Bissonette v. Lepage Bakeries Park St., LLC

460 F.Supp.3d 191

Neal BISSONETTE, Tyler Wojnarowski, Plaintiffs,

v.LEPAGE BAKERIES PARK ST., LLC, C.K. Sales Co., LLC, Flowers Foods, Inc., Defendants.

No. 3:19-cv-00965 (KAD)

United States District Court, D. Connecticut.

Signed May 14, 2020

Harold L. Lichten, Matthew W. Thomson, Zachary L. Rubin, Lichten & Liss-Riordan, P.C., Boston, MA, for Plaintiffs.

Benjamin R. Holland, Elizabeth R. Gift, Ogletree Deakins, Charlotte, NC, John Gerard Stretton, Kelly Marie Cardin, Nicole S. Mule, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Stamford, CT, Margaret Santen Hanrahan, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Atlanta, GA, for Defendants.

MEMORANDUM OF DECISION RE: DEFENDANTS’ MOTION TO DISMISS, OR IN THE ALTERNATIVE, TO COMPEL ARBITRATION AND SUPPLEMENTAL MOTION TO DISMISS (ECF NOS. 31, 41)

Kari A. Dooley, United States District Judge:

Plaintiffs Neal Bissonnette ("Bissonette") and Tyler Wojnarowski ("Wojnarowski" and, collectively, the "Plaintiffs") brought this putative class action under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 216(b), against Defendants Lepage Bakeries Park St., LLC ("Lepage"), CK Sales Co., LLC, ("CK Sales"), and Flowers Foods, Inc. ("Flowers Foods" and, collectively, the "Defendants") alleging that Defendants deliberately misclassified Plaintiffs as independent contractors in violation of Connecticut law and the FLSA. On September 18, 2019, Defendants filed a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) (ECF No. 31) and supporting memorandum (ECF No. 31-1) in which they urge the Court to dismiss the action, or, in the alternative, to compel arbitration, pursuant to an arbitration agreement executed by the parties. On October 9, 2019, Plaintiffs filed an opposition to the motion to dismiss (ECF No. 32) in which they argue principally that Plaintiffs cannot be compelled to arbitrate under the Federal Arbitration Act ("FAA") because they fall within the FAA's exemption for transportation workers. Defendants filed their reply brief on October 23, 2019 (ECF No. 35) and oral argument was held on December 5, 2019. (ECF No. 44.) The Court has also considered Plaintiffs’ sur-reply (ECF No. 48) and the Defendants’ response (ECF No. 49) following oral argument, as well as a notice of supplemental authority filed by the Plaintiffs on April 1, 2020. (ECF No. 50.) For the following reasons, Defendants’ motion to dismiss is GRANTED.¹

Background

The Parties and Their Relationship

Defendants are in the business of producing, transporting, and selling baked goods under brand names such as Wonder Bread and Country Kitchen. (First Am. Compl., "FAC," ¶ 12, ECF No. 24.) CK Sales is a wholly-owned subsidiary of Lepage, which is a wholly-owned subsidiary of Flowers Foods. (Defs.’ Mem. at 1 n.1; Rule 7.1 Disclosure Statement, ECF No. 17.)

Plaintiffs’ respective companies are franchisees that each entered into a "Distribution Agreement" with CK Sales, through which they acquired certain distribution rights in exchange for monetary consideration.² (FAC ¶¶ 16–17; Lithicum Decl. ¶¶ 6–7, ECF No. 31-2.) In essence, Plaintiffs purchase Defendants’ products from CK Sales and resell them to their customers at a higher price. (See Lithicum Decl. ¶ 9.) In doing so they pick up baked goods that have been delivered from one of Defendants’ commercial bakeries to a local warehouse and then deliver those products to retail outlets in Connecticut, where they display the products in accord with Defendants’ standards. (FAC ¶¶ 18, 33.) Plaintiffs allege that in an average week they spend at least forty hours delivering the Defendants’ baked goods.³ (Id. ¶ 33.) As franchisees, however, Plaintiffs are also contractually responsible for operating and growing their businesses, including by developing and maintaining customer relationships and servicing customers in their territories. (Lithicum Decl. ¶ 8.) Though the Distribution Agreements classify Plaintiffs as independent contractors, Plaintiffs allege that they are, in fact, employees given the degree of supervision and control Defendants retain over Plaintiffs’ work. (See FAC ¶¶ 21–37.)

Plaintiffs brought this putative class action under the FLSA on behalf of themselves and "all individuals who have signed a distributor agreement and who personally deliver products for Defendants in the State of Connecticut." (Id. ¶ 38.) They allege that Defendants deliberately misclassified Plaintiffs as independent contractors in violation of Connecticut law and the FLSA and assert claims for unpaid or withheld wages pursuant to Conn. Gen. Stat. § 31-72 (Count I), overtime wages pursuant to Conn Gen. Stat. § 31-76C (Count II), and back wages for overtime worked, liquidated damages, and reasonable costs and attorneys’ fees pursuant to the FLSA (Count III). They also assert a claim for unjust enrichment (also captioned Count III, though in effect constituting Count IV).

