HULL, Circuit Judge:
Plaintiffs-appellants Ashley Walthour and Kevin Chappell appeal the district court's order compelling arbitration and dismissing their complaint filed against defendants-appellees Chipio Windshield Repair, LLC; Kingco Promotions, Inc.; Levaughn Hall; and several "John Does." This appeal presents the question of whether an arbitration agreement, which waives an employee's ability to bring a collective action under the Fair Labor Standards Act, is enforceable under the Federal Arbitration Act. After careful review and with the benefit of oral argument, we affirm the district court's order compelling arbitration.
The underlying action arises out of plaintiffs Ashley Walthour's and Kevin Chappell's ("plaintiffs") employment with defendants Chipio Windshield Repair; Kingco Promotions, Inc.; and Levaughn Hall (collectively the "Chipio defendants").
In August 2011, plaintiffs began working for the Chipio defendants as "Window Repairers." "Window Repairers" perform "manual labor associated with repairing automobile windshields, work in Defendants'
In October 2011, soon after the Chipio defendants hired plaintiffs, defendant Kingco Promotions entered into separate, identical arbitration agreements (the "Arbitration Agreements") with plaintiffs. The Chipio defendants assert that Kingco Promotions was actually plaintiffs' employer and that defendants Chipio Windshield Repair and Hall were not plaintiffs' employer. However, for the purposes of this appeal and the Chipio defendants' motion to compel arbitration, both the Chipio defendants and plaintiffs have treated all three defendants — Kingco Promotions, Chipio Windshield Repair, and Hall — collectively as plaintiffs' employer.
Plaintiffs, each as "Employee," and the Chipio defendants, as "Employer," agreed that any kind of employment disagreement would be submitted to binding arbitration as follows:
In their Arbitration Agreements, plaintiffs also agreed that they may bring claims only individually, not as class members, and that they were giving up their rights to participate in a class or other representative action as follows:
On April 30, 2012, plaintiffs Walthour and Chappell brought a putative collective action against the Chipio defendants, pursuant to the Fair Labor Standards Act ("FLSA") § 16(b), 29 U.S.C. § 216(b). Plaintiffs' complaint alleges that the Chipio defendants (1) did not pay minimum wages to them, in violation of FLSA § 6, 29 U.S.C. § 206; (2) did not compensate them for the time that they worked in excess of 40 hours per week, in violation of FLSA § 7, 29 U.S.C. § 207; and (3) did not make adequate and accurate records of their wages and hours, in violation of FLSA §§ 11(c) and 15(a)(5), 29 U.S.C. §§ 211(c) and 215(a)(5) and 29 C.F.R. § 516.
After plaintiffs filed their complaint, the Chipio defendants filed (1) a motion to compel arbitration pursuant to the terms of the Arbitration Agreements and (2) a motion to dismiss the action or, alternatively, to stay the proceedings during the pendency of arbitration. Plaintiffs opposed the motions, arguing that their right to file a collective action under FLSA § 16(b) was a non-waivable, substantive right and that the Arbitration Agreements were invalid because they purported to waive that right.
The district court granted the Chipio defendants' motions and dismissed plaintiffs' complaint. The district court determined, inter alia, that, "in the absence of binding precedent holding that such a [waiver] provision is unenforceable as a matter of law," the Arbitration Agreements should be enforced, in light of the FAA's strong policy in favor of arbitration.
Plaintiffs timely filed this appeal.
A. The Federal Arbitration Act
The Federal Arbitration Act ("FAA") generally governs the validity of an arbitration agreement. Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1367 (11th Cir.2005).
The FAA's primary substantive provision provides that a written agreement to arbitrate a controversy arising out of that contract "shall be 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; see Pendergast v. Sprint Nextel Corp., 691 F.3d 1224, 1231 & n. 7 (11th Cir.2012).
