Pruitt et al v. Act Fast Delivery, Inc. et al

Western District of Texas, txwd-5:2019-cv-00049

ORDER DENYING [22] Motion to Compel Arbitration. Signed by Judge David A. Ezra.

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2 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION SANDRA PRUITT, JASMINE § NO. 5:19-CV-49-DAE HUNTSBERRY, YUVANNDA § WATSON, AYAN NUR, and KAREN § LAWSON, Individually and On Behalf § of All Others Similarly Situated,§ § Plaintiffs, § § vs. § § ACT FAST DELIVERY, INC.; ACT § FAST COURIER OF TEXAS, INC.; § ACT FAST DELIVERY OF § HOUSTON, INC.; ACT FAST OF § COASTAL BEND, INC.; ACT FAST § DELIVERY OF S.A., INC.; ACT FAST § DELIVERY OF TYLER, INC.; ACT § FAST DELIVERY OF TRAVIS § COUNTY, INC.; and MIKE D. § MILLER, § § Defendants. § ________________________________ § ORDER DENYING WITHOUT PREJUDICE TO REFILING MOTION TO COMPEL ARBITRATION The matter before the Court is Defendants Act Fast Delivery, Inc. et. al's (Defendants all collectively, "Act Fast") Motion to Compel Arbitration of the claims of Plaintiffs Sandra Pruitt, Karen Lawson, Ayan Nur, and Jasmine 2 Huntsberry (for this motion, "Plaintiffs").1 (Dkt. # 22.) Pursuant to Local Rule CV-7(h), the Court finds this matter suitable for disposition without a hearing. After careful consideration of the memoranda in support of and in opposition to the motion, the Court, for the reasons that follow, DENIES WITHOUT PREJUDICE TO REFILING the motion to compel arbitration. BACKGROUND On January 17, 2019, Plaintiffs Sandra Pruitt, Jasmine Huntsberry, YuVannda Watson, Ayan Nur, and Karen Lawson, individually and on behalf of all others similarly situated, brought this collective action suit in this Court by filing a complaint against Defendants for violations of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201 et. seq. (Dkt. # 1.) Act Fast is a medical courier service that does business in the territorial jurisdiction of this Court. (Id. at 7.) Act Fast employed Pruitt as a courier from approximately August 2014 to September 2018. (Id.) Act Fast employed, and continues to employ, Huntsberry as a courier from approximately March 2017 to present. (Id. at 8.) Act Fast employed Nur as a dispatcher from approximately January 2015 to July 2017. (Id.) Act Fast employed, and continues to employ, Lawson as an operations manager from approximately February 2012 to present. (Id.) According to Plaintiffs, 1 There are at least five other Plaintiffs in this collective action whose claims Defendants have not moved to compel arbitration. 2 2 during their employment with Act Fast, they were engaged in commerce or the production of goods for commerce. (Id.) Plaintiffs allege that Act Fast paid Plaintiffs and others similarly situated an hourly wage based on their route or job as couriers, but did not pay any overtime compensation at the required rate of time and one-half for all hours worked in excess of forty hours per week. (Dkt. # 1 at 9–10.) Plaintiffs contend that they and the others similarly situated were not exempt from overtime, and thus were denied overtime compensation as required under FLSA. (Id. at 10.) Subsequent to Plaintiffs' filing suit, at least four other named plaintiffs have joined in this action. (See Dkts. ## 5, 6.) On June 7, 2019, Defendants filed a motion to compel arbitration on the basis that the claims of Pruitt, Lawson, Nur, and Huntsberry ("Arbitration Plaintiffs") are subject to mandatory arbitration. (Dkt. # 22.) Plaintiffs filed a response in opposition on July 12, 2019 (Dkt. # 33); Defendants filed a reply on July 19, 2019 (Dkt. # 34). This motion is discussed below. LEGAL STANDARD Under the Federal Arbitration Act ("FAA"), "[a] written provision in. . . a contract to settle by arbitration a controversy thereafter arising out of such contract. . . shall be valid, irrevocable, and enforceable, save upon such grounds exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The 3 2 FAA "expresses a strong national policy favoring arbitration of disputes, and all doubts concerning the arbitrability of claims should be resolved in favor of arbitration." Primerica