Parr v. Stevens Transp., Inc.

JEREMY PARR et al. v. STEVENS TRANSPORT, INC. et al.

CIVIL ACTION NO. 3:19-CV-2378-S

United States District Court NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

May 5, 2020

MEMORANDUM OPINION AND ORDER

This Memorandum Opinion and Order addresses Defendants Stevens Transports, Inc. and Stevens Transport CD, Inc.'s Motion to Compel Individual Arbitration [ECF No. 71]. For the following reasons, the Court grants the Motion.

I. BACKGROUND

This is a putative wage-and-hour class action brought by Plaintiffs Jeremy Parr ("Parr"), Ronald Castle ("Castle"), and Julie Vines ("Vines") (collectively, "Plaintiffs") against Defendants Stevens Transport, Inc. ("STI"), Stevens Transport CD, Inc. ("CD"), and Does 1-10 (collectively, "Defendants") under California law. See Second Am. Compl. ¶ 1. STI and CD, Texas corporations engaged in the hauling and delivery of freight, allegedly hired Parr, Castle, and Vines as truck drivers. See id. ¶¶ 12, 15, 18, 22-25; Defs.' App. 7-12. Specifically, Defendants: hired Parr, a resident of Missouri or Texas,¹ and Castle, a resident of Arizona, as employees; and, entered into an independent contractor arrangement with Vines, a resident of Texas. See Second Am. Compl. ¶¶ 11, 14, 17; Defs.' App. 10, 12.

Importantly, individuals employed with STI, like Parr and Castle, attend a three-day orientation in Texas, where they execute certain paperwork and enter into a Mutual Agreement to Arbitrate Claims (the "Arbitration Agreement"). See Defs.' App. 9-10, 15-17. CD's independentcontractors, like Vines, are individuals who own or lease their own trucks, and who enter into independent contractor agreements with CD in Texas that include the Arbitration Agreement. See id. at 11. Defendants allow employees and independent contractors to ask questions about the Arbitration Agreement, to take it home for further review, and to discuss it with others, including an attorney. See id. at 69, 84, 99. In fact, the Arbitration Agreement requires the signatory to acknowledge that he or she "ha[s] been given the opportunity to discuss [the Arbitration] [A]greement with [his or her] private legal counsel" and that the signatory has "availed [him- or herself] of that opportunity to the extent" desired. Id. at 27, 39, 65. Parr, Castle, and Vine each signed the Arbitration Agreement with either STI or CD while in Texas. See id. at 15-17, 21-28, 33-40, 46, 59-66.

These agreements provided, in relevant part, that:

The Company and [Plaintiff] mutually consent to the resolution of all claims or controversies ("claims"), whether or not arising out of [Plaintiff's] employment (or its termination), that the Company may have against [Plaintiff] or that [Plaintiff] may have against the Company and/or its officers, directors, employees or agents. . . . includ[ing] . . . claims for wages or other compensation due; . . . and claims for violation of any federal, state, or other governmental law, statute, regulation, or ordinance . . . .

Id. at 22, 34, 60. According to the Arbitration Agreement, arbitration was to occur "under the auspices of . . . Judicial Workplace Arbitration, Inc.'s Rules & Procedures for Arbitration," id. at 25, 37, 63, and Defendants would "pay the fees and costs of the arbitrator and the arbitration hearing," id. at 26, 38, 64. Additionally, each agreement included an express class action waiver:

[Plaintiff] understand[s] and agree[s] that there will be no right or authority for any dispute to be brought, heard, or arbitrated as a class action and/or as a collective action (the "Class Action Waiver"). . . . [O]nly a court and not the arbitrator shall determine any issues or claims related to the applicability, enforceability, or formation of this Class Action Waiver, including but not limited to any claim that all or part of this Class Action Waiver is void or voidable.

If the Class Action Waiver is deemed to be unenforceable for any reason, the Company and [Plaintiff] agree that this [Arbitration] Agreement is otherwise silentas to any party's ability to bring a class and/or collective action in arbitration in so far as there has been no agreement between the parties on whether this Agreement permits class arbitration. If the Class Action Waiver is deemed to be unenforceable, the question of whether this [Arbitration] Agreement permits any dispute to be arbitrated as a class or collective action shall be determined only by a court and not by an arbitrator. All other questions of interpretation, applicability, enforcement or formation of this Agreement shall be determined by the arbitrator, as stated in the section entitled "Arbitration Procedures."

