Adkins v. Labor Ready, Inc.

Decision Date30 August 2002
Docket NumberNo. 01-2304.,01-2304.
Citation303 F.3d 496
PartiesCurtis M. ADKINS, Plaintiff-Appellant, and Lee Ayers; Angelo Bailey; Daniel Ballengee; Bobby Belcher; Lawrence Bentz; Larnie Boddy, Jr.; John Burgess; Eric Conley; Jan Courts; Cheryl Davis; Glenn Davis; Phillip Davis; Michael N. Dishner, Sr.; James Donaldson; Alexander Doran; Bruce Duling; Blake Friend; Harry Gaynor; Christopher Greene; James Hairston; Gail Harper; Edward Harvey; Floyd D. Hatfield, Sr.; Leland L. Holman; Shaun Jeffries; Eric Justice; James Justice; Craig Kutzner; Linda Kutzner; Joseph Legg; Freddie Leonard; Thomas Levandowski; Timothy Lillard; Farris Mallo; Joel Marin; Dontae Mason; Rodman L. Matthews; John McDaniel; Valerie Mcgill; Jason Means; Dwight Neal Mosley; George Pappas; Donna Pauley; Danny Peck; Brian Pence; Asa Perpall; Gary Pullen; Timonthy Ramsey; Larry Richards; Angela Renee Roton; Norman G. Roy, III; Roger Smith; Erthel Smoot; Rufus Spillman; Andrew Strum; Ronald Teet; Kenneth Terrell; Pamela Thaxton; Gordon Thomas; Craig Tolley; Chad Watson; William Wilson; Ronnie S. Zornes; Tina Roberts Zornes, Opt-in Plaintiffs-Appellants, v. LABOR READY, INCORPORATED; Labor Ready Mid-Atlantic, Incorporated, Defendants-Appellees.
CourtU.S. Court of Appeals — Fourth Circuit

Charleston, West Virginia, for Appellants. Carl H. Trieshmann, Schnader, Harrison, Segal & Lewis, L.L.P., Washington, D.C., for Appellees.

ON BRIEF:

Stuart Calwell, LAW OFFICES OF STUART CALWELL, P.L.L.C., Charleston, West Virginia, for Appellants.

Before WILKINSON, Chief Judge, WILKINS, Circuit Judge, and GOODWIN, United States District Judge for the Southern District of West Virginia, sitting by designation.

Affirmed by published opinion. Chief Judge WILKINSON wrote the opinion, in which Judge WILKINS and Judge GOODWIN joined.

OPINION

WILKINSON, Chief Judge.

Curtis Adkins filed suit against Labor Ready, Inc. and Labor Ready Mid Atlantic, Inc. (collectively "Labor Ready") alleging violations of federal and state labor laws. Labor Ready responded with a motion to compel arbitration based on an arbitration agreement signed by Adkins. The district court granted the motion, Adkins v. Labor Ready, Inc., 185 F.Supp.2d 628 (S.D.W.Va.2001), and dismissed the case. Because the arbitration agreement is enforceable and all of Adkins' claims are arbitrable, we affirm.

I.

Labor Ready is a temporary employment agency that provides manual day labor to companies throughout the United States. It has hundreds of dispatch offices, all of which operate under a strictly regimented "Work Today, Paid Today" employment procedure. Temporary employees report to work at the Labor Ready office before the start of the workday, where they wait on the premises until jobs are assigned to them. They receive work tickets at the home office and then travel to a Labor Ready customer's job site. At the end of each workday, the customer signs the employees' work tickets, whereupon the employees return to Labor Ready to receive immediate payment. Employees can choose payment either by check drawn upon a non-local bank or by cash. For cash payments, a fee of between one and two dollars is deducted.

Adkins alleges that Labor Ready's dispatch and payroll procedures violate the federal Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., West Virginia's Minimum Wage and Maximum Hours Standards for Employees, W. Va. Code § 21-5C-1 et seq., and West Virginia's Wage Payment and Collection Act, W. Va.Code § 21-5-1 et seq. He brought this suit as a proposed FLSA class action, filing approximately sixty-three consent forms from current and former Labor Ready employees wishing to join the action as plaintiffs.

Adkins contends that Labor Ready employees were statutorily entitled to payment for waiting time at Labor Ready's dispatch office, travel time between that office and the assigned workplace, and time spent undergoing required training. Further, he claims that if this amount of time was added to each employee's workweek, many employees would be entitled to overtime pay. He also alleges that Labor Ready employees were entitled to compensation for the cost of commuting to and from job sites at the prevailing rate of $.35 per mile. Additionally, he asserts that Labor Ready's means of payment, involving a deduction for cash payment, was itself contrary to law.

