United States District Court, W.D. Pennsylvania
TERRY WILLIAMS, et al. Plaintiffs,
NABORS DRILLING USA, LP, et al., Defendants.
JOY FLOWERS CONTI, Chief District Judge.
This is a collective and purported class action in which a group of current and former employees (collectively, the "Employees") accuse Nabors Drilling USA, LP and Nabors Corporate Services (collectively, "Nabors") of violating the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. §§ 201-219, the Pennsylvania Minimum Wage Act of 1968 ("MWA"), 43 P.S. §§ 333.101-333.115, the Pennsylvania Wage Payment and Collection Law ("WPCL"), 43 P.S. §§ 260.1-260.45, and Pennsylvania common law. (ECF No. 3 at 1-2.) Nabors filed a motion to compel arbitration and to stay, with accompanying brief and reply brief, (ECF Nos. 34, 35, and 52), and a related motion to suspend initial case management deadlines pending the court's disposition of the motion to compel arbitration, (ECF No. 36.) The Employees filed responses in opposition to both motions in which they contend that this court must adjudicate the case despite the arbitration agreements, which they assert are procedurally and substantively unconscionable. (ECF Nos. 43 and 44.) The parties were notified via text docket entry that the court would hear oral argument on the pending motions at the conference scheduled for February 18, 2014. For the reasons set forth below, the motion to compel arbitration and stay will be granted. Nabors' motion to suspend deadlines will be denied as moot.
I. FACTUAL BACKGROUND
A. Substantive Allegations
Although the merits of this dispute are not significant to the motions before the court, the court briefly summarizes the allegations of the complaint for purposes of providing context. The Employees are current and former non-exempt, hourly employees of Nabors who allege that they were not paid for time spent attending safety meetings and donning and doffing safety equipment, and were denied overtime pay due to Nabors' manipulation of the beginning and ending days of their workweek. (ECF No. 3 ¶¶ 32-40.) The Employees contend that they were required to perform "off the clock" work and "to remain on call, ' skip meals and breaks" without compensation. (Id. ¶¶ 35, 38.)
The Employees assert an FLSA collective action on behalf of all similarly-situated Nabors employees based on these factual allegations. (Id. ¶¶ 46-52, Count I.) The Employees also aver violations of Pennsylvania statutory law, specifically the MWA, the WPCL, and assert a common law unjust enrichment claim, "on behalf of all non-exempt hourly-paid employees of [Nabors] who worked for [Nabors] in Pennsylvania and who have not been paid their earned wages and overtime compensation in accordance with the MWA, WPCL, and Pennsylvania common law (the "Pennsylvania Class")." (Id. ¶ 53, Counts II-IV.)
B. The Arbitration Agreement
Nabors contends that the Employees cannot pursue their claims in this court because they agreed to arbitrate any disputes involving their employment relationship. (ECF No. 34.) The operative arbitration agreements are: (1) "Nabors Dispute Resolution Program and Rules, " effective April 15, 2001 (the "DRP" or the "Rules"), (ECF No. 35-1 at 13-29); and (2) a January 17, 2007 amendment thereto (the "Amendment") (collectively the "Arbitration Agreement"). (Id. at 32-33.) The purpose of the Amendment was to prohibit the pursuit of arbitration on a joint, consolidated, or representative (i.e., class) basis. (ECF No. 35-1 at 32-33.)
The Arbitration Agreement provides that "all legal and equitable claims, demands, and controversies" will be "finally and conclusively" resolved pursuant to the DRP and the Rules. (ECF No. 35-1 at 14-15 (DRP ¶ 2E) and 17 (DRP ¶ 4).) Either Nabors or an Employee can initiate the arbitration process by sending a "written request to initiate proceedings" at any time, subject to applicable statutes of limitations. (Id. at 20 (Rules ¶ 3).) The Arbitration Agreement includes provisions regarding the applicable law (Id. at 17-18 (DRP ¶ 8)), the scope of the arbitrator's authority (Id. at 27 (Rules ¶ 30)), and fees and expenses (Id. at 28 (Rules ¶ 32)), each of which is relevant to the court's disposition of the motion to compel arbitration.
