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

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

REPLY to Response to Motion, filed by Act Fast Delivery, Inc., re [36] Second MOTION to Compel Arbitration filed by Defendant Act Fast Delivery of Houston, Inc., Defendant Act Fast Delivery of Tyler, Inc., Defendant Act Fast of Coastal Bend, Inc., Defendant Act Fast Courier of Texas, Inc., Defendant Act Fast Delivery, Inc., Defendant Act Fast Delivery of Travis County, Inc., Defendant Act Fast Delivery of S.A., Inc.

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1 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION SANDRA PRUITT, JASMINE § HUNTSBERRY, YUVANNDA § WATSON, AYAN NUR, and KAREN § LAWSON, Individually and § On Behalf of All Others Similarly § Situated, § Plaintiffs, § § V. § § C.A. No. 5:19-CV-00049-DAE 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 MILLER; § Defendants § DEFENDANTS' REPLY TO PLAINTIFFS' RESPONSE TO DEFENDANTS' SECOND MOTION TO COMPEL ARBITRATION [RELATES TO DOC. NOS. 1, 22, 35, 36, and 38] TO THE UNITED STATES DISTRICT COURT: COME NOW Defendants 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 Miller (collectively "Defendants") and files this Defendants' Reply to Plaintiffs' Response Defendants' Second Motion to Compel Arbitration, and in support respectfully state: Defendants' Reply to Plaintiffs' Response to Defendants' Second Motion to Compel Arbitration Page 1 of 11 1 I. PRELIMINARY STATEMENT 1. Defendants file this reply to address issues raised in Plaintiffs' Response to Defendants' Second Motion to Compel Arbitration. Specifically, Plaintiffs argue that: (1) the Court should strike the Declaration of John Jackson because he lacks personal knowledge; (2) the Court should strike the Declaration of John Jackson because it was not timely disclosed; (3) the Texas General Arbitration Act ("TGAA") does not apply to agreements for the acquisition by one or more individuals of services in which the total consideration to be furnished by the individual is not more than $50,000; (4) some of the Independent Contract Agreements provide for Ohio law which they contend excludes claims under the FLSA; and (5) Plaintiffs transported goods in interstate commerce and are exempt under the FAA. Each of Plaintiffs' arguments fails. 2. First, the Declaration of John Jackson is made on personal knowledge and in his capacity as corporate representative for the various entity Defendants. His declaration is more than sufficient to establish the facts proffered and Plaintiffs have offered no declarations of their own to rebut the facts he establishes. 3. Second, John Jackson was timely disclosed in Defendants' Rule 26(a)(1) Initial Disclosures (which were served on August 8, 2019) as an individual likely to have information that bears significantly on any claim or defense. Further, the Declaration only came into being on October 2, 2019 and was served on Plaintiffs on October 3, 2019. 4. Third, the exception Plaintiffs' urge with regard to the TGAA does not apply. According to the plain language of the statute, the exception was designed for consumer protection purposes, it applies to individuals who paid money for services. The corporate Defendants' Reply to Plaintiffs' Response to Defendants' Second Motion to Compel Arbitration Page 2 of 11 1 Defendants are not "individuals." The "consumer exception" does not apply to the Arbitration Agreements.1 5. Fourth, the Arbitration Agreements are governed by Texas law. However, even if they are construed together with the Independent Contractor Agreements2 and some of them contain a governing law provision listing "laws of the State of Ohio." Ohio law still mandates arbitration. 6. Fifth, while Plaintiffs suggest that someone might have transported goods in interstate commerce, they provide no evidence to support their contention or even affirmatively allege that they crossed state lines while performing deliveries. II. ARGUMENT AND AUTHORITIES A. The Declaration of John Jackson is made on personal knowledge and in his capacity as corporate representative of Defendants. 7. Plaintiffs object to paragraphs 9 to 13 of the Declaration of John Jackson on the basis that he lacks personal knowledge and contain hearsay. Yet, none of the paragraphs objected to by Plaintiffs contain any hearsay statements. That is, none of the referenced paragraphs contain any statement "the declarant does not make while testifying at the current trial or hearing; and [Defendants] offer in evidence to prove the truth of the matter asserted in the statement." FED. R. EVID. 801(c). The paragraphs simply describe what Plaintiffs, as independent contractors, were hired to do. 8. The Declaration of John Jackson makes it clear that he is making his declaration on facts that are "within [his] personal knowledge," that he is the "General Counsel for 1 Defendants continue to use the term "Arbitration Agreements" as defined is Defendants' Second Motion to Compel Arbitration. Doc. No. 36, p. 5. 