Brock v. Flowers Foods, Inc.

• Decision Date: 16 May 2023
• Docket Number: Civil Action 1:22-cv-02413-CNS-MEH
• Parties: ANGELO BROCK, individually and on behalf of all others similarly situated, Plaintiff, v. FLOWERS FOOD, INC., a Georgia corporation, FLOWERS BAKERIES, LLC, a Georgia limited liability company, and FLOWERS BAKING CO. OF DENVER, LLC, a Colorado limited liability company, Defendants.
• Court: U.S. District Court — District of Colorado

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ANGELO BROCK, individually and on behalf of all others similarly situated, Plaintiff, v. FLOWERS FOOD, INC., a Georgia corporation, FLOWERS BAKERIES, LLC, a Georgia limited liability company, and FLOWERS BAKING CO. OF DENVER, LLC, a Colorado limited liability company, Defendants.

Civil Action No. 1:22-cv-02413-CNS-MEH

United States District Court, D. Colorado

May 16, 2023

ORDER

CHARLOTTE N. SWEENEY UNITED STATES DISTRICT JUDGE

Before the Court is Defendants Flowers Food, Inc., Flowers Bakeries LLC, and Flowers Baking Co. of Denver, LLC's Motion to Dismiss or Stay Proceedings and Compel Individual Arbitration (ECF No. 28). For the reasons set forth below, the Court DENIES the motion.

I. BACKGROUND^[1]

Flowers Foods, Inc. is a baking company that operates several subsidiaries (see, e.g., ECF No. 28-1 at 1 ¶ 3). Flowers Foods, Inc. is the ultimate parent company of Flowers Bakeries, LLC, and Flowers Baking Company of Denver, LLC, which is a wholly owned subsidiary of Flowers Bakeries, LLC (id. at ¶ 2). Flowers Foods, Inc., and its subsidiaries (collectively “Flowers”) produce “fresh breads, buns, rolls, and snack cakes” (id. at ¶ 3). These products are sold in supermarkets, drug stores, and convenient stores throughout the United States (ECF No. 29-3 at 8). Flowers' sale of these products generates billions of dollars in revenue each year (ECF No. 291 at 2 ¶ 2).

Flowers uses “Direct-Store-Delivery” to sell its products (ECF No. 29-2 at 2). Under this sales model, Flowers produces and markets its baked goods, and “sells its products through a network of independent distributors to retail and foodservice customers” (id.). Independent distributors are responsible for ordering products, which are then delivered to them from bakeries for sale and “direct delivery to customer stores” (ECF No. 29-3 at 9). Bakeries are located throughout the United States (see, e.g., ECF No. 29-2 at 3; ECF No. 29-8 at 7-8). Flowers Baking Company of Denver, LLC contracts with independent distributor franchisees, including Brock, Inc., the company owned and operated by Plaintiff Angelo Brock, to bring Flowers bakery products to market (ECF No. 28-1 at 1 ¶ 4).

Most products that Brock Inc. orders for Mr. Brock's customers “are produced by out-ofstate bakeries in response to his specific orders” (ECF No. 28-1 at 3 ¶ 11). These products are then shipped to Mr. Brock's warehouse in Colorado, where Mr. Brock and Brock Inc.'s “ultimate sale and delivery of the products to end customers for whom he ordered them pursuant to the Direct Store Delivery system” occurs (id.; see also ECF No. 28-1 at 36). When delivery trucks containing the Flowers products that he has ordered arrive at Mr. Brock's warehouse, he accepts the products, “sign[s] off” on them, loads them onto trucks, and “gets to work in [his] territories” (ECF No. 296 at 2 ¶¶ 3-4). Then, Mr. Brock “begin[s] to service the customers on [his] stops immediately after” (id. at ¶ 4).

To become an independent distributor for Flowers, Mr. Brock signed a Distributor Agreement (see ECF No. 28-1 at 6). The Distributor Agreement contained an “Arbitration Agreement” (id. at 38-40). The Arbitration Agreement provides:

The parties agree that any claim, dispute, and/or controversy except as specifically excluded herein, that either DISTRIBUTOR may have against COMPANY (and/or its affiliated companies . . .) . . . arising from, related to, or having any relationship or connection whatsoever with the Distributor Agreement between DISTRIBUTOR and COMPANY, including . . . any other association that DISTRIBUTOR may have with COMPANY (“Covered Claims”) shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act (9 U.S.C. §§ 1, et seq.) (“FAA”) ....

Covered Claims covered under this Arbitration Agreement include, but are not limited to: breach of contract, any claims challenging the independent contractor status of DISTRIBUTOR, claims alleging that DISTRIBUTOR was misclassified as an independent contractor, any other claims premised upon DISTRIBUTOR's alleged status as anything other than an independent contractor, ... claims for alleged unpaid compensation, . or statutory penalties under either federal or state law

(ECF No. 28-1 at 38-39). The Arbitration Agreement also states that it “shall be governed by the [Federal Arbitration Act] and Colorado law to the extent Colorado law is not inconsistent” with the Federal Arbitration Act (id. at 38, 40 (original emphasis)).

