Langston v. Premier Directional Drilling, L.P. et al
Filing
45
MEMORANDUM OPINION AND ORDER denying 35 MOTION to Compel Bilateral Arbitration and for Construction of the Arbitration Provision in Plaintiff Langston's Employment Agreement (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
United States District Court
Southern District of Texas
ENTERED
August 25, 2016
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
DOUGLAS LANGSTON, Individually
and On Behalf of All Others
Similarly Situated,
David J. Bradley, Clerk
§
§
§
§
Plaintiff,
§
§
§
§
v.
PREMIER DIRECTIONAL DRILLING,
L.P. and E-EMPLOYERS SOLUTIONS,
INC.
CIVIL ACTION NO. H-15-0882
§
§
§
§
§
I
Defendants.
MEMORANDUM OPINION AND ORDER
Plaintiff Douglas Langston
against
Premier
Directional
("Langston")
Drilling,
eEmployers Solutions, Inc. ( "eEmployers")
L.P.
("Premier" )
and
(together, "Defendants")
under the Fair Labor Standards Act ("FLSA") . 1
court is Premier Directional Drilling,
brings this action
Pending before the
L.P.'s Motion for Clause
Construction and to Compel Bilateral Arbitration Consistent With
Plaintiff's
Construction")
Arbitration
Agreement
(Docket Entry No.
35) .
("Motion
for
For the reasons
Clause
stated
below, the court will deny the Motion for Clause Construction.
1
See Collective Action Complaint ("Complaint"), Docket Entry
No. 1.
I.
Background
Langston alleges that he was jointly employed by Premier and
eEmployers. 2
eEmployers provided staffing, human resources, risk
management, employee benefits, payroll processing, timekeeping, and
instruction on pay practices to Premier. 3
Langston worked as a
"measurement while drilling" ( "MWD") employee. 4
He alleges that he
and other MWD employees were paid a base salary and a day rate
instead
of
being
paid
hourly
and
were
not
paid
overtime
compensation regardless of how many hours over forty they worked
per week. 5
Langston executed an employment
agreement
via eEmployer' s
online portal that contained the following arbitration provision
(the "Employment Agreement"):
Disputes - Any controversy arising between any parties to
this agreement, eESI, CLIENT, EMPLOYEE (or their agent,
officer, director or affiliate), including but not
limited to common law, statutory, tort or contract claims
will be submitted to mediation, failing settlement in
mediation, to binding arbitration in accordance with the
rules
of
the
American
Arbitration
Association.
Arbitration shall be conducted in San Antonio, Texas.
Each party will select one person to serve as arbitrator.
Those arbitrators will in turn select a single arbitrator
to hear the matter.
Each party is responsible for its
See id. at 3 ~ 15.
" [Langston] and the Putative Class
Members received pay checks and W-2s from [eEmployers] , even though
they performed services for Premier." Id. at 4 ~ 17.
3
4
See id. at 1-2
5
Id. at 4-5
~
~ 4i
3
~~
13-15.
22.
-2-
own costs and expenses and will share equally the cost
and expenses of the Arbitrator. The arbitration will be
subject to and governed by the provisions of the Federal
Arbitration Act, 9 U.S. C. , Sections l-et seq.
The
parties hereto stipulate and agree that this agreement
involves matters affecting interstate commerce. 6
Langston
filed
his
Complaint
on
April
6,
seeking
2015,
overtime wages under the FLSA, liquidated damages, attorney's fees,
and
costs
employees. 7
on
behalf
Premier
of
himself
answered
answered on June 1, 2015. 8
and
on May
a
putative
8,
2015,
class
and
of
MWD
eEmployers
Premier moved to compel arbitration on
July 2, 2015, and Langston did not oppose the motion.
9
entered an order compelling arbitration on July 14,
2015.
The court
10
The
6
See Declaration of Bonnie Selby ("Selby Declaration"),
Exhibit A to Motion for Clause Construction, Docket Entry No. 35-1;
Employment Agreement, Exhibit A to Selby Declaration, Exhibit A to
Motion for Clause Construction, Docket Entry No. 35-1, p. 4.
7
Complaint, Docket Entry No. 1, p. 2
~ 5;
pp. 5-7
~~ 23-29.
8
See
Premier Directional
Drilling,
L. P. 's
Answer
and
Affirmative Defenses to Plaintiff's Collective Action Complaint,
Docket Entry No. 11; Defendant, eEmployers Solutions, Inc. 's,
Original Answer and Affirmative Defenses to Plaintiff's Collective
Action Complaint, Docket Entry No. 16.
9
See Defendant Premier Directional Drilling, L.P.'s Amended
Motion to Compel Arbitration and to Stay the Trial of the Action
Until Arbitration Has Been Had ("Premier's Amended Motion to
Compel"), Docket Entry No. 22; Plaintiff's Notice of No Opposition
to Defendant Premier Directional Drilling, L. P. 's Amended Motion to
Compel Arbitration and to Stay the Trial of the Action Until
Arbitration Has Been Had, Docket Entry No. 25.
10
See Order of July 14, 2015, Docket Entry No. 26 (granting
Premier's Amended Motion to Compel, Docket Entry No. 22, and
denying without prejudice Plaintiff Douglas Langston's Motion for
Conditional Certification and for Notice to Putative Class Members,
Docket Entry No. 18).
