United States District Court, W.D. Wisconsin
ERIC GUNDRUM and MICHAEL KING, individually and on behalf of those similarly situated, Plaintiff,
CLEVELAND INTEGRITY SERVICES, INC., Defendant.
OPINION AND ORDER
WILLIAM M. CONLEY, District Judge.
lawsuit, plaintiffs Eric Gundrum and Michael King bring a
putative collective action under the Fair Labor Standards Act
("FLSA"), 29 U.S.C. § 201, et seq.,
against defendant Cleveland Integrity Services, Inc.
("Cleveland"). Plaintiffs allege that Cleveland
underpaid them and other similarly situated employees
overtime as required by the FLSA. This opinion addresses
defendant's threshold motion to transfer this case to the
District Court for the Northern District of Oklahoma pursuant
to a forum selection clause contained in an arbitration
agreement between the parties (dkt. #18), which plaintiffs
oppose on the basis that the arbitration agreement is illegal
and unenforceable. Because plaintiffs have failed to
establish that the forum selection clause is invalid for the
reasons explained below, defendant's motion will be
Cleveland is incorporated in Oklahoma and has its
headquarters in Cleveland, Oklahoma. (Compl. (dkt. #1) ¶
6.) Cleveland is in the business of "providing third
party inspection services for the construction and
maintenance of oil and natural gas transmission, midstream
and gathering lines, facility construction, meter runs and
many other types of oil and gas construction throughout the
United States." (Id. at ¶ 5.) Plaintiffs
Gundrum and King are both residents of Nevada who were
employed by Cleveland as "pipeline inspectors."
(Id. at ¶¶ 3, 4.) Both plaintiffs worked
in Wisconsin and Illinois as part of something called the
"Line 66 Pipeline Project." (Id. at ¶ 19.)
they "routinely worked between six (6) days to seven (7)
days per week and typically more than ten (10) hours per day,
up to fifteen (15) hours, " plaintiffs allege that
Cleveland willfully ignored its obligation to compensate them
properly for overtime. (Id. at ¶¶ 28, 33.)
Instead, plaintiffs allege, Cleveland used a "daily rate
compensation system that did not take into account all hours
worked in a workweek or overtime hours." (Id.
at ¶ 25.) Cleveland denies plaintiffs' allegations.
have moved for conditional certification of a collective FSLA
action under 29 U.S.C. § 216(b) (dkt. #6), but before
determining whether conditional certification is appropriate,
the court must first address defendant's motion to
transfer this case to the Northern District of Oklahoma as
called for by a forum selection clause in the arbitration
agreement signed by plaintiffs at the outset of their
employment. By signing Cleveland's "Agreement to
Arbitrate Disputes, " plaintiffs Gundrum and King agreed
to "submit to binding arbitration any dispute, claim or
controversy arising from [their] employment with Cleveland
Integrity Services, Inc., including, but not limited to, ...
all employment disputes, including, but not limited to, those
arising under. . . [the] FLSA[.]" (Def.'s Exs. (dkt.
##21-1, 23).) The arbitration agreements further state that
"[a]ny Arbitration shall be conducted by one (1)
arbitrator under the rules of the American Arbitration
Association and shall be held at the offices of Cleveland
Integrity Services, Inc. of Cleveland, Oklahoma."
U.S. Supreme Court recently clarified that "the
appropriate way to enforce a forum-selection clause pointing
to a state or foreign forum is through the doctrine of
forum non conveniens, " which is codified in 28
U.S.C. § 1404(a) "for the subset of cases in which
the transferee forum is within the federal court
system[.]" Atl. Marine Constr. Co. v. U.S. Dist.
Ct.for the W. Dist. of Tex., 571 U.S.__, 134 S.Ct. 568,
580 (2013). The Court also clarified that the § 1404(a)
analysis must be adjusted when a valid forum selection clause
is the basis for a motion to transfer; specifically, (1)
"the plaintiff's choice of forum merits no weight,
" (2) the parties' private interests are immaterial
and (3) the court should not weigh the transferee court's
familiarity with the law that would be determined by the
transferor court's choice of law rules, since those rules
will not be transferred along with a § 1404(a) transfer.
