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finding that the § 1 exemption applied where the plaintiffs worked for distributors of a bakery company, delivered the company's products to retailers in Florida, and at least a portion of the goods delivered were produced out-of-state
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Case No. 8:16-cv-3145-MSS-JSS
2020-03-12
Daniel MARTINS, individually and on behalf of others similarly situated, Plaintiff, v. FLOWERS FOODS, INC., Flowers Baking Co. of Bradenton, LLC, Flowers Baking Co. of Villa Rica, LLC, Flowers Baking Co. of Miami, LLC, Flowers Baking Co. of Jacksonville, LLC, and Flowers Baking Co. of Thomasville, LLC, Defendants.
Adeash Lakraj, Pro Hac Vice, Morgan & Morgan, P.A., Atlanta, GA, Andrew Ross Frisch, Chanelle Ventura, Morgan & Morgan, PA, Plantation, FL, for Plaintiff. Benjamin R. Holland, Pro Hac Vice, Margaret S. Hanrahan, Pro Hac Vice, Michael D. Ray, Pro Hac Vice, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Charlotte, NC, Calvin Garner Sanford, Jr., Pro Hac Vice, Nathan J. Allen, Pro Hac Vice, Kevin P. Hishta, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Atlanta, GA, Christopher Cascino, Helen Anne Palladeno, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Kevin Douglas Zwetsch, Cantrell Zwetsch, Tampa, FL, Christopher M. Cascino, Pro Hac Vice, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Chicago, IL, for Defendant Flowers Foods, Inc. Benjamin R. Holland, Pro Hac Vice, Margaret S. Hanrahan, Pro Hac Vice, Michael D. Ray, Pro Hac Vice, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Charlotte, NC, Calvin Garner Sanford, Jr., Pro Hac Vice, Nathan J. Allen, Pro Hac Vice, Kevin P. Hishta, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Atlanta, GA, Christopher Cascino, Helen Anne Palladeno, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Kevin Douglas Zwetsch, Cantrell Zwetsch, Tampa, FL, for Defendants Flowers Baking Co. of Bradenton, LLC, Flowers Baking Co. of Villa Rica, LLC. Christopher Cascino, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Tampa, FL, Nathan J. Allen, Calvin Garner Sanford, Jr., Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Atlanta, GA, for Defendants Flowers Baking Co. of Miami, LLC, Flowers Baking Co. of Jacksonville, LLC, Flowers Baking Co. of Thomasville, LLC.
Adeash Lakraj, Pro Hac Vice, Morgan & Morgan, P.A., Atlanta, GA, Andrew Ross Frisch, Chanelle Ventura, Morgan & Morgan, PA, Plantation, FL, for Plaintiff.
Benjamin R. Holland, Pro Hac Vice, Margaret S. Hanrahan, Pro Hac Vice, Michael D. Ray, Pro Hac Vice, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Charlotte, NC, Calvin Garner Sanford, Jr., Pro Hac Vice, Nathan J. Allen, Pro Hac Vice, Kevin P. Hishta, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Atlanta, GA, Christopher Cascino, Helen Anne Palladeno, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Kevin Douglas Zwetsch, Cantrell Zwetsch, Tampa, FL, Christopher M. Cascino, Pro Hac Vice, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Chicago, IL, for Defendant Flowers Foods, Inc.
Benjamin R. Holland, Pro Hac Vice, Margaret S. Hanrahan, Pro Hac Vice, Michael D. Ray, Pro Hac Vice, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Charlotte, NC, Calvin Garner Sanford, Jr., Pro Hac Vice, Nathan J. Allen, Pro Hac Vice, Kevin P. Hishta, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Atlanta, GA, Christopher Cascino, Helen Anne Palladeno, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Kevin Douglas Zwetsch, Cantrell Zwetsch, Tampa, FL, for Defendants Flowers Baking Co. of Bradenton, LLC, Flowers Baking Co. of Villa Rica, LLC.
Christopher Cascino, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Tampa, FL, Nathan J. Allen, Calvin Garner Sanford, Jr., Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Atlanta, GA, for Defendants Flowers Baking Co. of Miami, LLC, Flowers Baking Co. of Jacksonville, LLC, Flowers Baking Co. of Thomasville, LLC.
ORDER
MARY S. SCRIVEN, UNITED STATES DISTRICT JUDGE
THIS CAUSE comes before the Court for consideration of Defendants’ Second Motion to Dismiss or, in the Alternative, to (1) Compel Individual Arbitration or (2) Compel Individual Actions, (Dkt. 168), Plaintiffs’ response in opposition thereto, (Dkt. 174), and Defendants’ reply. (Dkt. 179) Upon consideration of all relevant filings, case law, and being otherwise fully advised, the Court GRANTS IN PART and DENIES IN PART Defendants’ Second Motion to Dismiss or, in the Alternative, to (1) Compel Individual Arbitration or (2) Compel Individual Actions.