2 Defendants continue to use the term "Independent Contractor Agreements" as defined is Defendants' Second Motion to Compel Arbitration. Doc. No. 36, p. 5. Defendants' Reply to Plaintiffs' Response to Defendants' Second Motion to Compel Arbitration Page 3 of 11 1 Defendants," that he is a "corporate representative of Defendants," and that he is "one of the custodians of records of the Defendants." Declaration of John Jackson, ¶ 1 and 2. Plaintiffs take particular issue with John Jackson's statement that "all of Plaintiffs' deliveries were in Texas none of the Plaintiffs crossed state lines while delivering goods for the Defendants." Declaration of John Jackson, ¶ 9. Plaintiffs argue that "unless he rode with them. . . he is not competent to testify about what they did." Doc. No. 38, p. 5. That is simply not true. "[P]ersonal knowledge and competence to testify [of corporate representatives] are reasonably inferred from their positions and the nature of their participation in the matters to which they swore." DIRECTV, Inc. v. Budden, 420 F.3d 521, 530 (5th Cir. 2005). Further, a corporate representative need not "have direct, personal knowledge of each and every fact discussed in her affidavit or her deposition" because, when a corporation offers the testimony of a representative, "the corporation appears vicariously through that agent." Hijeck v. Menlo Logistics, Inc., CIV A 307-CV-0530-G, 2008 WL 465274, at *4 (N.D. Tex. Feb. 21, 2008); citing Resolution Trust Corp. v. Southern Union Co., Inc., 985 F.2d 196, 197 (5th Cir. 1993). 9. As General Counsel for the Defendants John Jackson's personal knowledge can be reasonably inferred from his position and the nature of his duties and involvement in the operations of the Defendants including whether or not Plaintiffs made limited deliveries out of state. Further as corporate representative of the Defendants, John Jackson can testify on behalf of the Defendants. B. Both the identity of John Jackson as a witness with knowledge and the Declaration of John Jackson were timely disclosed. 10. The identity of John Jackson as both the Defendants' general counsel and as someone who had knowledge of the claims and defenses in this case was timely disclosed on August 8, 2019 in Defendants' Rule 26(a)(1) Initial Disclosures. Plaintiffs cannot contend John Defendants' Reply to Plaintiffs' Response to Defendants' Second Motion to Compel Arbitration Page 4 of 11 1 Jackson was not timely disclosed as a witness. Defendants fully complied with Fed. R. Civ. P. 26(a)(1). 11. The Declaration of John Jackson that was attached as Exhibit A to the Defendants' Second Motion to Compel, was executed on October 2, 2019. Prior to October 2, 2019 that declaration did not exist. Defendants cannot produce something that does not exist. After the declaration came to exist Defendants produced it to Plaintiffs the very next day. Defendants fully complied with Fed. R. Civ. P. 26(a)(1). 12. Plaintiffs cite Smith v. Cameron Co., Tex., No. B-05302, 2007 U.S. Dist. LEXIS 31115 (S.D. Tex. Apr. 27, 2007) and claim it stands for the proposition that an affidavit attached in support of a motion, from a previously timely disclosed witness, should be struck because the affidavit itself was not previously produced, even though the affidavit did not exist prior to being drafted in support of the motion. Clearly, Smith does not stand for that proposition at all. In Smith, the Court struck the affidavit of a witness who had not been disclosed or identified "as a person with any knowledge relevant to the instant action." Id. at p. 5. The first time the defendants in that case learned of the identity of the witness was in a response to a motion for summary judgment. Id. In Smith it was not the failure to produce the affidavit prior to attaching it to the response; it was the failure to previously identify a known witness that resulted in the sanction of striking the evidence. Id. The instant case is different. John Jackson was timely disclosed in Defendants' Rule 26(a)(1) Initial Disclosures. His declaration was provided a day after it was signed. The rules do not require that affidavits and declarations not in existence at the time of initial disclosures be produced. The Declaration of John Jackson should not be struck. Defendants' Reply to Plaintiffs' Response to Defendants' Second Motion to Compel Arbitration Page 5 of 11 1 C. The "consumer exception" in the TGAA does not apply to this case. 13. Plaintiffs argue that Defendants cannot compel arbitration of Plaintiffs' claims under the TGAA because the TGAA does not apply to "an agreement for the acquisition by one or more individuals of property, services, money, or credit in which the total consideration to be furnished by the individual is not more than $50,000." TEX. CIV. PRAC. & REM. CODE ANN. § 171.002. However, the arbitration agreements do not fall under this exception for two reasons: (1) the corporate entity defendants that signed the arbitration agreements are not "individuals;" and (2) the agreements are not for the acquisition of services in which the total consideration is "not more than $50,000." Id. 14. Section 171.002 is often referred to as the "consumer exception." In re Educ. Mgmt. Corp., Inc., 14 S.W.3d 418, 421 (Tex. App.