United States District Court, E.D. Wisconsin
DECISION AND ORDER
William C. Griesbach, Chief Judge United States District
A.R.M. Corporation has filed a motion to dismiss or stay
pending arbitration. Defendant Tina Moser filed a motion to
dismiss on the merits, arguing that she is not an
“employer” under the FLSA or Wisconsin law. For
the reasons that follow, the motion of A.R.M. Corporation
will be granted and the motion filed by Tina Moser will be
held in abeyance.
complaint brings a putative class action on behalf of all
nurses and other home care workers employed by A.R.M.
Corporation, which does business as Comfort Keepers, a
national franchise. Also doing business as Comfort Keepers is
Defendant SDX Home Care Operations LLC, which has filed an
answer but not a motion to dismiss. The complaint also names
Tina Moser, the owner of Defendant A.R.M. Corporation, as a
defendant. According to the complaint, workers typically
visit two or more patients' homes during a workday. The
complaint alleges that the Defendants failed to compensate
workers for the time they spent traveling between different
locations during the day. This, Plaintiff argues, violates
the Fair Labor Standards Act, 29 U.S.C. § 201, et seq.,
as well as state law.
Corporation moved to dismiss, citing an agreement to
arbitrate. On January 17, 2014, the Plaintiff signed a
Comfort Keepers' agreement in which she agreed
to submit any such dispute arising out of your employment . .
. exclusively to binding arbitration under [sic] Federal
Arbitration Act, 9 U.S.C. Section 1. This arbitration shall
be the exclusive means of resolving any dispute arising out
of your employment . . . and you waive all rights to civil
court action regarding your employment.
(ECF No. 13 at 3-5.)
2 of the Federal Arbitration Act states that “an
agreement in writing to submit to arbitration an existing
controversy ... shall be valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for the
revocation of any contract.” 9 U.S.C. § 2. To the
extent that an agreement satisfies the imperatives of section
2, the FAA empowers an inquiring court to stay a judicial
proceeding filed by a resisting party. Id. § 3.
Should the resisting party remain opposed to arbitration, the
court may compel arbitration. Id. §
Motion of Defendant A.R.M. Corp.
Plaintiff does not dispute that the arbitration clause is
clear on its face, nor does she deny that the dispute at hand
falls within the clause's scope. Instead, she argues the
clause is unenforceable because it prevents her and others
similarly situated from enforcing important statutory rights.
She also argues it is unenforceable under state law. The
federal conflict arises out of the fact that the FLSA
contains a two-year statute of limitations: Section 255(a)
provides that any action “may be commenced within two
years after the cause of action accrued, and every such
action shall be forever barred unless commenced within two
years after the cause of action accrued, except that a cause
of action arising out of a willful violation may be commenced
within three years after the cause of action accrued.”
29 U.S.C. § 255(a). This two (or three) year limitations
period stands in contrast with the Defendants'
arbitration policy, which requires a written request for
arbitration within one year of the incident in question. (ECF
No. 13 at 3.) The Plaintiff argues that the FLSA's
limitations period is part of the bundle of substantive
rights Congress has bestowed- it dictates the amount of
damages she may receive in a case like this-and so any
conflict between the statutory limitations period and the
arbitration clause must result in the clause being
outset, I note that the question of whether the matter is
arbitrable is generally one for the court, rather than an
arbitrator. “[A]n allegation by a party to an
arbitration agreement that some of the terms in an
arbitration agreement conflict with a statutory right that is
not waivable by contract” is a question of
arbitrability. Anderson v. Comcast Corp., 500 F.3d
66, 71 (1st Cir. 2007). “If that claim withstands
analysis, the court will have to decide whether the conflict
precludes enforcement of the arbitration agreement.”
The parties assume that this is the case here. However, for
that to be true, the court must answer the question of
whether there is a conflict in the affirmative. It
is not merely the possibility of some conflict-say,
between a one-year and two-year statute of limitations-there
must be an actual conflict that necessarily arises from the
facts alleged in the complaint. If instead the conflict would
only arise if an arbitrator made certain factual findings,
the question becomes the province of the arbitrator.
