Tallman v. Eighth Jud. Dist. Ct. , 2015 NV 71 ( 2015 )


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  •                                                      131 Nev., Advance Opinion 71
    IN THE SUPREME COURT OF THE STATE OF NEVADA
    DENNIS TALLMAN, INDIVIDUALLY                         No. 60673
    AND ON BEHALF OF OTHERS
    SIMILARLY SITUATED,
    Petitioner,
    vs.
    THE EIGHTH JUDICIAL DISTRICT
    ALE
    COURT OF THE STATE OF NEVADA,                               SEP 2k 2015
    IN AND FOR THE COUNTY OF
    aAcra K. UNDEMAN
    F.L.-QB
    CLARK; AND THE HONORABLE
    SUSAN JOHNSON, DISTRICT JUDGE,                         BY                (nERK
    Respondents,
    and
    CPS SECURITY (USA), INC.; AND CPS
    CONSTRUCTION SECURITY PLUS,
    INC.,
    Real Parties in Interest.
    DONALD MIKA; AND BERYL HARTER,                       No. 61390
    INDIVIDUALLY AND ON BEHALF OF
    OTHERS SIMILARLY SITUATED,
    Petitioners,
    vs.
    THE EIGHTH JUDICIAL DISTRICT
    COURT OF THE STATE OF NEVADA,
    IN AND FOR THE COUNTY OF
    CLARK; AND THE HONORABLE
    SUSAN JOHNSON, DISTRICT JUDGE,
    Respondents,
    and
    CPS SECURITY (USA), INC.; AND CPS
    CONSTRUCTION SECURITY PLUS,
    INC.,
    Real Parties in Interest.
    Original petitions for writ of mandamus challenging district
    court orders compelling arbitration in an employment action.
    Petitions denied.
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    Leon Greenberg Professional Corporation and Leon M. Greenberg, Las
    Vegas,
    for Petitioners.
    Kamer Zucker Abbott and Carol Davis Zucker and Timothy W. Roehrs,
    Las Vegas,
    for Real Parties in Interest.
    BEFORE THE COURT EN BANC.
    OPINION
    By the Court, PICKERING, J.:
    Petitioners Donald Mika, Beryl Harter, and Dennis Tallman
    seek writs of mandamus directing the district court to vacate its orders
    compelling arbitration of their claims against their former employer, real
    party in interest CPS Security (USA), Inc., and certain of its agents and
    associates (collectively, CPS). All three petitioners signed the same long-
    form arbitration agreement, which includes a clause waiving the right to
    initiate or participate in class actions. They urge this court to invalidate
    the agreement, first, because it was not countersigned by CPS and, second,
    because its class action waiver assertedly violates state and federal law.
    Petitioner Tallman also maintains that CPS waived its right to compel
    arbitration by litigating with him in state and federal court. The district
    court acted properly in compelling individual arbitration of petitioners'
    claims. We therefore deny writ relief.
    I.
    A.
    CPS provides security services to construction companies in
    Nevada and elsewhere. Petitioners worked 50 to 70 hours per week for
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    CPS as trailer guards. As a condition of their employment, CPS required
    petitioners to sleep overnight in small trailers located at its work sites.
    CPS did not pay petitioners for their sleep time except when they were
    called out to respond to an alarm or other activity at the site. Petitioners
    allege, and CPS denies, that they are owed at least the minimum wage for
    the required on-site sleep time, whether called out during the night or not,
    as well as overtime pay.
    Petitioners signed both short- and long-form arbitration
    agreements with CPS. The short-form agreement is entitled "Arbitration
    Agreement (Outside CA)" and includes concise language assenting to
    binding arbitration and providing that it can only be modified "by a
    written instrument executed by EMPLOYEE and Chris Coffey, on behalf
    of the COMPANY." The long-form agreement is entitled "Offer to
    Participate in Arbitration of Disputes" and is much more detailed. It
    specifies that arbitration shall be conducted pursuant to the JAMS
    Employment Arbitration Rules at a location convenient to the employee
    and provides for a written award, judicial review of the award, and for
    CPS to bear the costs of arbitration, including the arbitrators' fees.
    The long-form arbitration agreement includes a clause entitled
    "Waiver of Right to Initiate or Participate in Collective or Class Actions."
    This clause states that, "The Arbitrator shall not consolidate Claims of
    different employees into one proceeding, nor shall the Arbitrator have the
    power to hear arbitration as a class action." It continues:
    By entering into this Agreement, the
    Company [(CPS)] and I are agreeing to waive
    rights we might otherwise have including, but not
    limited to, the rights (a) to initiate representative
    actions, collective actions, and/or class actions; and
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    (b) to participate in representative actions,
    collective actions, or class actions initiated by
    others.
    The long-form agreement also includes an acknowledgment that CPS "is          •
    engaged in transactions involving interstate commerce [ and] that the
    employment relationship between us affects interstate commerce."
    The long-form agreement has two signature pages. Each of
    the petitioners signed both pages of his or her long-form agreement. The
    first signature page of the long-form agreement• also includes a signature
    line for CPS, which CPS left blank and never signed. The second and final
    signature page is set up for only the employee to sign. It contains three
    paragraphs, all in capital letters, headed "VOLUNTARY AGREEMENT,"
    "RIGHT TO CONSULT COUNSEL," and "30 DAY PERIOD TO OPT-
    OUT." The paragraph headed "OPT-OUT" acknowledges "THAT I WAS
    ADVISED THAT CHOOSING TO SIGN THIS AGREEMENT IS NOT A
    CONDITION OF MY EMPLOYMENT," and that "I HAVE BEEN GIVEN
    A COPY OF MY SIGNED AGREEMENT AND HAVE A FULL THIRTY