—Houston [14th Dist.] 2000, no pet.). That is, it excludes certain smaller transactions involving consumers. Because Plaintiffs are not in the role of individual consumers or as contemplated by the TGAA, the consumer exception does not apply to them. 15. In U.S. ex rel. Wilson v. Kellogg Brown & Root, Inc., former employees of a civilian defense contractor sued the contractor under multiple theories including employment related claims. U.S. ex rel. Wilson 525 F.3d 370, 373 (4th Cir. 2008). The employees asserted the consumer exception of the TGAA to contend that their employment-related claims were not arbitrable. Id. at 382. In analyzing the issue the Wilson court noted that "the exception only applies when one or more individuals acquire property, services, money, or credit, the scope of the term individual is critical." Id. (internal citations omitted) (emphasis in original). The parties in Wilson both agreed that under Texas law, "the term "individual" encompasses only human beings and does not include corporations." Id. The Wilson court agreed as well and cited both Defendants' Reply to Plaintiffs' Response to Defendants' Second Motion to Compel Arbitration Page 6 of 11 1 statutory and case law in support. Id. The Wilson court went on to hold that because the employer defendant "was not an individual under the statute, § 171.002(a)(2) is not applicable to [the employee plaintiff's] contracts." Id. 16. Less than a year later a Texas court of appeals followed the Wilson result to the same effect. In Glob. Evangelism Educ. Ministries, Inc. v. Caddell, 04-08-00686-CV, 2009 WL 398255 (Tex. App.—San Antonio Feb. 18, 2009, no pet.) a teacher sued his former employer for wrongful discharge and breach of his employment contract. The former employer moved to compel arbitration and the teacher objected. Id. at 1. Specifically, the teacher argued "that the [TGAA] did not apply because § 171.002 rendered the arbitration provision unenforceable. Id. The San Antonio Court of Appeals was not persuaded and held that "[t]he problem with [the teacher's] interpretation is that he is not the "individual" furnishing the consideration. [The employer] furnished the consideration consisting of salary and benefits." Id. at 2. 17. In the instant case the Plaintiffs fail to explain how they would apply the consumer exception to their case. They provide neither analysis of the statute nor precedent, but merely point to the consumer exception and posit that it applies. As shown, precedent from both Federal and Texas courts requires the opposite result. D. Ohio Law mandates arbitration. 18. Plaintiffs point out in their response that some of the Independent Contractor Agreements (not the Arbitration Agreements) contain a governing law provision that states it is governed by the "laws of the State of Ohio." Yet, even if the few Independent Contractor Agreements that contain the Ohio governing law provision are construed together with the Arbitration Agreements, Ohio law nevertheless mandates arbitration. Defendants' Reply to Plaintiffs' Response to Defendants' Second Motion to Compel Arbitration Page 7 of 11 1 19. Ohio law, unlike Texas law does not have a "consumer exception." The only exception for arbitration controversies are those involving the title to or possession of real estate. OHIO REV. CODE ANN. § 2711.01. Like Texas, Ohio recognizes a "presumption favoring arbitration." Taylor Bldg. Corp. of Am. v. Benfield, 884 N.E.2d 12, 19 (Ohio 2008). A contract, such as an arbitration agreement, that is clear and unambiguous, requires no real interpretation or construction and will be given the effect called for by the plain language of the contract. Locum Med. Group, L.L.C. v. VJC Med., L.L.C., 2015-Ohio-3037, ¶ 11. In the instant case, the Arbitration Agreements provide they cover "all disputes. . . based on. . . unpaid compensation of any kind. . . including. . . the Fair Labor Standards Act." See Arbitration Agreements, Ex. A-1 through A-10, ¶ 2 (emphasis added). Whether or not Ohio law applies to any of the Arbitration Agreements, the result is the same. The Plaintiffs' claims should go to arbitration. 