Sharon Owen v. Bristol Care, Inc.

United States Court of Appeals
For the Eighth Circuit
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No. 12-1719
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Sharon Owen
lllllllllllllllllllll Plaintiff - Appellee
v.
Bristol Care, Inc., doing business as Bristol Manor, doing business as Ashbury
Heights, doing business as The Essex
lllllllllllllllllllll Defendant - Appellant
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Employee Rights Advocacy Institute for Law & Policy; National Employment
Law Project; National Employment Lawyers Association
lllllllllllllllllllllAmici on Behalf of Appellee
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Appeal from United States District Court
for the Western District of Missouri - Jefferson City
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Submitted: November 13, 2012
Filed: January 7, 2013
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Before SMITH, BEAM, and GRUENDER, Circuit Judges.
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GRUENDER, Circuit Judge.
Bristol Care, Inc., (“Bristol Care”) appeals the denial of its motion to compel
arbitration in a suit initiated by its former employee Sharon Owen asserting claims
under the Fair Labor Standards Act (“FLSA”) and seeking class action certification
on behalf of other similarly situated current and former employees. Bristol Care
contends that the district court incorrectly held that the Mandatory Arbitration
Agreement (“MAA”) signed by Owen and Bristol Care was invalid because it
contained a class action waiver provision that prohibits Owen from arbitrating claims
subject to the agreement on behalf of a class. For the following reasons, we conclude
that the MAA is valid and reverse the district court’s order denying Bristol Care’s
motion to compel arbitration.
I. Background
Bristol Care, a company that operates residential care facilities for elderly
residents, hired Owen as an administrator at its Cameron, Missouri facility in 2009.
At the time of Owen’s hiring, Owen and Bristol Care signed the MAA, which
provides that Owen and Bristol Care agree “to the resolution by binding arbitration
of all claims or controversies for which a federal or state court or other dispute-
resolving body otherwise would be authorized to grant relief whether arising out of,
relating to or associated with . . . any . . . legal theory that Employee may have against
the Company or that the Company may have against the Employee.” The MAA
further provides that it applies to “claims for wages or other compensation,” as well
as “claims for violation of any federal . . . statute . . . including but not limited to . . .
the Fair Labor Standards Act . . . .” The agreement also contains a waiver that
prohibits the parties “from arbitrating claims subject to [the] Agreement as, or on
behalf of, a class” (the “class waiver”). The MAA, however, “does not waiv[e the]
right to file a complaint with the U.S. Equal Employment Opportunity
Commission . . . or any other federal, state or local agency designated to investigate
complaints of harassment, discrimination, other statutory violations, or similar
claims.”
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In September 2011, Owen initiated this action against Bristol Care,
alleging—on behalf of herself and other similarly situated current and former
employees—that the company deliberately misclassified administrators like herself
as “exempt” employees for the purposes of state and federal overtime laws, including
the FLSA. Owen alleged that Bristol Care required these employees to work more
than forty hours per week without overtime compensation. Bristol Care moved to
stay district court proceedings and compel arbitration in accordance with the MAA
and the Federal Arbitration Act (“FAA”). See 9 U.S.C. §§ 3-4. The district court
denied Bristol Care’s motion, holding that, although Owen’s allegations fell within
the scope of the agreement, the MAA was nonetheless invalid because of the class
waiver. In reaching this conclusion, the district court explained that the Supreme
Court’s decision in AT&T Mobility LLC v. Concepcion, 563 U.S. ---, 131 S. Ct. 1740
(2011), upholding the enforceability of a class waiver in a consumer contract, was not
controlling in the employment context. The district court instead relied on the recent
National Labor Relations Board (“NLRB”) decision, In re D.R. Horton, Inc., 357
NLRB No. 184, 2012 WL 36274 (Jan. 3, 2012), and a district court decision from the
Southern District of New York, Chen-Oster v. Goldman, Sachs & Co., 785 F. Supp.
2d 394 (S.D.N.Y. 2011), and concluded that class waivers are invalid in FLSA cases
because the FLSA provides for the right to bring a class action.
On appeal, Bristol Care contends that neither the language nor legislative
history of the FLSA indicates that the class waiver is impermissible, that other courts
have found that the FLSA does not prohibit the waiver of class actions in an
arbitration agreement, and that allowing class waivers is consistent with pro-
arbitration Supreme Court precedent. Bristol Care also argues that the district court
erred in relying on D.R. Horton and Chen-Oster.
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II. DISCUSSION
This court reviews a determination concerning the arbitrability of a dispute de
novo. Farber v. Menard, Inc., 367 F.3d 1048, 1051 (8th Cir. 2004). Section 2 of the
FAA provides that “[a] written provision in any . . . contract . . . to settle by
arbitration a controversy thereafter arising out of such contract . . . shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for
the revocation of any contract.” 9 U.S.C. § 2. The Supreme Court has stated
repeatedly that this provision establishes a “liberal federal policy favoring arbitration
agreements.” CompuCreditCorp. v. Greenwood, 565 U.S. ---, 132 S. Ct. 665, 669
(2012) (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
24 (1983)); see also Concepcion, 131 S. Ct. at 1745; Gilmer v. Interstate/Johnson
Lane Corp., 500 U.S. 20, 25 (1991).
