Holder v. Bacus Foods Corp.

1

Michael Holder, Plaintiff, v. Bacus Foods Corporation, et al., Defendants.

No. CV-23-00763-PHX-JJT

United States District Court, D. Arizona

September 1, 2023

ORDER

Honorable John J. Tuchi United States District Judge

At issue are several motions filed in this matter. The first is Plaintiff's Motion for Conditional Certification of a Collective Action (Doc. 8) under the Fair Labor Standards Act (“FLSA”), to which Defendants filed a Response (Doc. 28) and Plaintiff filed a Reply (Doc. 32). The next set of motions is Defendant BFCJJS106 LLC's Motion to Dismiss for Lack of Personal Jurisdiction under Federal Rule of Civil Procedure 12(b)(2), Defendants' Motion to Dismiss and/or Transfer under Rule 12(b)(3), and Defendants' Motion to Compel Arbitration (Doc. 25), to which Plaintiff filed a Response (Doc. 39) and Defendants filed a Reply (Doc. 40). The last motion at issue is Defendants' Motion to Defer Ruling on Plaintiff's Motion for Conditional Certification (Doc. 29), to which Plaintiff filed a Response (Doc. 35) and Defendants filed a Reply (Doc. 38).

None of the parties have requested oral argument, which the Court finds unnecessary to resolve the various issues they have raised. See LRCiv 7.2(f). The Court now resolves the pending Motions in the manner set forth below, ultimately concluding that Plaintiff is obligated to participate in arbitration with Defendants to address his claims.

I. BACKGROUND

Plaintiff works as a delivery driver for a Jimmy John's store in Lincoln, Nebraska. On May 3, 2023, he filed a Class and Collective Action Complaint (Doc. 1), which he amended on May 9, 2023 (Doc. 7, First Amended Class and Collective Action Complaint (“FAC”)). As Defendants, Plaintiff has named two individuals and two entities that, he alleges, make up a franchise group that owns and operates Jimmy John's stores across several states, including the store in Lincoln where he works.

The individual defendants are brothers Brandt and Jared Bacus (the “Bacus Brothers”), who sit atop the franchise group and reside in Arizona. The entity defendants are Bacus Foods Corporation (“BFC”) and BFCJJS106 LLC (“Store 106 LLC”). BFC is an Arizona corporation owned and operated by the Bacus Brothers. Plaintiff alleges BFC owns and operates Jimmy John's stores in Arizona, Kansas, Colorado, and Nebraska, including Plaintiff's store in Lincoln-Store 106. (FAC ¶¶ 13-14.) Plaintiff alleges Store 106 is also owned by Store 106 LLC, a Nebraska limited liability company that is, in turn, owned and operated by BFC and the Bacus Brothers. (Id. ¶ 27.) According to Plaintiff, both entities have their principal place of business at the same address in Mesa, Arizona, which serves as a consolidated corporate headquarters. (See id. ¶¶ 12 25.)

Plaintiff alleges Defendants unlawfully pay delivery drivers like himself less than minimum wage. More specifically, he alleges Defendants have failed to adequately reimburse drivers for their work-related expenses-principally, delivery-related vehicle expenses-thereby failing to pay them minimum wage in violation of the FLSA and the Nebraska Wage and Hour Act. He further alleges Defendants have failed to pay all wages due to delivery drivers and improperly diverted wages from them in violation of the Nebraska Wage Payment and Collection Act. He likens this case to other delivery-driver suits alleging violations of the Department of Labor's anti-kickback regulation, 29 C.F.R. § 531.35. See, e.g. Parker v. Battle Creek Pizza, Inc., 600 F.Supp.3d 809, 812 (W.D. Mich. 2022) (“The principle is relatively simple: employers cannot shift business expenses to their employees if doing so drops the employees' wages below minimum wage.”).

On May 9, 2023-the same day he filed the FAC-Plaintiff filed a Motion for Conditional Certification (Doc. 8). Plaintiff seeks an Order conditionally certifying this case as an FLSA collective action and authorizing notice to similarly situated delivery drivers employed at Defendants' Jimmy John's stores nationwide.

On May 30, 2023, Defendants filed an Expedited Motion requesting a stay of the briefing on Plaintiff's Motion for Conditional Certification or, alternatively, an extension of time in which to respond to it. (Doc. 19.) Defendants noted that because Plaintiff's Motion was filed before they were served with the FAC, they were in the unusual position of having to respond to Plaintiff's Motion before they were due to respond to the FAC. The Court declined Defendants' request for a stay, but granted their alternative request for an extension of time in which to respond to Plaintiff's Motion. (Doc. 20.) The Court permitted Defendants to file a formal request for the Court to defer ruling on Plaintiff's Motion, which they have since filed (Doc. 29) alongside their Response (Doc. 28).

