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Cooper v. Terminix International Co.

United States District Court, S.D. Texas, Houston Division

April 11, 2018

Jethro Cooper, individually and on behalf of all others similarly situated, Plaintiffs,
Terminix International Company, and Terminix International, Inc., Defendants.



         This dispute is before the court on Defendants' Motion to Dismiss and Compel Arbitration (Dkt. 14).[1] The court recommends that the motion be granted in full as to Plaintiff Cooper, and that the Motion to Dismiss be granted without prejudice as to the individuals who filed consents to opt-in as plaintiffs.

         I. Background

         Terminix[2] has employed Cooper as a pest control technician since 2003. On December 4, 2017, Cooper filed this action against Terminix under the Fair Labor Standards Act, 29 U.S.C. § 201, et seq. (FLSA) seeking unpaid overtime on behalf of himself and all others similarly situated. An order for conditional certification of a collective action has not been entered, but several individuals have filed consent forms to join this action as plaintiffs. See Dkts. 4-11, 26.

         Terminix seeks to compel Cooper to arbritate his FLSA claims and to dismiss this case. Cooper contends that the arbitration agreement he signed is unenforceable, and that even if he must arbitrate, the claims of individuals who have filed consents to join this action should not be dismissed.

         II. Legal Standards For Motion to Compel Arbitration

         Courts conduct a two-part inquiry when deciding whether parties should be compelled to arbitrate a dispute. First, the court must determine whether the parties agreed to arbitrate, and next the court must determine whether any federal statute or policy prohibits arbitration. OPE Int'l LP v. Chet Morrison Contractors, Inc., 258 F.3d 443, 445 (5th Cir. 2001). In deciding the first inquiry, i.e., whether the parties have agreed to arbitrate the dispute, the court must determine (1) whether there is a valid arbitration agreement, and (2) whether the specific dispute in question falls within the scope of that agreement. Id. The first determination, whether a valid agreement exists, is made on the basis of "ordinary state law principles that govern the formation of contracts." Morrison v. Amway Corp., 517 F.3d 248, 254 (5th Cir. 2008). The second determination, the scope of the arbitration clause, is made in accordance with the strong presumption in favor of arbitration, and doubts must be resolved in favor of arbitration. Pennzoil Exploration and Prod. Co. v. Ramco Energy Ltd., 139 F.3d 1061, 1068 (5th Cir. 1998); Moses H. Cone Mem. Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24-25 (1983).

         The court has no discretion to deny arbitration of claims that are subject to a valid arbitration provision. Bhatia v. Johnson, 818 F.2d 418, 421 (5th Cir. 1987). If all claims asserted in a case are subject to arbitration, dismissal is the proper remedy, not a stay pending arbitration. Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992); Ruiz v. Donahoe, 784 F.3d 247, 249-50 (5th Cir. 2015).

         III. Analysis

         A. Defendant's motion to compel arbitration and dismiss Cooper's Claims

         Cooper contends that the arbitration agreement is invalid because it is illusory. He further argues that it is invalid because it infringes his substantive FLSA rights. Because there is a strong federal policy in favor of arbitration, a party seeking to invalidate an arbitration agreement, here Cooper, bears the burden to establish invalidity. Carter v. Countrywide Credit Indus., 362 F.3d 294, 297 (5th Cir. 2004).

         1. The parties agreed to arbitrate

         a. There is a valid arbitration agreement

         Cooper and Terminix have entered two agreements relating to Cooper's employment, a 2014 Compensation Plan Summary signed February 19, 2014, and a 2012 We Listen Dispute Resolution Plan (We Listen Plan) signed November 15, 2011. Although the Compensation Plan is contingent on an employee signing the We Listen Plan, the arbitration agreement Terminix seeks to enforce is contained in the latter.[3]

         The We Listen Plan contains the following provision:

I HEREBY WAIVE MY RIGHT TO A COURT OR JURY TRIAL AND AGREE THAT THE PLAN IS THE EXCLUSIVE REMEDY THE COMPANY AND I HAVE FOR RESOLUTION OF DISPUTES. Accordingly, I may not pursue relief for any Dispute in any federal or state court of law except as stated in the Plan. If I do file a claim in any federal or state court, the Company may seek a stay or dismissal of the claim and compel arbitration and the dispute resolution steps under the Plan. I UNDERSTAND AND AGREE THAT MY SOLE AND FINAL LEGAL REMEDY IS BINDING ARBITRATION. The only exception is that either party may seek an injunction is a court if interim and/or immediate relief is necessary to preserve the status quo or the meaningfulness of the arbitration process pending the outcome in arbitration, to the extent allowable under federal or state law.

Dkt. 19-2 at ¶ 8 (emphasis in original).

         i. The arbitration agreement is not illusory

         In this case, the issue of whether a valid arbitration agreement exists is governed by Tennessee law. Dkt. 19-2 at ¶ 13 (". . . this Plan shall be construed, interpreted, and its validity and enforceability determined, strictly in accordance with the Federal Arbitration Act... and the laws of the State of Tennessee"). The Tennessee Supreme Court defines a contract "as an agreement upon sufficient consideration to do or not do a particular thing." Green v. Justice, No. 03A01-9512-CV-00445, 1996 WL 323689, at *2 (Tenn. Ct. App. June 13, 1996) (citing Smith v. Pickwick Elec. Co-op.367 S.W.2d 775, 780 (Tenn. 1963)); see also Moody Realty Co. v. Huestis,237 S.W.3d 666, 674 (Tenn. Ct. App. 2007) ("A contract 'must result from a meeting of the minds of the parties in mutual assent to the terms, must be based upon a sufficient consideration, free from fraud or undue ...

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