24 Hour Fitness USA v. Omlin

Filing 6

MEMORANDUM DECISION and ORDER STAYING CASE. IT IS ORDERED that 24 Hour Fitness Petition to Compel Arbitration is stayed pending the ruling on the Special Masters recommendation in the Northern District of California. After such a ruling 24 Hour shall produce a report to the Court within 10 days summarizing how the ruling affects 24 Hours Petition to Compel Arbitration. Signed by Judge Ted Stewart on 06/19/2012. (tls)

IN THE UNITED STATES COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION

24 HOUR FITNESS USA, INC. a California
corporation dba 24 HOUR FITNESS,
Petitioner,

MEMORANDUM DECISION AND
ORDER ON 24 HOUR FITNESS’S
PETITION TO COMPEL
ARBITRATION

vs.
BOB OMLIN,

Case No. 2:11-MC-1126 TS

Respondent.

This matter is before the Court on 24 Hour Fitness USA, Inc.’s (“24 Hour”) Petition to
Compel Arbitration. 1 Bob Omlin (“Respondent”) has not filed a response to 24 Hour’s petition.
For the reasons discussed more fully below, the Court will stay 24 Hour’s petition pending
related ongoing litigation in the Northern District of California (“N.D. Cal.”).
I. BACKGROUND
This matter arises out of Respondent’s original claim as a member of a decertified
collective action for overtime pay due to an alleged misclassification of overtime work by 24
Hour that violated the Fair Labor Standards Act (“FLSA”). 2 The employment agreement

1

Docket No. 2.

2

See Beauperthuy v. 24 Hour Fitness USA, Inc., 772 F. Supp. 1111, 1129 (N.D. Cal.
2011) (Respondent was an opt-in member of a decertified FLSA collective action that was filed
in the N.D. Cal. Respondent, together with other 24 Hour employees, claimed that 24 Hour
neither paid for hours worked in excess of 40 hours per week nor paid an overtime premium.
The California court found that the perspective collective action members did not satisfy all of
1

between 24 Hour and Respondent has an arbitration clause that states that any employment
dispute between 24 Hour and Respondent, aside from workers’ compensation and unemployment
claims, will be handled exclusively through arbitration. 3 Although the arbitration agreement
does not state a venue for the arbitration proceedings, 24 Hour seeks to compel arbitration in
Utah. To date, Respondent has not filed a response with the Court. However, Respondent is
seeking to compel arbitration in the N.D. Cal. 4
In its petition, 24 Hour indicates that Respondent worked for 24 Hour until February 28,
2002, and that he last worked for 24 Hour in Sandy, Utah. Additionally, 24 Hour asserts that
Respondent is bound by 24 Hour Fitness’s 2001 Arbitration Agreement. 5 The 2001 Arbitration
Agreement states that in the event of an employment dispute, an arbitrator would be selected “by
mutual agreement of the parties” but does not specify a venue for the arbitration. 6 24 Hour
claims that evidence pertaining to Respondent’s employment, such as relevant witnesses and
documents, is likely to be located in the District of Utah because it is the last place of
Respondent’s employment with 24 Hour. 7 As such, 24 Hour claims the most efficient place for
the arbitration to take place is in the District of Utah. 8

the necessary elements to be considered similarly situated and decertified the collective action
class.).
3

Docket No. 2, at 3 (quoting Hayward Decl. ¶ 7, Ex. C).

4

Id. at 1; Beauperhuy, Case No. 06-715 SC (N.D. Cal.) Docket No. 432.

5

Docket No. 2, at 3 (quoting Hayward Decl. ¶ 7, Ex. C).

6

Id. at 8.

7

Id.

8

Id.
2

The issue surrounding the arbitration venue is also the subject of pending motions by
both Respondent and 24 Hour in the N.D. Cal. 9 In the N.D. Cal., Respondent filed a Motion for
Temporary Restraining Order/Preliminary Injunction to prevent 24 Hour from filing additional
Petitions to Compel Arbitration—such as the instant Motion—throughout the country. 10 In
addition to filing Petitions to Compel Arbitration in federal districts throughout the country, 24
Hour filed a Consolidated Motion to Transfer Venue in the N.D. Cal. 11 That Motion seeks to
transfer Respondent’s petition together with similar petitions filed in the N.D. Cal. to the district
where the employee last worked for 24 Hour. 12 In sum, the parties have filed motions to compel
arbitration in different federal districts alleging that the other party refuses to arbitrate.
In the related ongoing litigation in the N.D. Cal., The Honorable Judge Conti appointed a
Special Master to consider all the pleadings previously on file as well as the briefs submitted by
the parties. 13 The Special Master made several recommendations that affect the disposition of
this case including: granting Respondent’s Motion for Temporary Restraining Order/Preliminary
Injunction to prevent 24 Hour from seeking to compel arbitration outside of the N.D. Cal.;
granting Respondent’s Motion to Compel Arbitration in the N.D. Cal.; and denying 24 Hour’s
Motion to Transfer Venue. 14
To date, the Special Master’s Recommendation is still pending in the N.D. Cal.