-3-
Employment Agreement required mediation,
which failed,
and the
parties' arbitrator selectors have selected a final arbitrator to
hear this matter. 11
Premier filed the pending motion on April 22, 2016, seeking an
order compelling Langston to individual arbitration with Premier
and eEmployers. 12
two questions:
The Motion to Compel urges the court to answer
(1) who decides whether arbitration may proceed on
an individual or collective basis, the court or the arbitrator? and
(2) did the parties agree to class or collective arbitration? 13
Premier argues that the court, not the arbitrator, should act
as decision-maker in determining whether the parties agreed to
arbitrate on an individual or collective basis . 14
Premier also
argues that the arbitration agreement does not permit arbitration
of collective actions and asks the court to dismiss Langston's
Collective Action Complaint. 15
Langston responds that because the
Employment Agreement includes broad coverage language and expressly
incorporates the American Arbitration Association's
Rules,
the
parties
agreed
to
allow
the
arbitrator
(the
to
"AAA")
act
as
11
See Joint Status Report filed Oct. 9, 2015, Docket Entry
No. 27; Joint Status Report filed Dec. 9, 2015, Docket Entry No. 28;
Joint Status Report filed June 7, 2016, Docket Entry No. 42.
12
See Motion for Clause Construction, Docket Entry No. 35, p. 8.
13
See id. at 9-10.
14
See id. at 10-20.
15
See id. at 20-32.
-4-
decision-maker in answering whether the parties agreed to submit to
collective arbitration. 16
II.
A.
Discussion
Questions of Arbitrability Versus Procedural Questions
Premier argues
that
whether arbitration may proceed as
a
collective action is a
question of arbitrability presumptively
reserved for the court. 17
Arbitration is a matter of contract, and
arbitration agreements are enforced according to their terms.
See
Rent-A-Center, West, Inc. v. Jackson, 130 S. Ct. 2772, 1776 (2010);
AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1745 (2011); AT&T
Technologies, Inc. v. Communications Workers of America, 106 S. Ct.
1415,
1418
include
(1986).
gateway
"Preliminary
disputes,
which
issues
in
typically
arbitration
require
cases
judicial
determination, and procedural questions, which are to be reviewed
by the arbitrator."
Services,
Inc.,
Robinson v. J & K Administrative Management
817 F.3d 193,
195
(5th Cir.
Ct.
2402,
(citing Green
Tree Financial Corp. v.
Bazzle,
(plurality opinion)) .
"The arbi trabili ty of disputes-in other
words,
123 S.
2016)
2406-08
(2003)
the determination of whether the agreement applies to the
16
Langston's Response to Premier's Motion to Compel Individual
Arbitration ("Langston's Response"), Docket Entry No. 40, p. 1.
Langston does not respond to Premier's second argument regarding
whether the Employment Agreement allows for collective arbitration.
17
Motion for Clause Construction, Docket Entry No. 35, pp. 9,
10.
-5-
parties' claims-is generally a gateway issue to be determined by
the courts."
1418-19) .
Id.
The
arbitrator,
(citing Communications Workers,
arbitrability determination
however,
when
Id.
intent to do so."
the
agreement
is
106 S. Ct. at
deferred
"espouses
(citing Howsam v.
to
the
the
parties
Dean Witter Reynolds,
Inc., 123 S. Ct. 588, 591-92 (2002)); see also Rent-A-Center, 130
S.
Ct.
at 2777
arbitrate
("We have recognized that parties can agree to
'gateway'
questions
of
'arbitrability'
II )
(citations omitted); First Options of Chicago, Inc. v. Kaplan, 115
S.
Ct.
1924
1920,
Workers,
106
S.
Ct.
(1995)
at
(quotations
1418
("Unless
omitted) ;
the parties
Communication
clearly and
unmistakably provide otherwise, the question of whether the parties
agreed
to
arbitrate
arbitrator.").
whether class
is
to
be
decided
by
the
court,
not
the
"The same is true for the threshold question of
or collective
arbitration agreement."
arbitration
is
available under an
Robinson, 817 F.3d at 195-96.
The Supreme Court has not decided if the question of whether
the
parties
agreed
to
arbitrate
on
a
arbitrability issue or procedural issue.
collective
basis
is
an
See Oxford Health Plans
LLC v. Sutter, 133 S. Ct. 2064, 2068 n.2 (2013); Stolt-Nielsen S.A.
v. AnimalFeeds International Corp., 130 S. Ct. 1758, 1772 (2010) . 18
18
Under Stolt-Nielsen, 130 S. Ct. at 1775, "a party may not be
compelled under the FAA to submit to class arbitration unless there
is a contractual basis for concluding that the party agreed to do
so."
-6-
Other circuit courts have held, like the Fifth Circuit in Robinson,
that it is an arbitrability question presumptively for the court.
In Dell Webb Communities, Inc. v. Carlson, 817 F.3d 867, 875 (4th
Cir. 2016), the Fourth Circuit noted that "[t]he evolution of the
[Supreme]
Court's
cases
are
but
a
short
step
away
from
the
conclusion that whether an arbitration agreement authorizes class
arbitration presents a question as to the arbitrator's inherent
power,
which
requires
judicial
review."
Thus,
it
was
"not
surprising
. that those circuit courts to have considered the
question have
concluded that,
'unless
the parties
clearly and
unmistakably provide otherwise,' whether an arbitration agreement
permits class arbitration is a question of arbitrability for the
court."
Id. at 876
Inc.
Crockett,
v.
question
whether
arbitration
is
a
(citations omitted); see also Reed Elsevier,
734
an
F.3d
594,
arbitration
gateway matter
599
(6th
agreement
Cir.
