Norred v. Cotton Patch Café, LLC

• Decision Date: 22 October 2019
• Docket Number: CIVIL ACTION NO. 3:19-CV-1010-G
• Parties: IAN NORRED, Individually, and on behalf of all others similarly situated under 29 U.S.C § 216(b), Plaintiffs, v. COTTON PATCH CAFÉ, LLC, Defendant.
• Court: U.S. District Court — Northern District of Texas

IAN NORRED, Individually, and on behalf ofall others similarly situated under 29 U.S.C § 216(b), Plaintiffs, v. COTTON PATCH CAFÉ, LLC, Defendant.

CIVIL ACTION NO. 3:19-CV-1010-G

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

October 22, 2019

MEMORANDUM OPINION AND ORDER

Before the court is the motion of the defendant, Cotton Patch Café, LLC, to compel arbitration and to stay this case pending arbitration, pursuant to the Federal Arbitration Act ("FAA"). For the reasons set forth below, the motion is granted.

I. BACKGROUND

The lead plaintiff in this action, Ian Norred, filed suit against his employer, Cotton Patch Café, LLC ("Cotton Patch") on April 26, 2019, alleging violations of the Fair Labor Standards Act ("FLSA"). Complaint ("Complaint") (docket entry 1) at 1. On June 4, 2019, another former Cotton Patch employee, Rain Bennett, joined Norred as a named plaintiff. Notice of Consent to Become a Party Plaintiff ("Notice of Consent") (docket entry 9).

The defendant operates a chain of Cotton Patch Café restaurants. Complaint at 4. Norred worked as a server at one of these restaurants from December, 2017 until April, 2019. Appendix in Support of Plaintiffs' Response in Opposition to Defendant's Motion to Compel Arbitration and Stay ("Response Appendix") (docket entry 14) at 1. Bennett worked as a server at a Cotton Patch restaurant from June of 2018 until March or April of 2019. Appendix to Motion to Compel Arbitration and Stay Court Proceedings ("Motion Appendix") (docket entry 11) at 4-5; Response Appendix at 3.

On December 27 or 28, 2017, Norred underwent Cotton Patch's onboarding process for new hires. See Appendix to Defendant's Reply in Support of its Motion to Compel Arbitration and Stay Court Proceedings ("Reply Appendix") (docket entry 16) at 1-2 (describing Cotton Patch's onboarding process); id. at 5-6 (showing document that Norred signed during onboarding dated 12/28/2017). The process required Norred to fill out various forms on a computer. Id. at 1. During his onboarding, Norred electronically signed a document titled "Notice to Employees." Motion Appendix at 2; Reply Appendix at 5-6. The notice to employees contains a section titled "Arbitration Acknowledgment, Safety Pledge and Receipt," and another titled "Agreement to Arbitrate." Reply Appendix at 5. Bennett also underwent the onboarding process and electronically signed the notice to employees on her first day of employment at Cotton Patch. Motion Appendix at 4.

The agreement to arbitrate section of the notice to employees reads as follows:

• I agree to use binding arbitration, instead of going to court, for any claims, including any claims now in existence or that may exist in the future (a) that I may have against [Cotton Patch], its affiliates, and/or their current or former employees or (b) that [Cotton Patch] and/or its affiliates may have against me. Without limitation, such claims include any concerning wages. Expense reimbursement, compensation, leave, employment (including, but not limited to, any claims concerning harassment, discrimination, or retaliation), conversion, breach of fiduciary duty, negligence, employment-related tort claims, and/or termination of employment.

• I am waiving my right to a jury trial and any right I may have to bring any employment-related claim covered by this agreement as a Class Action (as defined in full document see hyperlink above) or any class or representative action (either in court or in arbitration) or to participate in such action.

By signing below I agree that I have read and understand the above information, and I have been given an opportunity to discuss and ask questions. I have received a copy of the arbitration agreements and agree to be bound by the terms and conditions therein.

Reply Appendix at 5-6.

The hyperlink referenced in the agreement to arbitrate section appears at the top of the notice to employees in underlined text that reads "View Agreement." Id. at 5. When clicked on, the hyperlink opens a document in a new internet window with the headings "Arbitration Agreement," and "Mutual Agreement to Arbitrate" printed at the top of the page. Reply Appendix at 3; id. at 8 ("the arbitration agreement").The arbitration agreement states, in pertinent part, that "[t]his [a]greement is mutual, covering all claims that [Cotton Patch] or [c]laimant may have which arise from: Any injury suffered by [c]laimant while in the scope and course of [c]laimant's employment with [Cotton Patch], . . . and any other loss, detriment or claim of whatever kind and character." Id. at 9. The arbitration agreement also states that the effective date of the agreement is August 1, 2014. Id. at 8. Finally, the arbitration agreement grants Cotton Patch "the right to prospectively terminate th[e] [a]greement," but qualifies this right by stating that "[t]ermination is not effective for [c]overed [c]laims which accrued or occurred prior to the date of termination," and that "[t]ermination is also not effective until ten (10) days after reasonable notice is given to [c]laimant." Id. at 12.