9

Beauperhuy, Case No. 06-715 SC (N.D. Cal.) Docket. No. 463.

10

Id. Docket. No. 508.

11

Id. at 8.

12

Id. Docket. No. 488.

13

Id. Docket. No. 508, at 3.

14

Id. at 2–3.
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II. DISCUSSION
In its petition, 24 Hour claims that it is entitled to have its Petition to Compel Arbitration
granted by the Court under the Federal Arbitration Act (“FAA”). 15 The Supreme Court has held
that employment contracts are within the scope of the FAA. 16 As 24 Hour’s petition points out,
the Court has also stated that the intent of the FAA is “to move the parties to an arbitrable
dispute out of court and into arbitration as quickly and easily as possible” and that “questions of
arbitrability . . . be addressed with a healthy regard for the federal policy favoring arbitration.” 17
Although federal policy ordinarily favors arbitration, the issue in the present case is not whether
the employment dispute is arbitrable but rather which venue is most appropriate for arbitration.
The Court considers the favorability of arbitration and promoting judicial economy when
deciding whether to grant 24 Hour’s Petition under the given procedural posture.
A.

LEGAL STANDARD
The Court has the power to grant a stay pending the result of the ongoing N.D. Cal.

proceedings. 18 The Supreme Court has described the stay power as “incidental to the power
inherent in every court to control the disposition of the causes on its docket with economy of
time and effort for itself, for counsel, and for litigants.” 19 The following factors are relevant
when considering whether to grant a stay: (1) whether a stay would promote judicial economy;
15

Docket No. 2, at 5.

16

Circuit City Stores v. Adam, 532 U.S. 105, 113–14 (2001).

17

Docket No. 2, at 6 (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 22-25 (1983); accord, Roberts v. Synergistic Int’l, L.L.C., 676 F. Supp. 2d 934, 946
(E.D. Cal. 2009)).
18

Nederlandse ERTS-Tankersmaatchappij, N.V. v. Isbarndtsen Co., 339 F.2d 440, 441
(2d Cir. 1964).
19

Landis v. N. Am. Co., 299 U.S. 248, 254 (1936).
4

(2) whether a stay would avoid confusion and inconsistent results; and (3) whether a stay would
unduly prejudice the parties or create undue hardship. 20
B.

ANALYSIS
1.

Judicial Economy

The issue before the Court will likely be determined by the N.D. Cal.’s ruling on
Respondent and 24 Hour’s pending motions. The N.D. Cal. will likely either compel arbitration
in that district or it will transfer the cases to various federal districts, including the District of
Utah, pursuant to 24 Hour’s Motion to Transfer. Therefore, the Court finds that this factor
weighs in favor of staying the case pending the ongoing litigation in the N.D. Cal.
2.

Confusion and Inconsistent Results

Staying the case before the Court would avoid confusion and inconsistent results. If the
N.D. Cal. grants Respondent’s Motion to Compel Arbitration in that district and this Court
prematurely grants 24 Hour’s Petition to Compel Arbitration, then the two orders would be
inconsistent. If the N.D. Cal. grants 24 Hour’s Motion to Transfer and this Court denies 24
Hour’s Petition to Compel Arbitration then the parties would be left wanting a venue for
arbitration. If the Court stays the case, both of the above inconsistent scenarios will be avoided
and it would ensure proper venue for arbitration. Therefore, the Court finds that this factor
weighs in favor of staying the case.
3.

Prejudice

The heart of the dispute is Respondent’s claim against 24 Hour for an alleged FLSA
violation. Thus, Respondent is in the most vulnerable position if arbitration proceedings are
delayed. However, it is Respondent’s desire that the arbitration proceedings take place in the
20

Evergreen Holdings, Inc. v. Sequoia Global, Inc., No. CIV-09-766-F, 2008 WL
4723008, at *2 (W.D. Okla. 2008).
5

N.D. Cal. If Respondent would like a faster path to resolution, Respondent could submit to
arbitration in Utah. Granting a stay would not create undue hardship by delaying arbitration and
final resolution for the Respondent and 24 Hour any more than it is already being delayed in the
N.D. Cal. While it is recognized that 24 Hour may have a strong interest in resolving the FLSA
claim, in a parallel case before the District of Kansas, 24 Hour has recommended staying the
case pending the ongoing litigation. 21 The Court can conclude that any delay in final resolution
would not prejudice 24 Hour. Therefore, the Court finds that this factor weighs in favor of
staying the case.
IV. CONCLUSION
Based on the forgoing, it is therefore
ORDERED that 24 Hour Fitness’ Petition to Compel Arbitration is stayed pending the
ruling on the Special Master’s recommendation in the Northern District of California. After such
a ruling 24 Hour shall produce a report to the Court within 10 days summarizing how the ruling
affects 24 Hour’s Petition to Compel Arbitration.
DATED: June 19, 2012.
BY THE COURT:

_____________________________________
TED STEWART
United States District Judge

21

24 Hour Fitness USA, Inc. v. Ramirez, No. 2:12-cv-02038-SAC-KGS, 2012 WL
859725 (D. Kan. Mar. 13, 2012), Docket No. 17.
6