Jones v. Waffle House, Inc.

• Decision Date: 07 August 2017
• Docket Number: No. 16-15574,16-15574
• Parties: William JONES, on behalf of himself and others similarly situated, Plaintiff–Appellee, v. WAFFLE HOUSE, INC., a Georgia corporation, WH Capital, LLC, a Georgia limited liability company, Defendants–Appellants, The Source for Public Data, L.P., a foreign limited partnership doing business as Publicdata.com, et al., Defendants.
• Court: U.S. Court of Appeals — Eleventh Circuit

866 F.3d 1257

William JONES, on behalf of himself and others similarly situated, Plaintiff–Appellee,
v.
WAFFLE HOUSE, INC., a Georgia corporation, WH Capital, LLC, a Georgia limited liability company, Defendants–Appellants,

The Source for Public Data, L.P., a foreign limited partnership doing business as Publicdata.com, et al., Defendants.

No. 16-15574

United States Court of Appeals, Eleventh Circuit.

August 7, 2017

Joshua H. Eggnatz, Michael James Pascucci, Eggnatz Lopatin & Pascucci, LLP, Davie, FL, Alexandria Kachadoorian, Justin Kachadoorian, Anthony J. Orshansky, CounselOne, Beverly Hills, CA, for Plaintiff–Appellee.

David Michael Gettings, John C. Lynch, Troutman Sanders, LLP, Virginia Beach, VA, Richard Wade Smith, Fisher Rushmer, PA, Orlando, FL, for Defendants–Appellants Waffle House, Inc., WH Capital, LLC.

Before HULL, MARCUS, and CLEVENGER,^* Circuit Judges.

MARCUS, Circuit Judge:

In this appeal, Waffle House challenges the denial of its motion to compel arbitration. William Jones applied for a job at a Florida Waffle House in Ormond Beach in December 2014 but was rejected by the store. Some ten months later, in October 2015, Jones sued Waffle House and various data-reporting companies in federal district court, claiming that the defendants violated the Fair Credit Reporting Act by failing to give him a copy of the background checks that were run on him in connection with his job application and by failing to give him an opportunity to dispute those background checks. Jones also sought class relief, seeking to represent a class of United States residents who applied for employment or were employed with Waffle House in the preceding five years against whom Waffle House took adverse employment actions based on a background check.

While that lawsuit was pending, Jones continued to seek employment with Waffle House elsewhere, and, in February 2016, Jones applied for and gained employment at a Waffle House store in Kansas City, Missouri. In connection with his employment, Jones signed an arbitration agreement that covered "all claims and controversies [ ], past, present, or future, arising out of any aspect of or pertaining in any way to [his] employment." The agreement also included a delegation provision requiring

866 F.3d 1262

that "[t]he Arbitrator, and not any federal, state, or local court or agency, shall have authority to resolve any dispute relating to the interpretation, applicability, enforceability, or formation of this Agreement." Jones did not tell the lawyers representing him in the federal lawsuit that he had gained employment with another Waffle House or that he had signed an arbitration agreement. He also did not tell his new employer in Kansas City that he was actively suing Waffle House in Orlando. When Waffle House's legal team later learned, in March 2016, that Jones had signed an arbitration agreement, it moved to compel arbitration pursuant to the agreement. The district court denied the motion and Waffle House timely appealed.

After careful review, we conclude that the district court erred in denying Waffle House's motion to compel arbitration. The arbitration agreement contains a broad, valid, and enforceable delegation provision that expresses the parties' clear and unmistakable intent to arbitrate gateway questions of arbitrability, including questions concerning the interpretation, applicability, enforceability, and formation of the agreement. In the face of the Federal Arbitration Act's clear preference for and presumption in favor of arbitration, we are obliged to enforce the parties' clear intent to arbitrate these issues. We likewise reject Jones's claims that the arbitration agreement improperly interfered with the district court's managerial authority over class actions or that the agreement amounted to an improper ex parte communication with a represented party. Therefore, we vacate the district court's denial of Waffle House's motion to compel and remand with instructions to stay the case pending arbitration.

I.

