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Hubbard v. Dolgencorp LLC

United States District Court, W.D. Tennessee, Eastern Division

September 28, 2017

BRANDI HUBBARD, SHERLYN HUFFMAN, REBECCA BEAVER, and HOLLY JIMENEZ, Individually, and on behalf of themselves and other similarly situated current and former employees, Plaintiffs,



         Before the Court is Defendants Dolgencorp, LLC; Dollar General Corp.; and DG Retail, LLC (collectively “Dollar General”)'s Motion to Compel Arbitration (ECF No. 38) filed on July 14, 2017. Dollar General argues that in the course of their employment with Dollar General, Plaintiffs Brandi Hubbard, Sherlyn Huffman, Rebecca Beaver, and Holly Jimenez signed arbitration agreements, in which each agreed to submit any claim she might have against Dollar General to arbitration and proceed individually. Plaintiffs have responded in opposition, arguing that the Sixth Circuit's recent decision in National Labor Relations Board v. Alternative Entertainment, Inc., 858 F.3d 393 (6th Cir. 2017) renders the arbitration agreement and its class/collective action waiver unenforceable. Dollar General has filed reply as well as supplemental authority in support of the request to compel arbitration. For the reasons set forth below, the Motion to Compel Arbitration is GRANTED in part, DENIED in part.


         On April 26, 2017, Plaintiffs Brandi Hubbard, Sherlyn Huffman, Rebecca Beaver, and Holly Jimenez filed this collective action for relief under the Fair Labor Standards Act (“the FLSA”), 29 U.S.C. §§ 201 et seq., and class action relief under state law.[1] The Complaint alleges that Dollar General misclassified assistant store managers and lead sales associates at all of its stores nationwide and forced these employees to work off-the-clock and thereby failed to pay the employees the overtime which they were owed. Plaintiffs initially filed their Complaint in the United States District Court for the Central District of Illinois, and that Court transferred the case on a consent motion of the parties to this District on July 6, 2017. To date, approximately 44 plaintiffs have filed opt-in forms giving their consent to join in the collective action.

         In the Motion to Compel, Dollar General argues that the Court should enforce an arbitration agreement signed by three of the four named Plaintiffs as well as by all of the opt-in plaintiffs who worked for Dollar General in Tennessee. According to Dollar General, each employee and Dollar General mutually agreed to submit any claim related to the employee's employment with Dollar General to binding arbitration. Not only did each employee consent to arbitration, but each employee also agreed not to pursue any claim in arbitration as part of a class or collective action. Dollar General emphasizes the voluntary nature of the agreement and the fact that employees were permitted to consult an attorney before signing the agreement and opt out of the agreement entirely, if they notified Dollar General of their decision to opt out within 30 days of receiving the agreement. Dollar General further argues that the opt-out provision expressly stated that Dollar General would not retaliate against any employee who exercised the right to opt out of arbitration. Dollar General now contends that by agreeing to arbitrate any claim broadly related to their employment with Dollar General and by specifically agreeing to arbitrate any wage and hour claim, Plaintiffs' causes of action in this suit fall within the purview of the arbitration agreement. Therefore, the Court should compel Plaintiffs to take their claims to arbitration and resolve them on an individual basis.

         Dollar General makes a number of arguments about why the arbitration agreement is binding and enforceable. However, the real dispute is whether the Sixth Circuit's recent holding in National Labor Relations Board v. Alternative Entertainment, Inc., 858 F.3d 393 (6th Cir. 2017) applies in this case. The Court analyzes the scope of the Sixth Circuit's holding more fully below. Dollar General argues that the Sixth Circuit's opinion should be narrowly construed to stand for the proposition that mandatory arbitration agreements containing class waivers violate the National Labor Relations Act (“NLRA”) and therefore are unenforceable. Dollar General posits that the arbitration agreement in this case is distinguishable because the agreement was not a mandatory condition of Plaintiffs' employment with Dollar General.