2013)
permits
reserved
for
("[T]he
classwide
'judicial
determination unless the parties clearly and unmistakably provide
otherwise.'") ; Opalinski v.
F.3d 326,
335-36
(3d Cir.
Robert Half International Inc.,
2014)
761
("[T]he availability of class
arbitration is a 'question of arbitrability' for a court to decide
unless the parties unmistakably provide otherwise.").
The court
must therefore examine the parties' agreement to determine whether
they agreed to submit the collective arbitrability issue to the
arbitrator.
If not, it will be decided by the court.
-7-
B.
Whether
the
Parties
Agreed
to
Submit
Arbitration Question to the Arbitrator
Premier
presenting
argues
that
Langston
"clear and unmistakable"
cannot
the
meet
evidence
Collective
his
that
burden
the
of
parties
intended to submit this question to the arbitrator and that the
Employment Agreement is silent on the issue, leaving the question
for the court. 19
Langston responds that the Employment Agreement
contains broad coverage language that expressly gives questions of
"contract" to the arbitrator and does not remove any type of claim
from
arbitration,
compelling
deferral
of
the
collective
arbitrability question to the arbitrator. 20
1.
The "Broad Language" of the Arbitration Agreement
Langston relies on Robinson,
817 F.3d 196,
and Gonzales v.
Brand Energy & Infrastructure Services, Inc., Civ. Action No. H-121718, 2013 WL 1188136 (S.D. Tex. March 20, 2013), arguing that the
broad coverage language of the Employment Agreement compels the
deferral of class arbitrability to an arbitrator. 21
817 F.3d at 194,
In Robinson,
the Fifth Circuit held that the district court
properly applied Pedcor Management Co., Inc. Welfare Benefit Plan
v. Nations Personnel of Texas,
2003).
Inc., 343 F.3d 355, 359 (5th Cir.
The Robinson court clarified that Pedcor Management did not
19
See Motion for Clause Construction,
pp. 9, 13.
Docket Entry No.
20
See Langston's Response, Docket Entry No. 40, pp. 1-3.
21
See id. at 2-3.
-8-
35,
hold that availability of class arbitration is always a decision
for the arbitrator.
Management
includes
"held
broad
Robinson,
that
when
coverage
817 F.3d at 196.
an
arbitration
language,
such
as
Rather,
agreement
a
at
contract
Pedcor
issue
clause
submitting 'all disputes, claims, or controversies arising from or
relating to' the agreement to arbitration, then the availability of
class or collective arbitration is an issue arising out of the
agreement that
should be determined by the arbitrator. " 22
(citing Pedcor Management,
343 F.3d at 359).
Thus,
Id.
"if parties
agree to submit the issue of arbitrability to the arbitrator, then
the availability of class or collective arbitration is a question
for the arbitrator instead of the court."
Id. at 197.
The agreement in Robinson submitted to arbitration "'claims
challenging the validity or enforceability of this Agreement (in
whole or in part) or challenging the applicability of the Agreement
to a particular dispute or claim. '"
Id.
The defendant argued that
because the agreement was silent as to class arbitration, it could
The Robinson defendant argued that Stolt-Nielsen, 130 S. Ct.
1758, abrogated Pedcor Management. Robinson, 817 F.3d at 195-96.
Pedcor Management, 817 F.3d 355, relied on the Supreme Court's
reasoning in Bazzle, 123 S. Ct. 2402, but Stolt-Nielsen, 130 S. Ct.
at 1771-72, clarified that Bazzle did not yield a majority
decision.
However, Stolt-Nielsen "also refused to speak to [the
'who decides'] issue."
Robinson, 817 F.3d at 196 (citing StoltNielsen, 130 S. Ct. at 1772). Thus, the Robinson court concluded
that "Stolt-Nielsen's refusal to decide this issue is not
sufficient to set aside Pedcor Management," and "Stolt-Nielsen does
not overrule prior Supreme Court and Fifth Circuit decisions
requiring questions of arbitrability, including the availability of
class mechanisms, to be deferred to arbitration by agreement." Id.
at 197.
22
-9-
not be read to defer the issue to the arbitrator. 23
Id.
The court
compared the language to that in other cases:
Contract language similar to section (g) has been found
to authorize deferral of arbitrability issues.
In
[Bazzle] , the plurality held that language submitting
"[a]ll disputes, claims or controversies arising from or
relating to this contract" to arbitration was sufficient
for deferral.
Similarly, in Pedcor Management, this
court concluded that a clause submitting "any dispute
in connection with the [a] greement" included
determinations of class or collective arbitration. And,
in [Rent-A-Center], an agreement granting exclusive
authority to an arbitrator "to resolve any dispute
relating to the interpretation, applicability, enforceability or
formation of
[the]
[a] greement,"
was
determined to be an unambiguous and proper delegation of
authority under the Federal Arbitration Act.
Id. at 198 (citations omitted).
The Robinson court held that the
agreement, which required "that 'claims challenging the validity or
enforceability
"unambiguous
of'
the
evidence
arbitrability disputes
properly compelled." 24
agreement
of
the
must
parties
be
arbitrated"
intention
to
was
submit
to arbitration and that arbitration was
Id.
23
The defendant also argued that the "agreement applies only
between the company and Robinson and may not be read to include
arbitration of
[the] non-party claims." Robinson, 817 F.3d
at 197-98.
The court held that this argument was "a misguided
attempt to bootstrap a preliminary proceeding into judicial review
of an arbitration award that does not yet exist.
