Fraga v. Premium Retail Servs., Inc.

• Citation: 583 F.Supp.3d 275
• Decision Date: 31 January 2022
• Docket Number: CIVIL ACTION NO. 21-10751-WGY
• Parties: Sarah FRAGA, individually and on behalf of others similarly situated, Plaintiffs, v. PREMIUM RETAIL SERVICES, INC., Defendant.
• Court: U.S. District Court — District of Massachusetts

583 F.Supp.3d 275

Sarah FRAGA, individually and on behalf of others similarly situated, Plaintiffs,

v.PREMIUM RETAIL SERVICES, INC., Defendant.

CIVIL ACTION NO. 21-10751-WGY

United States District Court, D. Massachusetts.

Filed January 31, 2022

Alexandra K. Piazza, Pro Hac Vice, Camille Fundora Rodriguez, Pro Hac Vice, Daniel F. Thornton, Pro Hac Vice, Berger Montague, PC, Philadelphia, PA, Jason M. Leviton, Block & Leviton LLP, Boston, MA, for Plaintiffs.

Jonathan A. Keselenko, James S. Fullmer, Foley Hoag LLP, Boston, MA, for Defendant.

MEMORANDUM & ORDER

YOUNG, D.J.¹

When you are writing laws you are testing words to find their utmost power. Like spells, they have to make things happen in the real world, and like spells, they only work if people believe in them. If your law exacts a penalty, you must be able to enforce it -- on the rich as well as the poor ....

Hilary Mantel, Wolf Hall 533 (Henry Holt & Co. ed., 2009)

I. THE FEDERAL ARBITRATION ACT TODAY

One of the most puissant laws on the books today is the Federal Arbitration Act, 9 U.S.C. §§ 1 - 16, ("FAA"). See, e.g., Southland Corp. v. Keating, 465 U.S. 1, 10, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984) ("In enacting [Section] 2 of the [FAA], Congress declared a national policy favoring arbitration and withdrew the power of the states to require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration."); Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 22, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983) ("[A]ny doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration."); see also Katherine Van Wezel Stone, Rustic Justice: Community and Coercion Under the Federal Arbitration Act, 77 N.C.L. Rev. 931, 943-56 (1999) (describing the "extraordinarily expansive" reach of the FAA).

Fashioned by corporate America into one of its most potent weapons against its customers and its own employees, this single statute possesses the power largely to eviscerate the entire panoply of civil rights and consumer protection statutes so arduously constructed by the Congress over the years. See, e.g., American Exp. Co. v. Italian Colors Rest., 570 U.S. 228, 234, 236, 133 S.Ct. 2304, 186 L.Ed.2d 417 (2013) (declining to recognize a class's "entitlement to class proceedings for vindication of statutory rights" and concluding that "the fact that [a claim] is not worth the expense involved in proving a statutory remedy does not constitute the elimination of the right to pursue that remedy." (emphasis in original)). At the same time, its power warps our concepts of adhesion and unconscionability, see, e.g., AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 338, 351-52, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011),² sets at naught the court rules allowing the little guys to band together, id. at 344, 131 S.Ct. 1740 (concluding that "[r]equiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA"), and even marginalizes our constitutional right to trial by jury, see, e.g., Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 35, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) (holding an ADEA claimant can be subjected to compulsory arbitration and rejecting the argument that the ADEA was meant to protect claimants from a waiver of a judicial forum).

Small wonder, then, that there is an explosion of litigation by workers seeking to bring themselves within the FAA's exemption for "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce," 9 U.S.C. § 1. See, e.g., Levine v. Grubhub Holdings Inc. & Grubhub Inc., No. 1:21-cv-11742-WGY (D. Mass. removed Oct. 25, 2021) (referring dispute to arbitration).

This is such a case.

II. THE PRESENT CASE – PROCEDURAL SETTING

Fraga filed this present action, individually and on behalf of other people who are similarly situated, against her former employer, Premium Retail Services, Inc. ("Premium") on May 7, 2021. See Collective & Class Action Compl. ("Compl."), ECF No. 1. Fraga alleges four claims in her complaint: (1) violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et. seq. ; (2) violation of the Massachusetts Minimum Fair Wage Law (overtime), Mass. Gen. Laws ch. 151 §§ 1A -B; (3) violation of Massachusetts Minimum Fair Wage Law (timely wage payment), Mass. Gen. Laws ch. 151 §§ 1A -B; and (4) violation of Massachusetts Minimum Fair Wage Law (minimum wage), Mass. Gen. Laws ch. 151 §§ 1, 7, 20. Compl. ¶¶ 77-88, 80-93, 94-98, 99-102.

Premium moved to compel arbitration pursuant to the FAA, 9 U.S.C. §§ 3, 4, and, in the alternative, to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(1). See Mot. Compel Arb. & Dismiss Compl., ECF No. 7 ; Def. Premium Retail Services, Inc.’s Mem. P. & A. Supp. Mot. Compel Arb. ("Def. ’s Mem."), ECF No. 8. Fraga timely opposed Premium's motion. Mem. Law Opp'n Def.’s Mot. Compel Arb. ("Opp'n Mem."), ECF No. 16.