Consistent with the FAA's text, "courts must rigorously enforce arbitration agreements according to their terms, including terms that specify with whom [the
Here, plaintiffs and defendant Kingco agreed to resolve various claims by way of binding arbitration. The parties do not dispute that plaintiffs' FLSA claims against the Chipio defendants fall within the scope of the Arbitration Agreements. Further, there is no dispute that, in the Arbitration Agreements, plaintiffs explicitly waived their rights to any representative arbitration and agreed only to individual arbitration. The FAA, standing alone, requires enforcement of the Arbitration Agreements according to their terms, which, in this case, means individual, not collective, arbitration.
Plaintiffs, however, argue that the Arbitration Agreements are unenforceable because they contain a waiver of plaintiffs' statutory right to file a collective action under the FLSA. According to plaintiffs, the FLSA's text, legislative history and purposes show that the statutory right to bring a collective action under the FLSA is substantive and cannot be waived and that the FLSA has overridden the FAA's requirement that the collective action waivers in the Arbitration Agreements be enforced.
Therefore, we examine (1) the contrary congressional command inquiry, (2) then discuss the FLSA, and (3) finally, determine whether plaintiffs have shown that the FLSA overrides the FAA.
B. The Contrary Congressional Command Inquiry
Like any statutory directive, the FAA's requirement that arbitration agreements be enforced according to their terms may be overridden by a "contrary congressional command." See Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct. 2332, 2337, 96 L.Ed.2d 185 (1987).
The burden is on the party opposing arbitration, here, plaintiffs, to show that Congress intended to preclude a collective action waiver in an arbitration agreement. See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26, 111 S.Ct. 1647, 1652, 114 L.Ed.2d 26 (1991) (providing that the burden is on the party opposing arbitration to show that "Congress intended to preclude a waiver of a judicial forum for [statutory] claims").
If a contrary congressional command exists, "it will be discoverable in the text of the [FLSA], its legislative history, or an `inherent conflict' between arbitration and the [FLSA]'s underlying purposes." See id.; see also Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 3354, 87 L.Ed.2d 444 (1985) (stating that "[w]e must assume that if Congress intended the substantive protection afforded by a given statute to include protection against waiver of the right to a judicial forum, that intention will be deducible from text or legislative history"). In undertaking this inquiry, "it should be kept in mind that questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration." Gilmer, 500 U.S. at 26, 111 S.Ct. at 1652 (internal quotation marks omitted).
The Supreme Court's recent decision in CompuCredit sheds further light on what constitutes a "contrary congressional command." In CompuCredit, the Supreme Court held that the Credit Repair Organizations Act ("CROA"), 15 U.S.C. § 1679 et seq., did not preclude enforcement of an arbitration agreement in a lawsuit alleging violations of the CROA "[b]ecause the CROA is silent on whether claims under the Act can proceed in an arbitrable forum." 132 S.Ct. at 673. The Supreme Court's opinion, agreed to by six justices, did not discuss the CROA's legislative history or whether there was an inherent conflict between the CROA and FAA. Rather, the Court relied on the text of the CROA to determine whether CROA claims could proceed in an arbitrable forum. The Court observed that, when Congress had previously prohibited arbitration clauses, "it ha[d] done so with a clarity that far exceeds the claimed indications in the CROA." Id. at 672 (citing 7 U.S.C. § 26(n)(2) (2006) (providing that "[n]o predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section")).
In CompuCredit, two other justices concurred in the judgment only, stating that they did "not understand the majority opinion to hold that Congress must speak so explicitly in order to convey its intent to preclude arbitration of statutory claims." 132 S.Ct. at 675 (Sotomayor, J. concurring). Rather, the concurring justices observed that the respondents had "identif[ied] nothing in the legislative history or purpose of the Act that would tip the balance of the scale in favor of their interpretation." Id.
