Randle v. Metro. Transit Auth. of Harris Cnty.

• Decision Date: 01 October 2018
• Docket Number: CIVIL ACTION NO. H-18-1770
• Parties: HUBERT RANDLE, on behalf of himself, individually, and ALL OTHERS SIMILARLY SITUATED Plaintiff, v. METROPOLITAN TRANSIT AUTHORITY OF HARRIS COUNTY, Defendant.
• Court: U.S. District Court — Southern District of Texas

HUBERT RANDLE, on behalf of himself, individually,
and ALL OTHERS SIMILARLY SITUATED Plaintiff,
v.
METROPOLITAN TRANSIT AUTHORITY OF HARRIS COUNTY, Defendant.

CIVIL ACTION NO. H-18-1770

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

October 1, 2018

MEMORANDUM AND OPINION

This suit alleges a failure to pay overtime as required under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq. Hubert Randle, a public-transportation driver in Houston, Texas, sued the Metropolitan Transit Authority of Harris County ("Metro"), asserting a right to relief for himself and on behalf of other similarly situated employees. (Docket Entry No. 61). Randle, who drove a van for METROLift, which serves elderly and disabled passengers, claims that Metro mischaracterized METROLift drivers as independent contractors rather than as employees to avoid overtime payments under the FLSA. (Id. at ¶ 1). Metro moves to dismiss and to compel arbitration under arbitration clauses contained in agreements between Randle and the Greater Houston Transportation Company and Yellow Cab Paratransit Services, Inc. (Docket Entry No. 74). Based on a careful review of the pleadings; the motions; response and reply; counsels' arguments; and the applicable law, this court grants Metro's motion to dismiss and to compel arbitration. The reasons for the ruling are stated in detail below.

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I. Background

Metro is a public transportation service operating in Harris County, Texas. Its services include METROLift, which offers free or subsidized transportation to disabled and elderly residents.

Metro turned to private companies to provide drivers for METROLift. An agreement between Metro and the Greater Houston Transportation Company ("GHTC") permitted GHTC and its sister companies, Yellow Cab Paratransit Services and Texas Paratransit, Inc. (together, "Yellow Cab"), to enter into subcontractor agreements for METROLift services. (Docket Entry No. 74-2 at 2-3, 7). Yellow Cab entered into individual agreements with each driver, under which the drivers would pay Yellow Cab a service fee in exchange for the right to drive METROLift routes. (Id. at 3). Yellow Cab would also provide the drivers support services and equipment. (Id.).

The parties' filings show that on April 7, 2011, Randle signed a written agreement with Yellow Cab to lease and operate a taxicab. (Docket Entry No. 74-2 at 37). An addendum to that agreement signed on the same day permitted Randle to lease from Yellow Cab the equipment to drive for METROLift. (Docket Entry No. 74-2 at 51). On April 18, 2011, Randle signed a Master Agency Agreement and an addendum with Yellow Cab to drive for METROLift under Yellow Cab's agreement with Metro. (Docket Entry No. 74-2 at 53, 63).The parties executed other addenda to the Agreement in October 2011, August 2012, and July 2013. (Docket Entry Nos. 74-2 at 67-75). Yellow Cab and Randle also signed agreements extending Randle's license to lease Yellow Cab vehicles and to drive under Yellow Cab's METROLift agreement in October 2013. (Docket Entry No. 74-2 at 79).

In April 2016, Yellow Cab and Randle signed two additional agreements that renewed Randle's right to drive under Yellow Cab's METROLift agreement with Metro. (Id. at 81-88). The

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two April 2016 Yellow Cab agreements (together, the "Agreements") are at the heart of this motion to dismiss and compel arbitration. Both Agreements contain arbitration clauses.

The first of the Agreements, the Metro Contract Designation, refers to Randle as the "Licensee" and Yellow Cab as "the Company." The Designation includes the following arbitration clause:

Arbitration. Licensee and the Company agree that arbitration is the required and exclusive forum for the resolution of all disputes and claims arising out of or in any way relating to this METRO Contract Designation, whether in tort or contract or any other cause of action. Such arbitration shall be conducted by a single arbitrator and take place in Harris County, Texas under the rules of the American Arbitration Association, unless the parties agree otherwise. Notwithstanding anything to the contrary, Licensee and the Company may seek injunctive or equitable relief from a court of competent jurisdiction in any state or federal court in Houston, Harris County, Texas without first participating in arbitration.

