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Blanton v. Domino's Pizza Franchising LLC

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

October 25, 2019

HARLEY BLANTON and DEREK PIERSING, on Behalf of Themselves and All Others Similar Situated, Plaintiffs,
v.
DOMINO'S PIZZA FRANCHISING LLC, a Delaware Limited Liability Company; DOMINO'S PIZZA MASTER ISSUER LLC, a Delaware Limited Liability Company; DOMINIO'S PIZZA LLC, a Michigan Limited Liability Corporation; and DOMINO'S PIZZA, Inc., a Delaware Corporation. Defendants.

          ORDER REGARING DEFENDANTS' MOTION TO COMPEL ARBITRATION AND DISMISS OR STAY PROCEEDINGS [ECF No. 61]

          Victoria A. Roberts United States District Judge

         I. INTRODUCTION

         The issue before the Court is whether Harley Blanton (“Blanton”) and Derek Piersing (“Piersing”) (“Plaintiffs”) may proceed on their claims against Domino's Pizza Franchising LLC, Domino's Pizza Master Issuer LLC, Domino's Pizza LLC, and Domino's Pizza, Inc. (“Domino's”) or proceed to arbitration under employment agreements they entered into.

         Plaintiffs are former employees of Domino's franchisees. The franchisees are not named as parties to this lawsuit. Plaintiffs sue Domino's on behalf of themselves and all others similarly situated. Plaintiffs allege a conspiracy between Domino's and its franchisees to suppress wages and limit employment opportunities. They sue under the Clayton Act (15 U.S.C. §§ 15 and 26), the Sherman Act (15 U.S.C. § 4), and the Washington Consumer Protection Act (Wash. Rev. Code 19.86.030) (only to the Washington subclass).

         As employees of Domino's franchisees, Plaintiffs signed contracts agreeing to submit employment-related claims to arbitration.

         Domino's says Plaintiffs' claims against it are subject to the arbitration agreements and moves to dismiss or, in the alternative, stay proceedings and compel arbitration.

         For the reasons below, the Court GRANTS Defendants' Motion to Dismiss.

         II. LEGAL STANDARD

         To survive a motion to dismiss, the nonmoving party must allege enough facts to state a claim to relief that is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The facts must be construed in the light most favorable to the nonmoving party. Power & Tel. Supply Co. v. SunTrust Banks, Inc., 447 F.3d 923, 929-30 (6th Cir.2006) (quoting Bovee v. Coopers & Lybrand C.P.A., 272 F.3d 356, 360 (6th Cir. 2001)).

         The Federal Arbitration Act (“FAA”) requires courts to “rigorously enforce” arbitration agreements. It outlines a “strong federal policy in favor of enforcing arbitration agreements.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 217, 221, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). Any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983).

         Questions about the interpretation and construction of arbitration agreements are governed by federal substantive law. See, e.g., Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). The party opposing arbitration has the burden to show that the agreement is not enforceable. Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79, 91-92, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000).

         III. ANALYSIS

         1. Plaintiffs say that because Domino's did not sign the arbitration agreements, it cannot compel arbitration, and the delegation clauses are invalid

         Plaintiffs' argument is first about contract formation: they say that Domino's did not sign the arbitration agreements, and so it cannot compel arbitration or invoke the delegation clauses.

         Delegation clauses are clauses in the arbitration agreements which require “gateway” questions of “arbitrability”-whether the dispute is arbitrable or not, including any issues of scope, validity, or jurisdiction-to go to the arbitrator instead of a court. This argument applies to both Blanton and Piersing's arbitration agreements.

         Piersing also argues that his arbitration agreement has no delegation clause at all. Domino's says that there are valid delegation clauses pertaining to both agreements and it may invoke them.

         There must be “clear and unmistakable” evidence that the parties intended the arbitrator to decide questions of arbitrability. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). Absent “clear and unmistakable” evidence that the arbitrator decides questions of arbitrability, the Court has jurisdiction.

         A. The Arbitration Agreements

         Blanton and Piersing's arbitration agreements differ; the Court considers them separately. The Court first addresses whether Domino's can compel arbitration with either party, and then turns to whether there is a valid delegation clause in each arbitration agreement.

         Blanton

         Blanton signed an arbitration agreement when he began employment at Wilson Pizza Company (“Wilson Pizza”). He says this arbitration agreement is invalid because Domino's did not sign it, and Domino's cannot invoke the delegation clause. Domino's contends that the broad definition of the “Company” as well as the broad language of the delegation clause, includes Domino's.

         The Court first examines whether Domino's is a party to the arbitration agreement under the contract language.

         a. Contract formation is a question of state law

         Blanton's arbitration agreement says “this Arbitration Agreement will be governed by the Federal Arbitration Act. . . . All other legal decisions shall be determined by the federal, state or local law applicable in the state where the Team Member primarily works.” [ECF No. 61-3, PageID.974]

         Federal courts apply state law to determine whether ordinary contract law invalidates arbitration agreements. See, e.g., Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996). “[T]raditional principles of state law” determine whether a “contract [may] be enforced by or against nonparties to the contract through . . . third-party beneficiary theories . . . and estoppel.” Arthur ...


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