Section 2 requires courts to enforce arbitration agreements according to their
terms. Dean Witter Reynolds, Inc., v. Byrd, 470 U.S. 213, 221 (1985). As a result,
there must be a “contrary congressional command” for another statute to override the
FAA’s mandate. CompuCredit, 132 S. Ct. at 669 (quoting Shearson/Am. Express,
Inc. v. McMahon, 482 U.S. 220, 226 (1987)). “If such an intention exists, it will be
discoverable in the text of the [statute], its legislative history, or an ‘inherent conflict’
between arbitration and the [statute’s] underlying purposes.” Gilmer, 500 U.S. at 26;
see also CompuCredit, 132 S. Ct. at 672 (“When [Congress] has restricted the use of
arbitration . . . it has done so with clarity.”). The burden is on the party challenging
the arbitration agreement to show that Congress intended to preclude a waiver of the
judicial forum. Gilmer, 500 U.S. at 26.
Here, Owen identifies nothing in either the text or legislative history of the
FLSA that indicates a congressional intent to bar employees from agreeing to
arbitrate FLSA claims individually, nor is there an “inherent conflict” between the
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FLSA and the FAA. In short, the FLSA contains no “contrary congressional
command” as required to override the FAA.
Owen attempts to overcome this obstacle in several ways. First, Owen
contends that § 216(b) of the FLSA creates a right to pursue a class action because
it identifies “[t]he right . . . to bring an action by or on behalf of any employee, and
the right of any employee to become a party plaintiff to such any action.” 29 U.S.C.
§ 216(b) (emphasis added). However, the FLSA also states that “[n]o employee shall
be a party plaintiff to any such action unless he gives his consent in writing.” Id.
Even assuming Congress intended to create some “right” to class actions, if an
employee must affirmatively opt in to any such class action, surely the employee has
the power to waive participation in a class action as well. In any event, this provision
falls short of the “contrary congressional command” required to override the FAA.
Second, Owen argues that the legislative history indicates a congressional
command to override the FAA. In making this argument, Owen points to statements
made during the passage of another labor relations statute—the National Labor
Relations Act (“NLRA”) in 1935—as evidence that Congress intended to protect
workers’ rights to engage in concerted action. Owen contends that Congress passed
the NLRA “to ‘secur[e] for employees the full right to act collectively’ to ensure that
‘employers and employees should possess equality of bargaining power.’” She also
argues that in passing the NLRA, Congress intended to build upon the Norris-
LaGuardia Act, which was passed three years earlier to “prevent employers from
imposing contracts on employees that would require employees to forgo engaging in
collective actions.” Owen contends that the passage of that Act amounted to a
congressional declaration that it was the “‘public policy of the United States’ . . . to
protect workers’ rights to engage in concerted activities” and that this declaration
came “seven years after the passage of the FAA.” See 29 U.S.C. § 102. She also
points to language in the Norris-LaGuardia Act expressly repealing any acts or
portions of acts that conflict with its protections. See 29 U.S.C. § 115. Missing from
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this analysis, however, is the fact that although the FAA originally was enacted in
1925, it was reenacted in 1947. See Gilmer, 500 U.S. at 24. This reenactment came
twelve years after the NLRA and fifteen years after the passage of the Norris-
LaGuardia Act. Further, the FAA’s reenactment also occurred nine years after the
passage of the FLSA in 1938. The decision to reenact the FAA suggests that
Congress intended its arbitration protections to remain intact even in light of the
earlier passage of three major labor relations statutes. Thus, there is no inconsistency
between either the FLSA text or its legislative history and the conclusion that
arbitration agreements containing class waivers are enforceable in cases involving the
FLSA.
Finally, in arguing that there is an inherent conflict between the FLSA and the
FAA, Owen relies on the NLRB’s recent decision in D.R. Horton,1 which held a class
waiver unenforceable in a similar FLSA challenge based on the NLRB’s conclusion
that such a waiver conflicted with the rights protected by Section 7 of the NLRA.
2012 WL 36274, at *2. The NLRB stated that Section 7’s protections of employees’
right to pursue workplace grievances through concerted action includes the right to
proceed as a class. Id. However, D.R. Horton carries little persuasive authority in the
circumstances presented here. First, the NLRB limited its holding to arbitration
agreements barring all protected concerted action. Id. at *16. In contrast, the MAA
does not preclude an employee from filing a complaint with an administrative agency
such as the Department of Labor (which has jurisdiction over FLSA claims, see 29
U.S.C. § 204), the Equal Employment Opportunity Commission, the NLRB, or any
similar administrative body. Cf. Gilmer, 500 U.S. at 28 (upholding an arbitration
agreement that allowed Age Discrimination in Employment Act claimants to pursue
1
Although the district court also relied on Chen-Oster (and the case is cited
by the amici curiae), Owen does not rely on it on appeal. Therefore, noting that
the decision in Chen-Oster is not binding on this court, we decline to consider
arguments raised only by the amici curiae. See Carter v. Lutheran Med. Ctr., 87
F.3d 1025, 1026 (8th Cir. 1996) (per curiam).
