Owen v. Bristol Care, Inc.

• Decision Date: 07 January 2013
• Docket Number: No. 12–1719.,12–1719.
• Citation: 702 F.3d 1050
• Court: U.S. Court of Appeals — Eighth Circuit
• Parties: Sharon OWEN, Plaintiff–Appellee, v. BRISTOL CARE, INC., doing business as Bristol Manor, doing business as Ashbury Heights, doing business as The Essex, Defendant–Appellant. Employee Rights Advocacy Institute for Law & Policy; National Employment Law Project; National Employment Lawyers Association, Amici on Behalf of Appellee.

702 F.3d 1050

Sharon OWEN, Plaintiff–Appellee,

v. BRISTOL CARE, INC., doing business as Bristol Manor, doing business as Ashbury Heights, doing business as The Essex, Defendant–Appellant.Employee Rights Advocacy Institute for Law & Policy; National Employment Law Project; National Employment Lawyers Association, Amici on Behalf of Appellee.

No. 12–1719.

United States Court of Appeals, Eighth Circuit.

Submitted: Nov. 13, 2012.

Filed: Jan. 7, 2013.

Brian N. Woolley, argued, Robert Kent Sellers, Shelley Ericsson, on the brief, Kansas City, MO, for appellant.

Ryan A. Keane, argued and on the brief, John E. Campbell, on the brief, Saint Louis, MO, for appellee.

National Employment Lawyers Association, The Employee Rights Advocacy Institute for Law & Policy, and National Employment Law Project, Douglas Micko, Minneapolis, MN, Rebecca M. Harburg Cappy, San Francisco, CA, on the amicus brief in support of appellees.

Before SMITH, BEAM, and GRUENDER, Circuit Judges.

GRUENDER, Circuit Judge.

Bristol Care, Inc., (“Bristol Care”) appeals the denial of its motion to compel arbitration in a suit initiated by its former employee Sharon Owen asserting claims under the Fair Labor Standards Act (“FLSA”) and seeking class action certification on behalf of other similarly situated current and former employees. Bristol Care contends that the district court incorrectly held that the Mandatory Arbitration Agreement (“MAA”) signed by Owen and Bristol Care was invalid because it contained a class action waiver provision that prohibits Owen from arbitrating claims subject to the agreement on behalf of a class. For the following reasons, we conclude that the MAA is valid and reverse the district court's order denying Bristol Care's motion to compel arbitration.

I. Background

Bristol Care, a company that operates residential care facilities for elderly residents, hired Owen as an administrator at its Cameron, Missouri facility in 2009. At the time of Owen's hiring, Owen and Bristol Care signed the MAA, which provides that Owen and Bristol Care agree “to the resolution by binding arbitration of all claims or controversies for which a federal or state court or other dispute-resolving body otherwise would be authorized to grant relief whether arising out of, relating to or associated with ... any ... legal theory that Employee may have against the Company or that the Company may have against the Employee.” The MAA further provides that it applies to “claims for wages or other compensation,” as well as “claims for violation of any federal ... statute ... including but not limited to ... the Fair Labor Standards Act....” The agreement also contains a waiver that prohibits the parties “from arbitrating claims subject to [the] Agreement as, or on behalf of, a class” (the “class waiver”). The MAA, however, “does not waiv[e the] right to file a complaint with the U.S. Equal Employment Opportunity Commission ... or any other federal, state or local agency designated to investigate complaints of harassment, discrimination, other statutory violations, or similar claims.”

In September 2011, Owen initiated this action against Bristol Care, alleging—on behalf of herself and other similarly situated current and former employees—that the company deliberately misclassified administrators like herself as “exempt” employees for the purposes of state and federal overtime laws, including the FLSA. Owen alleged that Bristol Care required these employees to work more than forty hours per week without overtime compensation. Bristol Care moved to stay district court proceedings and compel arbitration in accordance with the MAA and the Federal Arbitration Act (“FAA”). See9 U.S.C. §§ 3–4. The district court denied Bristol Care's motion, holding that, although Owen's allegations fell within the scope of the agreement, the MAA was nonetheless invalid because of the class waiver. In reaching this conclusion, the district court explained that the Supreme Court's decision in AT & T Mobility LLC v. Concepcion, 563 U.S. ––––, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011), upholding the enforceability of a class waiver in a consumer contract, was not controlling in the employment context. The district court instead relied on the recent National Labor Relations Board (“NLRB”) decision, In re D.R. Horton, Inc., 357 NLRB No. 184, 2012 WL 36274 (Jan. 3, 2012), and a district court decision from the Southern District of New York, Chen–Oster v. Goldman, Sachs & Co., 785 F.Supp.2d 394 (S.D.N.Y.2011), and concluded that class waivers are invalid in FLSA cases because the FLSA provides for the right to bring a class action.