Life Ins. Co. v. Brown, 304 F.3d 469, 471 (5th Cir. 2002). The Fifth Circuit employs a two-step analysis to determine whether the parties have agreed to arbitrate a dispute. Sherer v. Green Tree Servicing LLC, 548 F.3d 379, 381 (5th Cir. 2008) (citations omitted). First, a court must ask if the parties agreed to arbitrate the dispute. Webb v. Instacorp., Inc., 89 F.3d 252, 258 (5th Cir. 1996). This determination requires consideration of whether a valid agreement to arbitrate exists among the parties and whether the dispute is within the scope of the arbitration agreement. Id. In making this determination, courts should generally apply "ordinary state-law principles that govern the formation of contracts," but must give due regard to the federal policy favoring arbitration and resolve any ambiguities as to the scope of the arbitration clause itself in favor of arbitration. Id. Once a court determines that the parties agreed to arbitrate, the court must assess whether any legal restraints external to the agreement foreclose arbitration of the dispute. OPE Int'l L.P. v. Chet Morrison Contractors, Inc., 258 F.3d 443, 445–46 (5th Cir. 2001). DISCUSSION Defendants move to compel the claims of the Plaintiffs on the basis that they entered into valid arbitration agreements with Act Fast. (Dkt. # 22.) As 4 2 evidence, Defendants have produced the signed arbitration agreements of each of the four Plaintiffs. (Dkt. # 22-1.) Defendants contend that the arbitration agreements expressly provide that they cover all disputes arising from unpaid compensation, including FLSA claims; thus, Defendants argue that the Plaintiffs' claims fall squarely within the plain language of the arbitration agreements and their FLSA claims in this case must be arbitrated. (Dkt. # 22 at 2–3.) Plaintiffs, in response, assert that Defendants' motion must be denied for three different reasons: (1) even if valid arbitration agreements exist, the FAA does not apply to contracts of transportation workers such as themselves; (2) no valid arbitration agreements exists between Plaintiffs and Act Fast; and (3) Plaintiffs' claims do not arise under the arbitration agreements because they have asserted claims under the FLSA and not under their independent contractor agreements. (Dkt. # 33.) A. Whether the FAA Applies to Plaintiffs' Claims Plaintiffs focus their argument on section one of the FAA which contains exemptions from coverage. (Dkt. # 33 at 5.) That section states that the FAA shall not apply "to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. The Supreme Court has construed this section as exempting "from the FAA only contracts of employment of transportation workers." Circuit City Stores v. 5 2 Adams, 532 U.S. 105, 111 (2001). Recently, the Supreme Court has determined that a "contract of employment," as used in section one of the FAA, "referred to agreements to perform work," regardless of whether the relationship was characterized as a master-servant relationship or an independent contractor relationship. New Prime, Inc. v. Oliveira, 586 U.S. ___, 139 S. Ct. 532, 542, 202 L.Ed.2d 536 (2019). Thus, an agreement where the parties agree to provide transportation services on an interstate basis falls under section one of the FAA whether or not the agreement is to provide the services as an employee or as an independent contractor. Id. Relying on the Supreme Court's decision in New Prime, Plaintiffs contend that they are transportation workers who were misclassified as independent contractors and denied overtime wages. (Dkt. # 33 at 5.) Because transportation workers are excluded from the FAA, Plaintiffs maintain that they cannot be compelled to arbitrate their claims under the FAA. (Id.) Act Fast disagrees with Plaintiffs' position, asserting that nowhere have these plaintiffs alleged that they were engaged in foreign or interstate commerce in order to trigger section one's exception. (Dkt. # 34 at 2.) In order to be considered a transportation worker, an employee must actually be employed in the transportation industry, that is, an industry directly involved in the movement of goods. Lenz