I. BACKGROUND
Daniel Martins brought this collective action against Flowers Foods, Inc. and five of its subsidiaries, alleging that they violated the Fair Labor Standards Act ("FLSA") by misclassifying him and similarly situated individuals in Florida and Georgia as independent contractors. (Dkt. 1; Dkt. 198 at ¶¶ 1-3, 88) Flowers Foods is "one of the largest producers of packaged bakery foods in the United States," operating over forty bakeries "that produce a wide range of bakery food for retail and foodservice customers in the U.S." (Dkt. 100-2 at 1; see also Dkt. 198 at ¶ 64) Martins worked as a distributor for Flowers Baking Co. of Bradenton, LLC, one of Flowers Foods’ subsidiaries. (Dkt. 198 at ¶¶ 6-7) As a distributor, Martins was responsible for delivering Flowers Foods’ products to retailers in Florida. (Id. at ¶¶ 7, 11)
On March 28, 2018, this Court conditionally certified a class consisting of "[a]ll Independent Distributors who distribute fresh bakery products for Flowers Foods, Inc., Flowers Baking Co. of Bradenton, LLC, Flowers Baking Company of Villa Rica, LLC, and any other bakeries, affiliates or subsidiaries of Flowers Foods, Inc. within the state of Florida or Georgia, excluding Independent Distributors who worked for Flowers Foods, Inc. through Derst Baking Company, LLC." (Dkt. 135 at 20)
At the same time, the Court denied without prejudice Defendants’ request to compel individual arbitration for seven opt-in Plaintiffs. (Id.; Dkt. 87) In opposing arbitration, Plaintiffs argued that the arbitration provisions at issue were unenforceable because they contained collective-action waivers in violation of Section 7 of the National Labor Relations Act ("NLRA"), 29 U.S.C. § 157, which guarantees workers the right to engage in "concerted activities for the purpose of collective bargaining or other mutual aid or protection." (Dkt. 135 at 15) Because the Supreme Court was poised to decide the enforceability of class-action waivers in Epic Systems Corp. v. Lewis, ––– U.S. ––––, 138 S. Ct. 1612, 200 L.Ed.2d 889 (2018), the Court denied the motion but allowed Defendants to move to compel arbitration again after the Supreme Court issued its decision. (Id. at 17)
The Supreme Court decided Epic Systems in May 2018, and one year later Defendants renewed their motion to compel arbitration. (Dkt. 168) By that time, 300 Plaintiffs had opted in to this action. (Dkts. 68-72, 74-76, 82, 86, 89, 91-92, 99, 102-03, 106, 111-19, 123, 143-49, 151, 155-56) Defendants now seek to compel individual arbitration as to 100 opt-in Plaintiffs falling into three categories: (i) eighty-one Plaintiffs who signed arbitration agreements contained in amendments to their distributor agreements; (ii) fifteen Plaintiffs who signed arbitration agreements when they became distributors; and (iii) four Plaintiffs who became bound by arbitration agreements when they purchased distributorships and agreed to assume those distributors’ contractual obligations. (Dkt. 168 at 1-2; Dkt. 169-1; Dkt. 169-2) Alternatively, Defendants contend that, if the arbitration agreements are found to be unenforceable, the Court should nevertheless enforce the collective-action waivers by compelling Plaintiffs to pursue their claims in individual actions. (Dkt. 168 at 23-24)
Although Defendants assert in their Motion that 102 Plaintiffs must arbitrate their claims, (Dkt. 168 at 1-2), that appears to be a scrivener's error, as the exhibits and declarations attached to the Motion refer to only 100 Plaintiffs. (Dkt. 169-1; Dkt. 169-2; Dkt. 169-3 at ¶ 24; Dkt. 169-8 at ¶ 14; Dkt. 169-15 at ¶¶ 10, 21)
Although the arbitration agreements appear in different types of contracts, they contain identical language:
The parties agree that any claim, dispute, and/or controversy except as specifically
excluded herein, that either DISTRIBUTOR may have against COMPANY (and/or its affiliated companies and its and/or their directors, officers, managers, employees, and agents and their successors and assigns) or that COMPANY may have against DISTRIBUTOR (or its owners, directors, officers, managers, employees, and agents), arising from, related to, or having any relationship or connection whatsoever with the Distributor Agreement between DISTRIBUTOR and COMPANY ("Agreement"), including the termination of the Agreement, services provided to COMPANY by DISTRIBUTOR, or any other association that DISTRIBUTOR may have with COMPANY ("Covered Claims") shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act (9 U.S.C. §§ I, et seq.) ("FAA") in conformity with the Commercial Arbitration Rules of the American Arbitration Association ("AAA" or "AAA Rules"), or any successor rules, except as otherwise agreed to by the parties and/or specified herein.