    (30) DAY PERIOD TO OPT-OUT OF THE AGREEMENT IF I CHANGE
    MY MIND."
    B.
    Tallman sued CPS in state court, asserting minimum wage
    and overtime claims individually and on behalf of others similarly situated
    under Nevada law, NRS Chapter 608, and the federal Fair Labor
    Standards Act (FLSA), 29 U.S.C. §§ 201-219 (2014). CPS removed
    Tallman's complaint to federal court, which retained jurisdiction of the
    FLSA claims but declined to exercise supplemental jurisdiction over, and
    therefore remanded, the Nevada-law-based claims. Thereafter, Mika and
    Harter filed a second state court suit against CPS. Their complaint, also
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    styled as a class action, reasserts Tallman's NRS Chapter 608 claims
    against CPS but adds new defendants and civil racketeering claims under
    NRS Chapter 207. The two suits were assigned to the same district court
    judge who, after briefing and argument, entered orders compelling
    individual arbitration of Tallman's, Mika's, and Harter's claims and
    denying their motions for class certification. It is from these orders that
    Tallman, Mika, and Harter seek extraordinary writ relief.
    Nevada has adopted the Uniform Arbitration Act of 2000
    (UAA). NRS 38.206 to 38.248. Consistent with its policy favoring efficient
    and expeditious enforcement of agreements to arbitrate, see NRS 38.219;
    D.R. Horton, Inc. v. Green, 
    120 Nev. 549
    , 553, 
    96 P.3d 1159
    , 1162 (2004),
    the Act authorizes interlocutory appeals from orders denying arbitration
    but makes no provision for interlocutory appeals of orders compelling
    arbitration. NRS 38.247(a)(1). We have said that the reason for not
    allowing interlocutory appeals of orders compelling arbitration is
    "obvious": "[If at the very threshold of the proceeding the defaulting party
    could appeal and thereby indefinitely delay the matter of arbitration, the
    object of the law [favoring arbitration] and the purpose of the written
    agreement of the parties would be entirely defeated."        Clark Cnty. v.
    Empire Elec., Inc., 
    96 Nev. 18
    , 20, 
    604 P.2d 352
    , 353 (1980) (internal
    quotations omitted) (addressing an earlier version of the UAA).
    Since petitioners have no immediate right of direct appeal,
    they ask this court to exercise original mandamus jurisdiction over the
    district court's orders compelling arbitration. Mandamus affords
    interlocutory appellate review in cases "where there is not a plain, speedy
    and adequate remedy in the ordinary course of law." NRS 34.170. The
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    petitioners assume, and CPS accepts, that they have no "plain, speedy and
    adequate remedy" besides mandamus because NRS 38.247(a)(1) does not
    provide for direct, interlocutory appeals from compelling arbitration.   See
    also Kindred v. Second Judicial Dist. Court, 
    116 Nev. 405
    , 409, 
    996 P.2d 903
    , 906 (2000) (reviewing an order compelling arbitration on a writ of
    mandamus and "concludfing] that [petitioner] has no remedy available
    other than that provided by a writ"). But error in ordering arbitration
    may be reviewed on appeal from the final judgment or order confirming or
    vacating the award, see NRS 38.247; Clark Cnty. v. Empire Elec., 
    Inc., 96 Nev. at 20
    , 604 P.2d at 353, eventual appellate review that the Uniform
    Arbitration Act deems adequate and appropriate.            See In re Gulf
    Exploration, LLC, 
    289 S.W.3d 836
    , 841-43 (Tex. 2009) (discussing the
    tension between mandamus review of orders compelling arbitration and
    "the legislative preference for moving cases to arbitration quickly" evident
    in the Uniform Arbitration Act's withholding a right of direct interlocutory
    appeal of such orders). Thus, the party seeking extraordinary writ relief
    from an order compelling arbitration still should show why an eventual
    appeal does not afford "a plain, speedy and adequate remedy in the
    ordinary course of law," NRS 34.170, 1 and that the matter meets the other
    1 We question Kindred to the extent it suggests that orders
    compelling arbitration automatically satisfy NRS 34.170's requirement
    that there not be "a plain, speedy and adequate remedy in the ordinary
    course of law." While the unavailability of an immediate appeal from an
    order compelling arbitration may present a situation in which an eventual
    appeal from the order confirming the award or other final judgment in the
    case will not be plain, speedy, or adequate, it is an overstatement to say
    this holds true in all cases where arbitration has been compelled. See
    generally In re Gulf 
    Exploration, 289 S.W.3d at 841-42
    (rejecting the
    argument that the lack of an immediate appeal from an order compelling
    continued on next page. . .
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    criteria for extraordinary writ relief, i.e., that mandamus is needed "to
    compel the performance of an act that the law requires or to control a
    manifest abuse of discretion" by the district court.   State ex rd. Masto v.
    Second Judicial Dist. Court, 
    125 Nev. 37
    , 43-44, 
    199 P.3d 828
    , 832 (2009)
    (also emphasizing that "the decision to entertain" a petition for mandamus
    challenging an order compelling arbitration is not automatic, but a matter
    "addressed solely to our discretion").
    The parties do not meaningfully address the requirements for
    extraordinary writ relief in their briefs. We nonetheless accept mandamus
    review of the petitions before us for two reasons. First, our case law may
    have invited the parties to assume that the lack of a right of interlocutory
    direct appeal made mandamus readily available.           See supra note 1;
    