Id. at 74 (holding that “a possible conflict
between the agreement's limitations period and the
statute of limitations posed no question of arbitrability
where the plaintiff alleged an ongoing injury because
‘(1) whether Plaintiffs in fact suffer from an ongoing
injury ...; and (2) whether such injury ... tolls the statute
of limitations ... would require an examination of the
‘merits of the case, ' i.e., the facts, the
province of the arbitrator.'” (citation omitted).
the existence of an actual conflict does not depend on the
merits of the action or on an arbitrator's factual
findings. According to the complaint, the Defendants failed
to pay required overtime and other wages for a period of
several years-well beyond the one-year period set forth in
the arbitration agreement. Therefore, an actual conflict
exists because the complaint seeks damages beyond the
one-year period in the arbitration clause. “Anderson
alleges that he returned his cable box to Comcast in 2002 but
did not file suit until 2005. Anderson's complaint can
only be read as an acknowledgment that he did not comply with
the arbitration agreement's one-year notice of claim
provision.” Id. at 75. The same holds true
here. Because the complaint alleges injury beyond the
one-year limitations period contained within the arbitration
clause, there is an actual conflict and therefore the
question of arbitrability is one for the court.
the next question would be whether the FLSA's statute of
limitations is waivable. Chasteen v. Rock Fin., No.
07-CV-10558, 2012 WL 8705090, at *5 (E.D. Mich. Jan. 31,
2012); Pruiett v. W. End Restaurants, LLC, No. CIV.
3:11-00747, 2011 WL 5520969, at *5 (M.D. Tenn. Nov. 14,
2011). However, the Defendant appears to concede that it is
not. Instead, it argues that the one-year limitation
contained in the arbitration agreement may be severed. In
other words, the offending clause may be excised and the case
may be sent to arbitration with the understanding that the
Plaintiff will be allowed to recover based on whatever
limitations period is available under FLSA, rather than the
shorter period dictated by the arbitration agreement.
have severed limitations periods when the arbitration
agreements themselves contained severability clauses.
Kristian v. Comcast Corp., 446 F.3d 25, 62 (1st Cir.
2006). “[W]hen the arbitration agreement at issue
includes a severability provision, courts should not lightly
conclude that a particular provision of an arbitration
agreement taints the entire agreement.” Morrison v.
Circuit City Stores, Inc., 317 F.3d 646, 674 (6th Cir.
2003). Here, however, the agreement contains no savings
clause, as the sur-reply points out. Although the agreement
does not contain a severability provision, there seems little
reason not to sever the offending clause and allow the
parties to proceed to arbitration, as they clearly intended.
First, I note that courts are to resolve disputes about
arbitrability in favor of arbitration. Century Indem. Co.
v. Certain Underwriters at Lloyd's, London, 584 F.3d
513, 522 (3d Cir. 2009) (“Congress designed the FAA to
overrule the judiciary's longstanding reluctance to
enforce agreements to arbitrate and its refusal to put such
agreements on the same footing as other contracts, and in the
FAA expressed a strong federal policy in favor of resolving
disputes through arbitration.”) Thus, if there is a
reasonable way to send the case to arbitration, a court
should normally do so. Second, although the one-year period
provided by contract is “substantive” in some
sense-it impacts the damages available to the Plaintiff- the
time period in which one may bring a claim it is not
fundamental to the agreement's purpose, which was to
ensure that the dispute is arbitrated rather than litigated.
Courts have found that severance is proper under these
circumstances, wholly apart from whether the agreement
contains a severability clause. Gannon v. Circuit City
Stores, Inc., 262 F.3d 677, 680 (8th Cir. 2001) (finding
the offending clause would be severable “[e]ven if the
parties had not recorded their intentions in the severability
provision.”); Herrera v. Katz Commc'ns,
Inc., 532 F.Supp.2d 644, 647 (S.D.N.Y. 2008) (if a
clause in an arbitration agreement is invalid, “the
proper remedy would be to sever the invalid provision of the
arbitration clause and compel arbitration of the underlying
dispute, rather than to invalidate the entire arbitration
clause as plaintiff urges.”); This is because a failure
to do so would “thwart the very essence of the arbitral
agreement the parties have reached.” Id. See also
Bynum v. Maplebear Inc., No. 15-CV-6263, 2016 WL
5373643, at *12 (E.D.N.Y. Sept. 19, 2016) (severing offending
clauses in FLSA case pursuant to parties' later
stipulation); Porter v. MC Equities, LLC, No. 1:12
CV 1186, 2012 WL 3778973, at *11 (N.D. Ohio Aug. 30, 2012)
(severing fee clause despite absence of severability clause).
Cf. Coronado v. D.N. W. Houston, Inc., No. CIV.A.
H-13-2179, 2015 WL 5781375, at *11 (S.D. Tex. Sept. 30, 2015)
(refusing to sever fee-shifting provisions contained in
arbitration agreement). As the Eighth Circuit put it:
By signing the arbitration contract, Gannon demonstrated her
intent to resolve any employment disputes with Circuit City
through binding arbitration. See Mitsubishi Motors
Corp., 473 U.S. at 626, 105 S.Ct. 3346 (“Thus, as
with any other contract, the parties' intentions control,
but those intentions are generously construed as to issues of
arbitrability.”). We do not believe that the severance
of the provision limiting punitive damages diminishes her
contractual intent to arbitrate because excluding the