Bailey v. Ameriquest Mortg. Co.

Decision Date14 October 2003
Docket NumberNo. 02-1444.,02-1444.
Citation346 F.3d 821
PartiesHalver BAILEY, et al., Plaintiffs — Appellees, v. AMERIQUEST MORTGAGE COMPANY, Defendant — Appellant.
CourtU.S. Court of Appeals — Eighth Circuit

Robert R. Reinhart, argued, Minneapolis, MN (Arthur Chinski, Elizabeth Murphy and Ruth L. Seroussi, Los Angeles, CA, on the brief), for appellant.

Paul J. Lukas, argued, Minneapolis, MN (Donald H. Nichols, on the brief), for appellee.

Before WOLLMAN, FAGG, and LOKEN,* Circuit Judges.

LOKEN, Chief Judge.

This is an action under the Fair Labor Standards Act, 29 U.S.C. §§ 201-219, by present and former account executives at Ameriquest Mortgage Company ("Ameriquest"), who allege that they often work more than forty hours per week without being paid overtime compensation the FLSA requires. Ameriquest moved to compel arbitration pursuant to the standard-form Mutual Agreement to Arbitrate Claims signed by Ameriquest and each account executive (the "Arbitration Agreement"). The district court denied the motion. Relying upon decisions from other circuits, the court concluded that the Arbitration Agreement is unenforceable because certain of its terms are inconsistent with the account executives' procedural and remedial rights under the FLSA.1 In so ruling, the court ignored the provision in the Arbitration Agreement giving the arbitrator "exclusive authority to resolve" disputes over the validity of any part of the agreement. The court also ignored controlling decisions of this court which have declined to follow the decisions from other circuits on which the district court relied. See Arkcom Digital Corp. v. Xerox Corp., 289 F.3d 536, 538-39 (8th Cir.2002).

Ameriquest appeals the order denying its motion to compel arbitration. Though the order is interlocutory, we have jurisdiction under the Federal Arbitration Act (FAA) to review it. See 9 U.S.C. § 16(a)(1)(B). The scope of our review is narrow; we determine only "whether there is a valid agreement to arbitrate and whether the specific dispute at issue falls within the substantive scope of that agreement." Larry's United Super, Inc. v. Werries, 253 F.3d 1083, 1085 (8th Cir. 2001). We reverse.

The Arbitration Agreement clearly encompasses the FLSA claims at issue, for the agreement broadly applies to all account executive claims, whether contractual or statutory, "for wages or other compensation due." The Supreme Court has repeatedly held that contracts to arbitrate federal statutory claims are enforceable unless "Congress has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue." Green Tree Fin. Corp. v. Randolph, 531 U.S. 79, 90, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000). That exception is not an issue here. The Court upheld the arbitrability of federal age discrimination claims in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991), and the age discrimination statute there at issue had borrowed its remedial provisions from the previously enacted FLSA. See 29 U.S.C. § 626(b).

The FAA provides that arbitration agreements are enforceable "save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. Based upon that § 2 proviso, the Supreme Court has noted an exception to the general rule that agreements to arbitrate federal statutory claims are enforceable:

Of course, courts should remain attuned to well-supported claims that the agreement to arbitrate resulted from the sort of fraud or overwhelming economic power that would provide grounds for the revocation of any contract.

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 627, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (quotation omitted), followed in Gilmer, 500 U.S. at 33, 111 S.Ct. 1647, and in Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987). In this case, though plaintiffs complain that the Arbitration Agreement was presented to account executives on a take-it-or-leave-it basis, there is no evidence of "fraud or overwhelming economic power." The agreement contains an express acknowledgment that the account executive has discussed its terms with an attorney "to the extent I wish to do so."2

Rather than invoke this narrow exception that the Supreme Court has recognized but never applied, the district court applied a far broader exception to arbitrability, declaring invalid and unenforceable an agreement to arbitrate that applies to a wide variety of claims because some of its procedural terms and remedial limitations appear to be facially inconsistent with the FLSA statutory claims being asserted by the account executives. In our view, the court's analysis reflects an outmoded judicial hostility to arbitration that the Supreme Court has consistently rejected in construing the FAA. The court's decision is contrary to controlling decisions of the Supreme Court and this court for two distinct reasons.

First, while a party does not forgo substantive statutory rights by agreeing to arbitrate statutory claims, see Gilmer, 500 U.S. at 26, 111 S.Ct. 1647, the Court has evidenced its confidence that arbitrators are perfectly capable of protecting statutory rights when the parties have conferred the authority to decide statutory claims. In PacifiCare Health Sys., Inc. v. Book, ___ U.S. ___, 123 S.Ct. 1531, 1536, 155 L.Ed.2d 578 (2003), for example, where plaintiffs alleged that the limited remedies in the agreement to arbitrate were inconsistent with their federal statutory rights, the Court held that it was proper to compel arbitration because "we do not know how the arbitrator will construe the remedial limitations." Similarly, the Court has held that procedural questions "which grow out of the dispute and bear on its final disposition"...

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  • Ciago v. Ameriquest Mortgage Co.
    • United States
    • U.S. District Court — Southern District of New York
    • 15 Diciembre 2003 a condition of employment, or continued employment, also is insufficient to invalidate the provision. Bailey v. Ameriquest Mortgage Co., 346 F.3d 821, 823 (8th Cir.2003) (holding that arbitration agreement identical to the one used here was not unconscionable merely because it was offere......
  • Marzano v. Proficio Mortg. Ventures, LLC
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    • U.S. District Court — Northern District of Illinois
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    ...even if those rights are in conflict with contractual limitations in the agreement that would otherwise apply.” Bailey v. Ameriquest Mortg. Co., 346 F.3d 821, 824 (8th Cir.2003) (holding that the arbitration agreement applied to FLSA claims even though it limited damages and included a cost......
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    • U.S. Court of Appeals — Eighth Circuit
    • 15 Julio 2014
  • Giddings v. Media Lodge, Inc.
    • United States
    • U.S. District Court — District of South Dakota
    • 13 Marzo 2018
    ...has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue.’ " Bailey v. Ameriquest Mortg. Co., 346 F.3d 821, 822–23 (8th Cir. 2003) (quoting Green Tree Fin. Corp., 531 U.S. at 90, 121 S.Ct. 513 ). Such congressional intent "will be discoverable in ......
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1 books & journal articles
  • William B. Gould Iv, Kissing Cousins?: the Federal Arbitration Act and Modern Labor Arbitration
    • United States
    • Emory University School of Law Emory Law Journal No. 55-4, 2006
    • Invalid date
    ...those rights are in conflict with contractual limitations in the agreement that would otherwise apply." Bailey v. Ameriquest Mortgage Co., 346 F.3d 821, 824 (8th Cir. 2003); accord Faber v. Menard, Inc., 367 F.3d 1048, 1052 (8th Cir. 2004). 314 "Even though a party is found to have violated......

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