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Whitlow v. Crescent Consulting, LLC

United States District Court, W.D. Oklahoma

April 23, 2018

TOMMY WHITLOW, on behalf of himself and all other similarly situated individuals, Plaintiff,
v.
CRESCENT CONSULTING, LLC. Defendant.

          ORDER

          DAVID L. RUSSELL, UNITED STATES DISTRICT JUDGE.

         Before the Court is Defendant's Motion to Stay and Compel Arbitration (Doc. No. 101). Plaintiff Shaw, the subject of the motion, responded in opposition thereto. Defendant filed a reply in support of its position. (Doc. No. 103). Accordingly, the motion is ripe for consideration. Having considered the parties' submissions, the Court finds as follows.

         Plaintiff is part of a collective action against Defendant alleging violations of the Fair Labor Standards Act. He performed services to Defendant as a drilling consultant. He, and other Plaintiffs, contend Defendant mischaracterized them as independent contractors in an effort to avoid payment of overtime wages. The Court certified this as a collective action on August 14, 2017, and Plaintiff Shaw filed a consent to join on September 22, 2017. On February 8. 2018, Defendant filed the instant motion, asserting that a February 17, 2017, Independent Contractor Master Services Agreement executed between Mr. Shaw and Crescent Consulting mandates arbitration of this dispute. Plaintiff contends that Defendant's motion defies the Court's Order regarding Notice, and further, that compelling arbitration is inappropriate under the Court's precedent and the Federal Arbitration Act.

         Plaintiff's first contention is that the Notice sent to potential opt-in plaintiffs did not include any information regarding arbitration. Without citation, Plaintiff argues that to permit arbitration of his claims is contrary to the language of the Notice, which informed potential plaintiffs:

If you return a Consent to Join Wage Claim form, you will join other drilling consultants who worked for Crescent and have already made a claim for unpaid overtime wages.

         The Court finds no legal basis for embracing Plaintiff's argument. Certain opt-in Plaintiffs were identified only after the Court ordered Notice. Although Defendant may have anticipated seeking to arbitrate the claims of certain drilling consultants in light of existing arbitration agreements, Plaintiff presents no legal support for his conclusion that Defendant was required to identify this issue when it objected to Plaintiff's motion for certification as a collective action.[1]

         Plaintiff next contends that the validity of the arbitration agreement is not presumed, and that it is not valid and enforceable, because it will effectively deprive him of an accessible forum to resolve his statutory claims. Doc. No. 103, p. 5.

“In determining whether statutory claims may be arbitrated, we first ask whether the parties agreed to submit their claims to arbitration, and then ask whether Congress has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue.” 531 U.S. at 90, 121 S.Ct. 513. The Court then separately addressed the effective vindication exception, suggesting that this exception stands apart from the issue of whether the parties voluntarily agreed to submit their claims to arbitration. In other words, we read Green Tree as implying that the effective vindication exception can apply even in situations where both parties voluntarily agreed, at the outset of their relationship, to arbitrate any claims that might arise between them. Under this framework, the availability of an opt-out clause is thus relevant only to the threshold question of “whether the parties agreed to submit their claims to arbitration, ” id., and does not impact the availability of the effective vindication exception.

Nesbitt v. FCNH, Inc., 811 F.3d 371, 378 (10th Cir. 2016). Although Plaintiff argues there is no presumption of a valid enforceable arbitration agreement, he does not dispute that he executed the February 2017 contract containing the arbitration provision. Rather, his second challenge is to the cost and fee shifting provision of the arbitration agreement.[2]

         The arbitration provisions of the Independent Contractor Master Services Agreement include the following[3]:

The Company and the Consultant agreed to share the expenses and fees of the arbitrator and the AAA arbitration administration fees. The Company will pay 75% of the fees and in the Consultant (sic) shall pay 25% of the fees. However, after limited and informal discovery and considering the likely scope, length, and cost of the arbitration, if the arbitrator decides that the arbitrator and the AAA's arbitration and administrative fees will be prohibitively expensive for the Consultant, then the Company will pay all arbitrator and AAA arbitration administration fees. The Company and the Consultant will be responsible for the expenses of their own legal representation, subject to the arbitrator awarding any attorney fees under applicable common decisional, and statutory law and the relevant jurisdiction.

Doc. No. 101-1, ¶ 14.3. Plaintiff bluntly states this provision “kills” the dispute resolution arbitration clause. Doc. No. 103, p. 5. The death of the provision is not instantaneous, as Plaintiff suggests, although it would have been prior to 2000. In 2000, the Supreme Court adopted a “case-by-case” approach to determining whether a cost-splitting provision deprives a litigant of an opportunity to vindicate statutory rights. Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79 (2000). Accordingly, the question presented is whether requiring Mr. Shaw to pay 25% of any arbitration fees will deprive him of his ability to vindicate his rights under the FLSA.

[T]he Supreme Court has never elaborated on “[h]ow detailed the showing of prohibitive expense must be before the party seeking arbitration must come forward with contrary evidence, ” it has explained that “the fact that it is not worth the expense involved in proving a statutory remedy does not constitute the elimination of the right to pursue that remedy.” Am. Express Co. v. Italian Colors Restaurant, 133 S.Ct. 2304, 2311 (2013). “So long as the prospective litigant effectively may vindicate its statutory cause of action in the arbitral forum, the statute will continue to serve both its remedial and deterrent function.” Id. at 637. Moreover, the party “seek[ing] to invalidate an arbitration agreement on the ground that arbitration would be prohibitively expensive ... bears the burden of showing the likelihood of incurring such costs.” Green Tree Financial Corp. v. Randolph, 531 U.S. 79, 92 (2000).

Daniels v. Encana Oil & Gas (USA) Inc., No. 16-CV-01851-CBS, 2017 WL 3263228, at *4 (D. Colo. Aug. 1, 2017). Plaintiff addresses the cost of arbitration proceedings, presenting a heavily-redacted Detail/Invoice Statement from the American Arbitration Association. Doc. No. 103-4. However, even assuming the Court accepts Plaintiff's representation that the arbitration in this case could reach $40, 000.00, his exposure under such a scenario would be limited to $10, 000 because the provision mandates a 25/75 split with Defendant. Furthermore, Plaintiff presents no evidence or argument that his personal financial circumstances would prevent him from paying $10, 000.[4] His day rate in 2017 while working for Crescent was $1348.00, and according to an exhibit provided by Defendant, Crescent paid him ...


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