    Kindred, 116 Nev. at 409
    , 996 P.2d at 906; cf. Pan v. Eighth Judicial Dist.
    Court, 
    120 Nev. 222
    , 228, 
    88 P.3d 840
    , 843-44 (2004) (although concluding
    that appeal, not mandamus, is the appropriate vehicle to review orders
    dismissing actions on forum non conveniens grounds, "because we
    previously indicated that the proper method of review in this type of case
    is a petition for a writ of mandamus, we will exercise our original
    jurisdiction and consider this petition"). Second, our decision to invalidate
    class action waivers in consumer arbitration agreements, see Picardi v.
    Eighth Judicial Dist, Court, 
    127 Nev. 106
    , 
    251 P.3d 723
    (2011), conflicts
    with the Supreme Court's more recent decision in AT&T Mobility LLC v.
    • . . continued
    arbitration under the Texas version of the UAA could or should satisfy the
    requirement that the party seeking mandamus show no adequate remedy
    at law).
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    Concepcion, 563 U.S.      , 
    131 S. Ct. 1740
    (2011), and petitioners present a
    nonfrivolous argument that, notwithstanding Concepcion, the National
    Labor Relations Act, 29 U.S.C. §§ 157, 158 (2014), may invalidate class
    and collective action waivers in employment arbitration agreements.      But
    see D.R. Horton, Inc. v. NLRB, 
    737 F.3d 344
    , 362 (5th Cir. 2013); Iskanian
    v. CLS Transp. Los Angeles, LLC,     
    327 P.3d 129
    , 141-42 (Cal. 2014), cert.
    denied,      U.S. 
    135 S. Ct. 1155
    (2015). The conflict between our
    decision in Picardi and the Supreme Court's decision in Concepcion, and
    the injury the petitioners and the class members they sought to represent
    would suffer if the district court's orders compelling individual arbitration
    proved wrong, together persuade us to consider the petitions on the
    merits.
    Petitioners raise a threshold question whether the long-form
    arbitration agreement, which contains the objected-to class action waiver,
    constitutes a valid contract. They contend that CPS's failure to sign the
    long-form agreement makes it unenforceable and that the short-form
    agreement, which CPS did sign and which does not include a class action
    waiver clause, therefore controls. Petitioners Mika and Harter separately
    argue that the additional defendants they sued, certain individuals and
    entities associated with CPS, were not party to and cannot enforce either
    form of arbitration agreement.
    NRS 38.219(1) expresses Nevada's fundamental policy
    favoring the enforceability of arbitration agreements. Similar to § 2 of the
    Federal Arbitration Act (FAA), 9 U.S.C. § 2 (2013), it provides that, "An
    agreement contained in a record to submit to arbitration any existing or
    subsequent controversy arising between the parties to the agreement is
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    valid, enforceable and irrevocable except. . . upon a ground that exists at
    law or in equity for the revocation of a contract." "Whether a dispute
    arising under a contract is arbitrable is a matter of contract
    interpretation, which is a question of law that we review de novo." State
    ex rel. 
    Masto, 125 Nev. at 44
    , 199 P.3d at 832. "As a matter of public
    policy, Nevada courts encourage arbitration and liberally construe
    arbitration clauses in favor of granting arbitration." 
    Id. Petitioners' argument
    that CPS's failure to sign the long-form
    arbitration agreement invalidates the agreement fails. While NRS
    38.219(1) requires that the arbitration agreement be "contained in a
    record," it does not require that the written record of the agreement to
    arbitrate be signed. 1 Thomas H. Oehmke, Commercial Arbitration § 7:1,
    at 7-2 (3d ed. 2014) (noting that, while the UAA requires that "the terms
    of an arbitration agreement . . . be in a record," this only means that "the
    arbitration contract must be in writing [;I neither the FAA nor the UAA
    (2000) require that the arbitral contract be executed"); see also Campanelli
    v. Conservas Altamira, S.A., 
    86 Nev. 838
    , 842, 
    477 P.2d 870
    , 872 (1970)
    ("Although an agreement to arbitrate future controversies must be in
    writing, a signature is not required." (internal citations omitted)).
    Petitioners dated and signed the short- and long-form
    agreements together; that CPS did not pre-sign the latter makes sense
    given the 30-day opt-out period the long-form agreement extended the
    signing employee. We agree with the district court, which held that the
    petitioners accepted the "offer" that was the long-form agreement when
    they signed it and did not thereafter timely opt out. The clause in the
    fully executed short-form agreement stating that "This Agreement can be
    modified only by a written instrument executed by EMPLOYEE and Chris
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    Coffey, on behalf of the COMPANY," does not alter the analysis.         Silver
    Dollar Club v. Cosgriff Neon Co., Inc., 