(E.g., Dkt. 169-3, Attachment 1, Ex. 2)
The arbitration agreements also contain collective-action waivers:
All Covered Claims against COMPANY must be brought by DISTRIBUTOR on an individual basis only and not as a plaintiff or class member in any purported class, collective, representative, or multi-plaintiff action. DISTRIBUTOR further agrees that if it is within any such class, collective, representative, or multi-plaintiff action, it will take all steps necessary to opt-out of the action or refrain from opting in or joining, as the case may be, and DISTRIBUTOR expressly waives any right to recover any relief from any such class, collective, representative, or multi-plaintiff action. Similarly, all Covered Claims by COMPANY against DISTRIBUTOR may not be brought as a plaintiff or class member in any purported class, collective, representative, or multi-plaintiff action. The parties understand that there is no right or authority for any Covered Claim to be heard or arbitrated on a multi-plaintiff, collective, or class action basis, as a private attorney general, or any other representative basis. The parties understand that there are no bench or jury trials and no class, collective, representative, or multi-plaintiff actions are permitted under this Arbitration Agreement.
(Id. )
Finally, the arbitration agreements (i) define "Covered Claims" to include "any claims challenging the independent contractor status of DISTRIBUTOR" or "alleging that DISTRIBUTOR was misclassified as an independent contractor"; (ii) contain a choice-of-law provision providing that the agreements "shall be governed by the FAA and Florida [or Georgia] law to the extent Florida [or Georgia] law is not inconsistent with the FAA"; and (iii) include an agreement to arbitrate the question of whether the arbitration provisions cover a "particular issue or claim":
Any issues concerning the arbitrability of a particular issue or claim under this Arbitration Agreement (except for those concerning the validity or enforceability of the prohibition against class, collective, representative, or multi-plaintiff action arbitration and/or applicability of the FAA) shall be resolved by the arbitrator, not a court.
(Id. )
Plaintiffs oppose arbitration, arguing primarily that the 100 opt-in Plaintiffs are "transportation workers" and thus exempt from the Federal Arbitration Act ("FAA"). (Dkt. 174 at 5-13) Plaintiffs also contend that the Court cannot compel arbitration under Florida or Georgia law because the arbitration agreements foreclose application of either state's law to the extent it is inconsistent with the FAA—which, unlike the Florida and Georgia arbitration statutes, does not apply to transportation workers. (Id. at 13-16). Plaintiffs appear to have abandoned their argument that the arbitration agreements are unenforceable because they violate Section 7 of the NLRA.
The Supreme Court rejected this argument in Epic Systems, reasoning that the NLRA "says nothing about how judges and arbitrators must try legal disputes that leave the workplace and enter the courtroom or arbitral forum." 138 S. Ct. at 1619.
II. LEGAL STANDARD
"The validity of an arbitration agreement is generally governed by the [FAA]." Lambert v. Austin Ind., 544 F.3d 1192, 1195 (11th Cir. 2008). The FAA provides that "arbitration agreements ‘shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’ " Collado v. J. & G. Transp., Inc., 820 F.3d 1256, 1259 (11th Cir. 2016) (quoting 9 U.S.C. § 2 ). Although the FAA embodies a "liberal federal policy favoring arbitration agreements," that policy does not apply to "disputes concerning whether an agreement to arbitrate has been made." Burch v. P.J. Cheese, Inc., 861 F.3d 1338, 1346 (11th Cir. 2017). Thus, "[w]hen presented with a motion to compel arbitration, a district court will consider three factors: (1) whether a valid agreement to arbitrate exists, (2) whether an arbitrable issue exists, and (3) whether the right to arbitrate was waived." Abellard v. Wells Fargo Bank, N.A., No. 19-CV-60099, 2019 WL 2106389, at *2 (S.D. Fla. May 14, 2019). "A plaintiff challenging the enforcement of an arbitration agreement bears the burden to establish, by substantial evidence, any defense to the enforcement of the agreement." Inetianbor v. CashCall, Inc., 923 F. Supp. 2d 1358, 1362 (S.D. Fla. 2013) (citing Bess v. Check Express, 294 F.3d 1298, 1306-07 (11th Cir. 2002) ).
