Garcia et al v. Supreme Production Services, Inc.

Filing 2

ORDER (Signed by Judge Hilda G Tagle) Parties notified.(mserpa, 2)

United States District Court
Southern District of Texas

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
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Plaintiffs,
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VS.
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SUPREME PRODUCTION SERVICES, §
INC.,
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Defendant.
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ENTERED
October 21, 2016
David J. Bradley, Clerk

JESUS GARCIA, et al,

CIVIL NO. 2:16-CV-433

ORDER
The Court is in receipt of Plaintiffs Jesus Garcia (“Garcia”) and David
Turner, Jr.’s, (“Turner”) Complaint against Defendant Supreme Production
Services, Inc. (“Supreme”). See Compl., Dkt. No. 1. Garcia and Turner are current
employees of Supreme. They seek to compel the arbitration of their Fair Labor
Standards Act (“FLSA”) claims against Supreme, in accordance with the arbitration
policy (“Policy”) made part of their terms of employment. Id. at ¶ 1. Plaintiffs
allege that Supreme contravened the Policy when it “sent letters demanding
deposition dates for claimants,” id. at ¶ 24; “proposed that the parties agree to a
single mediator and single arbitrator for all current and forth coming [sic]
mediations and arbitrations,” id. at ¶ 25; “opposed the selection of mediators outside
of Corpus Christi,” id. at ¶ 34; “argued that FLSA experience is not necessary,” id.;
and “claimed that only a few mediators could mediate Garcia and Turners’ . . .
claims.” Id. Finally, Plaintiffs allege that “Supreme now refuses to participate in
the very mediation and arbitration policy it created.” Id. at ¶ 35.
Garcia and Turner originally pursued their FLSA claims as opt-in plaintiffs
in Kubala v. Supreme Production Services, Inc., No. 2:15-cv-00116 (S.D. Tex.). On
October 6, 2015, this Court denied Supreme’s motion to dismiss Kubala’s claim for
lack of jurisdiction. Dkt. No. 32 at 8. On November 5, 2015, Supreme filed a Notice
of Appeal of the Court’s October 6, 2015 order to the Court of Appeals for the Fifth
Circuit. Dkt. No. 49.
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On December 22, 2015, this Court denied Supreme’s motion

for clarification and granted in part and denied in part Plaintiffs’ motion to lift the
stay on the case pending the Fifth Circuit appeal. Dkt. No. 57. On June 9, 2016
and June 14, 2016, this Court denied Supreme’s emergency motion to quash
subpoenas, Dkt. No. 88; denied Supreme’s motion for protective order, Dkt. No. 64;
denied Supreme’s motion to strike discovery requests served after stay of
proceedings, Dkt. No. 72; denied as moot Supreme’s motion to strike notices of
consent filed after stay of proceedings, Dkt. No. 71; denied without prejudice
Plaintiffs’ emergency motion for conditional certification, Dkt. No. 31; and granted
Supreme’s motion to compel Garcia’s claims, among those of other plaintiffs, to
arbitration. Dkt. No. 93 at 10. Upon agreement of the parties, Turner’s claims
were dismissed to be pursued in arbitration. Dkt. No. 97 at 1. On June 17, 2016,
Supreme filed another Notice of Appeal from the Court’s June 9, 2016 and June 14,
2016 rulings to the Court of Appeals for the Fifth Circuit. Dkt. No. 94.
On August 8, 2016, the Court of Appeals for the Fifth Circuit held that the
Policy at issue in Kubala “is binding and contains a delegation clause transferring
the power to decide threshold questions of arbitrability to the arbitrator.” Kubala v.
Supreme Prod. Servs., Inc., 830 F.3d 199, 201 (5th Cir. 2016). The Court found, “In
addition to various substantive terms, the policy contained a ‘delegation clause’
stating that any disputes as to the interpretation or applicability of the agreement
are to be resolved in the first instance by the arbitrator.” Id. According to the
Court of Appeals, the Policy’s delegation clause is the clause that reads: “The
arbitrator shall have the sole authority to rule on his/her own jurisdiction, including
any challenges or objections with respect to the existence, applicability, scope,
enforceability, construction, validity and interpretation of this Policy and any
agreement to arbitrate a Covered Dispute.” Id. at 204.
The Court of Appeals held that this clause is a valid and enforceable
delegation clause. Id. According to the Court, “[A] valid delegation clause requires
the court to refer a claim to arbitration to allow the arbitrator to decide gateway
arbitrability issues.” Id. at 202 (citing Rent-A-Ctr;, W., Inc. v. Jackson, 561 U.S. 63,
68–69 (2010)). In such cases, the “court’s analysis is limited.” Id. If, after finding

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that there is in fact a valid agreement (an issue not contested by Plaintiffs in the
instant Motion), the “only question” for the court “is whether the purported
delegation clause is in fact a delegation clause—that is, if it evinces an intent to
have the arbitrator decide whether a given claim must be arbitrated.” Id. So long
as there is a “plausible” argument that the arbitration agreement requires the
merits of the claim to be arbitrated, a delegation clause is effective to divest the
court of its ordinary power to decide arbitrability. Id. at 202 n.1 (citing Douglas v.
Regions Bank, 757 F.3d 460, 463 (5th Cir. 2014)). Thus, the court should “look only
to whether there is a bona fide dispute on arbitrability.” Id. If there is, the claim
“must be referred to arbitration for resolution of the arbitrability issue.” Id. The
Court further held: “[W]e do not opine on whether the agreement requires that the
merits of Kubala’s claim be arbitrated rather than tried in court. The only issue
now is who answers that question. It is plainly the right and responsibility only of
the arbitrator.” Id. at 204.
Following the holding of Kubala, the Court declines to opine on whether the
Policy at issue requires that the merits of Garcia and Turner’s instant claims be
arbitrated.

Rather, given the Policy’s language regarding the arbitrator’s sole

authority to rule on challenges or objections with respect to the construction,
validity, and interpretation of the Policy, see Compl., Dkt. No. 1, Ex. A at 3, this
Court ORDERS the parties to confer and identify the authority, if any, the Court
has to decide the issues raised in Plaintiffs’ complaint, as consistent with the Fifth
Circuit opinion in Kubala. 830 F.3d at 203–04. The Court ORDERS the parties to
advise the Court on this matter within seven days following entry of this order.
Additionally, this Court SUSPENDS the meet and confer requirements of Federal
Rule of Civil Procedure 26(f) and related discovery disclosures required by Rule
26(a)(1). See Fed. R. Civ. P. 26(f).
SIGNED this 21st day of October, 2016.
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Hilda Tagle
Senior United States District Judge

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