Ferrell v. Semgroup Corp., Case No. 19-CV-00610-GKF-JFJ

485 F.Supp.3d 1334

Robert FERRELL, individually and for others similarly situated, Plaintiff,

v.SEMGROUP CORPORATION, Defendant.

v.Cypress Environmental Management-TIR, LLC, Intervenor.

Case No. 19-CV-00610-GKF-JFJ

United States District Court, N.D. Oklahoma.

Signed September 9, 2020

Andrew Wells Dunlap, Taylor Ashley Jones, Michael A. Josephson, Carl A. Fitz, Josephson Dunlap, Houston, TX, Michael Burrage, Whitten Burrage, Oklahoma City, OK, for Plaintiff.

Annette A. Idalski, Annette A. Idalski, Kaitlin K. Lammers, Chamberlain Hrdlicka White Williams & Aughtry PC, Peter N. Hall, Holland & Knight LLP, Atlanta, GA, Brian A. Smith, Chamberlain Hrdlicka, Houston, TX, Harrison Mitchell Kosmider, William Kirk Turner, Kathy Rene Neal, McAfee & Taft, Tulsa, OK, for Defendant.

Paul DeMuro, Frederic Dorwart Lawyers, Tulsa, OK, Rachel Cowen, Rachel Beth Cowen, McDermott Will & Emery, Chicago, IL, for Intervenor.

OPINION AND ORDER

GREGORY K. FRIZZELL, UNITED STATES DISTRICT JUDGE

This matter comes before the court on the Motion to Dismiss and Compel Arbitration [Doc. 39] of defendant SemGroup Corporation; the Motion to Compel Arbitration [Doc. 64] of intervenor Cypress Environmental Management-TIR, LLC (TIR); and SemGroup's Response Joining in TIR's Motion to Compel Arbitration [Doc. 65]. For the reasons set forth below, the motions are denied.

I. Background and Procedural History

Plaintiff Robert Ferrell brings this case as a putative collective action under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (FLSA), on behalf of himself and other similarly situated employees pursuant to § 216(b) of that act. Ferrell alleges that he and putative collective members are persons currently or formerly employed by SemGroup as inspectors. Ferrell asserts that he and putative collective members worked in excess of forty (40) hours in a single workweek, but were not paid overtime as required by the FLSA, allegedly as a result of SemGroup's misclassification of himself and collective members as independent contractors.¹

SemGroup denies that it had an employment relationship with Ferrell. [Doc. 38, ¶ 1]. On April 9, 2020, SemGroup filed its Motion to Dismiss and Compel Arbitration [Doc. 39] seeking to enforce an arbitration provision included in the June 1, 2016 Employment Agreement executed by TIR, as "Employer," and Ferrell, as "Employee" (Agreement). [Doc 39-1, pp. 7-9]. Pursuant to the Agreement, TIR and Ferrell "mutually agree[d]" to the following relevant conditions:

1. The Employer hereby engages the Employee and the Employee accepts the term of employment according to the terms and conditions contained in this Employment Agreement.

* * *

4. The parties agree that any dispute, controversy or claim arising out of or related to in any way to the parties' employment relationship or termination of that relationship, including this Employment Agreement or any breach of this agreement, shall be submitted to and decided by binding arbitration in Tulsa, Tulsa County, Oklahoma. Arbitration shall be administered under the laws of the American Arbitration Association in accordance with American Arbitration Association Employment Arbitration Rules and Mediation Procedures in effect at the time the arbitration is commenced. The rules are available online at adr.org/employment. You may also call the American Arbitration Association at 800-778-7879 if there are questions about the arbitration process.

5. Employee and Employer expressly intend and agree that: (a) class action, collective action and representative action procedures shall not be asserted, nor will they apply, in any arbitration pursuant to this Employment Agreement; (b) each will not assert class action or representative action claims against the other in arbitration or otherwise; and (c) Employee and Employer shall only submit their own, individual claims in arbitration and will not seek to represent the interests of any other person. Further, Employee and Employer expressly intend and agree that any claims by the Employee will not be joined, consolidated or heard together with claims of any other employee. The validity and effect of this paragraph shall be determined exclusively by federal district or state district court of competent jurisdiction situated in Tulsa County, Oklahoma and not by an arbitrator.

* * *

9. This Employment Agreement sets forth the entire agreement between the parties. This agreement can only be modified in writing executed by the party against whom enforcement is sought. Further, any prior agreements, whether oral or written, concerning the employment of the Employee are hereby merged into this written agreement.

[Doc. 39-1, pp. 7-8].