III. DISCUSSION
A. The "Transportation Worker" Exemption Applies Here
Plaintiffs argue that the arbitration agreements at issue are unenforceable because Flowers Foods distributors are "transportation workers" and thus exempt from the FAA. (Dkt. 174 at 5-13) The FAA does not apply to "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. The Supreme Court has held that Section 1 ’s residual clause—"any other class of workers engaged in foreign or interstate commerce"—applies only to "contracts of employment of transportation workers." Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001). Where, as here, an arbitration agreement "gives an arbitrator authority to decide ... the initial question whether the parties’ dispute is subject to arbitration," the court still must decide for itself whether "the contract in which the [delegation] clause appears ... trigger[s] [Section] 1's ‘contracts of employment’ exception." New Prime Inc. v. Oliveira, ––– U.S. ––––, 139 S. Ct. 532, 538, 202 L.Ed.2d 536 (2019).
The term "contracts of employment" in Section 1 refers to both employer-employee contracts and contracts with independent contractors. New Prime, 139 S. Ct. at 543-44.
Although the Supreme Court has made clear that Section 1 exempts transportation workers from the FAA, it has not provided any additional guidance on the definition of "transportation worker." The Eleventh Circuit took up that task in Hill v. Rent-A-Center, Inc., 398 F.3d 1286 (11th Cir. 2005). There, the plaintiff "was employed as an account manager" for Rent-A-Center, "a business that rents furniture and appliances to customers on a ‘rent-to-own’ basis." Id. at 1288. The plaintiff's "job duties involved making delivery of goods to customers out of state in his employer's truck." Id. After the plaintiff sued Rent-A-Center for racial discrimination, the company moved to compel arbitration. Id. The plaintiff opposed the motion, contending that "he was a worker in interstate commerce and thus exempt from the mandatory arbitration provisions of the FAA." Id.
The Eleventh Circuit rejected that argument and held that the plaintiff was not exempt from the FAA because he was "not a transportation industry worker." Id. The court reasoned that, in creating the exemption, Congress intended to "reserve regulation of [transportation workers] for separate legislation more specific to the transportation industry." Id. at 1289. "The emphasis, therefore, was on a class of workers in the transportation industry, rather than on workers who incidentally transported goods interstate as part of their job in an industry that would otherwise be unregulated." Id. The court rejected the plaintiff's argument that, "because he did transport goods across state lines, ... the [ Section] 1 exemption should apply to him." Id. at 1290. The court explained that, "in addition to the interstate transportation of goods requirement ... the employee seeking application of [ Section] 1 ’s exemption must also be employed in the transportation industry." Id. Accordingly, because the plaintiff's "interstate transportation activity" was only "incidental to [his] employment as an account manager," the court concluded that he "was not within a class of workers within the transportation industry," and "his employment contract [was] not exempted from the FAA's mandatory arbitration provisions." Id. at 1289-90.
The opt-in Plaintiffs in this case satisfy both elements of the Hill test—they are "engaged in the transportation of goods in interstate commerce" and "employed in the transportation industry." Hamrick v. Partsfleet, LLC, 411 F. Supp. 3d 1298, 1301 (M.D. Fla. 2019).
First, Plaintiffs easily meet "the interstate transportation of goods requirement." Hill, 398 F.3d at 1290. As Flowers Foods distributors, Plaintiffs "or their employees order products from Flowers [Foods] and then pick up their ordered products at Flowers [Foods’] warehouses in a delivery vehicle of their choosing." (Dkt. 100-2 at 7) Defendants’ own promotional materials explain that Plaintiffs "are in supermarkets, convenience stores, and restaurants delivering and merchandising these fresh bakery foods every day." (Id. at 2) Moreover, Defendants concede that at least "a portion of the goods delivered" are "produced out-of-state." (Dkt. 168 at 20) Taken together, these facts establish that Plaintiffs are "actually engaged in the transportation of goods in interstate commerce." Hamrick, 411 F. Supp. 3d at 1301.
Defendants attempt to avoid this conclusion by arguing that Plaintiffs are comparable to the account manager in Hill and the "Sales Service Representatives" in Veliz v. Cintas Corp., No. C 03-1180 SBA, 2004 WL 2452851, at *1 (N.D. Cal. Apr. 5, 2004), modified on other grounds on reconsideration, 2005 WL 1048699 (N.D. Cal. May 4, 2005). (Dkt. 168 at 18-20) Plaintiffs, however, are not account managers who only "incidentally transport[ ] goods interstate as part of their job." Hill, 398 F.3d at 1289 (emphasis added). Nor are they "Sales Service Representatives" who sometimes "deliver goods" but whose "primary duty" is "customer service." Veliz, 2004 WL 2452851, at *10. Instead, Plaintiffs are distributors whose sole responsibility is to "[s]chedul[e] store visits to deliver product[s] and service the store[s]." (Dkt. 100-2 at 5; see also, e.g., Dkt. 61-5 at ¶¶ 11-16) Far from being "incidental to Plaintiffs’ employment," the "transportation of goods in interstate commerce" is the primary duty of Plaintiffs as distributors. Hamrick, 411 F. Supp. 3d at 1302. Plainly stated, their distribution work is not incidental to any other work because they perform no other work for Flowers Foods.