Mr. Brock filed his Class and Collective Action Complaint in September 2022, alleging that Flowers violated the Fair Labor Standards Act and Colorado law principally by misclassifying its employees as independent contractors and failing to pay overtime and other wages (see generally ECF No. 1). Flowers filed the instant motion to compel in February 2023, seeking to compel Mr. Brock to individual arbitration (see, e.g., ECF No. 28 at 20). The motion to compel is fully briefed (see ECF Nos. 29 and 33).

II. LEGAL STANDARD

A strong federal policy favoring arbitration “is about treating arbitration contracts like all others, not about fostering arbitration.” Morgan v. Sundance, Inc., 142 S.Ct. 1708, 1713 (2022) (citation omitted). The Federal Arbitration Act requires courts to enforce arbitration agreements in contracts “evidencing a transaction involving commerce . . . save upon such grounds as exist at law or in equity” for contracts' revocation. 9 U.S.C. § 2. Under the Federal Arbitration Act, a party may bring a motion to compel arbitration. See, e.g., 9 U.S.C. § 4; Fundamental Admin. Servs., LLC v. Patton, 504 Fed.Appx. 694, 698 (10th Cir. 2012). The party attempting to compel arbitration bears the burden of “demonstrating a valid arbitration agreement” exists. Fundamental Administrative Services, 504 Fed.Appx. at 698 (quotations omitted); see also Burgess v. Johnson, 835 Fed.Appx. 330, 332 (10th Cir. 2020). The party opposing arbitration based on an arbitration exemption bears the burden of demonstrating that they fall within an exemption under the Federal Arbitration Act. See, e.g., Shearson/Am. Exp., Inc. v. McMahon, 482 U.S. 220, 227 (1987) (“The burden is on the party opposing arbitration, however, to show that Congress intended to preclude a waiver of judicial remedies for the statutory rights at issue.” (citation omitted)); 9 U.S.C. § 1.

“When deciding whether the parties agreed to arbitrate a certain matter . . . courts generally . . . should apply ordinary state-law principles that govern the formation of contracts.” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995) (citation omitted). The Federal Arbitration Act contains several “enforcement mechanisms” for parties to compel arbitration pursuant to a valid agreement to arbitrate. Rittmann v. Amazon.com, Inc., 971 F.3d 904, 909 (9th Cir. 2020). However, “a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002) (quotations omitted). Moreover, § 1 of the Federal Arbitration Act provides that “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” are exempt from the Act's coverage. “[A] court should decide for itself whether § 1's ‘contracts of employment' exclusion applies before ordering arbitration.” New Prime Inc. v. Oliveira, 139 S.Ct. 532, 537 (2019).

III. ANALYSIS

Having considered Flowers' motion, related briefing, and relevant legal authority, the Court denies Flowers' motion. In explaining this denial, the Court first details recent legal developments regarding the Federal Arbitration Act, and then applies those developments in its analysis of Flowers' motion.

A. Southwest Airlines Company v. Saxon and Section 1

Central to the parties' dispute is the Supreme Court's recent decision in Southwest Airlines Company v. Saxon, 142 S.Ct. 1783 (2022). Flowers urges an interpretation of § 1 and Saxon under which the Court, in determining whether § 1's “transportation workers” exemption applies, should look to the nature of Flowers' business and whether Mr. Brock is “involved in interstate commerce” (ECF No. 28 at 9). Mr. Brock reads § 1 and Saxon differently, arguing that the Court's inquiry should focus on the relevant class of workers to which he belongs, and if that class of workers is engaged in interstate commerce (see, e.g., ECF No. 29 at 19). The Court agrees with Mr. Brock.

Saxon's import is widely acknowledged. See, e.g., Bissonnette v. LePage Bakeries Park St., LLC, 59 F.4th 594 (2d Cir. 2023) (“The Supreme Court's decision in Saxon . . . is [an] intervening decision . . . [warranting] rehearing en banc.”) (Nathan, J., dissenting from denial of rehearing en banc). Saxon clearly established the legal framework for applying § 1's “transportation workers” exemption: in assessing § 1's applicability, courts first “define the relevant ‘class of workers' to which [the plaintiff] belongs [and then] determine whether that class of workers is ‘engaged in foreign or interstate commerce.'” Saxon, 142 S.Ct. at 1788; see also Id. at 1793. Although divided on the factual circumstances that warrant § 1's application in Saxon's wake, appellate courts are largely in accord on the § 1 framework that Saxon established. Compare Fraga v. Premium Retail Servs., Inc., 61 F.4th 228, 234 (1st Cir. 2023), with Lopez v. Cintas Corp., 47 F.4th 428, 431 (5th Cir. 2022).^[2]

Flowers interprets Saxon and § 1 differently. According to Flowers, in determining whether § 1 applies the Court should look to the nature of its own business-and that dispositively in this case, Flowers is not a transportation company (ECF No. 28 at 9). But Saxon forecloses ...