(Docket Entry No. 74-2 at 84). The Services Agreement, which refers to Randle as "Customer" and Yellow Cab as "YCP," includes a virtually identical arbitration clause:

Arbitration. Customer and YCP agree that arbitration is the required and exclusive forum for the resolution of all disputes and claims arising out of or in any way relating to this Services Agreement, whether in tort or any other cause of action. Such arbitration shall be conducted by a single arbitrator and take place in Harris County, Texas under the rules of the American Arbitration Association, unless the parties agree otherwise. Notwithstanding anything to the contrary, Licensee and the Company may seek injunctive or equitable relief from a court of competent jurisdiction in any state or federal court in Houston, Harris County, Texas without first participating in arbitration.

(Docket Entry No. 74-2 at 87).

Although Randle did not directly contract with Metro, he filed this lawsuit against Metro in May 2018, alleging that Metro misclassified him and similarly situated METROLift drivers as independent contractors and failed to pay them the overtime wages required under the FLSA. (Docket Entry No. 1). After Randle moved for conditional collective action certification and

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issuance of notice, Metro moved to dismiss and to compel arbitration based on the arbitration clauses in Randle's Agreements with Yellow Cab. (Docket Entry Nos. 20, 24). This court denied the motion for conditional certification, without prejudice, and granted Randle leave to amend to find and substitute a named plaintiff not subject to an arbitration agreement. (Docket Entry No. 58). Randle filed an amended complaint and a response opposing the motion to dismiss and to compel arbitration; the amended complaint did not name a new plaintiff. (Docket Entry Nos. 61-62). Metro filed a new motion to dismiss and to compel arbitration based on the amended complaint and replied to Randle's response. (Docket Entry Nos. 74, 79). Without the court's leave or Metro's consent, Randle responded to the new motion to dismiss and to compel arbitration after the submission period ended. (Docket Entry No. 87).¹ The new response asked that if the court granted the motion to compel arbitration, it also grant leave to substitute a new named plaintiff. (Id. at 27). Metro responded. (Docket Entry No. 94).

II. The Legal Standards

Federal policy strongly favors enforcing contractual arbitration agreements if the contracts exist under state law and the disputes are within the scope of the arbitration clause. Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 217 (1983); Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). The Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., permits a party to move to compel arbitration when an opposing party refuses to arbitrate issues covered by a valid arbitration agreement. Am. Bankers Ins. Co. of Fla. v. Inman, 436 F.3d 490, 493 (5th Cir.

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2006) (quoting Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991)); 9 U.S.C. § 3, 4. A court must decide "whether the parties agreed to arbitrate the dispute in question," which requires deciding whether: "(1) 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." Tittle v. Enron Corp., 463 F.3d 410, 418 (5th Cir. 2006) (quoting Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996)). State contract law governs the validity and scope of an agreement. Morrison v. Amway Corp., 517 F.3d 248, 254 (5th Cir. 2008). If there is an enforceable agreement to arbitrate the dispute, the court must determine whether any federal statute or policy makes the claims nonarbitrable. JP Morgan Chase & Co. v. Conegie ex rel. Lee, 492 F.3d 596, 598 (5th Cir. 2007). Because of the strong presumption in favor of arbitration, "a party seeking to invalidate an arbitration agreement bears the burden of establishing its invalidity." Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294, 297 (5th Cir. 2004). The FAA requires district courts to order arbitration of all arbitrable claims. Sedco, Inc. v. Petroleos Mexicanos Mexican Nat'l Oil Co. (In re Sedeco, Inc.), 767 F.2d 1140, 1147 (5th Cir. 1985). District courts should dismiss rather than stay litigation pending arbitration if all issues must be resolved by arbitration. Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1991).

Despite its preference for arbitration, § 1 of the FAA contains an exception that limits the enforcement of arbitration agreements against certain workers. Randle argues that this exception applies. (Docket Entry No. 87 at 27). Section 1 states that "nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. This provision "exempts from the FAA only contracts of employment of transportation workers." Circuit City Stores, Inc. v. Adams, 532 U.S.

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105, 119 (2001). Applying this exception requires two findings: (1) the arbitration clause is part of an employment contract, and (2) the employee challenging the arbitration clause is a transportation worker. See id. If the exception applies, then the court cannot compel Randle to arbitrate his claims.

Once a court concludes there is a valid arbitration agreement, it must then determine whether the dispute is within the scope of that agreement, following the "strong national policy favoring arbitration of disputes, and [resolving] all doubts concerning...