[The defendant]
may be right that the agreement does not allow class or collective
arbitration, but that is not the issue before the court. The issue
is who decides if the arbitration agreement permits class or
collective procedures." Id.
24
See also Planet Beach Franchising Corp. v. Zaroff, 969
F. Supp. 2d 658, 659, 668 (E.D. La. Aug. 27, 2013) (finding that an
agreement to submit "[a]ll disputes and claims relating to this
Agreement or any other agreement entered into between the parties,
the rights and obligations of the parties, or any other claims or
(continued ... )
-10-
Premier
argues
that
Langston's
Employment
Agreement
is
distinguishable because the arbitration provisions in Robinson,
Bazzle,
Rent-A-Center,
assignments
of
all
and
Pedcor
Management
arbitrability issues
to
the
were
general
arbitrator and
contained language specifically committing issues relating to the
the
arbitration
itself
agreement
to
the
construction
of
arbitrator. 25
In contrast, Premier argues, Langston's Employment
Agreement "assigns only the substance of the parties' claims to the
arbitrator,
without
any
reference
to
the
interpretation
or
enforceability of the arbitration agreement itself," which is not
sufficient to reassign arbitrability questions from the court to
the arbitrator. 26
Premier argues that only agreeing to arbitrate
issues "connected with" or "related to" the arbitration agreement
itself
constitutes
arbitrator. 27
a
deferral
of
arbitrability
issues
to
the
Thus, Premier argues, the critical element that was
present in those cases is missing here.
24
( • • • continued)
causes of action relating to the making, interpretation, or
performance of either party under this Agreement, shall be settled
by arbitration .
. " constituted an agreement to submit the
collective arbitration issue to the arbitrator) .
25
See Motion for Clause Construction, Docket Entry No. 35,
p. lSi Reply in Support of Premier Directional Drilling, L.P.'s
Motion for Clause Construction and to Compel Bilateral Arbitration
Consistent With Plaintiff's Arbitration Agreement ("Reply in
Support"), Docket Entry No. 41, pp. 7-8.
26
See Motion for Clause Construction, Docket Entry No.
p. lSi Reply in Support, Docket Entry No. 41, p. 8.
27
See Motion for Clause Construction,
p. 15.
-11-
Docket Entry No.
3 5,
35,
In a case with similar arbitration language that also raised
class-wide and collective claims for unpaid overtime,
the court
denied the employer's "Petition to Dismiss or in the Alternative
Stay the Pending Arbitration and Compel Individual Arbitration in
Accordance With the Binding Arbitration Agreements."
Wells Fargo
Advisors, L.L.C. v. Tucker, Civ. Action No. 15-CV-7722 VEC,
WL 3670577, at *1 (S.D.N.Y. July 1, 2016).
2016
The arbitration clause
stated:
you agree that any controversy or dispute, including but
not limited to, claims of wrongful termination, breach of
contract,
discrimination,
harassment,
retaliation,
infliction of emotional distress, tortious interference
with business or contract, federal, state or local
statute or ordinance and/or other theory, arising between
you and Wells Fargo Advisors, shall be submitted for
28
arbitration .
The court discussed Bazzle, Stolt-Nielsen, Concepcion, and Oxford
Plans,
Health
Stolt-Nielsen,
and
acknowledged
[Concepcion] ,
that
and Oxford,
" [i] n
the
the Third,
wake
of
Fourth and
Sixth Circuits and at least one district court in this Circuit have
held that class arbitration is a gateway issue that the court must
decide."
Id.
at
*3-4
(citing
Dell
Webb,
817
F.3d
at
877;
Opalinski, 761 F.3d at 332; Huffman v. Hilltop Companies, LLC, 747
F.3d 391,
Ltd.,
398-99
950 F. Supp.
(6th Cir.
2d 633,
2014);
636
Anwar v.
(S.D.N.Y.
28
Fairfield Greenwich
2013)).
It also noted
The agreement provided for arbitration before the Financial
Industry Regulatory Authority ["FINRA"] with any nonaccepted
controversy, dispute, or claim to be submitted to the AAA pursuant
to its Securities Arbitration Rules.
Wells Fargo Advisors, 2016
WL 3670577, at *1.
-12-
that the Fifth Circuit reaffirmed the Pedcor Management holding
that
a
broad
arbitration
arbitration
arbitration
constitutes
determinations
Robinson, 817 F.3d at 197).
clause
submitting
unambiguous
an
to
the
"any
dispute"
deferral
arbitrator.
of
Id.
to
class
(citing
Thus, the Wells Fargo Advisors court
held that "[i]n the absence of Supreme Court precedent expressly
disavowing Bazzle and in keeping with Second Circuit precedent
regarding the arbitrator's role in interpreting the language of a
broad arbitration clause and the persuasive decisions of several
sister district courts, the Court finds that the availability of
class arbitration under the arbitration provisions at issue should
be decided by the arbitrator, not by the Court." 29
Id. at *4.
In another case (cited by Wells Fargo Advisors), Edwards v.
Macy's
Inc.,
2015
WL 4104718,
at
*2,
the
court
examined this
arbitration clause:
Any dispute, controversy, benefits requests, demands,
losses, damages, actions or causes of action
arising out of or relating in any way to this Amendment,
or to the solicitation for and/or sale of this Amendment,
shall be settled by arbitration under the provision of
the Federal Arbitration Act, 9 U.S.C., Section 1, et seq.
Such arbitration shall be governed by the rules of the
29
The court found persuasive cases holding that the issue is
a procedural one for the arbitrator.
