Middle District of Pennsylvania Holds that D.R. Horton Does Not Conflict with Concepcion

by Jeremy Clare

The United States District Court for the Middle District of Pennsylvania denied a motion for reconsideration of the court’s order compelling arbitration because plaintiffs failed to establish a change in controlling law.

Background

In Brown v. Trueblue, Inc., No. 10-CV-0514 (M.D. PA April 16, 2012), Stephen Brown and Matthew Jury (“plaintiffs”), two employees of Trueblue, a temporary staffing agency, filed a complaint with the district court alleging that Trueblue’s payment system violated the Pennsylvania Minimum Wage Act, the Pennsylvania Wage Payment and Collection Law, and the Fair Labor Standards Act. Trueblue filed a motion to compel arbitration based on the arbitration agreements found in the plaintiffs’ employment agreement with Trueblue. The court granted Trueblue’s motion. The plaintiffs filed a motion for reconsideration of the court’s order to compel arbitration, or in the alternative, a motion for interlocutory appeal.

District Court

The plaintiffs filed a motion for reconsideration based on the National Labor Relations Board’s (“NLRB”) ruling In re D.R. Horton, Inc., in which the NLRB interpreted the effect of the Supreme Court’s ruling in AT&T Mobility v. Concepcion. In D.R. Horton, the NLRB held that “employers may not compel employees to waive their [National Labor Relations Act] (“NLRA”) right to collectively pursue litigation of employment claims in all forums, arbitral and judicial.” The plaintiffs argued that because the arbitration agreements prohibited classwide arbitration, they violated the new holding in D.R. Horton.

The court first reviewed its order to compel arbitration to determine if any error occurred. Supported by Quilloin v. Tenet HealthSystem Philadelphia, Inc., a recent US Court of Appeals for the Third Circuit decision that considered the identical issue initially raised by the plaintiffs, the court found no error in its initial decision to compel arbitration. In Quilloin, the Third Circuit reversed a district court’s ruling to deny a motion to compel arbitration. The Third Circuit reasoned that Concepcion provided a new controlling precedent on the issue.

The district court then considered whether the plaintiffs presented adequate justification for reconsideration of the motion to compel arbitration. The plaintiffs argued that the arbitration agreement was void pursuant to D.R. Horton. First, the court found that the plaintiffs’ arguments were not timely raised. The plaintiffs contended that they could not have raised the arguments when the court was addressing the motion to compel arbitration because D.R. Horton had not been decided at the time and that D.R. Horton represents a change in controlling law. However, the court noted that D.R. Horton cannot be interpreted as a change in controlling law. Instead, the court concluded that it is merely an interpretation of Concepcion, already controlling precedent, which the plaintiffs could have presented before their motion for reconsideration. If D.R. Horton was interpreted as a change in controlling law and conflicted with Concepcion’s interpretation of the Federal Arbitration Act, the court would have rejected the decision in D.R. Horton as conflicting with Supreme Court precedent. Therefore, the plaintiffs could have presented such an interpretation of controlling law prior to the motion for reconsideration, and because they did not, the argument was not properly raised in time.

The court then determined that even if there were no procedural bar to the motion, it would still fail as a matter of law. The court noted that D.R. Horton is a decision regarding Sections 7 and 8 or the NLRA. The court found that it did not have jurisdiction to decide the issue because the plaintiffs’ argument for reconsideration is based on the NLRA and courts must defer such decisions to the NLRB. The court also determined that even if it did have jurisdiction over the issue, D.R. Horton would not bar arbitration in this case because D.R. Horton is narrower than the plaintiffs argued. Because the arbitration agreements at issue prohibited classwide arbitration, but not all class or collective actions, the court reasoned that they were consistent with the holding in D.R. Horton.

In the alternative, the plaintiffs sought an interlocutory appeal of the order compelling arbitration. Citing 28 U.S.C. § 1292(b), the court concluded that the plaintiffs’ arguments did not warrant an order for interlocutory appeal. Section 1292(b) lays out three prongs which the plaintiffs had to meet for an interlocutory appeal: (1) the order must have concerned a controlling question of law; (2) there must have been a substantial ground for difference of opinion; and (3) an immediate appeal from the order would have materially advanced the ultimate termination of the litigation. The court concluded that the plaintiffs’ claims did not meet the latter two prongs.

Finally, the court also denied the plaintiffs’ request for additional discovery. The plaintiffs claimed that the costs of individual arbitrations would be prohibitively expensive, but they failed to show any evidence that the costs of arbitration would preclude them from vindicating their statutory rights. Therefore, the court could not justify invalidating the agreements to arbitrate based on those claims. The plaintiffs then asked for additional discovery to show that the arbitrations would be prohibitively expensive. The court concluded that the plaintiffs sought discovery based on mere speculation and that the statutes they based their claims on (the Fair Labor Standards Act, the Pennsylvania Minimum Wage Act, the Pennsylvania Wage Payment and Collection Law, and the Check Casher Licensing Act) all provide for sufficient statutory remedies to ensure that individual arbitrations are not prohibitively expensive.

Jeremy Clare is a law clerk at Karl Bayer, Dispute Resolution Expert. Jeremy received his J.D. from the University of Texas School of Law in 2012 and received a B.A. from the University of South Carolina where he studied political science.