The "arbitration acknowledgment, safety pledge and receipt" section of the notice to employees states: "By my signature below, I acknowledge that I have received and read (or had the opportunity to read) the . . . [a]rbitration [a]greement, effective August 1, 2014." Id. at 5. Despite this language in the notice to employees, Norred and Bennett maintain that prior to the filing of this lawsuit, they had not seen the arbitration agreement. Response Appendix at 2, 3.

Norred was seventeen years old when he signed the notice to employees and began working for Cotton Patch in December of 2017. See id. at 1. Norred turned eighteen on July 9, 2018, id., and stopped working at Cotton Patch on April 30,2019. Motion Appendix at 4. Norred filed the complaint in this action on April 26, 2019, alleging that Cotton Patch has failed to adequately compensate him and other similarly situated employees, in violation of the FLSA. See Complaint (docket entry 1). Bennett filed her notice of consent on June 4, 2019, see Notice of Consent, and Cotton Patch filed the instant motion to compel arbitration on June 7, 2019, Motion to Compel Arbitration and Stay Court Proceedings ("Motion") (docket entry 10). Norred filed his response to the motion on June 28, 2019, Response (docket entry 13), and Cotton Patch filed its reply on July 12, 2019, Defendant's Reply in Support of its Motion to Compel Arbitration and Stay Court Proceedings ("Reply") (docket entry 15).

In its motion, Cotton Patch asserts that the plaintiffs' FLSA claim is subject to the terms of the notice to employees and the arbitration agreement, and that, in consequence, the court should stay proceedings in this case and order the plaintiffs to arbitrate their claims, or, in the alternative, that the court should dismiss this action with prejudice. Motion at 1. The matter being fully briefed, Cotton Patch's motion is now ripe for decision by the court.

II. ANALYSIS

A. Legal Standard

The Federal Arbitration Act ("FAA") applies to any written provision in a contract "evidencing a transaction involving commerce to settle by arbitration acontroversy thereafter arising out of such contract. . . ." 9 U.S.C. § 2. The Supreme Court has held that "involving" should be read expansively to apply to any transaction affecting interstate commerce. Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 273-74 (1995). In this case, the parties agree that this matter implicates interstate commerce, as the plaintiffs' work at Cotton Patch involved, for example, serving customers who were traveling from out of state across interstate lines. See Complaint at 6; Motion at 6-7.

Section 2 of the FAA provides that agreements to arbitrate controversies arising out of an existing contract "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. The FAA "leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (emphasis in original) (citing 9 U.S.C. §§ 3, 4)).

In considering whether a dispute is subject to binding arbitration, "the court engages in a two step process." Brendel v. Meyrowitz, No 3:15-CV-1928-D, 2016 WL 302282, at *3 (N.D. Tex. Jan. 25, 2016), reconsideration denied, No. 3:15-CV-1928-D, 2016 WL 1721312 (N.D. Tex. Apr. 29, 2016) (Fitzwater, J.). The first step a court must take "is to determine whether the parties agreed to arbitrate that dispute."Mitsubishi Motors Corporation v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985). "This determination involves two considerations: (1) whether there is a valid agreement to arbitrate between the parties; and (2) whether the dispute in question falls within the scope of that arbitration agreement." Brendel, 2016 WL 302282 at *3 (quoting Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996)). In determining whether the parties agreed to arbitrate the dispute, "courts apply the contract law of the particular state that governs the agreement." Washington Mutual Finance Group, L.L.C. v. Bailey, 364 F.3d 260, 264 (5th Cir. 2004) (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). Although there is a strong federal policy favoring arbitration, the court does not yield to this policy when making the threshold determination about the existence of a valid agreement to arbitrate. Sherer v. Green Tree Servicing LLC, 548 F.3d 379, 381 (5th Cir. 2008) (internal citations omitted). However, once an arbitration clause's validity has been established, the court must observe the strong federal policy favoring arbitration and resolve all ambiguities in favor of arbitration. Primerica Life...