See Wells Fargo Advisors,
2016 WL 3670577, at *4-5
(citing In re A2P SMS Antitrust
Litigation, Civ. Action No. 12-CV-2656(AJN), 2014 WL 2445756, at *1
(S.D.N.Y. May 29, 2014) and Edwards v. Macy's Inc., Civ. Action
No. 14CV-8616-CM-JLC, 2015 WL 4104718, at *11-12 (S.D.N.Y. June 30,
2015) . Other courts have found the same, even after Stolt-Nielsen.
See, e.g., Guida v. Home Savings of America, Inc., 793 F. Supp. 2d
611, 614-19 (E.D.N.Y. 2011) (issue is procedural and for the
arbitrator to decide) .
-13-
American Arbitration Association
If we, a
claimant, or a third party have any dispute that is
directly or indirectly related to a dispute governed by
this arbitration provision, the claimant and we agree to
consolidate all such disputes.
The court laid out the "long-standing rules," unaltered by StoltNielsen, that "[i]f the agreement is broad-that is, if it calls for
arbitration of 'any and all disputes'-there arises a presumption of
arbi trabili ty;
and if the claim
'implicates issues of contract
construction or the parties' rights and obligations under it,' the
issue of contract construction is perforce arbitrable."
*10-11
(citing Collins & Aikman Prods.
Inc., 58 F.3d 16, 23 (2d Cir. 1995)).
Co.
v.
Id. at
Building Systems,
The court held that
Applying the rules summarized above, it is clear that the
issue of whether the language quoted above authorizes
class-wide arbitration is for the arbitrators in the
first instance, not for the court.
The arbitration
clause in the Terms and Conditions is a broad "any and
all" clause-so broad that by its literal terms it extends
beyond disputes between the parties to include related
disputed involving third parties! Whether that language
encompasses claims asserted on behalf of a class is an
issue of contract construction.
Id. at *11.
that
the
The court's conclusion was "reinforced by the fact
arbitration
agreement
provide [d)
that
any
arbitration held thereunder will be conducted in accordance with
the Rules of the
[AAA] , '
"shall determine as a
which anticipate that the arbitrators
threshold matter,
in a
reasoned,
partial
final award on the construction of the arbitration clause, whether
the
applicable
arbitration
clause
permits
proceed on behalf of or against a class."
the
arbitration
to
Id. ; see also Blue Cross
Blue Shield of Massachusetts, Inc. v. BCS Insurance Co., 671 F.3d
-14-
635,
636-39
(7th
Cir.
2011)
(indicating
that
issues
like
the
appropriateness of consolidated or class arbitration are procedural
ones for the arbitrator) .
This authority aligns with the authority in this jurisdiction
and
supports
the
conclusion that
the
arbitrator
should decide
whether Langston and Premier agreed to collective arbitration.
Langston and Premier agreed broadly to submit
arising between [them]" to binding arbitration.
"any controversy
This is similar to
the language in Pedcor Management, 343 F.3d at 359:
in
connection
with
the
between any parties"
"Any
agreement."
is arguably broader,
specifically mentions
construing
the
"any dispute
controversy
arising
and neither provision
Langston
agreement.
and
Premier also specifically agreed to arbitrate claims "including but
not limited to common law,
tort or contract claims." 30
statutory,
While Langston's Employment Agreement does not single out claims
involving "this contract," the parties agreed to arbitrate contract
claims.
The
law
includes
broad
in
this
coverage
circuit
language,
is
that
such
as
"when
a
an
agreement
contract
clause
submitting 'all disputes, claims, or controversies arising from or
relating to' the agreement to arbitration, then the availability of
class or collective arbitration is an issue arising out of the
agreement
that
should
be
Robinson,
817 F.3d at 196
determined
by
the
arbitrator."
(citing Pedcor Management,
30
See
343 F.3d at
See Employment Agreement, Exhibit A to Selby Declaration,
Exhibit A to Motion for Clause Construction, Docket Entry No. 35-1,
p. 4.
-15-
359)
(emphasis in original); see also Gonzales, 2013 WL 1188136, at
*5.
Because the parties here agreed to submit "any controversy"
arising between them to arbitration, the court concludes that the
parties agreed to have the arbitrator decide the issue of whether
the Employment Agreement permits collective arbitration or not.
2.
The AAA Rules and AAA Supplementary Rules
The court's conclusion that the arbitrator must decide this
issue
is
supported
Agreement.
by
Langston
additional
argues
that
language
the
in
the
Employment
Employment
Agreement
explicitly provides for "binding arbitration in accordance with the
rules of the [AAA] ,"which include the rules governing the specific
type of action and the AAA supplementary rules. 31
Langston also
argues that even in the absence of an explicit adoption of AAA
rules,
the
parties
have
consented
consenting to AAA arbitration. 32
to
AAA's
rules
simply
by
Premier argues that "[t]here is
no controlling authority in the Fifth Circuit that resolves the
issue of whether an arbitration agreement,
like the one at issue
here, which merely refers to the 'rules' of the AAA, provides the
kind of
'clear and unmistakable'
evidence required to take the
arbitrability decision away from this Court." 33
Premier relies on
31
See Langston's Response, Docket Entry No. 40, p. 4.
33
See Motion for Clause Construction,
p. 16.
-16-
Docket Entry No.
35,
recent
decisions
from
the
Third,
Fourth,
Sixth,
and
Ninth
Circuits. 34
The
specific
AAA' s
arbitration
action
and
rules
separate
include
rules
Supplementary
governing
Rules
for
the
Class
Arbitrations (the "Supplementary Rules"), which were enacted after
the Supreme Court decided Bazzle.