         Plaintiffs have responded in opposition to the Motion to Compel Arbitration. Plaintiffs do not actually challenge Dollar General's arguments that the FLSA and state law claims alleged in this action are subject to the arbitration agreement each Plaintiff had with Dollar General.[2] Plaintiffs simply argue that the Sixth Circuit's decision in Alternative Entertainment renders the Dollar General arbitration agreement unenforceable in its entirety. Plaintiffs' argument tracks the reasoning of the Court of Appeals in Alternative Entertainment: the arbitration agreement's class/collective action waiver violates Plaintiffs' rights under the NLRA and thwarts their ability to pursue “concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Pls.' Resp. in Opp'n 3 (quoting NLRA § 7, 29 U.S.C. § 157). The Dollar General arbitration agreement violates Plaintiffs' rights to pursue collective action, either in a judicial forum or in arbitration. And with respect to Dollar General's claim that the arbitration agreement was not mandatory, Plaintiffs respond that the class/collective action waiver, even if optional, had the effect of frustrating the employee's rights under the NLRA. Plaintiffs argue then that the Court should deny the Motion to Compel Arbitration.

         Dollar General has filed a reply brief as well as supplemental authority addressing the Sixth Circuit's decision in Alternative Entertainment. Dollar General restates its argument that the Sixth Circuit's holding does not apply in this case because the Dollar General arbitration agreement was voluntary and not mandatory. Dollar General cites two recent opinions from the United States District Court for the Middle District of Tennessee, interpreting Alternative Entertainment and holding that the decision does not preclude enforcement of a collective action waiver in a valid arbitration agreement.


         The Federal Arbitration Act (“the FAA”) was enacted with the purpose “to reverse the longstanding judicial hostility to arbitration agreements that had existed at English common law and had been adopted by American courts, and to place arbitration agreements on the same footing as other contracts.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991); see also Rosenberg v. BlueCross BlueShield of Tenn., Inc., 219 S.W.3d. 892 (Tenn. 2006). When a party files a motion invoking an arbitration agreement, the Court “must follow the procedure set forth in section 4 of the FAA.” Highlands Wellmont Health Network, Inc. v. John Deere Health Plan, Inc., 350 F.3d 568, 573 (6th Cir. 2003). Section 4 of the FAA provides as follows:

A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court . . . for an order directing that such arbitration proceed . . . . [U]pon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration . . . .

9 U.S.C. § 4; Great Earth Cos., Inc. v. Simons, 288 F.3d 878, 889 (6th Cir. 2002). If the parties to a civil action have a valid arbitration agreement, the Court should compel arbitration and stay the proceedings pending the outcome of the arbitration. Fazio v. Lehman Bros., Inc., 340 F.3d 386, 392 (6th Cir. 2003) (citing 9 U.S.C. § 2).

         The Court conducts a four-step analysis of the arbitration agreement. See Fazio, 340 F.3d at 392 (citing Stout v. J.D. Byrider, 228 F.3d 709, 714 (6th Cir. 2000)). First, the Court must determine whether the parties have agreed to arbitrate. Id. Second, the Court construes the scope of the agreement. Id. Third, where federal statutory claims are asserted, the Court must consider whether Congress intended those claims to be non-arbitrable. Id. Finally, if the Court concludes that some, but not all, of the claims are subject to arbitration, it must determine whether to stay the remainder of the proceedings pending arbitration. Id.


         The issue presented is whether the Sixth Circuit's holding in Alternative Entertainment applies under the facts of this case and renders the class/collective action waiver in the arbitration agreement between Dollar General and its employees unenforceable. As an initial matter, the Court finds no evidence that named Plaintiff Brandi Hubbard ever signed an arbitration agreement with Dollar General. Dollar General acknowledges this fact in its opening brief where it asserts that Beaver, Jimenez and Huffman signed the agreement but then states in a footnote that “Plaintiff Brandi Hubbard was employed prior to Dollar General's rollout of the Agreement in August 2014.” Dollar General has not submitted any evidence showing that Hubbard agreed to arbitrate at all. Arbitration is in the final analysis “a matter ...

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