Although CompuCredit did not involve a waiver of the statutory right to bring a collective action under FLSA § 16(b), the decision suggests that the Supreme Court would focus primarily on the statutory text of the FLSA to determine whether that
C. The Fair Labor Standards Act
The FLSA was enacted in 1938 for "the prime purpose of ... aid[ing] the unprotected, unorganized and lowest paid of the nation's working population; that is, those employees who lacked sufficient bargaining power to secure for themselves a minimum subsistence wage." Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 698, 707 n. 18, 65 S.Ct. 895, 898, 902 n. 18, 89 L.Ed. 1296 (1945). Congress enacted the FLSA in recognition of the fact that, "due to the unequal bargaining power as between employer and employee, certain segments of the population required federal compulsory legislation to prevent private contracts on their part which endangered national health and efficiency and as a result the free movement of goods in interstate commerce." Id. at 706-07, 65 S.Ct. at 902. "To accomplish this purpose standards of minimum wages and maximum hours were provided," and the policy considerations underlying those standards forbid waiver of those basic standards. Id. at 707, 65 S.Ct. at 902.
Section 16(b) of the FLSA explicitly provides that an employee may bring an action for FLSA violations "for and in behalf of himself ... and other employees similarly situated," as follows:
FLSA § 16(b)-(c), 29 U.S.C. § 216(b)-(c) (emphases added). Under § 16(b), an action brought by a plaintiff employee "does not become a `collective' action unless other plaintiffs affirmatively opt into the class by giving written and filed consent." Cameron-Grant v. Maxim Healthcare Servs., Inc., 347 F.3d 1240, 1249 (11th Cir. 2003). And, "the right" provided by § 16(b) shall terminate if the Secretary of Labor files a complaint (1) to recover minimum wages or overtime compensation under §§ 6 or 7 or (2) to obtain certain injunctive relief under § 17. FLSA §§ 16(b)-(c), 17, 29 U.S.C. §§ 216(b)-(c), 217; see Donovan v. Univ. of Tex. at El Paso, 643 F.2d 1201, 1204 (5th Cir.1981) (providing that § 17 allows the Secretary to seek broad injunctive relief and back wages for all affected employees without any requirement that they be specifically named in the complaint).
Although Hoffmann did not involve an arbitration agreement, the Supreme Court did examine the language of § 16(b), which the ADEA adopts. The Hoffmann Court observed that "Congress has stated its policy that ADEA plaintiffs should have the opportunity to proceed collectively." Hoffmann-La Roche, 493 U.S. at 170, 110 S.Ct. at 486. The Supreme Court noted that the advantage of a collective action was "lower individual costs to vindicate rights by the pooling of resources." Id.
The second case, Gilmer, did involve the enforceability of an arbitration agreement and speaks somewhat more to the issue here. In Gilmer, the Supreme Court addressed whether an ADEA claim could be subject to compulsory arbitration, pursuant to an arbitration agreement, and engaged in the contrary congressional command inquiry. Gilmer, 500 U.S. at 23, 111 S.Ct. at 1650.
Plaintiff Gilmer conceded that nothing in the text of the ADEA or its legislative history explicitly precluded arbitration. Id. at 26, 111 S.Ct. at 1652. Instead, Gilmer argued that compulsory arbitration of ADEA claims was "inconsistent with the statutory framework and purposes of the ADEA." Id. at 27, 111 S.Ct. at 1652. However, the Supreme Court found no inherent inconsistency between (1) enforcing arbitration agreements as to ADEA claims and (2) the ADEA's important social policies concerning promoting employment of older persons and prohibiting arbitrary age discrimination. Id. at 27-28, 111 S.Ct. at 1652-53.
In arguing that arbitration was inconsistent with the ADEA, Gilmer also raised a "host of challenges to the adequacy of arbitration procedures." Id. at 30, 111 S.Ct. at 1654. One of these challenges was that arbitration procedures cannot adequately further the purposes of the ADEA because they do not provide for class actions. Id. at 32, 111 S.Ct. at 1655.
