Becker v. Delek US Energy, Inc.

• Decision Date: 08 October 2020
• Docket Number: Case No. 3:20-cv-00285
• Citation: 493 F.Supp.3d 644
• Court: U.S. District Court — Middle District of Tennessee
• Parties: Michael J. BECKER, Individually and for Others Similarly Situated, Plaintiff, v. DELEK US ENERGY, INC., Defendant, and Cypress Environmental Management–TIR, LLC, and Kestrel Field Services, Inc., Defendant-Intervenors.

493 F.Supp.3d 644

Michael J. BECKER, Individually and for Others Similarly Situated, Plaintiff,

v. DELEK US ENERGY, INC., Defendant,andCypress Environmental Management–TIR, LLC, and Kestrel Field Services, Inc., Defendant-Intervenors.

Case No. 3:20-cv-00285

United States District Court, M.D. Tennessee, Nashville Division.

Filed October 8, 2020

Andrew W. Dunlap, Michael A. Josephson, William Liles, Josephson Dunlap, LLP, Richard J. Burch, Bruckner Burch PLLC, Houston, TX, Charles P. Yezbak, III, Yezbak Law Offices, Nashville, TN, for Plaintiff.

Bryan E. Bowdler, Robert P. Lombardi, Samuel Zurik, III, The Kullman Firm, P.L.C., New Orleans, LA, Misty L. Foy, Delek US Holdings, Inc., Brentwood, TN, for Defendant Delek US Energy, Inc.

Christopher W. Cardwell, William C. Scales, Jr., Gullett, Sanford, Robinson & Martin PLLC, Nashville, TN, Rachel Cowen, McDermott Will & Emery LLP, Chicago, IL, for Defendant-Intervenor Cypress Environmental Management-TIR, LLC.

Gregory Scott Fiddler, Jaclyn C. Staple, Jackson Walker LLP, Houston, TX, Robert Earl Boston, Waller, Lansden, Dortch & Davis, LLP, Nashville, TN, for Defendant-Intervenor Kestrel Field Services, Inc.

MEMORANDUM

ALETA A. TRAUGER, United States District Judge

Plaintiff Michael Becker has filed a collective-action Complaint asserting claims to recover unpaid overtime wages and other damages from defendant Delek US Energy, Inc. ("Delek") under the Fair Labor Standards Act ("FLSA"). Becker brings the case on behalf of himself and "other similarly situated workers" who were employed by Delek. Shortly after the Complaint was filed, Freddy Rojas joined the action as an opt-in plaintiff. (See Doc. No. 7-1.)

Now before the court are the following motions: (1) Motion to Transfer, or Alternatively, Compel Arbitration (Doc. No. 60) filed by intervenor Cypress Environmental Management–TIR, LLC ("Cypress") addressed specifically to the claims brought by named plaintiff Michael Becker; (2) Motion to Compel Arbitration and Stay Proceedings (Doc. No. 84), filed by intervenor Kestrel Field Services, Inc. ("Kestrel"), which addresses the claims brought by Rojas; and (3) Delek's Motion to Compel Arbitration of Claims of Michael Becker and Freddy Rojas (Doc. No. 69).¹ For the reasons set forth herein, all three motions will be denied.

I. PROCEDURAL BACKGROUND

In the collective action Complaint, Becker describes Delek as a "downstream energy company with refineries and retail stores throughout the south and southwest United States." (Doc. No. 1 ¶ 2.) He alleges that Delek "employs inspector personnel to carry out its work" (id. ) and that he was one such employee. He expressly claims that he and others were employed by Delek and that Delek's employment and pay practices violated the FLSA. Becker filed a Motion for Conditional Certification and Court-Authorized Notice to class members in June 2020. (Doc. No. 26.)

Shortly thereafter, although the Complaint does not reference any other putative employer or rely on a joint-employer theory of liability, Cypress and Kestrel filed Motions to Intervene, asserting that they were the actual employers of Becker and Rojas, respectively, during the relevant time periods and that they alone determined the plaintiffs’ status as overtime exempt under the FLSA, paid them a daily rate, and assigned them to work for their customer, Delek. The intervenors also insist that Becker's and Rojas’ claims arise out of their employment relationships with Cypress and Kestrel; that the plaintiffs signed arbitration agreements, which included collective action waivers, with the intervenors; and, therefore, that they should be compelled to individually arbitrate any employment-related claims against Delek as well, even though Delek is not a signatory to either arbitration agreement. Copies of the arbitration agreements between Cypress and Becker and between Kestrel and Rojas were filed as exhibits to the Motions to Intervene. Also submitted as exhibits were the intervenors’ proposed Motions to Compel Arbitration. Delek, at the same time, filed a Motion to Stay (Doc. No. 39),² asking the court to stay discovery and to defer consideration of class certification until after resolution of the Motions to Intervene and Motions to Compel Arbitration.

