Peterson v. Binnacle Capital Servs. LLC

• Decision Date: 08 March 2019
• Docket Number: CIVIL ACTION NO. 18-40088-TSH
• Citation: 364 F.Supp.3d 108
• Parties: Janis PETERSON, Plaintiff, v. BINNACLE CAPITAL SERVICES LLC and Wind Gap Farm Services LLC, Defendants.
• Court: U.S. District Court — District of Massachusetts

364 F.Supp.3d 108

Janis PETERSON, Plaintiff,

v.BINNACLE CAPITAL SERVICES LLC and Wind Gap Farm Services LLC, Defendants.

CIVIL ACTION NO. 18-40088-TSH

United States District Court, D. Massachusetts.

Filed March 8, 2019

Scott A. Lathrop, Attorney at Law, Townsend, MA, for Plaintiff.

Anthony D. Rizzotti, Stephen T. Melnick, III, Littler Mendelson P.C., Boston, MA, for Defendants.

ORDER AND MEMORANDUM ON DEFENDANTS' MOTION TO COMPEL ARBITRATION (Docket No. 6)

TIMOTHY S. HILLMAN, DISTRICT JUDGE

Janis Peterson ("Plaintiff") brought suit in Massachusetts Superior Court alleging that Binnacle Capital Services LLC ("Binnacle") and Wind Gap Farm LLC ("Wind Gap") (collectively "Defendants") violated the Massachusetts Wage and Hour Laws, Mass. Gen. L. c. 151, § 1A, et seq. , Massachusetts Weekly Payment of Wages Statute, Mass. Gen. L. c. 149, §§ 148 ; 150, and the Fair Labor Standards Act of 1938, 29 U.S.C. § 201, et seq. Defendants removed the case to this Court and subsequently filed a motion to compel arbitration. (Docket No. 6). For the reasons that follow, Defendants' motion is granted in part and denied in part.

Background

In April 2013, Binnacle hired Plaintiff to perform home healthcare services as a Registered Nurse. On April 19, 2016, Plaintiff's employment was transferred to Wind Gap for which she performed similar home healthcare services as a Registered Nurse. Plaintiff was paid $ 50.00 per hour for her services and was never a salaried employee. She regularly worked more than 40 hours per week for both Binnacle and Wind Gap but contends that she was never paid overtime. Plaintiff estimates that she is owed in excess of $ 100,000 in unpaid overtime.

In November 2017, Plaintiff signed a Confidentiality & Non-Disclosure Agreement with Wind Gap. As consideration, Plaintiff was notified that the Agreement was "part of [Plaintiff's] ‘at-will’ employment / engagement relationship with the Company." In addition, Plaintiff was promised "for good and valuable consideration beyond any wages and/or compensation due [Plaintiff] in the amount of One thousand Dollars and no cents ($ 1,000.000)." The Agreement provides, in relevant part:

This Agreement affects my ability to participate in class and collective actions. Specifically, both the Company and I agree to bring any dispute (except either party may apply to a court of competent jurisdiction for temporary or preliminary injunctive relief in connection with an arbitrable controversy but only upon the ground that the award to which the party may be entitled may be rendered ineffectual without such relief, including but not limited to enforcing the provisions of paragraph 8 above) in arbitration on an individual basis only, and not on a class or collective basis on behalf of others. There will be no right or authority for any dispute to be brought, heard or arbitrated as a class or collective action, or as a member in any such class or collective proceeding ("Class Action Waiver"). Notwithstanding any other provision of this Agreement, disputes regarding the validity, enforceability or breach of the Class Action Waiver may be resolved only by a civil court of competent jurisdiction and not by an arbitrator. In any case in which (1) the dispute is filed as a class or collective action and (2) there is a final judicial determination that all or part of the Class Action Waiver is unenforceable, the class and/or collective action to that extent must be litigated in a civil court of competent jurisdiction, but the portion of the Class Action Waiver that is enforceable shall be enforced in arbitration. I understand that I shall not be retaliated against, discipline or threated with discipline as a result of exercising any rights under Section 7 of the National Labor Relations Act by the filing of or participating in a class or collective action in any forum. However, the Company may lawfully seek enforcement of this Agreement and the Class Action Waiver under the Federal Arbitration Act and seek dismissal of such class or collective actions or claims. The Class Action Waiver shall be severable in any case in which the dispute is filed as an individual action and severance is necessary to ensure that the individual action proceeds in arbitration.

(Docket No. 7-1, ¶ 10).