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their claims before the Equal Employment Opportunity Commission). Further,
nothing in the MAA precludes any of these agencies from investigating and, if
necessary, filing suit on behalf of a class of employees. Second, even if D.R. Horton
addressed the more limited type of class waiver present here, we still would owe no
deference to its reasoning. Delock v. Securitas Sec. Servs. USA, No. 4:11-CV-520-
DPM, 2012 WL 3150391, --- F. Supp. 2d ---- (E.D. Ark. Aug. 1, 2012), at *3 (“The
Board’s construction of the [NLRA] ‘is entitled to considerable deference and must
be upheld if it is reasonable and consistent with the policies of the Act,’ . . . the Board
has no special competence or experience in interpreting the Federal Arbitration Act.”
(quoting St. John’s Mercy Health Sys. v. NLRB, 436 F.3d 843, 846 (8th Cir. 2006))).
The NLRB also attempted to distinguish its conclusion from pro-arbitration Supreme
Court decisions such as Concepcion. D.R. Horton, 2012 WL 36274, at *16. This
court, however, is “not obligated to defer to [the Board’s] interpretation of Supreme
Court precedent under Chevron or any other principle.” Delock, 2012 WL 3150391,
at *3 (quoting N.Y. N.Y. LLC v. NLRB, 313 F.3d 585, 590 (D.C. Cir. 2002)).
Additionally, although no court of appeals has addressed D.R. Horton,2 nearly all of
the district courts to consider the decision have declined to follow it.3
2
We note, however, that an appeal of the NLRB’s decision in D.R. Horton is
currently pending in the Fifth Circuit. D.R. Horton, Inc. v. NLRB, No. 12-60031
(5th Cir. filed Jan. 13, 2012).
3
See, e.g., Carey v. 24 Hour Fitness USA, Inc., Civil Action No. H-10-3009,
2012 WL 4754726 (S.D. Tex. Oct. 4, 2012); Tenet Healthsystem Phila., Inc. v.
Rooney, No. 12-mc-58, 2012 WL 3550496 (E.D. Pa. Aug. 17, 2012); Reyes v.
Liberman Broadcasting, Inc., 146 Cal. Rptr. 3d 616 (C.D. Cal. 2012); Morvant v.
P.F. Chang’s China Bistro, Inc., No. 11-CV-05405YGR, 2012 WL 1604851, at
*8–12 (N.D. Cal. May 7, 2012); Delock, 2012 WL 3150391, at *1–6; LaVoice v.
UBS Fin. Servs., Inc., No. 11-civ-2308(BSJ)(JLC), 2012 WL 124590, at *6
(S.D.N.Y. Jan 13, 2012). But see Herrington v. Waterstone Mortg. Corp., No. 11-
cv-779-bbc, 2012 WL 1242318 (W.D. Wis. Mar. 16, 2012); Raniere v. Citigroup,
Inc., 827 F. Supp. 2d 294 (S.D.N.Y. 2011).
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Finally, our conclusion is consistent with all of the other courts of appeals that
have considered this issue and concluded that arbitration agreements containing class
waivers are enforceable in FLSA cases. See, e.g., Vilches v. Traveler’s Cos., 413 F.
App’x 487, 494 n.4 (3d Cir. 2011); Horenstein v. Mortg. Mkt., Inc., 9 F. App’x 618,
619 (9th Cir. 2011); Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1378 (11th
Cir. 2005); Carter v. Countrywide Credit Indus. Inc., 362 F.3d 294, 298 (5th Cir.
2004); Adkins v. Labor Ready, Inc., 303 F.3d 496, 503 (4th Cir. 2002); see also
Delock, 2012 WL 3150391, at *1 (explaining that it has generally “seemed settled law
that an employee’s statutory right to pursue a wage claim as part of a collective
action . . . could be waived in favor of individual arbitration”). These decisions also
are consistent with more than two decades of pro-arbitration Supreme Court
precedent. See, e.g., CompuCredit, 132 S. Ct. 665; Concepcion, 131 S. Ct. 1740;
Gilmer, 500 U.S. 20. Owen places considerable weight on the fact that Concepcion
and CompuCredit involved contracts for consumer goods rather than for employment.
Yet, the Court in Gilmer upheld a similar class waiver in an employment complaint
brought under the Age Discrimination in Employment Act. See 500 U.S. at 32. Thus,
the Court’s conclusion in Gilmer forecloses the argument that Supreme Court
precedent upholding the enforceability of class waivers is limited to the consumer
context.
Therefore, given the absence of any “contrary congressional command” from
the FLSA that a right to engage in class actions overrides the mandate of the FAA in
favor of arbitration, we reject Owen’s invitation to follow the NLRB’s rationale in
D.R. Horton and join our fellow circuits that have held that arbitration agreements
containing class waivers are enforceable in claims brought under the FLSA.
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III. CONCLUSION
Because we conclude that the class waiver in the MAA is enforceable, we
reverse the district court’s decision and direct the district court to enter an order
granting Bristol Care’s motion to stay proceedings and compel arbitration.
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