    80 Nev. 108
    , 111, 
    389 P.2d 923
    , 924
    (1964) ("Even where they include in the written contract an express
    provision that it can only be modified or discharged by a subsequent
    agreement in writing, nevertheless their later oral agreement to modify or
    discharge their written contract is both provable and effective to do so."
    (quoting Simpson on Contracts § 63, at 228)); see UAA of 2000, § 6, cmt. 1,
    7 U.L.A., part 1A 25 (2009) (noting that if an initial writing agreeing to
    arbitration exists, "a subsequent oral agreement about terms of an
    arbitration contract is valid"); Patterson v. Raymours Furniture Co.,        F.
    Supp.3d     , 
    2015 WL 1433219
    *3-4 (S.D.N.Y. 2015) (enforcing revisions
    to an arbitration agreement as acknowledged in an employee handbook
    and noting that, while the FAA requires a writing, it need not be signed).
    Also unavailing is the argument by petitioners Mika and
    Harter that the additional defendants they sued did not sign and so
    cannot enforce the CPS arbitration agreements. By its terms, the long-
    form arbitration agreement covers claims not only against CPS but also
    "against its officers, directors, managers, employees or agents." "When the
    non-signatory party is an employee of the signatory corporation and the
    underlying action in the dispute was undertaken in the course of the
    employee's employment, there is a uniform federal rule, founded on
    general state law principles of agency: [ifl 'a principal is bound under the
    terms of a valid arbitration clause, its agents, employees, and
    representatives are also covered under the terms of such agreements."
    1 Thomas H. 
    Oehmke, supra
    , 7:3, at 88 (2015 Supp.) (quoting Pritzker v.
    Merrill Lynch, Pierce, Fenner & Smith, Inc., 
    7 F.3d 1110
    , 1121 (3d Cir.
    1993)). The wrong that Mika and Harter allege they suffered ties directly
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    to CPS's trailer guard compensation and arbitration policies, which they
    allege the additional defendants, as CPS's "managers, officers, directors
    and/or controlling agents" and "agent or alter ego," devised and carried
    out. Given this record, the district court correctly treated Mika's and
    Harter's asserted claims against the additional defendants named in their
    complaint as covered by the long-form arbitration agreement they signed
    with CPS.
    IV.
    A.
    This brings us to the crux of the matter. Petitioners assert
    statutory overtime and minimum wage claims under NRS Chapter 608.
    Prosecuted individually, these are relatively small-dollar claims. If the
    long-form arbitration agreement stands, petitioners must proceed
    individually, and not by class action. Petitioners opposed CPS's motions to
    compel arbitration with an affidavit from their counsel, which estimates
    the size of their potential recoveries and the likely expense involved and
    concludes that, if the class action waiver is enforced, pursuing petitioners'
    statutory claims is economically infeasible. Citing Gentry v. Superior
    Court, 
    165 P.3d 556
    , 567-68 (Cal. 2007) abrogation recognized by Iskanian
    v. CLS Transp. Los Angeles, LLC,          
    327 P.3d 129
    , 135-36 (Cal. 2014),
    petitioners urge us to invalidate the class action waiver in the long-form
    arbitration agreement on the grounds it violates substantive state law by
    depriving them of the means to vindicate their statutory overtime and
    minimum wage claims.
    This court addressed the validity of a class action waiver in an
    arbitration agreement in Picardi v. Eighth Judicial District Court, 
    127 Nev. 106
    , 
    251 P.3d 723
    (2011). In Picardi, "we consider[ed] whether an
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    arbitration agreement is unenforceable because it is unconscionable or
    contrary to public policy when it requires consumers to waive their rights
    to participate in any form of class action litigation to pursue common
    claims that they may have concerning a retail installment sales 
    contract." 127 Nev. at 108
    , 251 P.3d at 724. Because "Nevada public policy favors
    allowing consumer class action proceedings when the class members
    present common legal or factual questions but their individual claims may
    be too small to be economically litigated on an individual basis," we held
    "that a clause in a contract that prohibits a consumer from pursuing
    claims through a class action, whether in court or through arbitration,
    violates Nevada public policy." 
    Id. Of note,
    the arbitration agreement in
    Picardi specified that it "shall be governed by the Federal Arbitration
    Act." 
    Id. at 111,
    251 P.3d at 726. Nonetheless, we concluded that "the
    FAA does not require states to enforce arbitration agreements" that offend
    substantive state policy. 
    Id. at 112,
    251 P.3d at 726. Because "the class
    action waiver in the arbitration agreement violates [Nevada] public
    policy," we deemed it unenforceable. 