On June 7, 2023, Defendants filed a Motion to Dismiss for Lack of Personal Jurisdiction under Rule 12(b)(2), Motion to Dismiss and/or Transfer under Rule 12(b)(3), and Motion to Compel Arbitration (Doc. 25, “Defendants' Dispositive Motions”). Defendants seek an Order dismissing this case, transferring it to another district, or compelling Plaintiff to participate in arbitration-prior to the issuance of notice to the proposed FLSA class. In support, Defendants provide a declaration by Brandt Bacus disputing some of Plaintiff's allegations about the structure of the franchise group and presenting an arbitration agreement Plaintiff signed with another Bacus-owned entity.

According to Brandt Bacus, BFC does not operate any stores in Nebraska and does not have any employees in that state; it only operates stores in Arizona. (Doc. 25-2, Declaration of Brandt Bacus (“First Bacus Decl.”), ¶¶ 21-24.) The Nebraska stores are operated by another entity owned and operated by the Bacus Brothers called BFCNE, which is incorporated in Nebraska. (Id. ¶¶ 2-3.) BFCNE, in turn, operates each Nebraska store through a separate limited liability company. (Id. ¶ 4.) Store 106 is operated by Store 106 LLC. (Id. ¶ 13.) Store 106 LLC has no employees or managers; its employees are employed by BFCNE. (Id.) Plaintiff's employment agreement is with BFCNE. (Id. ¶ 9.)

When Plaintiff was hired at Store 106, he signed a Dispute Resolution Procedure & Mutual Binding Arbitration Agreement with BFCNE. (First Bacus Decl., Ex. A (the “Arbitration Agreement”).) According to Mr. Bacus, the Arbitration Agreement was a component of Plaintiff's employment agreement. (First Bacus Decl. ¶¶ 9-11, 19.) The Arbitration Agreement outlines a three-step procedure for addressing “any claims, disputes, or controversies arising between [Plaintiff] and BFCNE . . ., which could give rise to a legal claim relating to [Plaintiff's] employment with [BFCNE] or the termination thereof, including the interpretation or application of this . . . Agreement.” The final step is “binding arbitration under the Federal Arbitration Act.” The parties agreed the outlined procedure would be “the exclusive means of redress for any disputes relating to or arising from [Plaintiff's] employment with [BFCNE], whether such disputes are initiated by [Plaintiff] or [BFCNE] . . . .” Plaintiff could choose to opt out of the arbitration provisions without penalty. To do so, he had to notify Human Resources via email at an address with a “bacusfoodscorp.com” domain or mail at the aforementioned address in Mesa, Arizona. According to Mr. Bacus, Plaintiff did not choose to opt out. (First Bacus Decl. ¶ 20.)

Plaintiff does not deny he signed the Arbitration Agreement with BFCNE. He argues the agreement does not cover this dispute, however, because he has not named BFCNE as a defendant and those he has named are neither signatories to the agreement, nor referenced in it. Plaintiff disputes that the Arbitration Agreement was part of his contract for employment at Store 106; he argues it is a standalone contract. He posits “there appears to be no support for Defendants' contention that BFCNE is Plaintiff's employer.” (Doc. 39 at 10, 13.) He claims “he has no knowledge of or experience with the entity, other than, apparently, having hurriedly e-signed an arbitration agreement with them.” (Id. at 8.) He disputes Defendants' suggestion that Store 106 LLC is “just a financial vehicle that has no employees.” (Id. at 13 n.11.) He shows that Store 106 LLC-not BFCNE-appears on his paystubs and W-2 tax forms. (See Docs. 39-3, 39-4.) He presents a document from the nonprofit news organization ProPublica showing that Store 106 LLC received a Paycheck Protection Program (“PPP”) loan for more than $90,000 in 2021. (Doc. 39-6.) According to ProPublica, Store 106 LLC reported it had 38 employees. (Id.) Plaintiff asserts that “BFCNE, on the other hand, did not receive a PPP loan.” (Doc. 39 at 13 n.11.)

Defendants reply with a supplemental declaration by Brandt Bacus. Mr Bacus asserts that the Arbitration Agreement is indeed a “sub-part” of Plaintiff's employment agreement with BFCNE. (Doc. 40, Declaration of Brandt Bacus (“Second Bacus Decl.”), ¶¶ 2-3.) The Arbitration Agreement is contained within a BFCNE “New Hire Packet.” (Second Bacus Decl., Ex. A.) Plaintiff completed the packet, in its entirety, on November 19, 2021. The cover page states Plaintiff was hired to work at Store 106 on November 19, 2021. (Id. at 1.) An I-9 Employment Eligibility Form within the packet shows his first day of work was to be November 22, 2021. (Id. at 17.^[1]) On November 22, 2021, a BFCNE manager countersigned various agreements in the packet, including the Arbitration Agreement. (Id. at 11.) Other agreements include “Rules for Employment” and a “BFCNE Inc Driver Agreement and Eligibility Policy.” (Id. at 4, 7.) The latter agreement described terms for “acceptance and commencement of hire by BFCNE Inc as a...