion to
dismiss, there is insufficient evidence of prejudice to find that
Defendant waived its right to compel arbitration. See, e.g., Steel
Warehouse Co. v. Albalone Shipping Ltd. of Nicosai, 141 F.3d 234,
238 (5th Cir. 1998) (finding no waiver where the party moving to
compel arbitration did not do “much other than defend themselves,”
had “not escalated t[he] case,” and had not “showered [the non7

movant] with interrogatories and discovery requests”); Tenneco
Resins, Inc. v. Davy Int’l, AG, 770 F.2d 416, 420-21 (5th Cir.
1985) (finding no waiver even though the party moved to compel
arbitration eight months into the litigation, after participating
in discovery, because the movant cited the arbitration clause in
its answer to the original complaint).
B. IS MEDIATION
AGREEMENT?

A

PRECONDITION

TO

ENFORCEMENT

OF

THE

Plaintiffs argue that the arbitration agreement explicitly
provides that the parties agree to arbitrate “after completing the
facilities [sic] Problem Resolution Procedure” and that, because
neither party has completed that procedure, neither party may
compel arbitration. Rec. Doc. 19 at 3.
Defendants respond that the “Problem Resolution” procedure is
permissive, not mandatory, and may only be initiated by the
employee. Rec. Doc. 20 at 4; see also Rec. Doc. 20-1 at 4 (the
“Problem Resolution” section of the employee handbook explains
that “[i]f employees disagree with established rules . . . or
practices, they can express concern through the problem resolution
procedure” and that “[t]he employee may discontinue the procedure
at any step”) (emphasis added).
In

the

only

case

cited

by

Plaintiffs,

agreement provided for a four-step program:

the

arbitration

“(1) talking about

problems one-on-one with a store manager, (2) formal review by the

8

corporate human resources department, (3) mediation, and (4) final
and binding arbitration.” In re Pisces Foods, L.L.C., 228 S.W.3d
349, 351 (Tex. App. 2007). The agreement emphasized that only “[i]f
you have a work-related problem . . . that could not be settled
through

Steps

arbitration.”

1,
Id.

2

or

3

of

(emphasis

the

Program,

added).

The

you

court

may

request

consequently

determined that “mediation must occur and fail before arbitration
is an option under the company’s mandatory program.” Id.
Here, Defendant correctly notes that the Problem Resolution
procedure is not mandatory, and further Plaintiff elected to bypass
that

employee

right

by

initiating

the

captioned

lawsuit.

Therefore, it is distinguishable from the agreement in Pisces Foods
and is not a precondition to arbitration.
C. IS THE AGREEMENT UNCONSCIONABLE?
Plaintiffs argue that the agreement is unconscionable for
three reasons.
First, they argue that it creates a statute of limitations
that conflicts with the FLSA limitations periods. Rec. Doc. 19 at
3-5. The agreement provides that “[t]he facility and employee agree
accrued claims arising from acts that occurred more than one year
before

the

beginning

of

the

facility’s

‘Problem

Resolution

Procedure’ shall be waived for all purposes.” See Rec. Doc. 18-1
at 4. The FLSA, of course, provides for either a two- or three-

9

year limitations period, depending on the willfulness of the
violation. 29 U.S.C. § 255(a).
In response, Defendant explicitly “waive[d] the one-year
limitations period” in the agreement and agreed to “instead apply
the statute of limitations applicable to FLSA claims as set forth
in 29 U.S.C. section 255(a) in this case.” Rec. Doc. 20 at 5.
Accordingly, the one-year limitations period in the arbitration
agreement is stricken and this issue is moot.
Second, Plaintiffs argue that the agreement impermissibly
limits discovery. Rec. Doc. 19 at 5. The agreement provides:
Before the hearing, each party shall have the right to
take one deposition of the other party, as well as one
deposition of any expert witness designated by the other
party. The parties may request permission from the
arbitrator to take the deposition of not more than two
(2) other persons not previously listed. The parties may
serve on each other one set of interrogatories, not more
than five (5) in number, including subparts, and not
more than three (3) requests for production of
documents, including subparts.
Rec. Doc. 18-1 at 4. Plaintiffs argue that “[a]n arbitration
agreement that provides for insufficient discovery to allow the
party

a

fair

opportunity

to

present

his

or

her

claims

is

unconscionable, and thus unenforceable.” Rec. Doc. 19 at 5.
Defendant responds that the parties agreed to streamline
discovery,

but

interrogatories,

that
serve

“each

party

requests

10

is

for

permitted
production

to

serve

and

take

depositions” and that “the limitations apply equally to both
parties.” Rec. Doc. 20 at 7.
Plaintiffs cite to a single case in support, Walker v. Ryan’s
Family Steak Houses, Inc., 400 F.3d 370 (6th Cir. 2005). However,
the court in that case determined that there was inadequate
consideration for the arbitration agreements, the plaintiffs did
not knowingly and voluntarily execute the agreements, the parties
did not mutually assent to the agreements, the chosen arbitral
forum was not neutral, and that limiting the parties to just one
deposition as of right and additional depositions at the discretion
of the biased panel was further evidence of unfairness. Id. at
378-88. The court explained that
the opportunity to undertake extensive discovery is not
necessarily appropriate in an arbitral forum, the
purpose of which is to reduce the costs of dispute
resolution. Indeed, when parties enter arbitration
agreements at arms-length they typically should expect
that the extent of discovery will be more circumscribed
than in a judicial setting. But parties to a valid
arbitration
agreement
also
expect
that
neutral
arbitrators will preside over their disputes regarding
both the resolution on the merits and the critical steps,
including discovery, that precede the arbitration award.
A structural bias in the make-up of the arbitration panel
. . . can be just as prejudicial as arbitral bias in the
final decision on the merits. Such is the case here,
providing an additional basis to conclude that [the]
arbitration scheme does not allow for the effective
vindication of Plaintiffs’ FLSA claims.
Id. at 387-88.
Here, discovery may be limited, but there is no allegation
that Plaintiffs will be subject to a non-neutral forum. The Walker
11

court specifically recognized that parties may contract to limit
discovery

during

arbitration.