    Id. at 114,
    251 P.3d at 728.
    The United States Supreme Court handed down its decision in
    Concepcion after we decided Picardi. At issue in Concepcion was whether
    the FAA preempted California's Discover Bank rule; 2 the Supreme Court
    held that it did. In Discover Bank, the California Supreme Court had
    held, much as we held in Picardi, that class arbitration waivers in the
    context of consumer contracts of adhesion are unconscionable and
    unenforceable when the amounts involved are too small to be challenged
    2Discover   Bank v. Superior Ct., 
    113 P.3d 1100
    (Cal. 2005).
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    individually, such that enforcing a class waiver allows the stronger party
    to escape 
    liability. 113 P.3d at 1109
    . The high court in Concepcion
    invalidated the rule in Discover Bank.        In its view, "Hequiring the
    availability of classwide arbitration interferes with fundamental
    attributes of arbitration and thus creates a scheme inconsistent with the
    FAA." 563 U.S. at , 131 S. Ct. at 1748. To require class arbitration, in
    the face of an agreement disallowing resort to class action procedures,
    "sacrifices •the principal advantage of arbitration—its informality—and
    makes the process slower, more costly, and more likely to generate
    procedural morass than final judgment."    
    Id. at ,
    131 S. Ct. at 1751.
    Thus, "because it stands as an obstacle to the accomplishment and
    execution of the full purposes and objectives of Congress, California's
    Discover Bank rule is preempted by the FAA." 
    Id. at ,
    131 S. Ct. at
    1753 (internal quotation omitted).
    Petitioners recognize that, although Concepcion does not
    mention Picardi by name, the high court's opinion abrogates Picardi as
    fully as it abrogates Discover Bank.       Nonetheless, they urge us to
    distinguish Concepcion on two bases. First, they insist that Concepcion is
    limited to the consumer arbitration context and does not affect cases like
    the underlying cases and 
    Gentry, 165 P.3d at 567-68
    , in which the
    California Supreme Court invalidated a class arbitration waiver on the
    grounds that it made effective vindication of an employee's small-dollar
    wage and overtime claims impossible. Second, they argue that Concepcion
    only applies to cases litigated in federal, not state court. Neither
    argument has merit.
    The argument that        Gentry    survived   Concepcion   was
    considered and rejected by the California Supreme Court in Iskanian v.
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    CLS Transportation Los Angeles, LLC, 
    327 P.3d 129
    (Cal. 2014). The
    plaintiff in Iskanian was an employee who sought "to bring a class action
    lawsuit on behalf of himself and similarly situated employees for his
    employer's alleged failure to compensate its employees for, among other
    things, overtime and meal and rest 
    periods." 327 P.3d at 133
    . Like
    petitioners here, Iskanian "had entered into an arbitration agreement that
    waived the right to class proceedings."       
    Id. He acknowledged
    that
    Concepcion abrogated Discover Bank but tried to distinguish Gentry, as
    follows: "Unlike Discover Bank, which held consumer class action bans
    generally unconscionable, Gentry held only that when a statutory right is
    unwaivable because of its public importance, banning class actions would
    in some circumstances lead to a de facto waiver and would impermissibly
    interfere with employees' ability to vindicate unwaivable rights and to
    enforce the overtime laws." 
    Id. at 135
    (internal quotations omitted).
    The California Supreme Court was not persuaded. In its view,
    "the fact that Gentry's rule against class waiver is stated more narrowly
    than Discover Bank's rule does not save it from FAA preemption under
    Concepcion." 
    Id. at 135
    . On this basis, the California Supreme Court
    upheld the district court's order compelling individual arbitration of
    Iskanian's wage and hour claims and held that Concepcion effectively
    overruled Gentry, in addition to Discover Bank:
    The high court in Concepcion made clear that even
    if a state law rule against consumer class waivers
    were limited to "class proceedings [that] are
    necessary to prosecute small-dollar claims that
    might otherwise slip through the legal system," it
    would still be preempted because states cannot
    require a procedure that interferes with
    fundamental attributes of arbitration "even if it is
    desirable for unrelated reasons." It is thus
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    incorrect to say that the infirmity of Discover
    Bank was that it did not require a case-specific
    showing that the class waiver was exculpatory.
    Concepcion holds that even if a class waiver is
    exculpatory in a particular case, it is nonetheless
    preempted by the FAA. Under the logic of
    Concepcion, the FAA preempts Gentry's rule
    against employment class waivers.
    
