Opinion
No. 18 C 7179
03-30-2020
Gregory SELLERS, individually and on behalf of similarly situated employees, Plaintiffs, v. EXELON CORPORATION; Work Management, Inc.; Bucher and Christian Consulting, Inc.; and Maxeta Technologies, Inc., Defendants.
Lindsay Itkin, Richard Schreiber, Michael A. Josephson, Josephson Dunlap Law Firm, Richard J. Burch, Bruckner Burch PLLC, Houston, TX, Douglas M. Werman, Maureen Ann Salas, Werman Salas P.C., Chicago, IL, for Plaintiffs. Heather Renee Adams, James Edward Davidson, Pro Hac Vice, Ice Miller LLP, Columbus, OH, John David Burke, Ice Miller LLP, Alex J. Maturi, Kenneth W. Gage, Paul Hastings LLP, Chicago, IL, Craig Bonnist, Pro Hac Vice, McCarter & English, LLP, Stamford, CT, for Defendants.
Lindsay Itkin, Richard Schreiber, Michael A. Josephson, Josephson Dunlap Law Firm, Richard J. Burch, Bruckner Burch PLLC, Houston, TX, Douglas M. Werman, Maureen Ann Salas, Werman Salas P.C., Chicago, IL, for Plaintiffs.
Heather Renee Adams, James Edward Davidson, Pro Hac Vice, Ice Miller LLP, Columbus, OH, John David Burke, Ice Miller LLP, Alex J. Maturi, Kenneth W. Gage, Paul Hastings LLP, Chicago, IL, Craig Bonnist, Pro Hac Vice, McCarter & English, LLP, Stamford, CT, for Defendants.
ORDER
REBECCA R. PALLMEYER, United States District Judge Defendant Maxeta's motion to compel arbitration [61] is denied.
STATEMENT
Plaintiff Alan Crary is a member of a collective action of individuals suing Defendants Exelon Corporation and three staffing companies—Work Management, Inc.; Bucher & Christian Consulting, Inc.; and Maxeta Technologies, Inc.—for alleged violations of the Fair Labor Standards Act. Crary's employer, Defendant Maxeta, asks the court to compel arbitration of Crary's claim pursuant to paragraph 10 of Crary's employment agreement, executed in January 2017. That paragraph reads as follows:
Any dispute arising under this Agreement will be subject to binding arbitration by a single Arbitrator with the American Arbitration Association (AAA), in accordance with its relevant industry rules, if any. The parties agree that this Agreement will be governed by and construed and interpreted in accordance with the laws of the State of New Jersey.
Plaintiff does not challenge the enforceability of his employment agreement, and the court notes that it sets forth his hourly pay rate. It is thus fair to conclude that his wage claim arises generally out of his employment relationship with Maxeta. Plaintiff opposes the motion to compel arbitration, however, because he contends that under New Jersey law, statutory rights (for example, rights under the Fair Labor Standards Act) are not subject to arbitration pursuant to a clause of this nature. Thus, he contends, "Courts applying New Jersey law consistently find arbitration agreements broadly purporting to cover all claims arising out of a worker's employment agreement do not apply to statutory claims including statutory wage and hour claims." (Opposition to Maxeta's Motion [75], at 4.)
The caselaw supports that contention. Applying New Jersey law, the Third Circuit Court of Appeals reversed an order compelling arbitration of an exotic dancer's wage claim in Moon v. Breathless, Inc. , 868 F.3d 209 (3rd Cir. 2017). The court observed that the arbitration language the employer sought to enforce called for arbitration of all disputes arising "under this agreement." Following the lead of New Jersey courts, the Third Circuit concluded that plaintiff's statutory wage claims did not arise "under this agreement" and therefore were not subject to arbitration under New Jersey law.