This story began when William Jones applied for a job at a Waffle House restaurant in Ormond Beach, Florida, in December 2014. In connection with the application, the local restaurant managers informed Jones that they had to run a background check on him. Jones neither heard back from Waffle House nor received a copy of his background check, and his employment application was ultimately denied.

On October 1, 2015, Jones commenced this lawsuit against Waffle House, Inc., and its parent company, WH Capital, LLC (collectively, "Waffle House"), as well as various data-reporting companies (collectively, "PublicData") in the United States District Court for the Middle District of Florida. Jones alleged that Waffle House and PublicData never provided him with a copy of the background report they ran on him and that they never gave him the opportunity to dispute the accuracy or completeness of the report as they were required to do by the Fair Credit Reporting Act (FCRA), Pub. L. No. 91-508, 84 Stat. 1127 (1970), codified as amended at 15 U.S.C. §§ 1681 et seq. Jones sought class certification; appointment as class representative; declaratory relief; and statutory, compensatory, special, general, and punitive damages.

While his Florida class-action lawsuit was pending, Jones continued to seek employment with Waffle House elsewhere. Thus, on February 2, 2016, Jones applied to work at a Waffle House in Kansas City, Missouri, which is operated by the Waffle House subsidiary Ozark Waffles, LLC. He did not tell anyone at that Waffle House that he had been denied employment in Florida or that he was suing the parent corporation in the Middle District of Florida. Nor did Jones tell his Florida lawyers that he had sought and gained employment at another Waffle House in another state. Waffle House's corporate management in Norcross, Georgia, was unaware of both his application and his employment.

866 F.3d 1263

Jones was hired by the Kansas City Waffle House on or about February 4, 2016. As part of his employee orientation, he signed an arbitration agreement. The agreement is standard for all new Waffle House employees, and local restaurant management typically does not consult with Waffle House's central corporate management or legal department before asking new employees to sign the agreement. The scope of the arbitration agreement is laid out in its coverage provision:

Waffle House and I will resolve by arbitration all claims and controversies ("claims"), past, present, or future, arising out of any aspect of or pertaining in any way to my employment, and specifically including, but not limited to, termination from employment, that I may have against Waffle House or against its officers, directors, employees or agents in their capacity as such or otherwise, or that Waffle House may have against me.

The agreement also contains a delegation provision, which reads this way:

The Arbitrator, and not any federal, state, or local court or agency, shall have authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement, including but not limited to any claim that all or any part of this Agreement is void or voidable.

Other provisions include, inter alia , a waiver of class-action arbitration and a choice-of-law provision selecting Georgia law. The arbitration agreements are preprinted with the signature of John Waller, Waffle House's Vice President and General Counsel, already affixed; he does not sign each agreement individually. Every new employee receives an arbitration agreement that has already been countersigned by Waller.

Meanwhile, Waffle House's central legal team in Georgia continued to work on Jones's class-action lawsuit and remained unaware that Jones had recently gained employment with the Kansas City Waffle House and signed an arbitration agreement. On March 21, 2016, Greg Newman, Waffle House's Vice President and Litigation Counsel, directed a paralegal to review Jones's file in the company's system in preparation for a quarterly litigation meeting. They noticed that Jones had a "last paid" date of February 2016, meaning that he was currently working for Waffle House and that he must have signed an arbitration agreement. The next day, counsel for Waffle House called Jones's Florida counsel to inform them of these developments.

On April 1, 2016, Waffle House moved the district court to compel arbitration pursuant to the arbitration agreement. Waffle House claimed that the agreement prevented Jones from proceeding with his Florida class-action lawsuit and that, because of the delegation provision, any threshold issues of arbitrability—including the scope of the agreement—were issues for the arbitrator, not the district court, to decide. The district court conducted a hearing on this motion and subsequently denied the motion to compel. Waffle House timely appealed. The district court stayed the class-action proceedings pending the outcome of this appeal.

II.

We review de novo both the district court's denial of a motion to compel arbitration, Jenkins v. First Am. Cash Advance of Ga., LLC , 400 F.3d 868, 873 (11th Cir. 2005), and the district court's interpretation of an arbitration clause, Martinez v. Carnival Corp. , 744 F.3d 1240, 1243 (11th Cir. 2014).

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