SemGroup argues that, under Oklahoma law, Ferrell should be estopped from avoiding arbitration of his FLSA claim. Specifically, SemGroup argues that, although Ferrell does not "formally" assert a claim against SemGroup, Ferrell nevertheless "advances a claim based on substantially interdependent conduct involving SemGroup and TIR." [Doc. 39, p. 14]. Alternatively, SemGroup argues that Ferrell's allegations "arise out of or relate to the arbitration agreement." [Id. at p. 17].

The day after SemGroup filed its motion to compel arbitration, TIR filed a motion to intervene, which this court granted in a June 12, 2020 Opinion and Order. [Doc. 63]. TIR then filed its own Motion to Compel Arbitration [Doc. 64]. Therein, TIR first argues that the arbitrability of Ferrell's FLSA claim is to be decided by an arbitrator, not this court. [Doc. 64, pp. 8-10]. Further, whether decided by the court or an arbitrator, TIR next contends that Ferrell's FLSA claim must be arbitrated under an estoppel theory because the Class Action Complaint alleges interdependent misconduct by TIR and SemGroup. [Id. at pp. 10-16]. SemGroup filed a response joining TIR's motion to compel arbitration. [Doc. 65]. In the response, SemGroup concurs that whether Ferrell must arbitrate his FLSA claim against SemGroup constitutes a question of arbitrability to be resolved by an arbitrator, not the court, and reiterates its assertion that Ferrell alleges interdependent misconduct which, under Oklahoma law, entitles SemGroup to compel arbitration. [Id. ].

By joining TIR's motion to compel arbitration, SemGroup raises identical issues to those raised by TIR. Further, SemGroup's own motion to compel raised similar arguments. Thus, the court considers the motions together.

II. Arbitrability Analysis

"The [Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. ] reflects the fundamental principle that arbitration is a matter of contract." Rent-A-Center, W., Inc. v. Jackson , 561 U.S. 63, 67, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010) ; see also AT&T Mobility LLC v. Concepcion , 563 U.S. 333, 339, 131 S.Ct. 1740, 179 L.Ed.2d 742 (2011) (internal citations omitted) (describing the FAA as "reflecting both a ‘liberal federal policy favoring arbitration,’ and the ‘fundamental principle that arbitration is a matter of contract’ "). As such, like all contracts, arbitration agreements must be enforced "according to their terms," Rent-A-Center, W., Inc. , 561 U.S. at 67, 130 S.Ct. 2772, and "a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." Howsam v. Dean Witter Reynolds, Inc. , 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) (quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co. , 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960) ). "Accordingly, the first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute." Dish Network L.L.C. v. Ray , 900 F.3d 1240, 1243 (10th Cir. 2018) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. , 473 U.S. 614, 626, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) ).

Generally, "[t]he question whether the parties have submitted a particular dispute to arbitration, i.e. , the ‘question of arbitrability ,’ is ‘an issue for judicial determination [u]nless the parties clearly and unmistakably provide otherwise.’ " Dish Network, L.L.C. , 900 F.3d at 1243-44 (emphasis in original) (quoting Howsam , 537 U.S. at 83, 123 S.Ct. 588 ); see also Henry Schein, Inc. v. Archer & White Sales, Inc. , ––– U.S. ––––, 139 S. Ct. 524, 530, 202 L.Ed.2d 480 (2019) ("This court has consistently held that parties may delegate threshold arbitrability questions to the arbitrator, so long as the parties' agreement does so by ‘clear and unmistakable’ evidence."). That is, "parties may agree to have an arbitrator decide not only the merits of a particular dispute but also ‘gateway’ questions of ‘arbitrability,’ such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy." Henry Schein, Inc. , 139 S. Ct. at 529 (quoting Rent-A-Center, W., Inc. , 561 U.S. at 68-69, 130 S.Ct. 2772 ). The Tenth Circuit has joined those Circuits holding that "when contracting parties incorporate the [American Arbitration Association] rules into a broad arbitration agreement ... such an incorporation clearly and unmistakably evinces their intent to arbitrate arbitrability." Dish Network, L.L.C. , 900 F.3d at 1246.

The Agreement in this case states that arbitration "shall be administered under the laws of the American Arbitration Association in accordance with American Arbitration Association Employment Arbitration Rules and Mediation Procedures in effect at the time the arbitration is commenced." [Doc. 39-1, pp. 7-8]. Based on the Agreement's incorporation of the AAA rules, TIR and SemGroup argue that, construed in light of the Henry Schein decision, the plain language of the Agreement requires that an arbitrator, rather than this court, determine whether SemGroup can compel arbitration of Ferrell's FLSA claim. [Doc. 64, pp. 8-10; Doc. 65, pp. 1-2]; see also Henry Schein, Inc. , 139 S. Ct. at 529 ("When the parties' contract delegates the arbitrability question to an arbitrator, a court may not override the...