The court granted Delek's Motion to Stay (Doc. No. 46) and the Motions to Intervene (Doc. No. 59), specifically finding that both intervenors made the requisite minimal showing of the relevant factors for intervention as of right under Rule 24(a) of the Federal Rules of Civil Procedure : that their applications were timely, that they had substantial legal interests implicated by the case that might be impaired in the absence of intervention, and that Delek's interests were sufficiently different from theirs that Delek might not adequately represent their interests. (See Memorandum, Doc. No. 58.) The court also ordered that the proposed Motions to Compel Arbitration and supporting documents be docketed separately, and it set a briefing schedule for those motions.³ Becker and Rojas filed separate Responses (Doc. Nos. 66, 67); Cypress and Kestrel filed separate Reply briefs (Doc. Nos. 72, 73). Meanwhile, Delek filed its own Motion to Compel Arbitration and supporting Memorandum (Doc. Nos. 69, 70), to which Becker responded in opposition (Doc. No. 74⁴ ). Delek filed a Reply. (Doc. No. 79.)

II. LEGAL STANDARDS

The Federal Arbitration Act ("FAA") allows parties to a "contract evidencing a transaction involving commerce" to agree that certain disputes between them arising from such "contract or transaction" will be decided by an arbitrator rather than by a court. 9 U.S.C. § 2. Described by the Supreme Court as the "primary substantive provision" of the FAA, 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), Section 2 of the FAA further provides that any such agreement to arbitrate "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. This section embodies "a liberal federal policy favoring arbitration." AT & T Mobility LLC v. Concepcion , 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (quoting Moses H. Cone , 460 U.S. at 24, 103 S.Ct. 927 ). The principal purpose of the FAA is to ensure the enforcement of private arbitration agreements according to their terms; the broader purpose of allowing parties to submit grievances to arbitration is to facilitate "efficient, streamlined procedures tailored to the type of dispute" at issue. Id. at 344, 131 S.Ct. 1740 (citations omitted); see also Stout v. J.D. Byrider , 228 F.3d 709, 714 (6th Cir. 2000) ("The FAA was designed to override judicial reluctance to enforce arbitration agreements, to relieve court congestion, and to provide parties with a speedier and less costly alternative to litigation."). At the same time, it is well established that arbitration is simply a "matter of contract[,] and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." AT & T Techs. v. Commc'ns Workers of Am. , 475 U.S. 643, 648, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) ; see also GGNSC Louisville Hillcreek, LLC v. Estate of Bramer , 932 F.3d 480, 485 (6th Cir. 2019) ("An agreement to arbitrate is fundamentally a matter of consent.").

The FAA provides that a party aggrieved by another party's failure or refusal to arbitrate in accordance with a written arbitration contract may petition the court for an order directing the parties to proceed in arbitration in accordance with the terms of an arbitration agreement. 9 U.S.C. § 4. The court reviewing the petition generally must "determine whether the parties agreed to arbitrate the dispute at issue." Stout , 228 F.3d at 714. "[A]ny ambiguities in the contract or doubts as to the parties’ intentions should be resolved in favor of arbitration." Id. In evaluating motions to compel arbitration, "courts treat the facts as they would in ruling on a summary judgment motion, construing all facts and reasonable inferences that can be drawn therefrom in a light most favorable to the non-moving party." Jones v. U-Haul Co. of Mass. & Ohio Inc. , 16 F. Supp. 3d 922, 930 (S.D. Ohio 2014) ; see also Great Earth Cos. v. Simons , 288 F.3d 878, 889 (6th Cir. 2002) ("In order to show that the validity of the agreement is ‘in issue,’ the party opposing arbitration must show a genuine issue of material fact as to the validity of the agreement to arbitrate. The required showing mirrors that required to withstand summary judgment in a civil suit." (internal citation omitted)).

A court considering whether to enforce an arbitration agreement must first determine whether the parties agreed to arbitrate. Stout , 228 F.3d at 714 (6th Cir. 2000). In doing so, the court applies the applicable state law pertaining to contract formation. De Angelis v. Icon Entm't Grp. Inc. , 364 F. Supp. 3d 787, 792 (S.D. Ohio 2019). Whether an arbitration agreement was formed is always a question to be resolved by the court. Granite Rock Co. v. Int'l Bhd. of Teamsters , 561 U.S. 287, 296, 130 S.Ct. 2847, 177 L.Ed.2d 567 (2010). Assuming the court finds that a contract was actually formed, the party opposing arbitration may also put forth "generally applicable state-law contract defenses" to the validity or enforceability of the contract, including, but not limited to, such defenses as "fraud, forgery, duress, mistake, lack of consideration or mutual obligation, or unconscionability." Cooper v. MRM Inv. Co. , 367 F.3d 493, 498 (6th Cir. 2004). The court must address these issues as well, "absent a valid provision specifically committing such disputes to an arbitrator." Granite Rock Co. , 561 U.S. at 299, 130 S.Ct. 2847.

That is, when an arbitration agreement includes such a provision—a "delegation provision"—the analysis changes. A delegation provision is "an agreement to arbitrate threshold issues concerning...