Defendants also contend that Plaintiffs are not "engaged in the transportation of goods in interstate commerce" because they "can successfully operate their business without ever personally driving a truck." (Dkt. 179 at 3) This argument rests on the faulty premise that the transportation worker exemption applies only to workers "who physically move ... packages." Palcko v. Airborne Express, Inc., 372 F.3d 588, 593 (3d Cir. 2004). The Third Circuit correctly rejected that premise in Palcko. There, the plaintiff supervised "between thirty and thirty-five drivers who delivered packages" in the Philadelphia area. Id. at 590. Although the plaintiff never drove a truck, the Third Circuit concluded that her "direct supervision of package shipments" was "so closely related [to interstate and foreign commerce] as to be in practical effect part of it," and that therefore she was "a transportation worker" "exempt from the FAA's coverage." Id. at 593-94. Here, even if some Plaintiffs do not drive the trucks that deliver Flowers Foods’ products, they are certainly responsible for supervising those who do. That is enough to satisfy "the interstate transportation of goods requirement." See Zamora v. Swift Transp. Corp., No. EP-07-CA-00400-KC, 2008 WL 2369769, at *6 (W.D. Tex. June 3, 2008) ("[T]he employee need not actually transport the goods himself for the exemption to apply."), aff'd, 319 F. App'x 333 (5th Cir. 2009).
As to the second prong, Plaintiffs have established that they are "employed in the transportation industry." Hill, 398 F.3d at 1290. In seeking to compel arbitration, Defendants contend that Plaintiffs are not "employed in the transportation industry" because, unlike "a trucking company, a railroad, or [a] fleet of ships," Defendants "are in the business of manufacturing fresh bakery products." (Dkt. 168 at 17) This argument depends on the assumption that Plaintiffs are employed by Flowers Foods. Yet Defendants’ primary defense in this action is that Plaintiffs are independent contractors and not employed by Flowers Foods, and that they are subject to independent "distributor agreements." (See, e.g., Dkt. 200 at 14 ("Martins and those distributors he purports to represent cannot recover under the FLSA because they are not ‘employees’ under the FLSA. Rather, Martins and those distributors he purports to represent entered into written independent distributor agreements with Flowers Foods’ subsidiaries ... which expressly provide that they are independent contractors ....") (emphasis added))
If the Court assumes, therefore, that Plaintiffs are independent contractors rather than Flowers Foods employees, the nature of Flowers Foods’ business is irrelevant to whether Plaintiffs are "employed in the transportation industry" under Hill. Cf. Wooten v. Sec'y, Dep't of Corr., No. 8:12-CV-1436-T-27EAJ, 2015 WL 5772282, at *5 n.3 (M.D. Fla. Sept. 30, 2015) (holding that a petitioner who "testified [she] was an independent contractor" for a mortgage lender was not "employed by a mortgage lender"). Considered as independent contractors, Plaintiffs clearly work in the transportation industry. As explained in Flowers Foods’ own words, Plaintiffs’ primary duty as distributors is "to sell and distribute certain Flowers [Foods] products within a defined geographic footprint." (Dkt. 100-2 at 6) Simply put, Plaintiffs are engaged in the transportation industry because their "mission [as distributors] ... is to move goods." Tran v. Texan Lincoln Mercury, Inc., No. CIV.A. H-07-1815, 2007 WL 2471616, at *5 (S.D. Tex. Aug. 29, 2007).
Even if the Court were to consider Plaintiffs as Flowers Foods employees, as Plaintiffs allege, they are "employed in the transportation industry" because they serve only as a part of the "Direct Store Delivery" "operating segment[ ]" of Flowers Foods, which operates in the transportation industry by selling and delivering "a significant portion of Flowers [Foods’] products." (Dkt. 100-2 at 5; see also Dkt. 169-21 at 45:16-46:1) In other words, considered as employees, Plaintiffs work solely for the distribution arm of Flowers Foods, which means they are employed in the transportation industry. See Waithaka v. Amazon.com, Inc., 404 F. Supp. 3d 335, 343 (D. Mass. 2019) (finding that a delivery driver for Amazon.com—"the largest online retailer in the United States"—"clearly works in the transportation industry").
