Zagorski v. Pennant Grp.

ORDER ON MOTION TO DISMISS OR STAY AND COMPEL ARBITRATION

NANCY JOSEPH, United States Magistrate Judge.

Gwen Zagorski filed a class action complaint against her former employers, The Pennant Group, Inc. (incorrectly named Pennant Group, Inc.) and Brenwood Park Senior Living, Inc. d/b/a Brenwood Park Assisted Living (incorrectly named Brenwood Park Senior Community II, LLC), seeking to represent a class of defendants' employees for alleged violations of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., and the Wisconsin Wage Payment and Collection Laws, Wis.Stat. § 103.001 et seq., Wis.Stat. § 104.01 et seq., Wis.Stat. § 109.01 et seq., Wis. Admin. Code § DWD 274.01 et seq., and Wis. Admin. Code § DWD 272.001 et seq. (“WWPCL”). (Compl., Docket # 1-1.) In response, the defendants filed a motion to dismiss or, in the alternative, to stay proceedings and compel individual arbitration under an August 3, 2015 “Mutual Agreement to Arbitrate Claims” that purports to cover claims arising under the FLSA and the WWPCL. (Docket # 4.) Zagorski opposes the motion. For the reasons explained below, the defendants' motion to dismiss this case and compel arbitration is granted.

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BACKGROUND FACTS

Pennant Group operates over 50 Assisted Living facilities across the United States, including a facility in Franklin, Wisconsin. (Compl. ¶¶ 8, 10.) Zagorski worked as a resident assistant at the Franklin facility from 2003 through December 2020. (Id. ¶ 18.) Zagorski was 60 years old when she began working for the defendants and has a high school education. (Declaration of Gwen Zagorski (“Zagorski Decl”) ¶ 2, Docket # 12.)

In August 2015, Brenwood Park Senior Living, Inc. acquired the Franklin facility. (Declaration of Raquel Pettersen (“Pettersen Decl.”) ¶ 2, Docket # 7.) Following the acquisition, existing employees were presented with a “Mutual Agreement to Arbitrate Claims” (the “Agreement”). (Id. ¶ 3.) The defendants assert that the employees were provided an opportunity to decide whether to enter into the Agreement and were given a hardcopy of the Agreement to review and sign. (Id.)

The Agreement provides as follows, in relevant part:

The below-named employer, (the “Company”) and Employee hereby agree to resolve by final and binding arbitration any and all claims or controversies for which a court or other governmental dispute resolution forum otherwise would be authorized by law to grant relief, in any way arising out of, relating to, or associated with Employee's employment with the Company or any of its parents, affiliates, or subsidiaries, or the termination of such employment. This mutual agreement to arbitrate includes any claims that the Company may have against Employee, or that Employee may have against the Company or against any of its officers, directors, employees, agents, or parent subsidiary, or affiliated entities. The Company and Employee agree that arbitration, as provided for in this Agreement shall be the exclusive forum for the resolution of any covered dispute between the parties. In agreeing to arbitration, both the Company and Employee explicitly waive their respective rights to trial by jury

The claims covered by this Agreement include, but are not limited to, claims for breach of any contract or covenant express or implied; claims for breach of any fiduciary duty or other duty owed to Employee by Company or to Company by Employee; tort claims; claims for wages or other compensation due; claims for discrimination or harassment, including but not limited to

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discrimination or harassment based on race, sex, pregnancy, religion, national origin, ancestry, age, marital status, physical disability, mental disability, medical condition, or sexual orientation; and claims for violation of any federal, state or other governmental constitution, statute, ordinance or regulation (as originally enacted and as amended), including but not limited to claims under Title VII of the Civil Rights Act of 1964 (“Title VII”), the Fair Labor Standards Act (“FLSA”), the Employee Retirement Income Security Act (“ERISA”), the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), the Family and Medical Leave Act (“FMLA”), the Wisconsin Fair Employment Act (“WFEA”), the Wisconsin Wage Payments, Claims, and Collections Law, and the Wisconsin Statutes (collectively, “Arbitrable Disputes”).

Both the Company and Employee waive any right either may otherwise have to pursue, file, participate in, or be represented in any Arbitrable Dispute brought in any court on a class basis, or as a collection action, or as a representative action. All Arbitrable Disputes subject to this Agreement must be arbitrated as individual claims. This Agreement specifically prohibits the arbitration of any Arbitrable Dispute on a class basis, or as a collection action, or as a representative action, and the arbitrator shall have no authority or jurisdiction to enter an award or otherwise provide relief on a class, collective or representative basis.

