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Thomas v. Right Choice Staffing Group, LLC

United States District Court, E.D. Michigan, Southern Division

November 2, 2016




         On July 6, 2015, this Court entered an opinion and order finding that employment agreements signed by Plaintiffs required them to arbitrate their Fair Labor Standards Act (“FLSA”) claims against Defendants, but only to the extent those claims arose after December 16, 2013 (the effective date of the agreements).[1] (ECF No. 27.) Plaintiffs now ask the Court to find the arbitration clause in their employment agreements unenforceable because the American Arbitration Association (“AAA”), to which the parties agreed to submit Plaintiffs' arbitrable claims, classified the dispute as subject to its commercial as opposed to its employment rules. This resulted in AAA splitting the anticipated arbitration costs between the parties and invoicing Plaintiffs fees of $9, 700. Rather than pursuing a challenge to this classification with AAA, Plaintiffs filed the pending motion. Because the arbitration agreement is silent as to arbitration costs and fees and the division of costs is based only on AAA's decision-- which does not appear to be definitive-- the Court holds that AAA's conduct is not a basis for declaring the arbitration clause unenforceable.


         Plaintiffs indicate, and Defendants do not dispute, that after this Court ordered the parties to arbitrate Plaintiffs' FLSA claims for work performed after December 16, 2013, they agreed to have AAA conduct the arbitration and Plaintiffs submitted a Demand for Arbitration to the AAA on September 15, 2015. (ECF No. 28 ¶¶ 6, 7.) Plaintiffs filed their demand as an employer-promulgated plan in an employment dispute to be governed by AAA's employment rules. (Id. ¶ 8.) Those rules required Plaintiff to pay a $200.00 filing fee. (Id.); see also Those rules further provide that the employer, alone, is obligated for the costs of arbitration. Id.

         Defendants objected to the characterization of the matter as an employment dispute and requested arbitration under AAA's commercial arbitration rules. (ECF No. 28 ¶ 9.) Under these rules, arbitration costs are split between the parties. (Id. ¶ 11); see also AAA agreed with Defendants that the matter should be arbitrated under its commercial rules and sent Plaintiffs an invoice for $9, 750, representing their portion of the actual or estimated arbitration costs.[2] (ECF No. 28 ¶¶ 10, 12.) Upon receipt of the invoice, Plaintiffs' counsel contacted AAA and challenged the commercial classification of the matter. (Id. ¶ 13.)

         On February 9, 2016, the arbitrator conducted a telephone conference with the parties' attorneys during which Plaintiffs' counsel again argued that the matter is an employment dispute governed by AAA's employment rules. (Id. ¶ 15.) The arbitrator requested briefing from the parties on the issue, and set a March 11, 2016 deadline for Plaintiffs' brief. (ECF No. 29 ¶ 20.) Instead of filing a brief with the AAA, Plaintiffs filed the instant motion asking the court to render the arbitration clause unenforceable. (ECF No. 28.)

         Parties' Arguments

         In their motion, Plaintiffs argue that the arbitration clause is unenforceable because the arbitration costs to be borne by Plaintiffs render arbitration unduly burdensome and would dissuade similarly situated plaintiffs from seeking to vindicate their FLSA rights. (Id.)

         Defendants respond, contending first that the Court lacks subject matter jurisdiction to decide Plaintiffs' motion. (ECF No. 29.) Defendants next urge the Court to deny Plaintiffs' motion because it is untimely. Defendants classify Plaintiffs' motion as a delayed motion for reconsideration of the Court's decision ordering arbitration. As such, Defendants argue it is too late. Defendants alternatively argue that Plaintiffs filed their motion too early because they did not wait for the arbitrator to make a final decision regarding whether AAA's commercial or employment rules will govern the matter.

         Finally, in their response to Plaintiffs' motion, Defendants argue that it is too speculative whether Plaintiffs will be required to pay any arbitration costs and whether those costs are prohibitive. Defendants point out that Plaintiffs submitted no evidence with their motion from which to gauge whether they can afford those costs. As such, Defendants contend that Plaintiffs do not satisfy their burden of showing that the commercial rules' cost-shifting provision would have a chilling effect on their ability to pursue their FLSA claims.

         Plaintiffs filed a reply brief addressing Defendants' arguments. (ECF No. 30.) Plaintiffs assert legal arguments supporting why the Court has jurisdiction to decide their motion and why their motion is timely (i.e., neither too late nor too early). In reply, Plaintiffs argue that the arbitration costs they will need to pay are not speculative and they submit information concerning their approximate annual incomes ($20, 000 for Thomas and $27, 000 for Queens) to show why these costs are prohibitively expensive and would dissuade similarly situated litigants from vindicating their statutory rights.

         Applicable Law & Analysis

         The question of whether an arbitration agreement is enforceable is a question for a court to decide, as this Court's July 6, 2015 opinion and order illustrates. Whether the costs of the arbitral forum effectively prevent a plaintiff from vindicating his or her statutory rights, thereby rendering an arbitration agreement unenforceable, also is a question for the court. See Green Tree Fin. Corp. v. Randolph, 531 U.S. 79 (2000), Morrison v. Circuit City Stores, Inc., 317 F.3d 646 (6th Cir. 2003). As such, this Court has jurisdiction to decide Plaintiffs' pending motion.

         Plaintiffs did not file their motion too late for the Court to consider the relief sought.[3] The Court does not agree with Defendants that Plaintiffs' motion is an untimely (i.e., late) request for reconsideration of the Court's July 6, 2015 decision. When they responded to Defendants' motion to compel arbitration, Plaintiffs had no reason to suspect that they would be responsible for any of the ...

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