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Walthour v. Chipio Windshield Repair, LLC

United States District Court, N.D. Georgia

February 27, 2013

ASHLEY WALTHOUR, and KEVIN CHAPPELL, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
CHIPIO WINDSHIELD REPAIR, LLC, KINGCO PROMOTIONS, INC., LEVAUGHN HALL, and JOHN DOES I-X, Defendants

For Ashley Walthour, Kevin Chappell, on behalf of themselves and all others similarly situated, Plaintiffs: Stephen M. Katz, LEAD ATTORNEY, The Katz Law Group, LLC, Marietta, GA.

For Chipio Windshield Repair, LLC, Defendant: Joseph Michael English, LEAD ATTORNEY, Taylor English Duma LLP, Atlanta, GA.

For Kingco Promotions, Inc., Levaughn Hall, Defendants: Lewis P. Janowsky, LEAD ATTORNEY, PRO HAC VICE, Rynn & Janowsky, Newport Beach, CA; Michael David Kabat, Wargo & French LLP, Atlanta, GA.

OPINION

AMY TOTENBERG, UNITED STATES DISTRICT JUDGE.

Page 1268

ORDER

This case brought pursuant to the Fair Labor Standards Act, 29 U.S.C. § 216(b) (" FLSA" ) is before the Court on Defendants' Joint Motion to Compel Arbitration and Motion to Dismiss Plaintiffs' Complaint or, Alternatively, Motion to Stay Proceedings (hereinafter referred to as " Motion to Compel Arbitration" ) [Doc. 6]. The issue before the Court, whether a contractual waiver of the right to bring a collective action in a mandatory arbitration agreement is enforceable under the FLSA, is a topic of increasing debate among federal district and appellate courts. The Court finds Plaintiffs' arguments against compelling individual arbitration to be persuasive. However, as the Eleventh Circuit has upheld the enforceability of similar arbitration provisions in FLSA cases, albeit on different grounds than those presented in the instant case, the Court concludes that it must GRANT Defendants' Motion to Compel Arbitration and Motion to Dismiss [Doc. 6] so as to permit the Court of Appeals itself to review the distinct issues presented here more closely.

Page 1269

I. BACKGROUND

Plaintiffs Ashley Walthour and Kevin Chappell brought this putative FLSA collective action against Defendants alleging that they, and other similarly situated current and former employees, were improperly misclassified as exempt from the FLSA's overtime requirements and were required to work in excess of 70 hours per week without overtime pay. [1] During their employment with Defendants each of the Plaintiffs executed a " Mandatory Arbitration of All Claims Policy" (hereinafter referred to as " the Arbitration Agreement" ). The Arbitration Agreements provide, in part, that Plaintiffs, as " Employees", and Kingco Promotions, Inc., as " Employer", agreed as follows:

[1] that all claims, disputes, controversies, or disagreements of any kind whatsoever arising out of or relating to any employment at-will agreement entered into between the parties and/or Employee's employment with Employer, and which may have occurred prior to or after entering into this arbitration agreement (other than claims Employee may have for workers' compensation or unemployment insurance benefits), shall be submitted to binding arbitration. Employer and Employee agree that the requirement to arbitrate shall also apply to any claim that may arise out of or relate to Employee's employment and which Employee may assert against Employer's employees, officers, directors, agents, suppliers or service providers, in their capacity as such, whether an individual or entity; and
[2] the arbitrator will have no authority to consider a class action by one or more employees or otherwise preside over any form of a representative or class proceeding. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. The award of the arbitrator may be enforced in any court of competent jurisdiction. BY SIGNING THIS AGREEMENT, EMPLOYEE AND EMPLOYER ARE EACH GIVING UP HIS/HER/ITS RIGHT TO A JURY TRIAL AND HIS/HER/ITS RIGHT TO PARTICIPATE IN A CLASS ACTION BECAUSE ALL CLAIMS WILL BE RESOLVED EXCLUSIVELY THROUGH ARBITRATION. EMPLOYEE AND EMPLOYER AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN HIS/HER/ITS INDIVIDUAL CAPACITY AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENATIVE PROCEEDING.

(Doc. 6-2 at 4-5.) Defendants seek to compel arbitration of Plaintiffs' FLSA claims pursuant to the Arbitration Agreements.

II. ANALYSIS

In support of their Motion to Compel Arbitration, Defendants assert that requiring mandatory arbitration of Plaintiffs' FLSA claims is supported by Supreme Court and Eleventh Circuit precedent and does not run afoul of the congressional intent in enacting the FLSA. In response, Plaintiffs argue a contractual waiver of their statutory right to a collective action under 29 U.S.C. § 216(b) of the FLSA is unenforceable as a matter of law. Specifically, Plaintiffs assert the following in support of the argument that the FLSA's collective action provision creates a non-waivable substantive right:

Page 1270

(1) the statutory language refers to the collective action provision as a right, not as a procedure;

(2) § 216(b) is integral to the FLSA, making the collective action provision non-waivable;

(2) courts have held that all other provisions of § 216(b) -- those providing the remedies of minimum wage and overtime backpay, liquidated damages, and attorney's fees -- are substantive rights that cannot be contractually waived;

(3) the right to proceed collectively under the FLSA is not simply procedural because the Act contains its own collective action provision instead of relying on Fed.R.Civ.P. 23's class action procedure;

(4) the Department of Labor, the agency charged with enforcement of the FLSA, has taken the position that the collective action provision is a substantive non-waivable right; and

(5) the legislative history of the Act demonstrates that the right to proceed in a collective action to enforce the provisions of the FLSA is ...


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