    Id. at 135
    -36 (alteration in original) (quoting 
    Concepcion, 563 U.S. at 131
    S. Ct. at 1753). We agree with the California Supreme Court that,
    while Concepcion specifically addressed class waivers in consumer
    arbitration agreements, nothing in Concepcion suggests that the FAA
    preemption principles it articulates do not apply broadly in other contexts,
    including state-law-based wage and hour claims. We therefore reject
    petitioners' argument that Concepcion does not apply to require individual
    arbitration, as per the long-form arbitration agreements, of their NRS
    Chapter 608 and other state-law claims.
    Nor are petitioners correct that the FAA only applies to cases
    litigated in federal court. By its terms, the Federal Arbitration Act
    governs the enforceability of "a written provision in . . . a contract
    evidencing a transaction involving commerce to settle by arbitration a
    controversy thereafter arising out of such contract or transaction." 9
    U.S.C. § 2 (2013). So long as "commerce" is involved, the FAA applies.
    "[T]hough state laws affecting arbitration can supplement the FAA in
    areas not addressed by federal law," 1 Thomas H. 
    Oehmke, supra
    , § 3:16,
    at 41 (2015 Supp.), when the FAA applies, it preempts contrary state law
    whether the preemption issue arises in state or federal court.      Marmet
    Health Care Center, Inc. v. Brown, 565 U.S. „ 
    132 S. Ct. 1201
    , 1203
    (2012). The Supreme Court has made it unmistakably clear that state
    courts "must abide by the FAA, which is 'the supreme Law of the Land,'
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    U.S. Const. art. VI, cl. 2, and by the opinions of [the Supreme] Court
    interpreting that law." Nitro-Lift Techs., LLC v. Howard,        568 U.S.
    ,
    133 S. Ct. 500
    , 503 (2012).
    Petitioners' employment by CPS involves commerce. Indeed,
    the long-form arbitration agreements so stipulate. Thus, the FAA applies.
    Concepcion teaches that the FAA protects class waivers in arbitration
    agreements, even when requiring individual arbitration hampers effective
    vindication of statutory claims. See also Am. Express Co. v. Italian Colors
    Rest., 570 U.S. „ 
    133 S. Ct. 2304
    , 2310 (2013) (upholding class
    arbitration waiver under the FAA against the argument that doing so will
    prevent vindication of small-dollar antitrust claims, thereby thwarting the
    policies of the federal antitrust laws and noting, "[t]he class-action waiver
    merely limits arbitration to the two contracting parties. It no more
    eliminates those parties' right to pursue their statutory remedy than did
    federal law before its adoption of the class action for legal relief in 1938."
    (internal citations omitted)).
    NRS 608.018 and NRS 608.250 afford Nevada employees the
    right to overtime and minimum wage for work performed. So vital is the
    right to a minimum wage that it is secured by the Nevada Constitution.
    Nev. Const. art. 15, § 16. 3 But the importance of a right does not entitle a
    3 Petitioners argue that class actions are a "remedy" protected by
    Article 15, Section 16B of the Nevada Constitution, which guarantees
    minimum wage and "all remedies available under the law or in equity
    appropriate to remedy any violation" of the minimum wage law, "including
    but not limited to back pay, damages, reinstatement or injunctive relief."
    As the list of remedies suggests, a class action is a procedural device, not a
    remedy. See D.R. Horton v. NLRB, 
    737 F.3d 344
    , 357 (5th Cir. 2013)
    (Thlhe use of class action procedures . . . is not a substantive right" or
    remedy; a class action is a procedural device). While a person's right to
    continued on next page . . .
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    litigant to arbitrate on a class basis when he has agreed to arbitrate his
    statutory claims on an individual basis. Concepcion, 563 U.S. at , 131
    S. Ct. at 1753 ("States cannot require a procedure that is inconsistent with
    the FAA, even if it is desirable for unrelated reasons."). Concepcion does
    not permit a state court to invalidate a class arbitration waiver in a
    transaction involving commerce on the basis that individual arbitration
    hampers effective vindication of an employee's state-law-based overtime
    and minimum wage claims.
    B.
    Petitioners next contend that the National Labor Relations
    Act (NLRA), 29 U.S.C. § 151 et seq. (2014), invalidates the class action
    waiver in the long-form arbitration agreement and that, as the more
    specific and more recent law, the NLRA overcomes the FAA and its pro-
    arbitration provisions. Section 7 of the NLRA grants covered employees
    certain substantive rights, including the right "to engage in other
    concerted activities for the purpose of collective bargaining or other
    mutual aid or protection." 29 U.S.C. § 157. Section 8(a)(1) of the NLRA
    makes it illegal for an employer "to interfere with, restrain, or coerce
    employees in the exercise of the rights guaranteed" by § 7. 
    Id. § 158(a)(1).
                     Petitioners cite as support for their argument the decision of the National
    Labor Relations Board (NLRB) in In re D.R. Horton, Inc., 357 N.L.R.B. No.
    184, 
    2012 WL 36274
    , *1 (Jan. 3, 2012) (Horton I), enforcement denied in
    . . • continued
    minimum wage is unwaivable, Nev. Const. art. 15, § 16, he may validly
    enter into an arbitration agreement that sets "not only the situs of suit but
    also the procedure to be used in resolving" it. Scherk v. Alberto-Culver
    Co., 
    417 U.S. 506
    , 519 (1974).
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    part by DR. Horton, Inc. v. NLRB, 
    737 F.3d 344
    (5th Cir. 2013), holding
    that it is unlawful under § 8 of the NLRA for employers to require that
    employees agree to arbitrate all employment-related claims on an
    individual basis, thereby giving up their right under § 7 to access class or
    collective procedures in judicial or arbitral forums for their "mutual aid or
    protection." Accord Murphy Oil USA, Inc., 361 N.L.R.B. No. 72, 
    2014 WL 5465454
    (Oct. 28, 2014). In the NLRB's view, this rule does not conflict
    with the FAA because the FAA does not require enforcement of illegal
    contracts and because § 7 of the NLRA amounts to a "contrary
    congressional command" overriding the FAA.             
    Id. at *12
    (quoting
    CompuCredit Corp. v. Greenwood, 565 U.S. , 
    132 S. Ct. 665
    , 668-69
    (2012)). 4
    D.R. Horton filed a petition for review of the NLRB's decision,
    and the Board cross-applied for enforcement of its order. On review, the
    United States Court of Appeals for the Fifth Circuit disagreed with the
    NLRB and overruled Horton I to the extent it invalidated the class
    arbitration waiver as illegal. D.R. Horton, Inc. v. NLRB, 
    737 F.3d 344
    ,
    359-61 (5th Cir. 2013) (Horton II).        Relying on Concepcion, the Fifth
    Circuit concluded that the Board's decision in Horton I effectively
    prohibits class action waivers, whether in an arbitral or judicial forum,
    and therefore constitutes "an actual impediment to arbitration [that]
    4Petitioners filed charges against CPS before the NLRB and
    submitted to this court as a supplemental authority a copy of an
    administrative law judge's decision that, under Horton I, the class action
    waiver in the long-form arbitration agreement is illegal. CPS filed
    exceptions to the administrative law judge's decision. The NLRB has yet
    to resolve the exceptions or seek enforcement of the AL's decision.
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    violates the FAA." Horton 
    II, 737 F.3d at 359-60
    . The Fifth Circuit then
    considered whether "the FAA's mandate" to enforce arbitration
    agreements as written "has been 'overridden by a contrary congressional
    command," 
    id. (quoting CompuCredit,
    565 U.S. , 132 S. Ct. at 669), and
    concluded that In] either the NLRA's statutory text nor its legislative
    history contains a congressional command against application of the FAA,"
    
