White v. Turner

Decision Date21 March 2016
Docket NumberCIVIL ACTION NO. H-15-1485
PartiesBRIAN WHITE and ROSLYN SCHOFFSTALL, on behalf of themselves and all others similarly situated, Plaintiffs, v. CORKEY TURNER, TURNER RESTAURANTS, d/b/a CASA OLÉ MEXICAN RESTAURANTS, and MEXICAN RESTAURANTS, INC., Defendants.
CourtU.S. District Court — Southern District of Texas
I. Background

Brian White and Roslyn Schoffstall worked as waitstaff at a Houston-area Casa Olé restaurant. In this lawsuit, they allege that they are required to spend over 20 percent of each working day on tasks that do not allow them to collect tips, such as rolling silverware, mixing salsa, making tea, and cleaning, and that they were paid far below minimum wage for the hours spent on these tasks. They also allege that when they work more than 40 hours in a workweek, they do not receive pay for these hours, even at regular hourly rates, and that this time is removed from their time sheets. White and Schoffstall allege that these practices violate the Fair Labor Standards Act requirements to pay minimum wage for time spent on non-tipped work, to pay for all hours worked, to pay overtime hours at overtime rates, and to keep accurate records. 29 U.S.C. § 201, et seq.

The Casa Olé restaurant where White and Schoffstall worked is owned and operated by Corkey Turner and Turner Restaurants (together, "Turner Restaurants"), under a franchise agreement with Mexican Restaurants Inc. ("MRI"). MRI directly owns and operates other Casa Olé restaurants. White and Schoffstall allege that the same illegal compensation practices they were subject to are applied at all 32 of the Casa Olé restaurants, both those owned and operated by MRI and those franchised and owned and operated by Turner Restaurants. These representative plaintiffs moved for conditional collective-action certification and issuance of notice to those who work or worked at any of these Casa Olé restaurants over the past three years. (Docket Entry No. 13). White and Schoffstall allege that at the Turner-Restaurants-owned Casa Olés, Turner Restaurants and MRI are joint employers.

White and Schoffstall worked only at a Turner-Restaurant-owned Casa Olé. Additional individuals have signed consent-to-join forms to opt in if the action is conditionally certified. One of these individuals, Maxine McInnis, worked at different times for both an MRI-owned and a Turner-Restaurant-owned Casa Olé. Another, Celia Uribe, worked only for an MRI-owned Casa Olé. After the motion for conditional certification was filed, but before it was granted, MRI moved to compel McInnis and other MRI-owned Casa Olé restaurant members who are members of the putative collective action to arbitrate their FLSA claims against MRI. In support, MRI asserted and presented evidence that it required all employees during the relevant period to sign written agreements requiring arbitration of all employment-related disputes with MRI, including FLSA claims. (Docket Entry No. 18). Turner Restaurants did require signed arbitration agreements as a condition of employment.

MRI acknowledged that it no longer has a copy of the agreement McInnis signed becauseher employment ended over three years ago, and MRI's routine document retention and destruction policy called for the destruction of personnel files three years after "separation." (Id., p. 3). MRI has produced copies of arbitration agreements for other employees at MRI-owned Casa Olés who White and Schoffstall referred to in the pleadings.

White and Schoffstall argue in response that the court should deny the motion to compel because: 1) MRI has not and cannot produce a written arbitration agreement for McInnis or for every putative class member, as the best evidence rule requires; 2) some putative class members may be minors and therefore lack the capacity to enter into an enforceable arbitration agreement; and 3) some putative class members may not speak or read English, making any agreement unenforceable. White and Schoffstall do not assert that the second or third arguments apply to either Uribe or McInnis. They argue instead that the court should deny the motion to compel and defer considering arbitrability until after the court orders notice, the opt-in period ends, and they can conduct discovery into the existence of written agreements and their enforceability for those who opt in. (Docket Entry No. 22 at p. 5-7).

The court has previously granted the motion for conditional certification and issuance of notice as to the employees at the two Turner-Restaurants-owned Casa Olés. The court also ruled that MRI and Turner Restaurants were not joint employers of those working at only Turner-Restaurants-owned Casa Olés. The court allowed the parties to submit added authority addressing whether and when to conditionally certify an FLSA collective action in the face of a motion to compel arbitration and the possibility of state-law defenses that could defeat arbitrability. MRI submitted supplemental authorities. (Docket Entry No. 44).