Because Plaintiffs are transportation workers, they are exempt from the FAA and cannot be compelled to arbitrate under the Act. See Hamrick, 411 F. Supp. 3d at 1302 ("Accordingly, the ‘transportation worker’ exemption applies, and arbitration cannot be compelled pursuant to the FAA.").
B. The Court Cannot Compel Arbitration Under State Law
Defendants contend that, even if the FAA does not apply to Plaintiffs, "this Court should still compel arbitration under" either Florida or Georgia law. (Dkt. 168 at 21) Plaintiffs disagree. Plaintiffs point to the arbitration agreements’ choice-of-law clause, which provides that the agreements "shall be governed by the FAA and Florida [or Georgia] law to the extent Florida [or Georgia] law is not inconsistent with the FAA." (Dkt. 169-3, Attachment 1, Ex. 2) According to Plaintiffs, because neither Florida nor Georgia law contains a transportation worker exemption, they are "inconsistent with the FAA" and thus cannot be used to compel Plaintiffs to arbitrate. (Dkt. 174 at 13-16) The Court agrees with Plaintiffs and declines to compel arbitration under Florida or Georgia law.
Defendants also contend that, if the FAA does not apply, the Court must enforce the arbitration agreements’ delegation provision and "submit the dispute to arbitration for an arbitrator to decide the question of arbitrability under state law." (Dkt. 179 at 6) But the cases Defendants cite enforced delegation provisions under the FAA, and the FAA does not apply here. (Id. (citing Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010) ; Jones v. Waffle House, Inc., 866 F.3d 1257 (11th Cir. 2017) ))
The transportation worker exemption "does not ... address the enforceability of employment contracts exempt from the FAA. It simply excludes these contracts from FAA coverage entirely." Valdes v. Swift Transp. Co., Inc., 292 F. Supp. 2d 524, 529 (S.D.N.Y. 2003). "When a contract with an arbitration provision falls beyond the reach of the FAA, courts [typically] look to state law to decide whether arbitration should be compelled nonetheless." Breazeale v. Victim Servs., Inc., 198 F. Supp. 3d 1070, 1079 (N.D. Cal. 2016).
Here, however, the parties have explicitly contracted for Florida and Georgia law not to apply to the arbitration agreements. Specifically, the agreements provide that they "shall be governed by the FAA and Florida [or Georgia] law [but only] to the extent Florida [or Georgia] law is not inconsistent with the FAA." (Dkt. 169-3, Attachment 1, Ex. 2) The FAA does not govern the agreements because, as discussed above, Plaintiffs are transportation workers exempt from the Act. Florida or Georgia law are in that regard both "inconsistent with" the FAA because neither contains a similar transportation worker exemption. See Guidice v. Sage Corp., No. 06-80659-CIV, 2006 WL 8433427, at *2 (S.D. Fla. Nov. 6, 2006) ("The Florida Arbitration Code is substantially similar to the FAA, except the Florida Arbitration Code does not include an exception for ‘transportation workers.’ "); Ga. Code Ann. § 9-9-2(c) (listing several classes of agreements exempt from the Georgia Arbitration Code, none of which relates to transportation workers). Given this fundamental inconsistency, "it appears that it is precisely against the parties’ intent to apply [Florida or Georgia] law to the [arbitration agreements]." Rittmann v. Amazon.com, Inc., 383 F. Supp. 3d 1196, 1203 (W.D. Wash. 2019). Thus, because neither the FAA nor Florida or Georgia law can be applied to the arbitration agreements, there is "no valid agreement to arbitrate." Id.
The court in Hamrick declined to compel arbitration for similar reasons. There, the court found that the plaintiffs—"delivery agents" who delivered packages for the defendants—were transportation workers exempt from the FAA. 411 F. Supp. 3d at 1301-02. The court then considered whether it could compel arbitration under state law. Id. at 1302. The parties’ contracts contained a general choice-of-law provision providing that "the [contracts] will be subject to state law." Id. The arbitration provision, however, specified that it was "governed by the Federal Arbitration Act." Id. Invoking the canon that "[w]hen two contract terms conflict, the specific term controls over the general one," the court gave controlling effect to the arbitration provision's selection of the FAA. Id. As a result, the court concluded that the arbitration provision could not "be interpreted pursuant to applicable state law and must rise or fall on the application of the FAA." Id. Because the plaintiffs were "exempt from arbitration under the FAA," the court concluded that it could not "compel arbitration pursuant to the parties’ [a]greements." Id.