    Id. at 361.
    Finally, the Fifth Circuit concluded that there is no inherent
    conflict between the FAA and the NLRA and that, indeed, the "courts
    repeatedly have understood the NLRA to permit and require arbitration."
    
    Id. Iskanian considered
    Horton I and Horton II in detail and
    concluded, as we do, that Horton I's invalidation of class arbitration
    waivers cannot be reconciled with the FAA as authoritatively interpreted
    by the Supreme Court in Concepcion and Italian Colors. 
    Iskanian, 327 P.3d at 141-42
    . In light of the FAA's "liberal federal policy favoring
    arbitration," Concepcion, 563 U.S. at , 131 S. Ct. at 1745, §§ 7 and 8 of
    the NLRA cannot fairly be taken as a "contrary congressional command"
    sufficient under CompuCredit, 565 U.S. at , 132 S. Ct. at 669, to
    override the FAA. Our conclusion in this regard is consistent with Horton
    Iskanian, and with "the judgment of all the federal circuit courts and
    most of the federal district courts that have considered the issue."
    
    Iskanian, 327 P.3d at 142
    (citing Sutherland v. Ernst & Young, LLP, 
    726 F.3d 290
    , 297 n.8 (2d Cir. 2013), Owen v. Bristol Care, Inc., 
    702 F.3d 1050
    ,
    1053-55 (8th Cir. 2013), and Delock v. Securitas Sec. Servs. USA, Inc., 
    883 F. Supp. 2d 784
    , 789-90 (E.D. Ark. 2012)); see also Richards v. Ernst &
    Young, LLP, 
    744 F.3d 1072
    , 1075 n.3 (9th Cir. 2013) (similarly collecting
    cases that "have determined that they should not defer to the NLRB's
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    decision in D.R. Horton on the ground that it conflicts with the explicit
    pronouncements of the Supreme Court concerning the policies
    undergirding the Federal Arbitration Act").
    V.
    As to Tallman, a final issue of waiver remains. Petitioner
    Tallman sued separately from petitioners Mika and Harter and included
    in his complaint both class claims under NRS Chapter 608 and collective
    claims under the FLSA, 29 U.S.C. § 216(b) (2014). CPS removed
    Tallman's action to federal court based on the FLSA claims. The federal
    court thereafter severed the FLSA from the state-law claims and
    remanded the latter to state court. In its answer and in its exchanges
    with Tallman, CPS demanded individual arbitration of Tallman's state-
    law claims. But it did not formally move to compel arbitration of them
    until those claims were remanded to state court. Tallman argues that
    CPS waived its right to compel arbitration by removing the action and
    thereafter litigating Tallman's collective FLSA claims in federal court. Of
    note, both Tallman and CPS assume that waiver was for the court, not the
    arbitrator to decide.
    Waiver of a contractual right to arbitration is not "lightly
    inferred." Clark Cnty. v. Blanchard Const. Co., 
    98 Nev. 488
    , 491, 
    653 P.2d 1217
    , 1219 (1982). The party opposing arbitration must demonstrate that
    "the party seeking to arbitrate (1) knew of his right to arbitrate, (2) acted
    inconsistently with that right, and (3) prejudiced the other party by his
    inconsistent acts." Nevada Gold & Casinos, Inc. v. Am. Heritage, Inc., 
    121 Nev. 84
    , 90, 
    110 P.3d 481
    , 485 (2005). Prejudice to the party opposing
    arbitration is the "primary focus in determining whether arbitration has
    been waived." 
    Id. "Prejudice may
    be shown (1) when the parties use
    discovery not available in arbitration, (2) when they litigate substantial
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    issues on the merits, or (3) when compelling arbitration would require a
    duplication of efforts." 
    Id. at 90-91,
    110 P.3d at 485.
    The district court rejected Tallman's waiver argument. While
    CPS knew of its right to arbitrate, the district court found that it did not
    act inconsistently with that right by removing the case to federal court, or
    prejudice Tallman by its activities in federal court. "Waiver is generally a
    question of fact[, Nut when the determination rests on the legal
    implications of essentially uncontested facts, then it may be determined as
    a matter of law." 
    Id. at 89,
    110 P.3d at 484 (internal citation omitted).
    The record does not permit us to rule as a matter of law that
    CPS waived its right to compel arbitration of Tallman's state-law claims,
    much less to say that the district court acted arbitrarily or capriciously in
    rejecting the waiver claim. The federal district court's order declining
    supplemental jurisdiction and remanding Tallman's state-law claims to
    state court authoritatively recites the history of proceedings in federal
    court. It emphasizes, as the state district court did in finding no waiver,
    that discovery had been stayed for a period of time to enable the parties to
    pursue mediation. Cf. Dickinson v. Heinold Sec., Inc., 
    661 F.2d 638
    , 641
    (7th Cir. 1981) (rejecting the argument that pursing settlement waives
    arbitration in dispute involving both arbitrable and nonarbitrable claims).
    In holding that Tallman's state-law claims substantially predominate over
    their FLSA claims, justifying rejection of supplemental jurisdiction over
    them, severance, and remand, the federal district court gave no indication
    that it considered or addressed the state claims or class certification on
    the merits. Indeed, the parties stipulated not to conduct discovery on
    potential class members' damages until class certification was resolved.
    This does not appear to be a case in which the party seeking arbitration
    SUPREME COURT
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    "lest[ed] the judicial waters" before moving to compel arbitration. 
    Id. at 91,
    110 P.3d at 485 (quoting Uwaydah v. Van Wert Cnty. Hosp., 246 F.
    Supp. 24808, 814 (N.D. Ohio 2002)).
    Both sides appear to have assumed that the collective action
    waiver in the long-form arbitration agreement could not be enforced as to
    Tallman's FLSA claims and/or that there is an inherent inconsistency in
    pursuing collective FLSA claims and class state-law claims in the same
    federal district court suit. See Mikel J. Sporer, In and Out: Reconciling
    'Inherently Incompatible' Group Action Procedures Under FLSA and Rule
    23, 28 ABA J. Lab. & Emp. L. 367 (2013). Recent cases cast doubt on both
    assumptions. See Cohen v. UBS Fin. Servs., Inc.,           F.3d „ 
    2015 WL 3953348
    (2d Cir. 2015); Ervin v. OS Restaurant Servs., Inc., 
    632 F.3d 971
    , 973-74 (7th Cir. 2011). But given the state of flux in the law on these
    issues, it is fair to credit the parties' assumptions that the collective action
    waiver could not be enforced as to Tallman's FLSA claims, and that those
    claims could not be litigated simultaneously with his state-law-based class
    action claims in federal court.
    A defendant does not automatically waive his right to compel
    arbitration by removing an action from state to federal court, Halim v.
    Great Gatsby's Auction Gallery, Inc., 
    516 F.3d 557
    , 562 (7th Cir. 2008),
    and "[w]here issues in litigation are separate and distinct from arbitrable
    controversies, no waiver. . . occurs." 3 Thomas H. 
    Oehmke, supra
    , §
    50:35, at 50-58; see Sweater Bee by Banff, Ltd. v. Manhattan Indus., Inc.,
    