20. For their part, Plaintiffs point to the Locum case and contend it requires this Court ignore the Arbitration Agreements. But that is not what Locum stands for. Locum involved two contracts, one that pertained to fee sharing and another that pertained to expenses. The expenses contract had an arbitration provision. The fee sharing contract did not. The dispute involved the fee sharing contract which did not require arbitration. The Locum court held that because the dispute involved only the fee sharing contract which did not require arbitration and the dispute did not involve the expenses contract which did have an arbitration clause, that arbitration was not required. The instant case is quite different. The object of the Arbitration Agreements was arbitration itself, not some other good or service foreign to the dispute. Indeed, the Arbitrations Agreements are central to this dispute since its entire object was to require arbitration of dispute just like those at bar—disputes under the FLSA. Plaintiffs reliance on Locum is misplaced. Defendants' Reply to Plaintiffs' Response to Defendants' Second Motion to Compel Arbitration Page 8 of 11 1 21. In fact, the Sixth Circuit has recently held the exact opposite. That is, "clauses in employment agreements that compel arbitration of FLSA and [Ohio Minimum Wage Fair Standards Act ("OMWFSA")] claims should be upheld, and that individual arbitration of OMFWSA claims could be compelled." Mason v. Synchrony Bank, 3:17-CV-314, 2018 WL 527981, at *3 (S.D. Ohio Jan. 22, 2018); citing Huffman v. Hilltop Cos., 747 F.3d 391, 398-99 (6th Cir. 2014). 22. Even if some of the Independent Contractor Agreements provide that they are governed by the laws of the State of Ohio, the Arbitration Agreements should be enforced. E. Plaintiffs demand Defendants produce documents which they have never requested, which Defendants have never refused to produce, and concerning facts Plaintiffs could establish by their own declaration. 23. In support of their argument that Plaintiffs have made deliveries in interstate commerce and are therefore excluded from the FAA, Plaintiffs posit the existence of documents they allege might prove or disprove that Plaintiffs have travelled across state lines, claim Defendants have withheld them, and demand this Court order they be produced. Doc. No. 38, p. 10. However, Defendants never even bother to allege, much less to actually offer any evidence that they actually crossed state lines. Left with nothing of substance to add, Plaintiffs have attempted to misconstrue the Independent Contractor Agreements to suggest that Defendants have withheld evidence. This is not the case. Plaintiffs have never previously requested these documents in discovery. Defendants have never refused to produce these alleged documents. Nor are these alleged documents essential to the Plaintiffs at this stage. Importantly, presuming solely for the sake of argument, Plaintiffs could have truthfully contended they crossed state lines. They did not do so. In fact, Plaintiffs have not submitted any evidence as part of their Defendants' Reply to Plaintiffs' Response to Defendants' Second Motion to Compel Arbitration Page 9 of 11 1 response. The only evidence before the Court is that Plaintiffs did not cross state lines. Plaintiffs' argument from silence is a red herring. IV. CONCLUSION 24. Plaintiffs signed valid binding Arbitration Agreements which cover "all disputes. . . based on. . . unpaid compensation of any kind. . . including. . . the Fair Labor Standards Act." See Arbitration Agreements, Ex. A-1 through A-10, ¶ 2. Plaintiffs never rebut this simple fact. The Declaration of John Jackson is sufficient to overcome Plaintiffs' objections as to hearsay and lack of personal knowledge. Further, John Jackson was timely disclosed as a witness. The TGAA's "consumer exception" does not apply. The presence of an Ohio choice of law in the Independent Contractor Agreements does not affect arbitrability. And finally, Plaintiffs have failed to adduce any evidence in support of their arguments. WHEREFORE, Defendants 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 Miller respectfully request that the Court grant this Motion, dismiss the pending litigation, compel Plaintiffs Sandra Pruitt, Karen Lawson, Ayan Nur, Jasmine Huntsberry, Charmane Nash, Fernando Cabrera, Sheila Chew, Keith Green, Denetria Penfield, and Yuvannda Watson's claims to arbitration, and award Defendants any further relief to which they are justly entitled. Defendants' Reply to Plaintiffs' Response to Defendants' Second Motion to Compel Arbitration Page 10 of 11 1 Respectfully submitted, By: /s/ Joseph F. Colvin, Jr. Joseph F. Colvin, Jr. TBN: 24072777 Hughes Watters Askanase, L.L.P. Total Plaza 1201 Louisiana, 28th Floor Houston, Texas 77002 Phone:(713) 759-0818 Fax: (713) 759-6834 jcolvin@hwa.com ATTORNEY-IN-CHARGE FOR DEFENDANTS CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of Defendants' Reply to Plaintiffs' Response to Defendants' Second Motion to Compel Arbitration was served on the following counsel of record via the Court's ECF Filing System on the 24th day of October 2019: Melissa Moore melissa@mooreandassociates.net Curt Christopher Hesse curt@mooreandassociates.net Bridget Dale Davidson bridget@mooreandassociates.net Moore & Associates Lyric Center 440 Louisiana, Ste. 675 Houston, Texas 77002 By: /s/ Joseph F. Colvin, Jr. Joseph F. Colvin, Jr. Defendants' Reply to Plaintiffs' Response to Defendants' Second Motion to Compel Arbitration Page 11 of 11