v. Yellow Transp., Inc., 431 F.3d 348, 6 2 351 (8th Cir. 2005) ("The emphasis [of the § 1 exclusion, therefore,] was on a class of workers in the transportation industry. . .") (citation and quotation marks omitted) (brackets in original); Hill v. Rent–A–Center, Inc., 398 F.3d 1286, 1289– 90 (11th Cir. 2005) ("[I]t is apparent Congress was concerned only with giving the arbitration exemption to 'classes' of transportation workers within the transportation industry."); Tran v. Texan Lincoln Mercury, Inc., Civ Action No. H–07–1815, 2007 WL 2471616 (S.D. Tex. Aug. 29, 2007) ("[A] transportation worker is someone who works in the transportation industry—an industry whose mission it is to move goods."). Still, employment in the transportation industry is not in itself sufficient; the employee's responsibilities within the transportation industry must be closely related to interstate commerce. Lenz, 431 F.3d at 352. However, the employee need not actually transport the goods himself for the exemption to apply. See id. at 351–52; Palcko v. Airborne Express, 372 F.3d 588, 593 (3rd Cir. 2004) (cert. denied); see also Bacashishua v. United States Postal Serv., 859 F.2d 402, 405 (6th Cir. 1988) (a pre-Circuit City opinion holding that a United States Postal Service parcel post distributor, who processed packages that moved interstate, was engaged in interstate commerce for purposes of the FAA). 7 2 In Lenz, the Eighth Circuit set out an eight-factor test in order to determine whether a transportation industry employee is a "transportation worker" under the FAA. Lenz, 431 F.3d at 352. The Lenz court's non-exclusive factors include: 1) whether the employee works in the transportation industry; 2) whether the employee is directly responsible for transporting goods in interstate commerce; 3) whether the employee handles goods that travel interstate; 4) whether the employee supervises employees who are themselves transportation workers; 5) whether like seamen or railroad employees, the employee is within a class of employees for which special arbitration already existed when Congress enacted the FAA; 6) whether the vehicle itself is vital to the commercial enterprise of the employer; 7) whether a strike by the employee would disrupt interstate commerce; and 8) the nexus that exists between the employee's job duties and the vehicle the employee uses in carrying out his duties. Id. At least one district court within the Fifth Circuit has applied the Lenz test. Barker v. Halliburton Co., Civ. Action No. H–07–2677, 2008 WL 1883880, at *1–2 (S.D. Tex. April 25, 2008). Here, on the briefing provided by the parties on the motion to compel arbitration, the Court cannot determine with any certainty whether any of the Plaintiffs are transportation workers who are exempt from the FAA pursuant to section one. The parties have not provided sufficient evidence or otherwise made 8 2 any argument regarding each of the eight Lenz factors.2 For this reason, as discussed below, the Court will order the parties to submit further briefing on this issue should Act Fast choose to refile the motion to compel arbitration. B. TGAA Act Fast also asserts that even if Plaintiffs are exempt from the FAA, they are still subject to the Texas General Arbitration Act ("TGAA"), Texas Civil Practices and Remedies Code § 171.001, et seq., which requires that their claims be compelled to arbitration. (Dkt. # 34 at 3.) "The mere fact that a contract affects interstate commerce, thus triggering the FAA, does not preclude enforcement under the T[G]AA as well." In re D. Wilson Constr. Co., 196 S.W.3d 774, 780 (Tex. 2006); see also Shanks v. Swift Transp. Co. Inc., No. L–07–55, 2008 WL 2513056, at *4 (S.D. Tex. June 19, 2008) ("[E]ven if the FAA is inapplicable, state arbitration law governs."). Indeed, because the arbitration agreements signed by Pruitt (Doc. # 22-1 at 3), Lawson (id. at 6), Nur (id. at 9), and Huntsberry (id. at 12) do not specify whether the FAA or the TGAA governs the Agreements, it appears that both statutes may be applicable.3 See Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 2 The Court notes that both parties' briefing is overall lacking. 