De Pombo v. IRINOX N. Am., Inc.
| Decision Date | 27 October 2020 |
| Docket Number | Case No. 20-cv-20533-BLOOM/Louis |
| Parties | FRANCISCO J. DE POMBO, and all others similarly situated under 29 U.S.C. § 216(b), Plaintiff, v. IRINOX NORTH AMERICA, INC. and JOHN HORVATH, individually, Defendants. |
| Court | U.S. District Court — Southern District of Florida |
THIS CAUSE is before the Court upon Defendants IRINOX North America, Inc. and John Horvath's (collectively, "Defendants") Motion for Court to Appoint Arbitrator and for Arbitration to Proceed in Compliance with the Arbitration Agreement, ECF No. [38] ("Motion"). Plaintiff Francisco De Pombo ("Plaintiff") filed a Response in Opposition, ECF No. [40] ("Response"), to which Defendants filed a Reply, ECF No. [41] ("Reply"). The Court has carefully reviewed the Motion, all opposing and supporting submissions, the record in this case, the applicable law, and is otherwise fully advised. For the reasons set forth below, the Motion is granted.
On February 5, 2020, Plaintiff initiated the instant action under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. ("FLSA"), against Defendants, asserting a single count under the FLSA for the nonpayment of overtime wages incurred while Plaintiff was employed by Defendants. ECF No. [1]. Defendants filed a motion on March 16, 2020, seeking to compel arbitration and dismiss the case because Plaintiff entered into an "Employee Separation and Release Agreement," ECF No. [38-1] ("Agreement"), which states: "Should a dispute arise concerning this Agreement or its performance, such dispute shall be resolved at the election of the party seeking to enforce the Agreement . . . by binding arbitration administered by the American Arbitration Association [("AAA")] under its commercial dispute resolution rules." Id. at 4, ¶ 12.2 ("Arbitration Clause"). This Court granted the motion in part and stayed the case pending arbitration. ECF No. [28] ("Order Compelling Arbitration").
Plaintiff subsequently commenced arbitration proceedings before the AAA. However, Defendants contend that, instead of enforcing the indemnification clause in the Agreement,1 the arbitrator ordered Defendants to pay $1,900.00 of the initial arbitration fee despite what Defendants characterize as Plaintiff's refusal to show his inability to pay. ECF No. [40-3]. Defendants refused to pay the fee and the AAA accordingly administratively closed the case and declined to administer any future employment matter involving Defendants. ECF No. [38-3] at 10.
Defendants now file the instant Motion requesting that the Court appoint an arbitrator to continue the arbitration proceedings pursuant to the parties' Agreement and 9 U.S.C. §§ 4, 5, arguing that the choice of arbitral forum was not integral to the parties' Agreement and that, regardless, the choice of arbitral forum is severable from the rest of the Agreement. Plaintiff, on the other hand, strongly opposes any such appointment, arguing that the arbitration was hinderedby Defendants' own refusal to pay the required fee, and that Defendants' gamesmanship should not be rewarded through the appointment of another arbitrator because doing so would be inequitable and would "likely become so cost prohibitive that it [would] presumably chill" Plaintiff's rights. ECF No. [40] at 8.2 Remarkably, however, the remaining arguments presented in Plaintiff's Response simply rehash the arguments presented in response to Defendants' motion to compel arbitration, which this Court rejected in its Order Compelling Arbitration. As such, these arguments will not be addressed again at this stage.
"[T]he FAA provides that, when a recalcitrant party refuses to proceed with an arbitration agreement, District Courts 'shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement.'" Inetianbor v. CashCall, Inc., 768 F.3d 1346, 1349 (11th Cir. 2014) (emphasis omitted) (quoting 9 U.S.C. § 4). Moreover, § 5 of the FAA states:
If in the agreement provision be made for a method of naming or appointing an arbitrator or arbitrators or an umpire, such method shall be followed; but if no method be provided therein, or if a method be provided and any party thereto shall fail to avail himself of such method, or if for any other reason there shall be a lapse in the naming of an arbitrator or arbitrators or umpire, or in filling a vacancy, then upon the application of either party to the controversy the court shall designate and appoint an arbitrator or arbitrators or umpire, as the case may require, who shall act under the said agreement with the same force and effect as if he or they had been specifically named therein; and unless otherwise provided in the agreement the arbitration shall be by a single arbitrator.
9 U.S.C. § 5.
The Court of Appeals for the Eleventh Circuit has set forth the requisite analysis to employ when determining whether a substitute arbitrator may be appointed pursuant to § 5 of the FAA and the parties' contractual agreement.