Before proceeding with a substantive analysis of the motion to compel, the court must address Nabors' attachment of several declarations, with voluminous supporting documentation, to its opening brief in support of the motion to compel arbitration. According to Nabors, this evidence establishes that each Employee received notice of and signed acknowledgements of the DRP, the Rules, and the Amendment. A court's consideration of that evidence would ordinarily require application of a summary judgment-type standard of review to the motion to compel arbitration, and could justify limited discovery to further develop the factual record. Guidotti v. Legal Helpers Debt Resolution, L.L.C. , 716 F.3d 764, 776 (3d Cir. 2013). The court, however, need not, and did not, consider this evidence because it is immaterial.
The Employees do not contend that they never received notice of the Arbitration Agreement, or that they did not agree to its terms. Instead, the Employees assert that the Arbitration Agreement is unenforceable because it is procedurally and substantively unconscionable. The evidence submitted by Nabors might be relevant to this court's assessment of the procedural unconscionability of the Arbitration Agreement. As discussed below, however, the court need not reach that issue in order to decide the instant motion to compel arbitration because there is no basis on which to find that the Agreement is substantively unconscionable.
II. STANDARD OF REVIEW
The Federal Arbitration Act, 9 U.S.C. §§ 1-16 ("FAA"), provides that arbitration agreements are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The FAA establishes a strong policy in favor of arbitration. Puleo v. Chase Bank USA, N.A. , 605 F.3d 172, 178 (3d Cir. 2010). Any "party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court... for an order directing that such arbitration proceed in the manner provided for in such agreement." 9 U.S.C. § 4. A party to a valid and enforceable arbitration agreement is entitled to a stay of federal court proceedings pending arbitration. 9 U.S.C. § 3.
The Court of Appeals for the Third Circuit recently clarified the legal standard of review that district courts should apply when faced with a motion to compel arbitration. Guidotti , 716 F.3d at 776. The United States District Court for the Eastern District of Pennsylvania recently and succinctly summarized the test set forth by the court of appeals in Guidotti:
When it is apparent based on the face of a complaint, and documents relied upon in the complaint, that certain of a party's claims are subject to an enforceable arbitration clause, a motion to compel arbitration should be considered under a Rule 12(b)(6) standard without discovery's delay." Guidotti v. Legal Helpers Debt Resolution, L.L.C. , 716 F.3d 764, 776 (3d Cir. 2013). However, if the complaint and its supporting documents are unclear about the agreement to arbitrate, or if the party seeking to avoid arbitration has put forth additional facts sufficient to place the agreement to arbitrate in issue, "the motion to compel arbitration must be denied pending further development of the factual record." Id. at 775. Following this limited discovery on the question of arbitrability, the court may entertain a renewed motion to compel arbitration. Id . This renewed motion to compel must be reviewed using a summary judgment standard. Id . Under this standard, "a court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a).
Porreca v. The Rose Group, No. 13-1674, 2013 WL 6498392, at *6 (E.D. Pa. Dec. 11, 2013).
Where a party challenges the validity of an arbitration agreement on the ground that it is unconscionable, a threshold question of arbitrability is presented, which must be decided by the court, before arbitration can be compelled. Quilloin v. Tenet HealthSystem Phila., Inc. , 673 F.3d 221, 228-29 (3d Cir. 2012) (citing decisions); Nino v. Jewelry Exchange, Inc. , 609 F.3d 191, 200 (3d Cir. 2010). Federal courts are to apply state contract law, to the extent that it does not conflict with the FAA, to determine whether an arbitration agreement is unconscionable. Quilloin , 673 F.3d at 230 (citing AT&T Mobility LLC v. Concepcion , 131 S.Ct. 1740, 1746-47, 1753 (2011)). To prove unconscionability under Pennsylvania law, the party challenging the ...