Levine v. Vitamin Cottage Nat. Food Mkts., Civil Action 20-cv-00261-STV

CourtUnited States District Courts. 10th Circuit. United States District Court of Colorado
Writing for the CourtScott T. Varholak, United States Magistrate Judge
PartiesMICHAEL LEVINE, individually and on behalf of all others similarly situated, Plaintiff, v. VITAMIN COTTAGE NATURAL FOOD MARKETS, INC., Defendant.
Docket NumberCivil Action 20-cv-00261-STV
Decision Date27 September 2021

MICHAEL LEVINE, individually and on behalf of all others similarly situated, Plaintiff,
v.

VITAMIN COTTAGE NATURAL FOOD MARKETS, INC., Defendant.

Civil Action No. 20-cv-00261-STV

United States District Court, D. Colorado

September 27, 2021


ORDER

Scott T. Varholak, United States Magistrate Judge

This matter comes before the Court on Defendant's Motion to Dismiss and Compel Individual Arbitration as to Certain Opt-In Plaintiffs (the “Motion”). [#70] The Motion is before the Court on the Parties' consent to have a United States magistrate judge conduct all proceedings in this action and to order the entry of a final judgment. [#15, 16] The Court has carefully considered the Motion and related briefing, the entire case file, and the applicable case law, and has determined that oral argument would not materially assist in the disposition of the Motion. For the following reasons, the Motion is GRANTED in part and DENIED in part.

I. BACKGROUND

Defendant Natural Grocers owns and operates more than 150 grocery stores throughout the Central and Western United States. [#17 at ¶ 15] Defendant employs Assistant Store Managers (“ASMs”) in its stores and classifies them as exempt from overtime. [Id. at ¶¶ 2, 4] Plaintiff Michael Levine was employed by Defendant as an

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ASM in Highlands Ranch, Colorado from March 2018 to April 2019. [Id. at ¶ 10] Plaintiff filed the instant action on January 31, 2020, on behalf of himself and others employed by Defendant as ASMs. [Id. at ¶¶ 6-7] Plaintiff alleges that:

Plaintiff and all other similarly situated were required to work more than 40 hours in a workweek and/or 12 hours in a day while employed by Defendant in order to complete their job duties. However, in accordance with Defendant's policy, pattern, and/or practice, they were misclassified as exempt from overtime compensation and were not paid at the mandated rate of time-and-one-half for all hours worked in excess of 40 in a workweek and/or 12 hours in a day

[Id. at ¶ 5] Following the filing of this action, 158 current or former ASMs filed notice of consent to join the action as opt-in as plaintiffs. [See #104] Defendant argues that 57 of those opt-in plaintiffs signed electronic arbitration agreements.[1] [See generally ##70, 70-1, 107, 107-1]

A. Evidence of Arbitration Agreements

Defendant has submitted two categories of documents in support of its argument that certain opt-in plaintiffs signed arbitration agreements. [##70-1, 107-1] The first category consists of two-page documents titled “Arbitration Agreement and Class Action Waiver”; these documents contain employee digital signatures-created by checking a box-and timestamps on the second page. [See, e.g., #70-1 at 1-2] The second category consists of three-page documents taken from Defendant's human resources portal. [See Id. at 3-5; #70-2] The first page of these documents is titled “Arbitration Agreement and Class Action Waiver, ” and: (1) identifies a specific employee by name and employee ID number, (2) contains an acknowledgement message, and (3)

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indicates the date on which the employee accepted the arbitration agreement. [Id. at 3] The acknowledgement message reads as follows:

I acknowledge that:

I have read the Agreement in full
By accepting the Agreement, I agree to and am bound by all of its terms, including the arbitration/class action waiver provisions on page 1.
I have had sufficient time to review the Agreement. I understand that I may access my executed or electronically accepted copy at any time by accessing the Document Acknowledgement Tab in my HRIS record, clicking on the Arbitration Agreement link and then clicking on the Arbitration Agreement and Class Action Waiver Document link.

Pages two and three consist of the actual arbitration agreement, which is titled “ARBITRATION AGREEMENT AND CLASS ACTION WAIVER.” [Id. at 4-5]

Defendant also submitted a declaration by Heidi Hayward, Defendant's Vice President of Human Resources. [#70-2] The declaration details the following pertinent information: Defendant has included an arbitration agreement in all new-hire onboarding paperwork in its applicant tracking system, iCIMS, since September 10, 2018 [id. at ¶¶ 3-4]; Defendant has included the arbitration agreement as required paperwork in iCIMS for all recipients of company job offers, including promotions, since December 10, 2019 [id. at ¶ 5]; Defendant has included the arbitration agreement as required paperwork for all Store Managers and ASMs in the company's online human resources information system, UltiPro HRIS, since January 10, 2020 [id. at ¶ 6]; as of January 10, 2020, Defendant expressly conditioned continued employment and an annual merit pay increase for Store Managers and ASMs upon acceptance of the terms of the Arbitration Agreement [id.]; and after January 10, 2020, UltiPro HRIS sent automatic reminders to Store Managers and ASMs who had accepted continued employment and the merit increase but had failed to sign the agreement [id. at ¶ 7].

