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Judge v. Unigroup, Inc.

United States District Court, M.D. Florida, Tampa Division

September 8, 2017

JACK JUDGE, et al., Plaintiffs,
v.
UNIGROUP, INC., et al., Defendants.

          ORDER

          STEVEN D. MERRYDAY UNITED STATES DISTRICT JUDGE

         Household-goods carriers Mayflower Transit, LLC, and United Van Lines, LLC, contract with independently owned moving companies (“agents”). (Doc. 47-1 at 3) Through agency agreements, the agents provide transportation services under United's and Mayflower's federal motor-carrier authorities. (Doc. 47-1 at 3). In turn, the agents contract under independent-contractor operating agreements (“agreements”) with independent owner-operators.[1] Each independent owner-operator “provide[s] driving and moving services” to his agent. (Doc. 47-1 at 3) The plaintiffs, independent owner-operators, entered into agreements with their respective agents, and each agreement purportedly “govern[s] the entire relationship” between the independent owner-operator and his agent. (Doc. 47 at 2)

         The plaintiffs sue (Doc. 1) under the Fair Labor Standards Act for unpaid minimum wages. The defendants move (Doc. 47) to compel arbitration and move (Doc. 43) to dismiss under Rule 12(b)(6), Federal Rules of Civil Procedure. The defendants argue that the Federal Arbitration Act (“FAA”) requires arbitration of the plaintiffs' claims, that the plaintiffs are not exempt from either the FAA or the Missouri Uniform Arbitration Act (“MUAA”), that the arbitration agreements preclude arbitration on a class or collective basis, that the defendants can enforce the arbitration agreements, and that the defendants acted consistently with their purported right to compel arbitration. (Doc. 47) The plaintiffs respond (Doc. 51) that the FAA exempts transportation employees, that no applicable state law compels arbitration, that the defendants lack a contractual right to compel arbitration, and that the defendants waived the right to compel arbitration.

         The Arbitration Agreement

         The FAA codifies a “strong federal preference for arbitration of disputes.” Musnick v. King Motor Co., 325 F.3d 1255, 1258 (11th Cir. 2003). Under Section 4 of the FAA a party to a contract containing an arbitration agreement can move for an order compelling arbitration. “‘[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.'” Ivax Corp. v. B. Braun of Am., Inc., 286 F.3d 1309, 1315 (11th Cir. 2002)(quoting AT & T Techs., Inc. v. Commc'n, 475 U.S. 643, 648 (1986)).

         Each agreement contains an identical clause that requires arbitration:

Any dispute . . . arising in connection with or relating to this Agreement, its terms, or its implementation, including any allegation of tort or of breach of this Agreement or of violations of the requirements of any applicable government authorities, whether local, state, [or] federal . . . shall be fully and finally resolved by arbitration in accordance with . . . the Federal Arbitration Act . . . or, if the Federal Arbitration Act is held not to apply, the arbitration laws of the State of Missouri . . . .

(Docs. 47-3, 47-4, 47-5, 47-6, 47-7, 47-8, ¶ 24(a)). Also, each agreement states that “no consolidated or class arbitrations shall be conducted.” (Docs. 47-3, 47-4, 47-5, 47-6, 47-7, 47-8, ¶ 24(b)) Nothing in the clause, which requires arbitrating “any dispute, ” exempts from arbitration an FLSA claim. See Lambert v. Austin Ind., 544 F.3d 1192, 1197 (11th Cir. 2008) (holding that a party must “clearly express” an intent to exempt from arbitration a particular type of claim). An arbitration agreement containing a collective action waiver is enforceable under the FAA.Walthour v. Chipio Windshield Repair, LLC, 745 F.3d 1326, 1334 (11th Cir. 2014)(‘[T]he FLSA contains no explicit provision precluding . . . a waiver of the right to a collective action.”).

         FAA Exemptions

         The plaintiffs argue (Doc. 51 at 10) that the defendants cannot compel arbitration because Section 1 of the FAA exempts transportation employees from compelled arbitration. Also, the plaintiffs assert that “the defendants cite solely to the terms of the [agreements] in making their arguments [whether the plaintiffs were employees or independent contractors]” and that “the court . . . should order limited discovery and briefing on whether that contract in fact made the plaintiffs employees.” (Doc. 51 at 13) The defendants respond that the plaintiffs were independent contractors, that the transportation-worker exemption is inapplicable, and that the plaintiffs fail to meet “their burden [under Section 1] of establishing that they are not independent contractors.” (Doc. 47 at 10-11)

         The FAA embodies a “liberal federal policy favoring arbitration agreements, ” Hill v. Rent-A-Center, Inc., 398 F.3d 1286, 1288 (11th Cir. 2005), and any doubt about the “scope of arbitrable issues” is “resolved in favor of arbitration.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). Also, a statutory exemption is construed strictly against the party who invokes the exemption's benefit. U.S. v. Endotec, Inc., 563 F.3d 1187, 1196 (11th Cir 2009). “[A] district court has no authority to compel arbitration . . . where Section 1 exempts the underlying contract from the FAA's provisions.” Van Dusen v. Swift Transp. Co., 654 F.3d 838, 843 (9th Cir. 2011) (O'Grady, J.). Section 1 exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 106 (2001) (holding that the Section 1 exemption is construed narrowly).

         “A split of authority has developed about the meaning of ‘contract of employment' in the context of owner-operators.” Owner-Operator Indep. Drivers Ass'n., Inc. v. United Van Lines, LLC., 06-CV-219, 2006 WL 5003366 (E.D. Mo. Nov. 15, 2006) (Hamilton, J.). As examined in United Van Lines:

One line of cases holds that, unless the non-moving party proves to the Court that the FAA does not apply, the court should apply the characterization of the relationship described in the agreement and find that an owner-operator characterized as an independent contractor does not have a contract of employment with the carrier. . . . Other cases have come to the opposite conclusion, but only one . . . has articulated a reason for its conclusion. . . . Upon consideration, the Court adopts the [Owner-Operator Independent Drivers Association, Inc. v. Swift Transportation Co., 288 F.Supp.2d 1033, 1035-36 (D. Ariz. 2003)] standard because it better effectuates the FAA's goals. Swift 's reasoning not only furthers the complementary policies of favoring arbitration and narrowly construing the FAA's exceptions, but also provides a sound methodology, having the non-moving party prove the FAA does not apply, for determining whether an agreement qualifies as a contract of employment.

2006 WL 5003366, *7-10. A clause that designates a contracting party as an independent contractor cannot alone transform an employee to an independent contractor. Rutherfood Food Corp. v. McComb, 331 U.S. 722, 729 (1947) (‘[P]utting on an independent contractor label does not take the worker from the protection of the [FLSA].”). But each agreement contains terms consistent with the characteristics of an independent contractor. Whether a worker is an independent contractor or an employee depends on:

the hiring party's right to control the manner and means by which the product is accomplished[;] . . . the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party's discretion over when and how long to work; the method of payment; the hired party's role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party.

Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 323-24 (1992). See also Scantland v. Jeffry Knight, Inc., 721 F.3d 1308, 1311-1312 ...


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