University,
681 F.3d 630,
other grounds,
See Reed v. Florida Metropolitan
634-35
(5th Cir.
Oxford Health Plans,
133 S.
2012),
Ct.
abrogated on
2064.
Langston
argues that by consenting to AAA arbitration, the parties have also
consented to the AAA's rules. 35
The AAA's Employment Arbitration
Rules explain:
34
See id. at 10. Premier also notes that "a number of district
courts have held that reference to the AAA rules is not a
sufficiently 'clear and unmistakable' indication that the parties
intended to refer the question of class arbitration to the
arbitrator." Id. at 18 n.9 (citing Thomas v. Right Choice Staffing
Group, LLC, Civ. Action No. 15-10055, 2015 WL 4078173, at *7 (E.D.
Mich. July 6, 2015); Shakoor v. VXI Global Solutions, 35 N.E.3d
539, 547 (Ohio App. 7 Dist. June 16, 2015); Chesapeake Appalachia,
LLC v. Suppa, 91 F. Supp. 3d 853, 863-64 (N.D. W. Va. 2015); Torres
v. CleanNet, U.S.A., Inc., 90 F. Supp. 3d 369, 373, 381 (E.D. Pa.
2015); Bachrach v. Cornwell Quality Tools Co., Civ. Action
No. 27113, 2014 WL 7454687, *3 (Ohio App. 9 Dist. Dec. 31, 2014);
Chesapeake Appalachia, L.L.C. v. Scout Petroleum, LLC, 73 F. Supp.
3d 488, 500-01 (M.D. Pa. 2014); Chico v. Hilton Worldwide, Inc.,
Civ. Act. No. 14-cv-05750, 2014 WL 5088240, at *11 (C.D. Cal.
Oct.
7,
2014);
Tompkins
v.
23andMe,
Inc.,
Civ.
Act.
Nos. 5:13-CV-05682, 5:14-CV-00294, 5:14-CV-00429, 5:14-CV-01167,
5:14-CV-01191, 5:14-CV-01258, 5:14-CV-01348, 5:14-CV-01455, 2014
WL 2903752, at *12 (N.D. Cal. June 25, 2014); Lopez v. Ace Cash
Exoress, Inc., Civ. Act. Nos. LA CV11-04611 JAK (JCx), LA
CV11-07116 JAK (JCx), 2012 WL 1655720, at *8 (C.D. Cal. May 4,
2012); Moody v. Metal Supermarket Franchising America Inc., Civ.
Act. No. 13-cv-5098 PJH, 2014 WL 988811, at *3 (N.D. Cal. Mar. 10,
2014); Chassen v. Fidelity National Financial, Inc., Civ. Act.
No. 09-cv-00291, 2014 WL 202763, at *6 (D.N.J. Jan. 17, 2014). In
some of these cases the agreements do not mention the AAA Rules,
and some do not include the language of the agreements.
35
See Langston's Response, Docket Entry No. 40, p. 4.
-17-
The parties shall be deemed to have made these rules a
part of their arbitration agreement whenever they have
provided for arbitration by the American Arbitration
Association (hereinafter "AAA") or under its Employment
Arbitration Rules and Mediation Procedures or for
arbitration by the AAA of an employment dispute without
specifying particular rules. If a party establishes that
an adverse material inconsistency exists between the
arbitration agreement and these rules, the arbitrator
shall apply these rules.
AAA Employment Arbitration Rules and Mediation Procedures,
(Eff.
Nov.
1,
2009) . 36
Thus,
R.
1
the AAA rules apply even if the
parties have not specified particular rules, and the Supplementary
Rules apply to any dispute governed by "any of the rules" of the
AAA:
These
Supplementary Rules
for
Class
Arbitrations
("Supplementary Rules") shall apply to any dispute
arising out of an agreement that provides for arbitration
pursuant to any of the rules of the [AAA] where a party
submits a dispute to arbitration on behalf of or against
a class or purported class, and shall supplement any
other applicable AAA rules.
These Supplementary Rules
shall also apply whenever a court refers a matter pleaded
as a class action to the AAA for administration, or when
a party to a pending AAA arbitration asserts new claims
on behalf of or against a class or purported class.
Suppl.
R.
1(a)
(Eff.
WL 1188136, at *5 n.22.
Oct.
8,
2003) ; 37
see also Gonzales,
2013
Supplementary Rule 3 provides (in part):
Upon appointment, the arbitrator shall determine as a
threshold matter, in a reasoned, partial final award on
the construction of the arbitration clause, whether the
applicable arbitration clause permits the arbitration to
36
Available
004366.
37
at:
https://www.adr.org/aaa/ShowPDF?doc=ADRSTG
Available at: https://www.adr.org/aaa/ShowPDF?doc=ADRSTG_OO
4129.
-18-
proceed on behalf of or against a class
Construction Award") . 38
In Reed,
681 F. 3d at 636,
(the "Clause
the Fifth Circuit held that the
district court correctly referred the class arbitration issue to
the arbitrator.
The court did not resolve the question of whether
class arbitration constitutes an arbitrability question for the
court because
"the parties here consented to the Supplementary
Rules, and therefore agreed to submit the class arbitration issue
to the arbitrator,
[so] we need not and do not revisit this issue."
Id. at 634 n.3; see also id. at n.7 ("Nor would the arbitrability
determination necessarily be conclusive, as parties may agree to
submit
arbitrability
questions
to
an
arbitrator.")