Here too, the Court cannot give effect to the parties’ choice of Florida or Georgia law, not only by operation of contract construction principles but, more importantly, by the contracting parties’ express terms, which dictate that the arbitration agreements "must rise or fall on the application of the FAA" where, as here, the conflict with the FAA operates to preclude the application of state law. Id. In sum, Plaintiffs are transportation workers, the FAA does not apply, state law cannot apply to vitiate the exemption of the FAA, and the arbitration agreements are, therefore, unenforceable.
C. The Collective-Action Waivers are Enforceable as Standalone Provisions
Defendants argue separately that, if the arbitration agreements are found to be unenforceable, the Court should nevertheless enforce the collective-action waivers and compel Plaintiffs who have signed such waivers to pursue their claims in individual actions. (Dkt. 168 at 23-24) Plaintiffs respond that the collective-action waivers are unenforceable because the FLSA prohibits such waivers in the absence of a valid arbitration agreement. (Dkt. 174 at 17-19) The Court concludes that the waivers require Plaintiffs who have signed them to pursue their misclassification claims in individual actions.
As an initial matter, the collective-action waivers plainly apply to Plaintiffs’ claims in this action. The waivers require Flowers Foods distributors to bring "[a]ll Covered Claims ... on an individual basis only and not as a plaintiff or class member in any purported class, collective, representative, or multi-plaintiff action." (Dkt. 169-3, Attachment 1, Ex. 2) "Covered Claims," in turn, are defined to include "any claims challenging the independent contractor status of DISTRIBUTOR" or "alleging that DISTRIBUTOR was misclassified as an independent contractor." (Id. ) Here, Plaintiffs allege that they are owed unpaid overtime because Defendants misclassified them as independent contractors. (Dkt. 198 at ¶¶ 1-3, 88) Thus, assuming the collective-action waivers are enforceable, Plaintiffs’ claims are "Covered Claims" that must be brought "on an individual basis only." (Dkt. 169-3, Attachment 1, Ex. 2)
Plaintiffs do not dispute that the language of the waivers covers their claims. Instead, they contend that the waivers are invalid absent an enforceable arbitration agreement because the FLSA prohibits waivers of collective-action rights. (Dkt. 174 at 19) In support of this argument, Plaintiffs rely principally on Killion v. KeHE Distributors, LLC, 761 F.3d 574 (6th Cir. 2014). There, the Sixth Circuit held that a waiver of FLSA collective-action rights is unenforceable "where arbitration is not a part of the waiver provision." Id. at 592. The court reasoned that the FLSA reflects a "concern" that "an employer could circumvent the Act's requirements—and thus gain an advantage over its competitors—by having its employees waive their rights under the Act." Id. at 591. "Requiring an employee to litigate on an individual basis," the court explained, "grants the employer" just such an impermissible "unfair advantage over its competitors." Id. at 592. While "the considerations change when an arbitration clause is involved" because of "the countervailing federal policy" in favor of arbitration, "no arbitration agreement [was] present in the case before" the court. Id. at 591-92.
The Court declines to follow Killion because it rests on an interpretation of the FLSA that the Eleventh Circuit rejected in Walthour v. Chipio Windshield Repair, LLC, 745 F.3d 1326 (11th Cir. 2014). Walthour addressed the "question of whether an arbitration agreement, which waives an employee's ability to bring a collective action under the [FLSA], is enforceable under the [FAA]." Id. at 1327. The court examined the "FLSA's text, legislative history, [and] purposes" and concluded that the FLSA does not "preclude[ ] the enforcement of plaintiffs’ ... collective action waivers." Id. at 1334. Specifically, the court found that (i) "the FLSA contains no explicit provision precluding ... a waiver of the right to a collective action"; (ii) "the text of FLSA § 16(b) does not set forth a non-waivable substantive right to a collective action"; (iii) the FLSA's legislative history "do[es] not show that Congress intended the collective action provision to be essential to the effective vindication of the FLSA's rights"; and (iv) given "the purposes of the FLSA," "the enforcement of collective action waivers ... is ... not inconsistent with the FLSA." Id. at 1334-35. Walthour’s conclusion that the FLSA does not bar waivers of collective-action rights cannot be squared with Killion.
Plaintiffs contend that Walthour is distinguishable "because it concerned a valid agreement to arbitrate." (Dkt. 174 at 19) As other courts have explained, however, Walthour "found waivers enforceable not because of the strong policy in favor of the FAA, but rather ... because the FLSA's text, scheme, and legislative history reveal that the FLSA ‘does not set forth a non-waivable substantive right to a collective action.’ " Benedict v. Hewlett-Packard Co., No. 13-CV-00119-BLF, 2016 WL 1213985, at *5 (N.D. Cal. Mar. 29, 2016) (quoting Walthour, 745 F.3d at 1335 ); see also Feamster v. Compucom Sys., Inc., No. 7:15-CV-00564, 2016 WL 722190, at *4 (W.D. Va. Feb. 19, 2016) ("Even though the employment agreements in Walthour contained arbitration clauses, the court is constrained to conclude that the Eleventh Circuit's findings as to the rights afforded in the FLSA and the validity of collective action waivers are applicable in this case, even though CompuCom's agreements lack arbitration clauses."). Accordingly, because the Court concludes that the FLSA does not prohibit enforcement of the collective-action waivers in this case, the Plaintiffs who agreed to such waivers must pursue their claims in individual actions.