The Third Circuit was guided by its analysis of three New Jersey state cases. In Garfinkel v. Morristown Obstetrics and Gynecology Assocs. , 168 N.J. 124, 773 A.2d 665, 672 (2001), plaintiff doctor was not required to take his statutory discrimination claim to arbitration based upon a clause in his employment agreement that required arbitration of "any controversy or claim arising out of, or relating to, this Agreement or the breach thereof." Similarly, in Atalese v. U.S. Legal Servs. Grp. , 219 N.J. 430, 99 A.3d 306, 315–16 (2014), where a customer sued a debt adjustment services company, the New Jersey Supreme Court concluded the customer had not given up her right to a judicial forum for her consumer-rights-law claims by agreeing to arbitration of "any claim or dispute ... related to this Agreement or related to any performance of any services related to this Agreement." The Moon court specifically distinguished Martindale v. Sandvik, Inc. , 173 N.J. 76, 800 A.2d 872, 883 (2002), where the terms of the arbitration agreement were broader; rather than agreeing to arbitrate disputes arising out of her employment agreement, in that case the plaintiff had agreed to arbitrate "in any action or proceeding related to [her] employment." The New Jersey Supreme Court therefore affirmed an order compelling arbitration of the plaintiff's statutory family leave and discrimination claims. Like Moon , this case resembles Atalese and Garfinkel and differs from Martindale ; it involves a clause that dictates arbitration of claims arising "under this agreement," not all claims arising out of Crary's employment relationship with Maxeta. The court concludes Crary is not barred from litigating his statutory wage claims in federal court.
Defendant resists this conclusion for several reasons. First, Defendant suggests that Crary should not be permitted to "cherry pick" the substantive law that determines arbitrability. (Maxeta Reply [76] at 2.) But it was Maxeta, not Crary, that drafted the agreement specifically invoking New Jersey law in the arbitration clause. This motion puts Maxeta in the awkward position of arguing that its chosen substantive law must be disregarded as preempted by the Federal Arbitration Act; Maxeta offers no explanation for its inclusion of the reference to New Jersey law at the time it executed the agreement with Crary in January 2017, well after the cases cited by the Moon court were decided.
Maxeta cites Wal-Mart Stores, Inc. v. Helferich Patent Licensing, LLC , 51 F. Supp. 3d 713, 718–19 (N.D. Ill. 2014) in support of its argument that federal law preempts and displaces New Jersey law. Helferich , a non-binding ruling, recognized only that " ‘a general choice of law provision in a contract will not extend to the arbitration clause, absent specific evidence the parties intended it to do so’." 51 F. Supp. 3d at 719, citing BEM I, L.L.C. v. Anthropologie Inc. , No. 98 C 358, 2000 WL 1849574, at *6 (N.D. Ill. Dec. 15, 2000). In this case, the inclusion of the choice-of-law provision in the very paragraph that includes the arbitration clause may constitute such "specific evidence." In any event, the statement in Helferich was dicta; the court concluded that Illinois law is consistent with the FAA in that case.
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As Maxeta observes, the Federal Arbitration Act embodies a federal policy favoring arbitration, and any doubts about arbitrability are to be resolved in favor of arbitration. Hoenig v. Karl Knauz Motors, Inc. , 983 F. Supp. 2d 952, 961-962 (N.D. Ill. 2013). And the court agrees that Crary's employment contract involves transactions in interstate commerce. The court recognizes, further, that Crary, who opposes arbitration, would have the burden of proving that the arbitration agreement is unenforceable. See Shearson/American Express, Inc. v. McMahon , 482 U.S. 220, 227, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987) ). But the court is not making a finding that the agreement is unenforceable; instead, it concludes that the parties did not agree, by way of the arbitration clause, to arbitration of this FLSA dispute. In AT & T Mobility, LLC v. Concepcion , 563 U.S. 333, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011), the Court held that "[w]hen state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA." Thus, the FAA preempted California law that deemed unconscionable an arbitration clause that disallowed classwide procedures. The Concepcion court described § 2 of the FAA "as reflecting both a ‘liberal federal policy favoring arbitration,’ and the ‘fundamental principle that arbitration is a matter of contract.’ " (citations omitted). This means that "courts must place arbitration agreements on an equal footing with other contracts, and enforce them according to their terms." Id. at 339, 131 S. Ct. at 1745. In applying the agreement's own choice-of-law provision, this court is placing it on equal footing with other contracts that include such provisions, and enforcing that provision by its own terms.
Concepcion teaches that state laws that disfavor arbitration of particular claims are preempted by the FAA. The state case law that Crary cites here does not disfavor arbitration of FLSA claims, however. As the court reads that case law, arbitration of such claims would be appropriate under New Jersey law if the parties' agreement called for arbitration of "any claim arising out of the employment relationship." But that is not what this clause says, and is not the way that the language has been interpreted by New Jersey courts. To the extent Maxeta believes the Supreme Court would come out differently than did the Third Circuit in Moon , this court is not free to do so.
Maxeta's motion to compel arbitration [61] is denied.