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Stone v. Certified Folder Display Service Inc.

United States District Court, D. Arizona

February 4, 2019

Joseph P. Stone, Plaintiff,
Certified Folder Display Service Incorporated, Defendant.


          Honorable John J. Tuchi United States District Judge

         At issue is Defendant's Motion to Compel Arbitration (Doc. 22), to which Plaintiff filed a Response (Doc. 31) and Defendant filed a Reply (Doc. 32). In this Order, the Court also resolves Plaintiff's Motion for Telephonic Conference (Doc. 33). The Court finds these matters appropriate for decision without oral argument. See LRCiv 7.2(f).


         Plaintiff Joseph P. Stone filed a Complaint on behalf of himself and a similarly situated class of employees against Defendant Certified Folder Display Service, Inc. (Doc. 1, Compl.) On behalf of a class of employees, Plaintiff alleges that Defendant violated the Fair Labor Standards Act (“FLSA”) by failing to pay overtime wages. (Compl. ¶ 1.) In his individual capacity, Plaintiff claims that Defendant violated A.R.S. §§ 23-350-23-355 (“Arizona Wage Statute”). (Compl. ¶ 1.)

         Plaintiff began working for Defendant in 2015. (Compl. ¶ 9.) At that time, Plaintiff received an employee manual containing an arbitration provision. (Doc. 22-5, Arbitration Agreement.) Plaintiff signed the employee manual in acknowledgement of his receipt and understanding. (Doc. 22-6.) The Arbitration Agreement provides that:

[E]mployee and [Defendant] agree to submit to final and binding arbitration any dispute arising from or related to employee's employment with [Defendant] . . . Employee and [Defendant] agree that such arbitration shall be the exclusive forum for resolving all disputes arising out of or involving the employee's employment with [Defendant] . . . EMPLOYEE AND [DEFENDANT] ACKNOWLEDGE AND AGREE THAT BY RESOLVING ANY DISPUTES THROUGH ARBITRATION AS PROVIDED IN THIS AGREEMENT, THE PARTIES ARE WAIVING ANY STATUTORY OR CONSTITUTIONAL RIGHTS EITHER MAY HAVE TO A JURY OR COURT TRIAL.

(Arbitration Agreement at 5-6.)

         Defendant filed a Motion to Compel Arbitration (Doc. 22, Mot.). Defendant argues that Plaintiff's individual claims must proceed to arbitration, pursuant to their Arbitration Agreement. (Mot. at 1.) As for Plaintiff's class claims, Defendant asserts they are precluded by the Arbitration Agreement and that this Court must dismiss them. (Mot. at 1.) Plaintiff responds that he attempted to contact Defendant's counsel about moving the case to arbitration in early 2018, to no avail. (Doc. 31, Resp. at 1.) Plaintiff agrees that his individual claims are covered by the Arbitration Agreement but argues that his collective claims should also proceed to arbitration. (Resp. at 1-2.)[1] Plaintiff moves for sanctions against Defendant for its failure to respond to his attempts to stipulate to arbitration on all claims. (Resp. at 5.) Plaintiff argues that Defendant “needlessly expanded this litigation by failing to respond to Plaintiff's request, ” and then “refused to respond with a final answer regarding the draft stipulation Plaintiff circulated to that effect until late the day before Plaintiff's [Response to Defendant's Motion to Compel Arbitration] was due.” (Resp. at 5.)

         Defendant responds to Plaintiff's request for sanctions by pointing out that the parties could not reach a stipulation because submitting all of Plaintiff's claims-including his collective claims-to arbitration is the exact outcome that Defendant hopes to avoid. (Reply at 6-7.) Rather, Defendant believes that Plaintiff's class claims are precluded by the Arbitration Agreement and must be dismissed.

         The parties' disagreement on whether all of Plaintiff's claims should proceed to arbitration hinges on a dispute about who can resolve that question. While Defendant believes it is within the Court's power to decide whether the Arbitration Agreement precludes Plaintiff's class claims, Plaintiff argues that the arbitrator must decide whether his class claims survive. (Doc. 32, Reply at 5; Resp. at 4.) Plaintiff argues that this Court cannot decide whether the Arbitration Agreement allows class arbitration because that “agreement provides that ‘any dispute' arising from Plaintiff's employment must be decided by an arbitrator . . . [including] disputes regarding interpretation of whether Plaintiff can bring a claim arising from his employment on a class or collective action basis.” (Resp. at 5.)


         The Arbitration Agreement at issue is governed by the Federal Arbitration Act (“FAA”). Courts have recognized the FAA as a “liberal federal policy favoring arbitration.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). Thus, “courts must place arbitration agreements on an equal footing with other contracts . . . and enforce them according to their terms.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (internal citations omitted).

         Even given courts' deference to arbitration agreements, there are certain questions pertaining to the enforcement of those agreements that should be decided by courts rather than arbitrators. The Supreme Court explained one such instance in First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995). There, the Court explained that there are often three disagreements between parties to an arbitration clause.

         First, [parties] disagree about . . . the merits of the dispute. Second, they disagree about whether they agreed to arbitrate the merits. That disagreement is about the arbitrability of the dispute. Third, they disagree about who should have the primary power to decide the second matter. Does that power belong primarily to the arbitrators (because the court reviews their arbitrability decision deferentially) or to the ...

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