Id. at 23, 35, 61. The agreements also contained forum-selection and choice-of-law provisions, that required arbitration to take place in Dallas, Texas, under "the substantive law (and the law of remedies, if applicable) of the State of Texas, or federal law, or both." Id. at 25, 37, 63. Finally, the Arbitration Agreement delegated all issues, other than those pertaining to the class waiver, to the arbitrator:

The arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this [Arbitration] Agreement including, but not limited to any claim that all or any part of this [Arbitration] Agreement is void or voidable. However, as stated in the "Class Action Waiver" section above, the preceding sentence shall not apply to the clause entitled "Class Action Waiver."

Id. at 25, 37, 63.

Based on the parties' Arbitration Agreement, Defendants filed the present Motion to Compel Individual Arbitration, which is now ripe and before the Court.

II. ANALYSIS

A. Choice of Law

As the parties agree, state law, rather than federal law, dictates the enforceability of the arbitration agreement and the class-action waiver, because Plaintiffs are interstate truck drivers who qualify for the Federal Arbitration Act's "transportation worker" exemption. See Shanks v. Swift Transp. Co., Civ. A. L-07-55, 2008 WL 2513056, at *4 (S.D. Tex. June 19, 2008) (collecting authorities). The parties disagree, however, as to whether Texas law or California law applies. See Mot. 9 (arguing that Texas law applies); Resp. 8-12 (arguing that California law applies). Inresolving this issue, the Court applies California's conflict-of-law rules because this case was transferred to this Court under 28 U.S.C. § 1404. See Ferens v. John Deere Co., 494 U.S. 516, 523 (1990); Van Dusen v. Barrack, 376 U.S. 612, 635-37 (1964).

Under California law, in cases where the parties have entered into a contractual choice-of-law clause:

[T]he party advocating application of the choice-of-law provision . . . has the burden of establishing either (1) the chosen state has a substantial relationship to the parties or their transaction, or (2) another reasonable basis for the parties' choice of law. If [the party] makes this showing, the burden then shifts to the party opposing enforcement of the choice-of-law provision . . . to demonstrate [that] 'the chosen state's law is contrary to a fundamental policy of California' and that 'California has a materially greater interest than the chosen state in the determination of the particular issue.' Accordingly, 'the parties' choice generally will be enforced unless the other side can establish both that the chosen law is contrary to a fundamental policy of California and that California has a materially greater interest in the determination of the particular issue.

Tri-Union Seafoods, LLC v. Starr Surplus Lines Ins., 88 F. Supp. 3d 1156, 1166 (S.D. Cal. 2015) (citations omitted) (quoting Wash. Mut. Bank, FA v. Superior Court, 15 P.3d 1071, 1078-79 (Cal. 2001)). Here, the fact that Defendants are Texas corporations "is sufficient under California choice of law rules to establish a 'substantial relationship' between the chosen law and the parties to the dispute." Abat v. Chase Bank USA, N.A., Case No.: SACV 07-01476-CJC(ANx), 2010 WL 11465416, at *1 (C.D. Cal. Oct. 28, 2010) (citing Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459, 467 (Cal. 1992)). Thus, the sole issue is whether Plaintiffs demonstrated both that Texas's law is contrary to a fundamental policy of California and that California has a materially greater interest than the chosen state in the determination of the particular issue. See id. (citing Wash. Mut. Bank, 15 P.3d at 1078-79).

The Court finds that Plaintiffs did not demonstrate that California has a materially greater interest than the chosen state in the determination of the enforceability of the ArbitrationAgreement and class-action waiver.² "[P]laintiffs' own contacts with [California] are dubious." ECF No. 48 at 6 (opinion of the Northern District of California). Plaintiffs are not California residents. See Second Am. Compl. ¶¶ 11, 14, 17; Defs.' App. 10, 12. Parr logged 10.2% of his mileage in California over 7 months; Castle logged 10.4% over 3.5 years; and Vines logged 6.55% over almost 4 years. See Defs.' App. 10, 15-16, 45-46. Similarly, the Arbitration Agreements at issue were signed while Plaintiffs were physically in Texas. See id. at 9-11, 15-17, Defendants are incorporated and headquartered in Texas, manage their business activities and operations in Texas, and retain drivers as Texas employees for purposes of unemployment and workers' compensation. See Second Am. Compl. ¶¶ 12, 15, 18, 22-25; Defs.' App. 7-12. Of Defendants' drivers, 9 out of 3,248 were California residents, while 1,122 were Texas residents; similarly, 8 out of 1,176 independent contractors were California residents, while 404 were Texas residents See Defs.' App. 10 46. Given the parties' significant interaction with Texas and minimal interaction with California, the Court finds that California does not have a materially greater interest in determining the enforceability of the arbitration agreement and the class-action waiver. See McKinney v. Google, Inc., ...