On appeal, Bristol Care contends that neither the language nor legislative history of the FLSA indicates that the class waiver is impermissible, that other courts have found that the FLSA does not prohibit the waiver of class actions in an arbitration agreement, and that allowing class waivers is consistent with pro-arbitration Supreme Court precedent. Bristol Care also argues that the district court erred in relying on D.R. Horton and Chen–Oster.

II. DISCUSSION

This court reviews a determination concerning the arbitrability of a dispute de novo. Faber v. Menard, Inc., 367 F.3d 1048, 1051 (8th Cir.2004). Section 2 of the FAA provides that “[a] written provision in any ... contract ... to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The Supreme Court has stated repeatedly that this provision establishes a “liberal federal policy favoring arbitration agreements.” CompuCredit Corp. v. Greenwood, 565 U.S. ––––, 132 S.Ct. 665, 669, 181 L.Ed.2d 586 (2012) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983)); see also Concepcion, 131 S.Ct. at 1745;Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991).

Section 2 requires courts to enforce arbitration agreements according to their terms. Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). As a result, there must be a “contrary congressional command” for another statute to override the FAA's mandate. CompuCredit, 132 S.Ct. at 669 (quoting Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987)). “If such an intention exists, it will be discoverable in the text of the [statute], its legislative history, or an ‘inherent conflict’ between arbitration and the [statute's] underlying purposes.” Gilmer, 500 U.S. at 26, 111 S.Ct. 1647;see also CompuCredit, 132 S.Ct. at 672 (“When [Congress] has restricted the use of arbitration ... it has done so with clarity.”). The burden is on the party challenging the arbitration agreement to show that Congress intended to preclude a waiver of the judicial forum. Gilmer, 500 U.S. at 26, 111 S.Ct. 1647.

Here, Owen identifies nothing in either the text or legislative history of the FLSA that indicates a congressional intent to bar employees from agreeing to arbitrate FLSA claims individually, nor is there an “inherent conflict” between the FLSA and the FAA. In short, the FLSA contains no “contrary congressional command” as required to override the FAA.

Owen attempts to overcome this obstacle in several ways. First, Owen contends that § 216(b) of the FLSA creates a right to pursue a class action because it identifies “[t]he right ... to bring an action by or on behalf of any employee, and the right of any employee to become a party plaintiff to such any action.” 29 U.S.C. § 216(b) (emphasis added). However, the FLSA also states that “[n]o employee shall be a party plaintiff to any such action unless he gives his consent in writing.” Id. Even assuming Congress intended to create some “right” to class actions, if an employee must affirmatively opt in to any such class action, surely the employee has the power to waive participation in a class action as well. In any event, this provision falls short of the “contrary congressional command” required to override the FAA.

Second, Owen argues that the legislative history indicates a congressional command to override the FAA. In making this argument, Owen points to statements made during the passage of another labor relations statute—the National Labor Relations Act (“NLRA”) in 1935—as evidence that Congress intended to protect workers' rights to engage in concerted action. Owen contends that Congress passed the NLRA “to ‘secur[e] for employees the full right to act collectively’ to ensure that ‘employers and employees should possess equality of bargaining power.’ ” She also argues that in passing the NLRA, Congress intended to build upon the Norris–LaGuardia Act, which was passed three years earlier to “prevent employers from imposing contracts on employees that would require employees to forgo engaging in collective actions.” Owen contends that the passage of that Act amounted to a congressional declaration that it was the “ ‘public policy of the United States' ... to protect workers' rights to engage in concerted activities” and that this declaration came “seven years after the passage of the FAA.” See29 U.S.C. § 102. She also points to language in the Norris–LaGuardia Act expressly repealing any acts or portions of acts that conflict with its protections. See29 U.S.C. § 115. Missing from this analysis, however, is the fact that although the FAA originally was enacted in 1925, it was reenacted in 1947. See Gilmer, 500 U.S. at 24, 111 S.Ct. 1647. This reenactment came twelve years after the NLRA and fifteen years after the passage of the Norris–LaGuardia Act. Further, the FAA's reenactment also occurred nine years after the passage of the FLSA in 1938. The decision to reenact the FAA suggests that Congress intended its arbitration protections to remain intact even in light of...