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Ms. Hayward's declaration also includes an exhibit detailing the process by which employees signed the agreement in UltiPro HRIS. [Id. at 4-6] First, an employee was required to log into their UltiPro HRIS account, which informed the employee of required employment documents they had not yet signed. [Id. at 4] The employee then would click on the title of the document they had not yet signed-in this case, the Arbitration Agreement. [Id.] They would next be shown a screen containing: (1) the name of the agreement, (2) a link to view the actual agreement, (3) the acknowledgement message, and (4) an empty check box stating “Accept?” [Id. at 5] The employee could then click the “Accept” box to indicate that they accepted the agreement. [Id.] Importantly, the system did not permit an employee to click the “Accept” box unless they had opened the actual agreement by clicking the document link. [Id.] After accepting, the employee was shown a pop-up box again containing the acknowledgment message and prompting the employee to confirm “yes” or “no” to “acknowledge” the message contained therein. [Id. at 6] Once an employee had clicked the “Accept” box and then re-confirmed acknowledgement by clicking “yes, ” the UltiPro HRIS system showed the document as “Accepted” for that employee and indicated the date and time of acceptance. [Id.]

B. Content of Arbitration Agreements

There are two versions of the Arbitration Agreement. [See generally ##70, 70-1, 107, 107-1] The first version states that the Agreement is in consideration of the signatory's employment with Defendant. [See #70-1 at 1] The second states that the Agreement is in consideration of: (1) the signatory's employment with Defendant, (2) a “new position . . . and associated pay increase, ” (3) a “relocation bonus, ” and/or (4) a

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“merit increase.” [See e.g., #107-1 at 1] The Agreements thereafter contain either five or seven terms and conditions. [##70-1 at 1; 107-1 at 1] All the Agreements contain a term stating: “Any dispute, controversy or claim arising out of or relating to my employment with the Company or the termination thereof will, to the fullest extent permitted by applicable law, be settled exclusively by binding arbitration.” [Id.]

Agreements containing a check box and electronic signature on the agreement itself contain the following statements: “I have executed this Arbitration Agreement and Class Action Waiver as of the date set forth below” and “Checking the checkbox above is equivalent to a handwritten signature.” [See #70-1 at 2] Agreements completed through the UltiPro HRIS process detailed above contain the following statement: “I have agreed to this Agreement as of the date of my execution or electronic acceptance thereof.” [Id. at 5]

C. Plaintiff's Evidence

Plaintiff has submitted nearly identical declarations from 23 opt-in plaintiffs.[2][##126-1 to 126-24] Each of these opt-in plaintiffs completed the acknowledgement process in UltiPro HRIS. [Id.] The declarations describe the employees' experience working for Defendant, their receipt of several emails regarding the arbitration agreements, and assert that Defendant misrepresented the agreement. [Id.] Some declarations also contain information specific to the individual employees, which the Court will address in the analysis. [Id.]

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D. Procedural History

Defendant filed its Motion to Compel on February 4, 2021. [#70] Through the Motion, Defendant argues that 32 opt-in plaintiffs signed an arbitration agreement and should be compelled to arbitrate. [Id.] On February 23, 2021, Plaintiff filed a motion seeking an extension of time to respond to the Motion in order to conduct discovery into the alleged agreements. [#79] The Court thereafter granted Plaintiff a 60 day extension to conduct discovery. [#92] Plaintiff filed his response to the Motion on May 24, 2021, in which he informed the Court that despite the extension of time, he did not conduct any discovery into the arbitration agreements. [#103 at 14 n. 4] Defendant filed a reply to the Motion on June 7, 2021, and identified additional opt-in plaintiffs it argues are subject to arbitration, thus bringing the total to 57. [#107 at 2 n.2]

On June 29, 2021, Plaintiff filed a motion seeking additional time to investigate the alleged agreements of the opt-in plaintiffs identified by Defendant in its reply. [#112] The Court granted Plaintiff two weeks to conduct additional investigation and later permitted Plaintiff to file a surreply to the Motion. [##113, 122] Plaintiff then filed his surreply and Defendant filed a response. [##126, 128]

II. LEGAL STANDARDS

Arbitration agreements are governed by the Federal Arbitration Act (“FAA”). See 9 U.S.C. § 1 et seq.; Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001) (finding that employment contracts fall within the FAA, except “contracts of employment of...

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