Based on the pleadings; the motions, responses and replies; the arguments of counsel; therecord; and the relevant law; the court grants MRI's motion to compel arbitration, (Docket Entry. No. 18), and denies the motion for conditional certification of a class of current and former employees of MRI-owned Casa Olés within the three years before this action was filed, (Docket Entry No. 13). This decision does not alter the court's previous ruling conditionally certifying and issuing notice to a class of current and former employees of Turner-Restaurants-owned Casa Olés within the three years before this action was filed.

The reasons for these rulings are explained below.

II. Analysis
A. The Legal Standard for a Motion to Compel Arbitration

District courts must enforce valid arbitration agreements under the Federal Arbitration Act, 9 U.S.C. § 2. Under the FAA, federal courts first determine whether a valid agreement to arbitrate exists and, if so, whether it covers the parties' disputes. Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 452 (2003); Tittle v. Enron Corp, No. 05-20380, 2006 WL 2522444, at *6 (5th Cir. Sept. 1, 2006) (quoting Webb v. Investacorp, 89 F.3d 252, 258 (5th Cir. 1996)). "Generally under the FAA, state law governs whether a litigant agreed to arbitrate, and federal law determines the scope of the arbitration clause." In re Weekley Homes, 180 S.W.3d 127 (Tex. 2005); Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069, 1077-78 (5th Cir. 2002), opinion supplemented on denial of rehearing, 303 F.3d 570 (5th Cir. 2002) (same). These are generally issues for the courts to decide. Green Tree, 539 U.S. at 452. Questions of contract interpretation relevant to these issues are decided under "ordinary state-law principles that govern the formation of contracts." Webb, 89 F.3d at 258 (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995)); Banc One Acceptance Corp. v. Hill, 367 F.3d 426, 429 (5th Cir. 2004).

If there is a binding agreement to arbitrate, the court then decides whether the agreement covers the parties' dispute. Green Tree, 539 U.S. at 452; Tittle, 2006 WL 2522444, at *6. Once a valid arbitration agreement is found, the FAA's "strong national policy favoring arbitration of disputes" applies, and all doubts concerning the arbitrability of claims should be resolved in favor of arbitration." Wash. Mut. Fin. Group, L.L.C. v. Bailey, 364 F.3d 260, 263 (5th Cir. 2004) (quotations omitted); EEOC v. Waffle House, Inc., 534 U.S. 279, 294 (2002). The duty to arbitrate remains one of contract; a court cannot compel parties to arbitrate issues they have not agreed to submit. AT & T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 648 (1986); Tittle v. Enron Corp., 463 F.3d 410, 418 (5th Cir. 2006); Neal v. Hardee's Food Sys., Inc., 918 F.2d 34, 37 (5th Cir. 1990).

The motion to compel is analyzed as to Uribe and McInnis, who signed consent-to-join forms. They both worked at an MRI-owned Casa Olé, and McInnes also worked at a Turner-Restaurant-owned Casa Olé.

B. Uribe

Uribe worked at an MRI-owned and operated Casa Olé, but not at one owned and operated by Turner Restaurants. MRI has produced a copy of the written arbitration agreement Uribe signed. (Docket Entry No. 44, Ex. 1). She has not disputed that she signed the agreement. Nor has she asserted that she was a minor or could not read it. There is a written signed arbitration agreement that is not subject to the state-law defenses identified in this suit. Uribe's FLSA claims against MRI are subject to a valid arbitration agreement that covers "all disputes, including statutory and common law claims, whether under state, federal or local law, including, but not limited to, . . . [the] Fair Labor Standards Act . . . ." (Id.). The agreement also states that "class actions and collective actionsare not permissible under this Agreement." (Id.). Uribe's FLSA claims against MRI cannot be litigated but must be arbitrated, and only in an individual proceeding.

White and Schoffstall argue that the arbitration agreement Uribe signed cannot be applied to an individual like Uribe, who signed a consent-to-join or opt-in form in a pending FLSA collective action, as opposed to a representative plaintiff who initially filed the suit. But neither the parties' agreement nor the cited case law distinguishes between the enforceability of an arbitration agreement signed by those initiating a collective action and those later signing consent-to-sue forms or opting in. Because MRI and Uribe entered into a valid arbitration agreement that covers all Uribe's claims, MRI's motion to compel her to arbitrate those claims is granted.

C. McInnis

McInnis, unlike White and Schoffstall, previously worked at an MRI-owned Casa Olé. Like White and Schoffstall, she currently works for a Turner-Restaurant-owned Casa Olé. MRI moved to compel McInnis to arbitrate her FLSA claims against MRI, but could not produce a written...

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