(citing
Rent-A-Center, 130 S. Ct. at 2777)).
The parties' agreement stated:
The student agrees that any dispute arising from my
enrollment
at
Everest
University,
no matter how
described, pleaded or styled, shall be resolved by
binding arbitration under the Federal Arbitration Act
conducted by the American Arbitration Association ( "AAA")
under its Commercial Rules.
The award rendered by the
arbitrator may be enforced in any court having
jurisdiction.
Acknowledgment of Waiver of Jury Trial and Availability
of AAA Rules
By my signature on the reverse, I acknowledge that I
understand that both I and Everest University are
irrevocably waiving rights to a trial by jury, and are
selecting instead to submit any and all claims to the
38
See note 3 7 supra.
-19-
decision of an arbitrator instead of a court.
I
understand that the award of the arbitrator will be
binding, and not merely advisory.
Id. at 632-33.
The court reasoned that the parties' consent to the
AAA Commercial
Rules.
Rules
constituted
Id. at 634-35.
consent
to
the
Supplementary
"[c]ommentators and AAA
It noted that:
arbitral tribunals have consistently concluded that consent to any
of the AAA' s
substantive rules also constitutes consent to the
Id. at 63 5. 39
Supplementary Rules."
Premier argues that "Reed is the opposite of this case because
Langston and Premier have not agreed to the application of the
AAA's
Supplementary
Langston's
Rules.
Employment
Agreement
provides only generically that the 'rules' of the AAA will apply;
it
makes
Unlike
no
the
reference
defendant
whatsoever
in Reed,
to
the
Premier
Supplementary
has
not
argued
Rules.
in any
pleading for the application of the Supplementary Rules." 40
There are differences between Reed and this case.
parties
never
specifically
disputed
the
Supplementary Rules, where Premier does. 41
applicability
See Reed,
The Reed
of
the
681 F.3d at
39
Reed, 681 F.3d at 635 n.4, noted that one arbitral tribunal
decided that the parties consented to the Supplementary Rules by
agreeing that they would be governed by "the Rules of the [AAA] ,"
even though their arbitration agreement was executed five years
prior to the enactment of the Supplementary Rules
(citing
Presidents and Fellows of Harvard College v. JSC Surgutneftegaz,
770 PLI/Lit. 127, 135 n.5 (2008)).
40
See Motion for Clause Construction,
p. 14.
41
See id.
-20-
Docket Entry No.
35,
635 n.S.
The Reed defendant also cited Supplementary Rule 3 in a
motion to vacate the clause construction award and argued that
to which these parties agreed provide that a
"' [t] he AAA rules
clause construction award would be subject to a motion to vacate, '"
while Premier has not relied on the Supplementary Rules in any
pleading.
"rules
of
Langston's Employment Agreement
the
[AAA]"
while
the
Reed
referenced the AAA's Commercial Rules.
the Reed parties'
Rules,
refers
agreement
to the
specifically
See id. at 632.
However,
agreement did not reference the Supplementary
and the parties did not stipulate that the Supplementary
Rules would apply.
The broadly stated rule in Reed and the AAA
Rules themselves lead the court to conclude that consent to any of
the substantive rules also constitutes consent to the Supplementary
Rules.
Langston also relies on Gonzales,
2013 WL 1188136, *1.
The
Gonzales agreement provided "Any employment and/or personal injury
claim arising out of or relating to Brand and employees at-will
employment or other disputes covered in this Program . . . shall be
governed by the
final,
Federal Arbitration Act
(FAA)
binding arbitration administered by the
current Employment Rules . .
II
42
Id. at *1. 42
and resolved by
[AAA]
under its
The AAA Employment
The Dispute Resolution Program Acknowledgment stated, "I will
submit to and seek to resolve any disputes arising out of or
relating to my application or candidacy for employment, employment
and/or cessation of employment through the Brand Dispute Resolution
Program." Gonzales, 2013 WL 1188136, at *2.
-21-
Rules cross-reference the Supplementary Rules, but the agreement
See id. 43
did not mention the Supplementary Rules.
The court held:
Through language similar to that used in Bazzle, the
parties agreed to submit to arbitration "any disputes
arising out of or relating to [Gonzales'] application or
candidacy for employment, employment and/or cessation of
employment."
The court therefore concludes that the
parties agreed to submit the collective and class
arbitration questions to the arbitrator because those
questions constitute disputes that have arisen out of
Gonzales' employment.
Reed compels the same result. The parties in this case
agreed to "binding arbitration administered by the [AAA]
under its current Employment Rules."
Under Reed the
parties therefore also agreed that the Supplementary
Rules would apply. The court concludes that Reed and the
Supplementary Rules, like Bazzle, apply with equal force
to collective and class actions alike. Accordingly, the
question of collective or class arbitration is for the
arbitrator to decide.
Gonzales, 2013 WL 1188136, at *5.
Premier argues that Gonzales is also distinguishable. 44
It
points out that the arbitration agreement in Gonzales was longer
and
more
referenced
developed
the
AAA's
than
Langston's
current
Employment
Employment
reference the AAA' s Supplementary Rules. 45
Rules,
Agreement
which
and
cross-
Premier points out that
43
Gonzales was decided before Robinson clarified that Pedcor
Management did not hold that the arbitrator always decides whether
collective arbitration is appropriate.
However, Gonzales, 2013
WL 1188136, at *4, acknowledged that Bazzle was only a plurality
and that the Supreme Court has never decided "who decides."