The Arbitration Agreements

The Distribution Agreements signed by the Plaintiffs each contain a "Mandatory and Binding Arbitration" provision that incorporates, as Exhibit K, a separate Arbitration Agreement.⁴ That Arbitration Agreement provides in relevant part that claims "arising from, related to, or having any relationship or connection whatsoever with the Distributor Agreement ... shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act ( 9 U.S.C. §§ 1, et seq. ) (‘FAA’) in conformity with the Commercial Arbitration Rules of the American Arbitration Association ...." (Distributor Agreements Ex. K at 1, ECF No. 31-2 at 41, 80; ECF No. 41-1 at 38, 112.) It expressly includes as covered claims those "alleging that DISTRIBUTOR was misclassified as an independent contractor, [and] any other claims premised upon DISTRIBUTOR's alleged status as anything other than an independent contractor ...." (Ex. K at 2.) The Arbitration Agreement also contains a class action waiver which states:

TO THE MAXIMUM EXTENT PERMITTED BY LAW, BOTH PARTIES EXPLICITLY WAIVE ANY RIGHT TO: (1) INITIATE OR MAINTAIN ANY COVERED CLAIM ON A CLASS, COLLECTIVE, REPRESENTATIVE, OR MULTI-PLAINTIFF BASIS EITHER IN COURT OR ARBITRATION; (2) SERVE OR PARTICIPATE AS A REPRESENTATIVE OF ANY SUCH CLASS, COLLECTIVE, OR REPRESENTATIVE ACTION; (3) SERVE OR PARTICIPATE AS A MEMBER OF ANY SUCH CLASS, COLLECTIVE, OR REPRESENTATIVE ACTION; OR (4) RECOVER ANY RELIEF FROM ANY SUCH CLASS, COLLECTIVE, REPRESENTATIVE, OR MULTI-PLAINTIFF ACTION .

(Ex. K at 1.) It further provides that "[a]ny issues concerning arbitrability of a particular issue or claim under this Arbitration Agreement, ... shall be resolved by the arbitrator, not a court," with certain exceptions, including one for issues "concerning ... the applicability of the FAA." (Ex. K at 2.) Finally, the Arbitration Agreement contains a choice of law provision which provides that it "shall be governed by the FAA and Connecticut law to the extent Connecticut law is not inconsistent with the FAA." (Ex. K at 3.)

Relying on these provisions, Defendants argue that this action must be dismissed and alternatively seek an order compelling arbitration. As noted previously, Plaintiffs respond that they cannot be compelled to arbitrate because they fall within the FAA's exemption for transportation workers. They further assert that they cannot be compelled to arbitrate under Connecticut law because: (1) requiring arbitration would be "inconsistent within the FAA" and thus violate the Arbitration Agreement; (2) the FAA preempts Connecticut law; and (3) the class action waiver is unenforceable under Connecticut law as a matter of public policy.

Standard of Review

A party aggrieved by another party's failure or refusal to arbitrate may petition the district court for an order directing that arbitration commence in the manner provided for in the parties’ agreement. 9 U.S.C. § 4. In deciding whether arbitration must be compelled, the Court applies a standard comparable to that applied on a motion for summary judgment. See Schnabel v. Trilegiant Corp. , 697 F.3d 110, 113 (2d Cir. 2012) (citing Bensadoun v. Jobe-Riat , 316 F.3d 171, 175 (2d Cir. 2003) ).⁵ Thus, "[w]hile it is generally improper to consider documents not appended to the initial pleading or incorporated in that pleading by reference in the context of a Rule 12(b)(6) motion to dismiss, it is proper (and in fact necessary) to consider such extrinsic evidence when faced with a motion to compel arbitration." Guida v. Home Sav. of Am., Inc. , 793 F. Supp. 2d 611, 613 n.2 (E.D.N.Y. 2011) (quotation marks and citations omitted).

"[T]he party resisting arbitration bears the burden of proving that the claims at issue are unsuitable for arbitration." Long v. Amway Corp. , 306 F. Supp. 3d 601, 607 (S.D.N.Y. 2018) (quoting Green Tree Fin. Corp.–Ala. v. Randolph , 531 U.S. 79, 91, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000) ). "A party opposing arbitration may not satisfy this burden through ‘general denials of the facts on which the right to arbitration depends’; instead, ‘[i]f the party seeking arbitration has substantiated the entitlement by a showing of evidentiary facts, the party opposing may not rest on a denial but must submit evidentiary facts showing that there is a dispute of fact to be tried.’ " Id. (quoting Oppenheimer & Co. v. Neidhardt , 56 F.3d 352, 358 (2d Cir. 1995) ).

Discussion

The FAA provides that "[a] written provision in any ... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... 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. "The FAA embodies a national policy favoring arbitration founded upon a desire to preserve the parties’ ability to agree to arbitrate, rather than litigate, their disputes." Doctor's Assocs., Inc. v. Alemayehu , 934 F.3d 245, 250 (2d Cir. 2019) (quotation marks, alteration and citation...