Legal Standard

Written arbitration agreements are governed pursuant to the Federal Arbitration Act. 9 U.S.C. §§ 1 - 301. See Circuit City Stores, Inc. v. Adams , 532 U.S. 105, 119, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001) (holding that the FAA extends to employees other than transportation workers in employment cases). The FAA was enacted to combat "longstanding judicial hostility to arbitration agreements and to ‘place such agreements upon the same footing as other contracts.’ " United States ex rel. Hagerty v. Cyberonics, Inc. , 146 F.Supp.3d 337 (D. Mass. 2015) (quoting Allied-Bruce Terminix Cos., Inc. v. Dobson , 513 U.S. 265, 271, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995) ). When "construing an arbitration clause, courts and arbitrators must give effect to the contractual rights and expectations of the parties." Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp. , 559 U.S. 662, 682, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010) (quotation marks and citation omitted). The FAA institutes "a liberal federal policy favoring arbitration agreements" thus "establish[ing] ... as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983).

"A party seeking to compel arbitration under the FAA must demonstrate that a valid agreement to arbitrate exists, that the movant is entitled to invoke the arbitration clause, that the other party is bound by that clause, and that the claim asserted comes within the clause's scope." Dialysis Access Center, LLC v. RMS Lifeline, Inc. , 638 F.3d 367, 375 (1st Cir. 2011) (quotation marks and citation omitted). The Supreme Court has clarified that courts "discharge th[e] duty [of effectuating the policy favoring arbitration] by: (1) applying the presumption of arbitrability only where a validly formed and enforceable arbitration agreement is ambiguous about whether it covers the dispute at hand; and (2) adhering to the presumption and ordering arbitration only where the presumption is not rebutted." Granite Rock Co. v. Int'l Bhd. Of Teamsters , 561 U.S. 287, 130 S.Ct. 2847, 2858-59, 177 L.Ed.2d 567 (2010). Thus, a party seeking to compel arbitration must demonstrate that a valid arbitration agreement exists. If it does, ambiguities regarding the scope of the agreement are presumptively resolved in favor of arbitration. See McCarthy v. Azure , 22 F.3d 351, 354-55 (1st Cir. 1994) (noting that despite the strong federal policy favoring arbitration, "a party seeking to substitute an arbitral forum for a judicial forum must show, at a bare minimum, that the protagonists have agreed to arbitrate some claims.... The federal policy presumes proof of a preexisting agreement to arbitrate disputes arising between the protagonists" (emphasis in original) ).

"The Supreme Court has differentiated between two types of challenges to the validity of arbitration agreements: (1) challenges to the validity of an entire contract which contains an arbitration clause, and (2) challenges to the validity of the specific agreement to resolve the dispute through arbitration." Farnsworth v. Towboat Nantucket Sound, Inc. , 790 F.3d 90, 96 (1st Cir. 2015) (citations omitted). "[C]hallenges of the first type are for the arbitrator to decide, whereas challenges of the second type are for the courts to decide, if timely and properly made." Id. (citations omitted).¹

Discussion

1. Agreement to Arbitrate

a. Challenges to the Validity of the Entire Contract

As a preliminary matter, Plaintiff argues that the Agreement is invalid because "when Wind Gap presented her with the so-called ‘CONFIDENTIALITY & NON-DISCLOSURE AGREEMENT’, it implicitly, if not explicitly, threated [sic] that if she did not sign ... she would not be scheduled to work any further and most importantly would not be paid for reimbursable expenses that Wind Gap already owed her." (Docket No. 17 at 4). This argument targets the Agreement in its entirety.² Therefore, because Plaintiff does not contend that she was under duress specifically with respect to the agreement to arbitrate, this issue is for the arbitrator to decide. See Farnsworth , 790 F.3d at 98 ("[E]ven where the claimed basis for invalidity of the contract is logically applicable to the entire contract, courts nonetheless require the basis of challenge to be directed specifically to the agreement to arbitrate before the court will intervene.").³

b. Challenges to the Arbitration Agreement

When deciding challenges under the second prong (whether a valid arbitration agreement exists) federal courts generally "apply ordinary state-law principles that govern the formation of contracts." First Options of Chi., Inc. v. Kaplan , 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) ; see also Campbell v. General Dynamics Gov't Sys. Corp. , 407 F.3d 546, 552 (1st Cir. 2005) ("[P]rinciples of state contract law control the determination of whether a valid agreement to arbitrate exists.").

The Agreement notes that the parties "intend[ ] to be legally bound ... under the laws of the State of Vermont." (Docket No. 7-2, at 2). "Under Vermont law, and consistent with American contract law generally, contract formation depends upon proof of ‘a meeting of the minds of the parties: an offer by one of them and an acceptance of such offer by the other. To be valid, an offer must be one which is intended of itself to create a legally binding relationship on acceptance.’ "

Top Ridge Investments, LLC v. Anichini, Inc. , 2017 WL 3016787, at *5 (D. Vt. July 14, 2017) (quoting Starr Farm Beach Campowners Ass'n, Inc. v. Boylan , 174 Vt. 503, 505, 811 A.2d 155, 158 (2002)...