44
See Motion for Clause Construction, Docket Entry No.
p. 15; Reply in Support, Docket Entry No. 41, pp. 9-10.
45
See Reply in Support, Docket Entry No. 41, pp. 9-10.
-22-
35,
there are several versions of the AAA rules that do not crossreference the Supplementary Rules. 46
this distinction.
identical
to
Other courts have recognized
Premier cites a case that used language nearly
that
in
Langston's
Employment
Agreement.
In
Chesapeake Appalachia, LLC v. Scout Petroleum, LLC, 809 F.3d 746,
748
(3d Cir.
2016),
the Third Circuit examined an arbitration
provision in oil and gas leases that provided:
disagreement
between Lessor
and Lessee
"In the event of a
concerning
this
Lease,
performance thereunder, or damages caused by Lessee's operations,
the
resolution
of
all
such
disputes
shall
be
determined
arbitration in accordance with the rules of the [AAA] ."
by
The court
held "that the Leases do not 'clearly and unmistakably' delegate
the question of class arbitrability to the arbitrators."
id.
at
763
("The
Commercial
Supplementary Rules
.
Rules
do
not
"); Dell Webb,
even
refer
Id.; see
to
the
817 F.3d at 869,
877
(arbitration agreement stating "every controversy or claim arising
out of or relating to this Agreement, or the breach thereof shall
be settled by binding arbitration .
The rules of the [AAA] ,
published for construction industry arbitrations, shall govern the
arbitration
proceeding
and
the
method
of
appointment
of
the
arbitrator" did not "unmistakably provide that the arbitrator would
decide whether their agreement authorize[d] class arbitration" so
the district court erred in concluding that the question was a
46
See id. at 10.
-23-
procedural one for the arbitrator); Reed Elsevier, 734 F.3d at 599
(agreement was "silent or ambiguous as to whether an arbitrator
should determine the question of classwide arbitrability; and that
is not enough to wrest that decision from the courts" despite a
reference to the AAA rules); Huffman, 747 F. 3d at 398-99.
The court is not persuaded, however, that failure to reference
a particular subset of the AAA Rules removes the agreement from the
rule in Reed and Gonzales.
Under the AAA's Employment Arbitration
Rules, the parties are deemed to have made the Employment Rules a
part of their arbitration agreement whenever they have "provided
for arbitration by the [AAA]
an
employment
dispute
. or for arbitration by the AAA of
without
specifying
Langston's Employment Agreement does both.
particular
rules. " 47
The Supplementary Rules
apply to "any dispute arising out of an agreement that provides for
arbitration pursuant to any of the rules of the [AAA] where a party
submits a dispute to arbitration on behalf of or against a class or
purported class,
rules. " 48
47
and shall supplement any other applicable AAA
This language does not suggest that the parties must
See note 3 6 supra.
48
See note 3 7 supra. The court notes that, as in Reed, " [ t] he
parties' adoption of the AAA Commercial Rules and the Supplementary
Rules cannot, however, be considered in deciding whether they
agreed to arbitrate as a class." Reed, 681 F.3d at 636 n.6.
See
AAA Suppl. R. 3 ("In construing the applicable arbitration clause,
the arbitrator shall not consider the existence of these
Supplementary Rules, or any other AAA rules, to be a factor either
in favor of or against permitting the arbitration to proceed on a
class basis.").
-24-
r
I
I
I
specify which rules apply in order to incorporate the Supplementary
Rules.
Nor does
it
state
that
the primary rules must
cross-
reference the Supplementary Rules in order for the Supplementary
Rules to be effective.
Instead,
the Supplementary Rules "shall
supplement any other applicable AAA rules."
Id.
Other courts have
held that parties agree to delegate the issue of class arbitration
to
the
arbitrator
agreement.
No.
See,
by
incorporating
e.g.,
Guess?,
2:16-cv-00780-CAS(ASx),
April 18,
2016)
the
Inc.
2016
WL
v.
AAA
Rules
Russell,
1620119,
at
(" [B] y incorporating the AAA' s
in
Civ.
*6
their
Action
(C.D.
Cal.
Model Rules for
Arbitration of Employment Disputes, the parties in this case agreed
to delegate the question of whether respondents could pursue their
claims
on
Gonzales,
a
class-wide
basis
2013 WL 1188136,
to
at *5
an
arbitrator.")
i
see
also
(applying Reed's reasoning and
reliance on the Supplementary Rules to a collective,
rather than
class, action).
III.
Conclusion
While the Supreme Court has not decided "who decides" whether
the parties agreed to collective or class arbitration, the rule in
several circuits, including this one, appears to be that it is an
arbi trabili ty question for the court.
However, a broad arbitration
clause or agreement to submit to the AAA Rules may constitute an
agreement by the parties to submit that question to the arbitrator.
Langston's Employment Agreement includes both a broad arbitration
-25-
r
i
clause
and
an
agreement
to
submit
incorporate the Supplementary Rules.
to
the
AAA
Rules,
which
For these reasons, the court
concludes that the parties agreed to have the arbitrator decide
whether they agreed to collective arbitration.
Therefore, Premier
Directional Drilling, L.P.'s Motion for Clause Construction and to
Compel
Bilateral
Arbitration
Consistent
With
Plaintiff's
Arbitration Agreement (Docket Entry No. 35) is DENIED.
SIGNED at Houston, Texas, on this 25th day of August, 2016.
rsiMLAKE
UNITED STATES DISTRICT JUDGE
-26-
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