The Court notes, however, that all of the Plaintiffs who agreed to waive their collective-action rights did so before this Court conditionally certified the collective in March 2018, and that the vast majority did so before this action was initiated in November 2016. (Dkts. 169-3, 169-8, 169-11, 169-15, 169-16, 169-17) Thus, the Court makes no determination as to whether the collective-action waivers would be enforceable if Defendants had sought and obtained them after conditional certification or as a means of settling the claims without court approval.
D. Missing Agreements and Opt-In Plaintiffs Who Have Withdrawn from This Action
Finally, Plaintiffs oppose enforcement of the arbitration agreements and collective-action waivers on the grounds that Defendants failed to produce signed agreements for six opt-in Plaintiffs. (Dkt. 174 at 16-17) With respect to four of these individuals—Brian Jernigan, Loren Johnson, Calvin Waddell, and George Cruz—Plaintiffs’ contention is incorrect. All four purchased distributorships from existing distributors and, as a result, assumed those distributors’ contractual obligations. (Dkt. 169-3 at ¶ 24; Dkt. 169-7, Attachments 21-22; Dkt. 169-8 at ¶ 14; Dkt. 169-10, Attachments 11, 12; Dkt. 169-15 at ¶¶ 10, 21; Dkt. 169-15, Attachments 7-9, 20-21) Those obligations included arbitration agreements and collective-action waivers, signed copies of which are attached to Defendants’ Motion. (Id. ) After Defendants’ Motion became ripe, however, one of these individuals—Loren Johnson—withdrew his consent to join this action. (Dkt. 226) Thus, the Court cannot dismiss him from this action.
In addition, Plaintiffs are correct that Defendants failed to produce signed agreements for Kaleb Patrick and Jailer Dominguez. Although Defendants attached a copy of Dominguez's distributor agreement, they failed to include either the signature page or Exhibit K, which contains the arbitration agreement and the collective-action waiver. (Dkt. 169-20, Attachment 22) While Defendants assert that Patrick's distributor agreement is included as Attachment 23 to John Tallon's declaration, (Dkt. 169-2), no such attachment exists. (Dkt. 169-20) Because Defendants have failed to meet their burden of producing the relevant agreements for Patrick or Dominguez, the Court declines to dismiss them. If Defendants intend to renew their request to dismiss Patrick or Dominguez from this action, they must include complete copies of the relevant agreements.
Finally, although Defendants sought to dismiss Michael Burpeau, Devin Brown, and Michael Long from this action, (Dkts. 169-1, Dkt. 169-2), those Plaintiffs have since withdrawn their consents to join this action. (Dkts. 211, Dkt. 227, Dkt. 229) Thus, the Court cannot dismiss them.
IV. CONCLUSION
Upon consideration of the foregoing, it is hereby ORDERED as follows:
1. Defendants’ Second Motion to Dismiss or, in the Alternative, to (1) Compel Individual Arbitration or (2) Compel Individual Actions, (Dkt.
168), is GRANTED IN PART AND DENIED IN PART .
2. Defendants’ Second Motion to Compel Individual Arbitration is DENIED .
3. Defendants’ Second Motion to Compel Individual Actions is GRANTED as follows :
a. With the exception of Kaleb Patrick, Jailer Dominguez, Michael Burpeau, Devin Brown, and Michael Long, all of the opt-in Plaintiffs identified in Dkt. 169-1 and Dkt. 169-2 are DISMISSED from this action. Brian Jernigan, Calvin Waddell, and George Cruz are also DISMISSED from this action. To the extent the Plaintiffs dismissed from this action desire to pursue their misclassification claims, they must do so on an individual basis. To avoid prejudice to the Plaintiffs dismissed from this action, the Court TOLLS the statute of limitations applicable to these Plaintiffs for sixty (60) days following the date of this Order.
b. If agreement cannot be reached, Defendants shall have twenty-one (21) days from the date of this Order to file a renewed motion to dismiss with respect to Kaleb Patrick and Jailer Dominguez. Any such motion must include complete copies of the relevant agreements.
DONE and ORDERED in Tampa, Florida, this 12th day of March, 2020.