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Lopez v. YourPeople Inc.

United States District Court, D. Arizona

July 20, 2017

Leonardo Lopez, Plaintiff,
YourPeople Incorporated, Defendant.


          Honorable John Z. Boyle United States Magistrate Judge.

         Pending before the Court is Defendant's Motion to Dismiss and Compel Arbitration of Individual Claims. (Doc. 11.) For the reasons below, the Court will grant Defendant's Motion to Compel and order Plaintiff Leonardo Lopez and Defendant to proceed to arbitration as provided in the parties' Arbitration Agreement. The Court will deny without prejudice Defendant's request to dismiss the Complaint and order the parties to provide briefing regarding whether the Court should stay or dismiss this action while Plaintiff and Defendant proceed to arbitration, and the impact of the opt-in Plaintiffs on this case moving forward.[1]

         I. Background

         Plaintiff began working for Defendant as an Account Executive in Defendant's Arizona Office on January 5, 2015. (Doc. 1 ¶¶ 15, 28; Doc. 11-1 ¶¶ 8-9.) On February 26, 2016, Defendant informed Plaintiff it would be terminating his employment, effective February 29, 2016. (Doc. 11-1 ¶ 11.) Defendant provided Plaintiff with a Severance Agreement for his consideration on February 26, 2016. (Id. ¶ 12.) Plaintiff signed the Agreement on March 4, 2016, and thereafter accepted the consideration detailed in the Agreement. (Id. ¶ 14.)

         The Agreement provides that Defendant would pay Plaintiff a lump sum severance payment, reimbursement for COBRA premiums for six months, and a separate payment made in lieu of any claim to unpaid accrued vacation. (Doc. 11-1 at 5.) The Agreement further states that Plaintiff “acknowledge[s] that [Defendant] has paid all wages, bonuses, earned commissions, and accrued vacation or PTO (as applicable) and any and all other compensation and benefits owed to you as of your Termination Date . . .” (Id.) In consideration for the payment, Plaintiff agreed to a Release of Claims, which stated Plaintiff “agree[s] not to sue or otherwise institute or cause to be instituted any legal or administrative proceedings concerning, any claim, duty, obligation or cause of action relating to any matters of any kind . . . including, without limitation: . . . any and all claims for violation of . . . the Fair Labor Standards Act.” (Id. at 6-7.) The Agreement also contains the following provisions:

18. Governing Law and Disputes. Any dispute or claims arising from or related to this Agreement, your employment relationship with [Defendant], or the termination of that relationship (including but not limited to statutory, contractual, constitutional, or common law claims), shall be resolved, to the fullest extent permitted by law, by final, binding and confidential arbitration in San Francisco, California conducted before a single neutral arbitrator by JAMS, Inc. (“JAMS”) or its successor, under the then-applicable JAMS Arbitration Rules and Procedures for Employment Disputes (available at, on an individual basis only, and not on a class, collective, or private attorney general representative basis on behalf of others. You and [Defendant] acknowledge that by agreeing to this arbitration procedure, you and [Defendant] waive the right to resolve any such dispute, claim or demand through a trial by jury or judge or by administrative proceeding. You will have the right to be represented by legal counsel at any arbitration proceeding, at your expense. The arbitrator shall: (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be available under applicable law in a court proceeding; (b) issue a written statement signed by the arbitrator regarding the disposition of each claim and the relief, if any, awarded as to each claim, the reasons for the award, and the arbitrator's essential findings and conclusions on which the award is based; and (c) have the authority to award recovery of reasonable attorneys' fees and costs to the party deemed to be the prevailing party in any such arbitration. [Defendant] shall pay all JAMS' arbitration fees. Nothing in this Agreement is intended to prevent either you or the Firm from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any arbitration. This Agreement shall be construed and interpreted in accordance with the laws of the State of California and the Federal Arbitration Act (“FAA”). In the case of a conflict, the FAA will control.
19. Severability. In the event that any provisions hereof, or any portion thereof, becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision or said portion of said provision.
. . . .
21. Voluntary Execution of Agreement; Acknowledgments. This Agreement is executed voluntarily and without any duress or undue influence on the part or behalf of the Parties hereto, with the full intent of releasing all of your claims. You acknowledge that:
(a) You have read this Agreement;
(b) You understand the terms and consequences of this Agreement and of the release it contains;
(c) You are fully aware of the legal and binding effect of this Agreement;
(d) You have been advised to consult with any attorney prior to executing the Agreement.

(Id. at 8-9.)

         On November 17, 2016, Plaintiff filed a “Collective Action Complaint” pursuant to the Fair Labor Standards Act (FLSA), individually and on the behalf of other similarly situated employees, alleging Defendant failed to pay overtime wages. (Doc. 1 ¶¶ 3-6.)

         On February 6, 2017, Defendant filed a Motion to Dismiss and Compel Arbitration of Individual Claims. (Doc. 11.) Defendant asserts that the parties entered a valid and enforceable Arbitration Agreement, which requires Plaintiff to bring his claims individually in arbitration, and that any claims regarding arbitrability must be submitted to the arbitrator in the first instance. In response, Plaintiff does not dispute that the Agreement contains a mutual Arbitration Agreement, Plaintiff signed the written Agreement, and Defendant paid Plaintiff the payments provided for by the Agreement. (Doc. 25.) Rather, Plaintiff asserts that the entire Severance Agreement, including the Arbitration Agreement, is void because private settlements of FLSA claims are unenforceable without court or Department of Labor (DOL) approval, and, therefore, the Severance Agreement fails for lack of consideration, the Arbitration Agreement is unconscionable, a collective action affords potential claimants the best opportunity to exercise their rights under the FLSA, and Defendant has waived enforcement of the Arbitration Agreement by attempting to settle with Plaintiff and other similarly situated former employees outside of arbitration. (Doc. 25.)

         II. Discussion

         a. Delegation of ...

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