Labor Ready filed a motion to compel arbitration and stay proceedings based on an arbitration agreement signed by Adkins and every other Labor Ready employee. This agreement, contained in Labor Ready's Policy Regarding Dispatch Procedures Employment and Arbitration ("the Policy"), must be signed by all potential employees as part of the job application before they may join Labor Ready's pool of temporary workers. The Policy is contained within an enclosed box on the employment application. It provides in pertinent part:

I understand that my employment with LABOR READY, INC. is on a day-to-day basis. That is, at the end of the work day, I will be deemed to have quit unless and until I request and receive a work assignment at a later date.

I agree that any disputes arising out of my employment, including any claims of discrimination, harassment or wrongful termination that I believe I have against Labor Ready and all other employment related issues (excluding only claims arising under the National Labor Relations act [sic] or otherwise within the jurisdiction of the National Labor Relations Board) will be resolved by arbitration as my sole remedy. The arbitration shall be conducted by the American Arbitration Association under its Commercial Arbitration Rules and the decision of the arbitrator shall be final and binding. I understand that Labor Ready also agrees to arbitrate in the same manner any claims which the company believes it has against me.

I HAVE READ AND AGREE TO THE ABOVE STATEMENTS.

Relying on the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16, Labor Ready argues that the arbitration agreement was valid, covered Adkins' claims, and should be enforced.

The district court agreed and ordered the parties to submit Adkins' claims to arbitration in accordance with the terms of the arbitration agreement. The court then dismissed the action on the ground that all of the issues presented in the suit were arbitrable. See Choice Hotels Int'l v. BSR Tropicana Resort, 252 F.3d 707, 709-10 (4th Cir.2001). Adkins appeals.

II.

The FAA reflects "a liberal federal policy favoring arbitration agreements." 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). Underlying this policy is Congress's view that arbitration constitutes a more efficient dispute resolution process than litigation. Hightower v. GMRI, Inc., 272 F.3d 239, 241 (4th Cir.2001). Accordingly, "due regard must be given to the federal policy favoring arbitration, and ambiguities as to the scope of the arbitration clause itself resolved in favor of arbitration." Volt Info. Sciences, Inc. v. Bd. of Tr. of Leland Stanford Jr. Univ., 489 U.S. 468, 475-76, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989).

The FAA requires a court to stay "any suit or proceeding" pending arbitration of "any issue referable to arbitration under an agreement in writing for such arbitration." 9 U.S.C. § 3. This stay-of-litigation provision is mandatory. A district court therefore has no choice but to grant a motion to compel arbitration where a valid arbitration agreement exists and the issues in a case fall within its purview. United States v. Bankers Ins. Co., 245 F.3d 315, 319 (4th Cir.2001).

Thus mindful of the "clear federal directive in support of arbitration," Hightower, 272 F.3d at 242, we proceed to the analysis of the district court's order compelling arbitration.

III.

In the Fourth Circuit, a litigant can compel arbitration under the FAA if he can demonstrate "(1) the existence of a dispute between the parties, (2) a written agreement that includes an arbitration provision which purports to cover the dispute, (3) the relationship of the transaction, which is evidenced by the agreement, to interstate or foreign commerce, and (4) the failure, neglect or refusal of the defendant to arbitrate the dispute." Whiteside v. Teltech Corp., 940 F.2d 99, 102 (4th Cir.1991). Adkins contests the second element, denying the existence of a binding contract to arbitrate this dispute.

It is clear that "even though arbitration has a favored place, there still must be an underlying agreement between the parties to arbitrate." Arrants v. Buck, 130 F.3d 636, 640 (4th Cir.1997). Whether a party agreed to arbitrate a particular dispute is a question of state law governing contract formation. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). We turn initially, therefore, to West Virginia contract law to determine whether the employment application mandates arbitration of Adkins' claims as a contractual matter. We review the trial court's decision on this issue de novo. See Arnold v. United Cos. Lending Corp., 204 W.Va. 229, 511 S.E.2d 854, 860-61 (1998).

A.

Adkins first argues that there was no exchange of consideration to support the formation of a contract based on the employment application. By its terms, however, the arbitration clause requires both Adkins and Labor Ready to arbitrate any employment-related claims either might have. Because "no consideration [is required] above and beyond the agreement to be bound by the arbitration process" for any claims brought by the employee, Johnson v. Circuit City Stores, 148 F.3d 373, 378 (4th Cir.1998), Labor Ready's promise to arbitrate its own claims is a fortiori adequate consideration for this agreement.

Adkins argues that this promise was "illusory" but advances no convincing reasons to support this assertion. His contention that Labor Ready has no reciprocal rights...

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