Rodgers-Rouzier v. Am. Queen Steamboat Operating Co.

104 F.4th 978

Mary RODGERS-ROUZIER, Plaintiff-Appellant, v. AMERICAN QUEEN STEAMBOAT OPERATING COMPANY,LLC and HMS Global Maritime LLC, Defendants-Appellees.

No. 23-1812

United States Court of Appeals, Seventh Circuit

Argued January 23, 2024

Decided June 18, 2024

Appeal from the United States District Court for the Southern District of Indiana, New Albany Division. No. 4:20-cv-00004 — Sarah Evans Barker, Judge.

Leah M. Nicholls, Shelby Hannah Leighton, Attorneys, Public Justice, Washington, DC, Douglas M. Werman, Attorney, Chicago, IL, Sarah Jean Arendt, Maureen Ann Salas, Attorneys, Werman Salas P.C., Chicago, IL, for Plaintiff-Appellant.

Dennis D. Murrell, Matthew Philip Dearmond, Augustus S. Herbert, Attorneys, Gray Ice Higdon, PLLC, Louisville, KY, for Defendants-Appellees.

Summer H. Murshid, Attorney, Hawks Quindel, S.C., Milwaukee, WI, for Amicus Curiae National Employment Lawyers Association.

Dean A. Romhilt, Attorney, Department of Labor, Office of the Solicitor, Washington, DC, for Amicus Curiae Julie A. Su.

Before Rovner, Brennan, and Pryor, Circuit Judges.

Rovner, Circuit Judge.

Mary Rodgers-Rouzier alleges that she and her coworkers who entertained guests on steamboat cruises were denied overtime payment to which they were entitled under the Fair Labor Standards Act. Over one hundred of her coworkers filed consent forms to join her proposed collective action. Meanwhile, their employer, American Queen Steamboat Operating Company, moved to dismiss the case for improper venue because Rodgers-Rouzier had agreed to arbitration. The arbitration agreement and American Queen's motion invoked the Federal Arbitration Act (FAA) exclusively, and the district court denied the motion on those terms. American Queen then moved again to dismiss based on the arbitration agreement, this time invoking Indiana state law. The district court granted this motion, over Rodgers-Rouzier's objections that American Queen had waived its argument and the court lacked authority to apply Indiana law in this context. The court further determined that all the workers who had filed consent forms were not parties to the action.

We reverse. Although we conclude American Queen's arguments are not waived and the court had authority to enforce the arbitration agreement under Indiana law just as an Indiana court would, we believe that Indiana law would hold American Queen to its bargain that its arbitration agreement was governed by the FAA. Rodgers-Rouzier's case may therefore continue in federal court. We do not decide now whether it may do so as a collective action and leave that question for further litigation.¹

I.

Rodgers-Rouzier worked as a bartender on steamboats operated by American Queen. She alleged that she and her coworkers were wrongly denied overtime wages. While working for American Queen, she signed an arbitration agreement as a condition of her continued employment. The parties represent that her coworkers entered similar, but not necessarily identical, agreements at various times during their own employment with American Queen.

The agreement is only three short pages, split into six sections, several of which are relevant to this appeal. Section one contains the main agreement that the parties will settle all claims arising out of Rodgers-Rouzier's employment exclusively by binding arbitration, except for certain claims related to unemployment benefits, worker's compensation, and labor relations. The procedures for the arbitration are specified in section two, which provides that the arbitration "shall be conducted under the rules and procedures of the American Arbitration Association, Judicial Arbitration and Mediation Services or another arbitration service selected by the company." It also specifies that arbitration should generally be conducted in the county where Rodgers-Rouzier was last employed. Section four operates as a waiver of any statute of limitations, requiring each party to commence a claim no more than six months after it accrues.

Section six addresses the interpretation of the Agreement and provides that "[t]his Agreement and the applicability/construction of any arbitration decision shall be governed by the Federal Arbitration Act." The section also includes severability rules: "The provisions of this Agreement shall be severable. If any portion of this Agreement is held to be invalid or unenforceable, it shall not affect the remaining portions of this Agreement. This Agreement may be modified by a court or an arbitrator to render it enforceable."

After Rodgers-Rouzier filed this suit as a putative collective action, see 29 U.S.C. § 216(b), American Queen moved to compel arbitration under the FAA. Specifically, it sought to dismiss the complaint in its entirety for improper venue under Rule 12(b)(3) of the Federal Rules of Civil Procedure. The district court denied this motion because § 1 of the FAA provides that "nothing" in the Act "shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce," and it concluded that Rodgers-Rouzier was a "seaman" within the meaning of the FAA.