Id. at 581-82.
"[w]hen the parties have agreed to a valid
forum-selection clause, a district court should ordinarily
transfer the case to the forum specified in that clause. Only
under extraordinary circumstances unrelated to the
convenience of the parties should a § 1404(a) motion be
denied." Id. at 581 (footnote omitted).
support of its transfer motion, defendant also points to
Merrill Lynch, Pierce, Fenner & Smith, Inc. v.
Lauer, 49 F.3d 323 (7th Cir. 1995), which held that when
"the location of arbitration is preordained, "
motions to compel arbitration under § 4 of the Federal
Arbitration Act ("FAA"), 9 U.S.C. § 4, must be
brought in the district where arbitration is to take place.
Id. at 327 (citing Lawn v. Franklin, 328
F.Supp. 791, 793 (S.D.N.Y. 1971) ("The proper District
within which the petition for [a § 4] order should be
filed is the District where the 'proceedings' by
virtue of the contract of the parties are to take
place.")); see also Daniels v. Painter, Case
No. 15-CV-1334, 2016 WL 3034246, at *5 (granting the
defendants' § 1404(a) motion to transfer the case to
the Central District of California pursuant to arbitration
agreements providing for exclusive arbitration in Los
Angeles, despite the plaintiffs' challenge to the scope
of the arbitration clause). Here, the Seventh Circuit's
Merrill Lynch decision, therefore, would appear to
dictate a direct transfer to the Northern District of
oppose defendant's motion to transfer on the grounds that
the Atlantic Marine, Merrill Lynch and
Daniels decisions are all factually distinguishable
because the validity of the forum selection clauses
in those cases was not in dispute. Plaintiffs assert that here,
in contrast, Cleveland's arbitration agreement is
"illegal and unenforceable on its face, " in light
of the Seventh Circuit's decision in Lewis v. Epic
Systems Corp., 823 F.3d 1147 (7th Cir. 2016). In
Lewis, the Seventh Circuit affirmed the district
court's denial of defendant Epic's motion to compel
arbitration, holding that "[b]ecause it precludes
employees from seeking any class, collective, or
representative remedies to wage-and-hour disputes, Epic's
arbitration provision violates Sections 7 and 8 of the NLRA
[("National Labor Relations Act")]."
Id. at 1161.
in contrast, Cleveland's arbitration agreement contains
no term precluding class or collective remedies.
Even so, plaintiffs contend that the holding in
Lewis applies here because Cleveland argued in a
motion to compel individual arbitration in a similar
collective action in the District of Kansas, that the same
arbitration language at issue here "does not provide for
class or collective actions, [so] none are permitted[,
]" (Pis.' Opp'n Br. (dkt. #31) at
this interpretation, plaintiffs argue, the arbitration
agreement is unlawful, because "[t]he [National Labor
Relations] Board [("NLRB")] has held in a number of
cases that the maintenance of a mandatory arbitration
agreement is unlawful, even if it is silent regarding class
or collective claims, if the employer has applied the
agreement to preclude employees from pursuing
employment-related claims on a class or collective basis in
any forum." Rim Hosp. & Nelson Chico, an
Individual, Case 21-CA-137250, 2016 WL 3626603 (N.L.R.B.
Div. of Judges June 15, 2016) (collecting cases); see
also Haynes Bldg. Servs., LLC & J. Tadeo Gomez-Flores,
363 N.L.R.B. No. 125, at *4 (2016) ("[W]e find that by
threatening to compel arbitration on an individual rather
than a class or collective basis, the Respondent has applied
the Notice to Applicant and Arbitration Agreement to restrict
Section 7 rights, in violation of Section 8(a)(1)[.]").
other words, plaintiffs contend that Cleveland's attempt
to read an implied collective action waiver into its
arbitration agreement in the District of Kansas litigation
violates the NLRA. As such, that reading would also run afoul
of the savings clause of the FAA, which "provides that
any written contract 'evidencing a transaction involving
commerce to settle by arbitration a controversy thereafter
arising out of such contract or transaction . . . shall be
valid, irrevocable, and enforceable, save upon such grounds
as exist ...