Sun Coast Resources, Inc. v. Conrad
Filing
17
OPINION on Arbitration. (Signed by Judge Lynn N Hughes) Parties notified. (ghassan, 4)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS District Court
United States
Southern District of Texas
ENTERED
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Sun Coast Resources, Inc.,
Plaintiff,
versus
Roy Conrad,
Defendant.
December 21, 2018
David J. Bradley, Clerk
Opinion on Arbitration
1.
Introduction.
This case arises from an arbitrator's decision allowing a claim under the Fair
Labor Standards Act to be arbitrated as a collective action. Roy Conrad and Sun Coast
Resources, Inc., jointly allowed the arbitrator to decide if they agreed to a collective
action arbitration. The arbitrator decided that they did. Sun Coast is challenging that
decision. Sun Coast will lose; the arbitrator's decision stands.
2.
Background.
On November
22, 2013,
Sun Coast and Conrad entered into a mediation and
arbitration agreement that any employment related claim must be brought before a
mediator. If the mediation fails, they must arbitrate.
In
2017,
Conrad filed suit against Sun Coast alleging that it failed to pay him
overtime wages, violating the FLSA. Conrad filed the claim on behalf of himself and
others similarly situated.
At the arbitration, the parties filed an agreed scheduling order stating that the
arbitrator should first decide whether the arbitration could continue as a collective
action. To make this decision, the arbitrator was required to interpret the November
2013
agreement.
3.
Arbitration.
The agreement between Conrad and Sun Coast states that the Federal
Arbitration Act applies to all proceedings arising from it. The Act allows courts to
vacate an arbitrator's decision only in extreme circumstances. An incorrect application
of the law is not an extreme circumstance. When a contract's interpretation is at issue,
the question is whether the arbitrator rationally interpreted the parties's contract and
not whether the arbitrator got the meaning right or wrong. I
The agreement between Conrad and Sun Coast lists claims covered under the
agreement and claims that are not covered. Collective actions are in neither clause. The
parties asked the arbitrator to determine if the contract allowed Conrad to arbitrate as
a collective action, or if he could only bring claims for himself.
In his decision, the arbitrator cited to multiple parts of the contract to support
his finding in favor of collective action. The arbitrator cited that "any controversy ...
must be submitted to arbitration"; the agreement included "any and all disputes"; and
he used the statutory interpretation tool that, when there is a list, anything excluded
from that list was purposefully excluded, to reinforce his decision.
Under the contract's broad language, it is plausible that the arbitrator is correct.
Sun Coast could have included collective action in the "claims not covered" clause. It
did not. Rather, the "claims covered" clause says that any dispute about the arbitrability
of any controversy or claim is covered. This, arguably, easily includes collective action.
Further, the parties submitted the question of collective action to the arbitrator.
The arbitrator made his decision. Sun Coast cannot - successfully - claim that the
arbitrator exceeded his authority in answering a question that it asked him to answer
just because he ruled against Sun Coast.
4.
Conclusion.
Sun Coast and Conrad could have included collective action as a claim that is
not covered. They did not. When reading the contract, it is possible that collective
action is a covered claim. The arbitrator thinks that it is. This is not a manifest
disregard of the law; it is an entirely rational interpretation.
I
See Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 569, 133 S. Ct. 2064, 2068,186 LEd. 2d
113 (20 13).
The arbitrator decided that Roy Conrad may arbitrate a collective action under
the employment agreement and this court will not disturb that decision. The request
for this court to interfere with that decision will be denied.
Roy Conrad may continue arbitrating as a collective action against Sun Cost
Resources, Inc.
Signed December
"'l..\ , 2.018, at Houston, Texas.
..
-c5-
~Jon
Lynn N. Hughes
United States DistrictJudge
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