After filing its answer, American Queen moved again to either dismiss or stay the litigation based on the arbitration agreement. Accepting that the FAA did not apply to Rodgers-Rouzier, it instead invoked the Indiana Uniform Arbitration Act (IUAA), IND. CODE §§ 34-57-2-1 to-22. Rodgers-Rouzier objected that American Queen had already moved to dismiss once under Rule 12(b)(3), and so was not permitted to do so again. FED. R. CIV. P. 12(g)(2), (h)(1). She also argued that the court was not permitted to enforce the contract under Indiana law, when the FAA did not apply and section six specified that the agreement was governed by the FAA. Assuming the court could enforce the agreement, though, she contended that section two improperly gave American Queen unilateral authority to "select" any potentially biased arbitration service and section four's waiver of the statute of limitations violated the FLSA and rendered the whole agreement unconscionable.

The district court granted the motion and dismissed Rodgers-Rouzier's case. Although the court agreed that American Queen had waived its opportunity to file another motion under Rule 12(b)(3), the court concluded that American Queen had not waived its right to compel arbitration as a substantive matter. The court further determined that, in the absence of the FAA, some law had to apply to the agreement, and so it applied Indiana law, including the IUAA. It next concluded that neither section two nor section four was unconscionable, because it concluded the provision regarding selection of another arbitrator in the former was not integral to the agreement and the waiver of the statute of limitations in the latter was not contrary to federal or state law. It therefore compelled Rodgers-Rouzier to arbitrate by dismissing her suit.

Meanwhile, the parties had also been litigating whether court-approved notice should be sent to other American Queen workers so that they could opt into the case as a collective action. See Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 171, 110 S.Ct. 482, 107 L.Ed.2d 480 (1989). The court concluded that any notice was premature because it had not yet certified the case to proceed as a collective action. Yet, even without notice from the court, 127 other American Queen employees filed consent forms to opt into the action under 29 U.S.C. § 216(b). In light of its dismissal of Rodgers-Rouzier's case, the district court concluded that these employees were not parties to the litigation. Rodgers-Rouzier and the other 127 employees appeal.

II.

On appeal, Rodgers-Rouzier renews her three arguments against dismissal of her suit. First, she argues that Rule 12 of the Federal Rules of Civil Procedure prohibited American Queen from seeking enforcement of the arbitration agreement on its state-law theory. Second, she maintains the district court had no authority to apply Indiana law to compel arbitration. And third, she contends that she could not be compelled to arbitrate as a matter of Indiana law. Reviewing each of these questions of law de novo, see A.D. v. Credit One Bank, N.A., 885 F.3d 1054, 1059 (7th Cir. 2018), we reject her first two arguments and conclude that the district court had the authority to consider American Queen's motion and could have potentially compelled arbitration under Indiana law. But we agree with her that in this case Indiana law would not compel her to arbitrate, for the simple reason that the agreement expressly states that it is governed by the FAA.

A.

We start with waiver. Rodgers-Rouzier contends that the only means of seeking dismissal based on an arbitration clause is a motion to dismiss for improper venue under Rule 12(b)(3). Rule 12(g)(2) generally permits only a single motion to dismiss, and Rule 12(h)(1) establishes that any defense listed in 12(b)(2)-(5) is waived if it is omitted from that single motion. See Ennenga v. Starns, 677 F.3d 766, 772-73 (7th Cir. 2012). So, Rodgers-Rouzier logically concludes, American Queen waived its IUAA theory for dismissal by omitting it from its initial motion to dismiss under Rule 12(b)(3). The district court accepted that American Queen had waived its right to move again under Rule 12(b)(3) but concluded that it had not waived its right to compel arbitration generally.

We think the distinction drawn by the district court is sound, but there is a more fundamental flaw with Rodgers-Rouzier's argument. Rule 12(h)(1) does not govern the question of waiver because a motion to dismiss under Rule 12(b)(3) is not the proper means of enforcing an arbitration agreement in the first place. We had concluded that it was in Continental Casualty Co. v. American National Insurance Co., 417 F.3d 727, 733 (7th Cir. 2005), by comparing an arbitration agreement to a forum-selection clause. See also Faulkenberg v. CB Tax Franchise Sys., LP, ...