Fraga's opposition raised three arguments: 1) Premium failed to meet its burden to show the arbitration agreement (the "Agreement") was valid and enforceable; 2) Fraga's claims are not covered by the Agreement; and 3) that she, and others similarly situated, are exempt under the residual clause of Section 1 of the FAA. See Opp'n Mem. 4-12.

The first two arguments are but forlorn hopes, marched out onto barren factual ground to be shot down by established precedent. The Court deals with them in the Appendix. The third, however, is intriguing and, while it skirts the boundary of the Section 1 exemption, requires denial of the motion to dismiss.

III. THE PRESENT CASE -- FACTS PLAUSIBLY PLED

Fraga was an employee of Premium from December 2020 to January 2021.³ Compl. ¶ 25. Premium, headquartered and incorporated in Chesterfield, Missouri, id. ¶¶ 7, 8, provides varying retail support to its clients, id. ¶¶ 21, 22; see also Premium, https://premiumretail.com (last visited Jan. 25, 2022). It employs thousands of Merchandisers in all fifty states. Compl. ¶ 22.

Merchandisers’ duties include, but are not limited to, auditing and stocking product, building product displays, and updating product pricing and signage, see id. ¶ 24, as well as staging the point-of-purchase ("POP") materials, see id. ¶¶ 43-44, and traveling between their weekly preassigned jobsites to deliver and install the POP materials, see id. ¶ 28. Staging the POP materials involves receiving, sorting, and arranging POP displays, taking stock of material required for each job assignment, and ensuring that displays are paired with the appropriate assignment. Id. ¶ 43. These materials are shipped from outside of Massachusetts. Opp'n Mem., Ex. 1, Decl. Sarah Fraga ("Pl. Decl.") ¶¶ 3, 7, ECF No. 16-1. Once the Merchandisers have completed staging the materials, they must transport them to the designated retail location. Pl. Decl. ¶ 6; Compl. ¶¶ 22, 43.

Premium assigns each Merchandiser a zone of store locations to which the Merchandiser must travel to fulfill their job assignments. Compl. ¶ 28. The Merchandisers clock in and out of each worksite using the Q-Trax mobile application, which is a job management system utilized by Premium. Id. ¶¶ 31-32. Premium's time-clock policy is that the Merchandisers may only clock-in on Q-Trax when they arrive at the first store for the day and must clock out as they leave that store. Id. ¶¶ 31-32, 47. Premium does not pay Merchandisers for their time spent on staging or traveling. Id. ¶ 47.

Fraga was employed as a Merchandiser. Id. ¶ 25. Her zone of store locations included Massachusetts, Connecticut, New Jersey, and New York. Id.; Pl. Decl. ¶ 2. Fraga would visit up to or more than five retailers in one day. Compl. ¶ 30. Depending on the day, these retailers were located within or outside of Massachusetts. Id. ¶ 28 (explaining that Merchandisers received preassigned jobsites that varied). Fraga alleges Premium only paid her for work performed at the jobsites, after she clocked into the Q-Trax application, and did not account for travel or staging time. Id. ¶¶ 26, 31-32.

Fraga alleges the staging duties are executed at the Merchandisers’ homes.⁴ See id. ¶¶ 43-47. Fraga states that she was not compensated for performing these duties since they are not completed at the retail location where the Merchandiser is able to clock in. Id. ¶ 47. Fraga alleges Premium's policy of not compensating Merchandisers for "off-the-clock" time is depriving her, and others similarly situated, of wages earned from staging duties and travel time. Id. ¶ 48. Thus, Fraga brings this lawsuit as a collective action on behalf of any other similarly situated individuals who may opt in. Id. ¶¶ 62–63.

IV. ANALYSIS

Since arbitration alone can supervene many constitutional and most statutory norms, it is no surprise that the scope of the exemption found in 9 U.S.C. § 1 must be construed narrowly. Cunningham v. Lyft, Inc., 17 F.4th 244, 251 (1st Cir. 2021). Even so, courts have the singular authority "to determine whether an agreement is excluded from FAA coverage even where there is a delegation clause." Singh v. Uber Techs. Inc., 939 F.3d 210, 215 (3rd Cir. 2019) (citing New Prime, Inc. v. Oliveira, ––– U.S. ––––, 139 S. Ct. 532, 538, 202 L.Ed.2d 536 (2019) ); Cunningham v. Lyft, Inc., 450 F.Supp.3d 37, 43 (D. Mass. 2020) (Talwani, J.) overruled on other grounds, 17 F.4th 244 (1st Cir. 2021). Should the FAA not apply, state law determines the enforceability of an arbitration agreement. See Waithaka v. Amazon.com Inc., 966 F.3d 10, 26 (1st Cir. 2020) (concluding Amazon delivery drivers were exempt from the FAA and deciding whether arbitration should be compelled under state law).

A. Broad Purpose of the FAA

The FAA provides that "[a] written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract ... shall...