    754 F.2d 457
    , 463 (2d Cir. 1985). From the limited excerpts of record we
    have, it appears that the federal court proceedings did not prejudice but
    may actually have facilitated eventual arbitration of Tallman's state-law
    claims. His argument that denial of class arbitration prejudices unnamed
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    potential class members may be true but follows from Concepcion, not
    CPS's delay in moving to compel arbitration.     See also 
    Iskanian, 327 P.3d at 143-44
    (refusing to find waiver of the right to compel individual
    arbitration where, as here, the motion to compel arbitration was filed
    shortly after Concepcion abrogated Discover Bank and, by extension,
    Gentry).
    For these reasons, we conclude that writ relief is inappropriate
    and therefore deny the petitions for extraordinary writ relief in these
    cases.
    J.
    Pickering
    We concur:
    , C.J.
    -CLICiesatn
    Hardesty                                   Parraguirre
    1,,t 14-2
    Douglas.
    Saitta                                     Gibbons
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Document Info

Docket Number: 60673

Citation Numbers: 2015 NV 71

Filed Date: 9/24/2015

Precedential Status: Precedential

Modified Date: 9/24/2015

Authorities (20)

Scherk v. Alberto-Culver Co. , 94 S. Ct. 2449 ( 1974 )

Marmet Health Care Center, Inc. v. Brown , 132 S. Ct. 1201 ( 2012 )

Nitro-Lift Technologies, L. L. C. v. Howard , 133 S. Ct. 500 ( 2012 )

American Express Co. v. Italian Colors Restaurant , 133 S. Ct. 2304 ( 2013 )

Silver Dollar Club v. Cosgriff Neon Company , 80 Nev. 108 ( 1964 )

In Re Gulf Exploration, LLC , 52 Tex. Sup. Ct. J. 612 ( 2009 )

Discover Bank v. Superior Court , 30 Cal. Rptr. 3d 76 ( 2005 )

Picardi v. Eighth Judicial District Court Ex Rel. County of ... , 127 Nev. 106 ( 2011 )

State Ex Rel. Masto v. SECOND JUDICIAL DIST. CT. , 199 P.3d 828 ( 2009 )

Sweater Bee by Banff, Ltd. v. Manhattan Industries, Inc. ... , 754 F.2d 457 ( 1985 )

eli-pritzker-sol-cooperstein-jack-levin-as-trustees-of-penn-electric , 7 F.3d 1110 ( 1993 )

Clark County v. Empire Electric, Inc. , 96 Nev. 18 ( 1980 )

Fed. Sec. L. Rep. P 98,309 Clarance B. Dickinson, a v. ... , 661 F.2d 638 ( 1981 )

Kindred v. Second Judicial District Court of Nevada , 1 Nev. 405 ( 2000 )

County of Clark v. Blanchard Construction Co. , 98 Nev. 488 ( 1982 )

Pan v. Dist. Ct. , 88 P.3d 840 ( 2004 )

Halim v. Great Gatsby's Auction Gallery, Inc. , 516 F.3d 557 ( 2008 )

At&T Mobility LLC v. Concepcion , 131 S. Ct. 1740 ( 2011 )

Campanelli v. Conservas Altamira, S.A. , 86 Nev. 838 ( 1970 )

Ervin v. OS Restaurant Services, Inc. , 632 F.3d 971 ( 2011 )

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