In Gilmer, the Supreme Court determined that the arbitration rules that would apply if Gilmer's claims proceeded to arbitration did, in fact, provide for collective proceedings. Id. However, the Supreme Court concluded that, even assuming that the enforcement of the arbitration agreement would result in the parties forgoing proceeding collectively, "the fact that the ADEA provides for the possibility of bringing a collective action does not mean that individual attempts at conciliation were intended to be barred." Id. (internal quotation marks and brackets omitted). The Supreme Court also observed that the arbitration agreements would not preclude the Equal Employment Opportunity Commission from bringing actions seeking class-wide relief. Id.
The Supreme Court also rejected Gilmer's argument that arbitration agreements relating to ADEA claims were unenforceable due to unequal bargaining power between employers and employees. Id. at 32-33, 111 S.Ct. at 1655. The Supreme Court determined that "[m]ere inequality in bargaining power ... is not a
Subsequently, in Italian Colors Restaurant, the Supreme Court relied on Gilmer in rejecting plaintiffs' claims that the waiver of class arbitration barred "effective vindication" of their federal statutory rights under the antitrust laws by removing their economic incentive to bring the antitrust claims. See 133 S.Ct. at 2310. The "effective vindication" exception, if applicable, may invalidate an arbitration agreement that "operate as a prospective waiver of a party's right to pursue statutory remedies." Id. (quotation marks and ellipsis omitted and alteration adopted).
The Supreme Court relied on Gilmer in reaching this result and stated that, in Gilmer, it "had no qualms in enforcing a class waiver in an arbitration agreement even though the federal statute at issue, the [ADEA] expressly permitted collective actions." Id.
D. The Validity of the Collective Action Waiver
After examining the FLSA's text, legislative history, purposes, and these Supreme Court decisions, we discern no "contrary congressional command" that precludes the enforcement of plaintiffs' Arbitration Agreements and their collective action waivers. First, the FLSA contains no explicit provision precluding arbitration or a waiver of the right to a collective action under § 16(b).
Second, we reject plaintiffs' argument that the text of the FLSA overrides the FAA. Plaintiffs argue that the FLSA overrides the FAA because § 16(b) of the FLSA uses the word "right" and the Supreme Court has recognized that § 16(b)'s language sets forth Congress's policy that plaintiffs should have the opportunity to proceed collectively. In other words, plaintiffs argue that the "right" to a collective action is a non-waivable, substantive right. However, the Supreme Court has already rejected a similar argument in Gilmer.
As interpreted in Italian Colors Restaurant, the Supreme Court in Gilmer had "no qualms" about enforcing an arbitration agreement that would result in the parties forgoing their right to proceed collectively, despite (1) the ADEA expressly permitting plaintiffs to bring collective actions, and (2) the Supreme Court's recognition of Congress's policy that ADEA plaintiffs should have the "opportunity" to proceed collectively. See Italian Colors Rest., 133 S.Ct.
The Supreme Court's decision in Gilmer, as interpreted by Italian Colors Restaurant, addressed the ADEA, but applies with equal force to the FLSA, because, as noted above, the ADEA expressly adopts the FLSA's class action provision. See 29 U.S.C. § 626(b); Adkins v. Labor Ready, Inc., 303 F.3d 496, 506 (4th Cir.2002) (determining that the Supreme Court's conclusions on the ADEA could be applied to the FLSA and rejecting attempts to distinguish the FLSA and the ADEA). Thus, based on these Supreme Court decisions read together, we conclude that the text of FLSA § 16(b) does not set forth a non-waivable substantive right to a collective action. See Gilmer, 500 U.S. at 32, 111 S.Ct. at 1655; see also Italian Colors Rest., 133 S.Ct. at 2311 (interpreting Gilmer). Additionally, we agree with the Eighth Circuit's reasoning in Owen v. Bristol Care, Inc., that "[e]ven assuming Congress intended to create some `right' to class actions, if an employee must affirmatively opt in to any such class action, surely the employee has the power to waive participation in a class action as well." 702 F.3d 1050, 1052-53 (8th Cir.2013) (analyzing FLSA § 16(b)).