3 In this case, the arbitration agreements state only that the arbitration "shall be in accordance with the National rules for the Resolution of Disputes of the American Arbitration Association ("AAA") in effect at the time of hearing." (Dkt. # 22-1.) 9 2 98 n.64 (Tex. 2011) ("The T[G]AA and the FAA may both be applicable to an agreement, absent the parties' choice of one or the other." (citing In re L&L Kempwood Assocs., L.P., 9 S.W.3d 125, 127–28 (Tex. 1999) (per curiam))); see also Davis v. EGL Eagle Global Logistics L.P., 243 F. App'x 39, 44 (5th Cir. 2007); Freudensprung v. Offshore Technical Servs. Inc., 379 F.3d 327, 338 n.7 (5th Cir. 2004). Should Act Fast choose to refile the motion, the Court orders further briefing from the parties on whether the TGAA applies to Plaintiffs' arbitration agreements in light of the fact that the agreements are silent on whether the TGAA applies. Should the Court find the TGAA to be applicable, it is likely that Plaintiffs' claims must be submitted to arbitration. In order to compel arbitration under the TGAA, Act Fast must show that the employees received notice of the binding arbitration agreement, accepted the agreement, and raise claims that fall within the scope of the agreement. In re Dallas Peterbilt, Ltd., L.L.P., 196 S.W.3d 161, 162–63 (Tex. 2006) (citing In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex. 1999) (per curiam)). Here, there appears to be no dispute that Plaintiffs each received and signed a copy of the arbitration agreements. See Pruitt Agreement (Doc. # 22-1 at 3); Lawson Agreement (id. at 6); Nur Agreement (id. at 9); and Huntsberry Agreement (id. at 12). Furthermore, each arbitration agreement states that Act Fast and the employee agree to arbitrate "[a]ny and all claims or 10 2 controversies arising out of or relating to. . . employment, termination thereof or otherwise," including claims "based on tort, contract (express or implied), statute, . . . unpaid compensation of any kind, whether they be based on applicable state law or federal law, [and] the Fair Labor Standards Act. . . . Pruitt Agreement (Doc. # 22-1 at 3); Lawson Agreement (id. at 6); Nur Agreement (id. at 9); and Huntsberry Agreement (id. at 12). Plaintiffs' FLSA claims therefore are within the scope of the arbitration agreements. Despite this, Plaintiffs contend that Act Fast failed to include their actual independent contractor agreements as evidence in consideration of the motion to compel arbitration. (Dkt. # 33 at 6.) According to Plaintiffs, this is important because their independent contractor agreements: (1) do not contain any arbitration provision, and (2) contain a merger clause, which states that the independent contractor agreement "supersedes any other agreements between the parties in force on the date of execution of this agreement." (Id.; Dkt. # 33-1.) For this reason, Plaintiffs maintain that the independent contractor agreements must supersede any signed arbitration agreement. Notably, however, Plaintiffs have failed to attach any of their signed independent contractor agreements as evidence. Instead, Plaintiffs have provided only unsigned independent contractor agreements that do not contain any signature date. Again, should Act Fast choose to refile its motion, the parties must submit any signed and dated independent contractor 11 2 agreements that exist for Plaintiffs. The Court will then consider Plaintiffs' arguments on this issue at that time. CONCLUSION Because the Court finds the parties' briefing on the instant motion lacking, the Court will DENY WITHOUT PREJUDICE TO REFILING Act Fast's Motion to Compel Arbitration of the claims of Plaintiffs Sandra Pruitt, Karen Lawson, Ayan Nur, and Jasmine Huntsberry. (Dkt. # 22.) Should Act Fast choose to refile its motion, it should do so within twenty-one days of the date of this Order, and the parties should address the deficiencies noted above. IT IS SO ORDERED. DATED: San Antonio, Texas, September 12, 2019. _____________________________________ David Alan Ezra Senior United States Distict Judge 12