The

Court

finds

nothing

unconscionable about the limits agreed to by the parties in this
case. “[T]he mere fact that discovery in arbitration proceedings
‘might not be as extensive as in federal courts’ does not render
those agreements invalid; by agreeing to arbitrate, a party simply
‘trades the procedures and opportunity for review of the courtroom
for the simplicity, informality, and expedition of arbitration.’”
Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294, 298 (5th
Cir. 2004) (quoting Gilmer v. Interstate/Johnson Lane Corp., 500
U.S. 20, 31 (1991)). Plaintiffs have failed to show that the
discovery

provisions

at

issue

will

not

provide

them

a

fair

opportunity to present their claims. Id. at 298-99.
Finally,

Plaintiffs

argue

that

the

agreement

permits

Defendant to collect attorneys’ fees, even though the FLSA provides
only that prevailing plaintiffs may collect such fees. Rec. Doc.
19 at 5-6. The FLSA explicitly provides that the court “shall, in
addition to any judgment awarded to the plaintiff or plaintiffs,
allow a reasonable attorney’s fee to be paid by the defendant, and
costs of the action.” 29 U.S.C. § 216(b). The instant agreement
provides that “[i]f either party pursues a covered claim against
the other by any action . . . other than the arbitration provision
. . . the responding party shall be entitled to . . . recovery of
all cost[s], losses, attorneys[’] fees . . . relating to such
12

action.” Rec. Doc. 18-1 at 4. Plaintiffs argue simply that because
“[t]he FLSA does not provide attorney[s’] fees for the defendant,
[the agreement] is unconscionable and unenforceable.” Rec. Doc. 19
at 6.
Defendant responds that the fees provision does not permit it
“to recover its fees should it prevail on Plaintiffs’ FLSA claims
in arbitration,” but is limited “to the recovery of fees and costs
related to enforcing [Defendant’s] rights to arbitration.” Rec.
Doc. 20 at 7. Even if the Court finds the provision unconscionable,
Defendant argues that the Court should simply sever the fees
provision. Id. (citing Jallow v. Convergenz, LLC, No. 15-219, 2015
WL 12831722 (S.D. Tex. Nov. 4, 2015); Long v. BDP Int’l, Inc., 919
F. Supp. 2d 832 (S.D. Tex. 2013); Rec. Doc. 18-1 at 4 (providing
that “[i]f any provision of this Agreement is ruled invalid, the
rest and remainder shall survive and be enforced”)).
We find that the fees provision permits recovery of fees
associated with compelling arbitration, not those associated with
the underlying FLSA claims.3 The court in Escalera v. JD Byrider

3

To the extent that this, or any other, provision may be interpreted
differently, the parties are reminded that the arbitration agreement is valid
so long as it “does not waive the substantive rights and remedies the statute
affords and the arbitration procedures are fair, such that the employee may
effectively vindicate his statutory rights.” Coronado v. D.N.W. Houston, Inc.,
No. 13-2179, 2015 WL 5781375, at *7 (S.D. Tex. Sept. 30, 2015), appeal dismissed
sub nom. (Oct. 30, 2015) (quotation marks and citations omitted). “Arbitration
provisions relating to federal statutory claims are not enforceable when a party
is forced to forgo the substantive rights afforded by the statute, as opposed
to merely submitting to resolution in an arbitral, rather than a judicial,
forum.” Id. (quotation marks and citations omitted). In other words, by

13

Dfw-Texas, Incorporated considered a similar provision. No. 14817, 2014 WL 12588317, at *2 (N.D. Tex. June 16, 2014). It provided
that any party who failed to arbitrate “shall . . . be taxed by
the arbitrator(s) with all of the costs, including reasonable
attorneys’ fees, of the other party who had to resort to any action
compelling arbitration . . . .” Id. The court determined that the
provision was not unconscionable because (1) the provision applied
equally to both parties; (2) “Texas courts have allowed an award
of attorneys’ fees where one party has breached an arbitration
agreement by litigating a claim”; and (3) “the provision only
applies if a party fails to arbitrate; if [the plaintiff] had
initiated his FLSA claim in an arbitrable forum rather than in
court, he would not have incurred any costs at all. Thus, the
justification for finding a fee-shifting agreement unconscionable
– that large arbitration costs may preclude a litigant from
pursuing his claims through arbitration – does not apply here.”
Id. at *3 (citations omitted). Therefore, the fees provision is
not unconscionable and does not render the arbitration agreement
unenforceable.

For the reasons assigned above,

submitting their claims to arbitration, Plaintiffs are not waiving their
statutory rights.

14

IT IS ORDERED that Defendant’s motion to compel arbitration
(Rec. Doc. 18) is GRANTED;
IT

IS

FURTHER

ORDERED

that

the

case

is

stayed

and

ADMINISTRATIVELY CLOSED. No later than thirty (30) days after the
arbitrator’s final decision, either party may file a motion to
reopen for good cause. The arbitrator’s decision shall be attached
to any such motion. If the case is disposed of through arbitration,
or

any

other

means,

Plaintiffs

shall

promptly

file

an

appropriate motion to dismiss within 30 days of disposition.
Failure to timely comply with this order may lead to sanctions,
including dismissal of clams, without further notice.
New Orleans, Louisiana, this 29th day of August, 2017.

___________________________________
SENIOR UNITED STATES DISTRICT JUDGE

15