Third, the portions of the FLSA's legislative history plaintiffs cite do not show that Congress intended the collective action provision to be essential to the effective vindication of the FLSA's rights.
Fourth, after reviewing the purposes of the FLSA, we conclude that the enforcement of collective action waivers in arbitration agreements is also not inconsistent with the FLSA. Accord Gilmer, 500 U.S. at 26-27, 111 S.Ct. at 1652 (determining that the compulsory arbitration of ADEA claims pursuant to arbitration agreements is not inconsistent with the ADEA and that "[m]ere inequality in bargaining power... is not a sufficient reason to hold that arbitration agreements are never enforceable in the employment context"); Adkins, 303 F.3d at 506 ("Since the Supreme Court has already held that the FAA is compatible with the ADEA ... we reject Adkins'[s] structural argument that there is an inherent conflict between the FAA and the FLSA.").
Fifth, all of the circuits to address this issue have concluded that § 16(b) does not provide for a non-waivable, substantive right to bring a collective action. See Sutherland v. Ernst & Young LLP, 726 F.3d 290, 296-97 & n. 6 (2d Cir.2013) (determining that the FLSA does not contain a "contrary congressional command" that prevents an employee from waiving his or her ability to proceed collectively and that the FLSA collective action right is a waivable procedural mechanism); Owen, 702 F.3d at 1052-53 (determining that the FLSA did not set forth a "contrary congressional command" showing "that a right to engage in class actions overrides the mandate of the FAA in favor of arbitration"); Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294, 298 (5th Cir.2004) (rejecting the plaintiffs' claim that their inability to proceed collectively deprived them of a substantive right to proceed under the FLSA because, in Gilmer, the Supreme Court rejected similar arguments regarding the ADEA); Adkins, 303 F.3d at 503 (determining that a plaintiff failed to point to any "suggestion in the text, legislative history, or purpose of the FLSA that Congress intended to confer a non-waivable right to a class action under that statute" and that the plaintiff's "inability to bring a class action, therefore, cannot by itself suffice to defeat the strong congressional preference for an arbitral forum"); cf. D.R. Horton, 737 F.3d at 362 (determining that the National Labor Relations Act does not contain a contrary congressional command overriding the application of the FAA).
Sixth, we also reject plaintiffs' argument that it is significant that Congress explicitly provided for the right to bring a collective action in the FLSA, rather than leaving it to the Federal Rules of Civil Procedure. The Federal Rules of Civil Procedure do not provide for collective actions, and the requirements for pursuing a § 16(b) collective action "are independent of, and unrelated to, the requirements for class action under Rule 23 of the Federal Rules of Civil Procedure." Grayson v. K Mart Corp., 79 F.3d 1086, 1096 n. 12 (11th Cir.1996). Congress's decision to specifically include the procedural right to a collective action in the FLSA does not somehow transform that procedural right into a substantive right. Rather than expand a plaintiff's substantive rights, Congress's decision to enact the collective action provision actually limited a plaintiff's existing procedural rights set forth in Rule 23. Were it not for § 16(b), a plaintiff could bring a representative FLSA action even without the prior consent of similarly situated employees. See Cameron-Grant, 347 F.3d at 1249.
Brooklyn Savings Bank v. O'Neil
Before concluding, we address plaintiffs' reliance on the Supreme Court's 1945 decision in Brooklyn Savings Bank v. O'Neil. O'Neil is materially distinguishable from this case. There, the Supreme Court "held that a plaintiff cannot waive her right to liquidated damages in a FLSA settlement when there is no genuine dispute
For the foregoing reasons, we affirm the district court's order compelling arbitration and dismissing plaintiffs' complaint.