(Id. U 4, Ex. 1, Docket # 7-1.)

Zagorski states that she was 72 years old in 2015 when she was allegedly presented with the Agreement. (Zagorski Decl. U 2.) She avers that although she does not particularly recall signing the Agreement, she does recall signing various documents during the course of her employment, but at the time of signing the documents, she did not understand their significance nor was she given a meaningful opportunity to review them. (Id. U 3.) The Agreement dated August 3, 2015, bears the signatures of Raquel Pettersen on behalf of Brenwood and Zagorski. (Pettersen Decl., Ex. 1.)

On or around December 28, 2020, at the age of 77, Zagorski suffered a heart attack during one of her shifts. (Zagorski Decl. ¶ 1.) She alleges that her supervisor refused to allow her to leave work to seek immediate medical assistance, thus exacerbating the severity of her

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condition. (Id.) Zagorski alleges that she was unable to return to work due to the severity of the heart attack. (Id.)

In May 2021, Zagorski filed suit against the defendants, alleging that throughout the course of her employment, Zagorski regularly worked through her lunch. (Compl. ¶ 19.) She alleges that the defendants violated the FLSA and the WWPCL by automatically deducting a half-hour from each shift for a meal break, even if she did not actually take such a meal break, thus failing to compensate her for all hours worked. (Id. ¶¶ 25-32.) Zagorski further alleges the defendants violated Wis.Stat. § 103.02 by refusing to grant her permission to leave work to seek medical attention during her heart attack, thus causing her to work for a period that was dangerous to her life, health, safety, and welfare. (Id. ¶¶ 33-36.) She seeks to represent a putative class of employees with similar claims. (Id. ¶¶ 37-42.)

APPLICABLE RULE

The Federal Arbitration Act generally requires a court to order arbitration when it finds: (1) a written agreement to arbitrate; (2) a dispute within the scope of the arbitration agreement; and (3) a refusal by the opposing party to proceed to arbitration. Zurich Am. Ins. Co. v. Watts Indus., Inc., 417 F.3d 682, 687 (7th Cir. 2005). Whether the parties entered into a written agreement to arbitrate is a matter of state contract law. Hawkins v. Aid Ass'n for Lutherans, 338 F.3d 801, 806 (7th Cir. 2003). The parties do not dispute that, pursuant to the Agreement, Wisconsin law governs. (See Pettersen Decl., Ex. 1 “. . . this mutual agreement to arbitrate claims shall be enforced under the laws of the state in which Employee was last employed for the Company.”) Because a motion to compel arbitration is treated as an assertion that the court lacks subject matter jurisdiction, the court may also consider background information in the form of exhibits and affidavits. Schultz v. Epic Sys. Corp.,

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376 F.Supp.3d 927, 933 (W.D. Wis. 2019) (“Because a motion to compel arbitration is essentially a claim that the court lacks subject matter jurisdiction, it is proper for the court to consider matters beyond the allegations in the complaint.”) (internal citation omitted). The party seeking to invalidate or oppose the arbitration agreement bears the burden of demonstrating that the arbitration agreement is unenforceable and that the claims are unsuitable for arbitration. Paragon Micro, Inc. v. Bundy, 22 F.Supp.3d 880, 887 (N.D. Ill. 2014).

ANALYSIS

Zagorski opposes the defendants' motion to compel arbitration on three grounds: (1) the dispute is outside the scope of the Agreement; (2) even if the dispute is within the scope, the Agreement is both procedurally and substantively unconscionable; and (3) the Agreement was not signed by the defendants. (Pl.'s Br. in Opp., Docket # 11.) I will address each argument in turn.

1. The Scope of the Agreement

As an initial matter, Zagorski does not argue that her specific types of claims (i.e., under the FLSA and WWPCL) do not fall under the ambit of the Agreement. Rather, Zagorski argues that her dispute is outside the scope of the Agreement because the Agreement only applies to claims that accrued as of the date of signing-August 3, 2015- and did not contemplate future claims. (Id. at 5-7.) She argues that the present dispute arose from events occurring several years after the Agreement was entered into, specifically, May 28, 2018 onward. (Pl.'s Br. in Opp. at 5, Compl. ¶ 37.) In support of her argument, Zagorski focuses on the phrase “may have” from this portion of the Agreement:

This mutual agreement to arbitrate includes any claims that the Company may have against Employee, or that