Where the chosen forum is unavailable . . . or has failed for some reason, § 5 applies and a substitute arbitrator may be named. Astra Footwear Indus. v. Harwyn Int'l, Inc., 442 F. Supp. 907, 910 (S.D.N.Y.), aff'd, 578 F.2d 1366 (2d Cir. 1978). Only if the choice of forum is an integral part of the agreement to arbitrate, rather than an "ancillary logistical concern" will the failure of the chosen forum preclude arbitration. See Zechman v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 742 F. Supp. 1359, 1364 (N.D. Ill. 1990) (citing Nat'l Iranian Oil Co. v. Ashland Oil, 817 F.2d 326 (5th Cir. 1987)).
Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217, 1222 (11th Cir. 2000). "To determine whether the forum selection clause is integral, [courts] must consider how important the term was to one or both of the parties at the time they entered into the agreement." Flagg v. First Premier Bank, 644 F. App'x 893, 896 (11th Cir. 2016) (quoting Inetianbor, 768 F.3d at 1350). Further, courts determine the parties' intent by examining the text of the arbitration provision. Id.3 Where the choice of arbitral forum is not deemed to be integral to the parties' agreement, a court may then appoint a substitute arbitrator pursuant to § 5 of the FAA.
In this case, the parties' Agreement contains a dispute resolution clause that states "[s]hould a dispute arise concerning this Agreement or its performance, such a dispute shall beresolved at the election of the party seeking to enforce the Agreement, either by court action, or by binding arbitration administered by the American Arbitration Association under its commercial dispute resolution rules." ECF No. [38-1] at 4, ¶ 12.2. The clause also notes that, "[i]f arbitration is initiated, the arbitration shall be held in the State of FLORIDA." Id. Aside from this arbitration clause, the Agreement does not refer to the AAA in any other provision.
Defendants argue that the choice of arbitral forum was not integral to the parties' Agreement, but rather was merely an ancillary logistical concern, as evidenced by the lack of reference to the AAA anywhere else in the Agreement. This absence of any additional reference to the AAA, Defendants contend, indicates that the choice of arbitral forum in this case is distinguishable from the integral forum selection clauses in Inetianbor and Parm v. Nat'l Bank of Cal., N.A., 835 F.3d 1331 (11th Cir. 2016), and comparable to the ancillary arbitration clauses in Brown and Jones v. Sallie Mae, Inc., No. 3:13-cv-837-J-99MMH-MCR, 2013 WL 6283483, at *1 (M.D. Fla. Dec. 4, 2013). Aside from conclusory statements without any legal analysis that the choice of arbitral forum in this case was integral to the parties' Agreement, Plaintiff makes little effort to address the cases cited by Defendants. See Turean v. Mastec, Inc., No. 10-60494-CIV, 2010 WL 11597760, at *2 (S.D. Fla. Aug. 30, 2010) . Nevertheless, as explained below, the Court agrees with Defendants that the selection of the AAA as the arbitral forum in this case was merely an ancillary logistical concern that permits the appointment of a substitute arbitrator.
The Eleventh Circuit analyzed two highly similar arbitration agreements in Parm and Inetianbor,4 both of which expressly required that any disputes "be resolved by Arbitration, which shall be conducted by the Cheyenne River Sioux Tribal Nation [(the "Tribe")] by an authorized representative in accordance with its consumer dispute rules and the terms of this Agreement." See Parm, 835 F.3d at 1333; Inetianbor, 768 F.3d at 1348. Both agreements also referred to the Tribe in numerous other provisions, and both agreements mandated the exclusive application of the Tribe's laws and jurisdiction. See Parm, 835 F.3d at 1338; Inetianbor, 768 F.3d at 1351. When the tribal arbitral forum was unavailable in, the defendants in Parm and Inetianbor sought to have a substitute arbitral forum appointed pursuant to § 5 of the FAA. See Parm, 835 F.3d at 1334; Inetianbor, 768 F.3d at 1349.
The Eleventh Circuit, in holding that the choice of arbitral forum provisions was integral to the parties' agreements in both cases, examined the contractual language to determine the parties' intent in selecting the Tribe as the arbitral forum. See Parm, 835 F.3d at 1334; Inetianbor, 768 F.3d at 1349. Specifically, the Eleventh Circuit not only noted the exclusive and mandatory language used in the forum selection provisions, but also emphasized the numerous references to the Tribe and repeated requirements throughout the entirety of both agreements that the Tribe be involved in the resolution of any disputes. See Parm, 835 F.3d at 1338 (...
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