United States District Court, W.D. Texas, San Antonio Division
RICHARD WIATREK, Individually, and on Behalf of all Others Similarly Situated, Plaintiff,
FLOWERS FOODS, INC. and FLOWERS BAKING CO. OF SAN ANTONIO, Defendants.
RODRIGUEZ UNITED STATES DISTRICT JUDGE
date, the Court considered the status of the above-captioned
case, including Defendants' Motion to Dismiss (Docket no.
32), Plaintiffs' Motion to Amend Complaint (Docket no.
33), Plaintiffs' Motion to Certify a Rule 23 Class
(Docket no. 34), and Plaintiffs' Motion for Sanctions
(Docket no. 41). After careful consideration, the Court
GRANTS Defendants' motion to compel Plaintiffs who have
signed the Arbitration Agreement into arbitration and DENIES
Plaintiff's request to sanction Defendants. Further,
having reviewed the Scheduling Order and Plaintiff's
Motion for Leave to Amend, the motion to amend is GRANTED IN
PART and DENIED IN PART, and the related motion to certify a
Rule 23 class is DENIED.
Wiatrek filed this case on August 15, 2017 individually and
on behalf of all others similarly situated. Docket no. 1.
Plaintiff asserts that Defendants, Flowers Foods, Inc. and
Flowers Baking Co. of San Antonio (“FBC”)
misclassified him and other distributors with FBC of San
Antonio as independent contractor distributors rather than
employees and that as a result, Plaintiffs were not paid
overtime under the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. 2021, et seq. Docket no. 1
¶¶50-57. This claim was brought as a collective
action under the FLSA, pursuant to 29 U.S.C. § 26(b).
This Court conditionally certified a class of distributors in
San Antonio on February 5, 2018, and thirty-two additional
distributors have opted in. The opt-in period has closed.
now move to compel arbitration as to twenty-two of the opt-in
Plaintiffs. In December 2015, Plaintiffs Steve Aguilar,
Pourang Babsharif, John Coburn, Ralph Faykus, Vidal Ferrazas,
Jr., Rashaan Frankin, Jeffrey Hamilton, Armando Lopez, Bobby
Lopez, Christopher Felix Mejia, Marco Palomo, Andres Razo,
Rigoberto Razo, Leonel Rivera, Daniel Sanchez, Humberto
Sanchez, Mickey J. Schulm, Benjamin Smith Short III, Juan
Vasquez, Tony L. Way, and Carman P. Wadlington entered into
amendments to the distributorship agreements with Defendants.
Docket no. 32 at 1-2. The Amendment requires individuals to
settle claims, disputes, and controversies relating to the
distributorship agreement through individual arbitration,
effectively waiving any right Plaintiffs might have in a
collective or class action. Id. 3-4. The Plaintiffs
who signed the Amendment had the choice of receiving $1,
000.00 or purchasing certain products at an additional
discount for a one-year period. Id. at 3.
signing the Amendment, the above-mentioned Plaintiffs entered
into the comprehensive arbitration agreements
(“Arbitration Agreements”). The Arbitration
Agreements also informed Plaintiffs that claims arising out
of their Distributor Contract with Defendants would be
subject to arbitration and that they were giving up the right
to bring their claims against Defendant as a class or
collective action in a court of law or arbitration. Docket
no. 32 at 4.
14, 2018, Defendants filed their motion to dismiss currently
before the Court, asking the Court to compel the twenty-two
Plaintiffs who signed Arbitration Agreements to proceed with
individual arbitration and to dismiss their claims in this
litigation with prejudice, except to enforce any arbitration
award. Defendants argue that Plaintiffs entered into a valid
arbitration agreement, containing a valid delegation clause,
and therefore Plaintiffs' claims relating to the
Distributor Agreement should be subject to individual
arbitration, pursuant to the Amendment and the Arbitration
agreement. Docket no. 32 at 8-13.
23, Plaintiffs filed a Motion for Leave to Amend their
Complaint to add certain claims, and a related Motion to
Certify a Rule 23 Class for the state-law claims, both of
which are opposed. On May 31, Plaintiffs filed a motion
requesting sanctions, a temporary restraining order, and a
permanent injunction, alleging improper actions by
Defendants. Docket no. 41. In the motion, Plaintiffs complain
about the manner in which Defendants obtained the Arbitration
Agreements and allege that Defendants took deliberate actions
to persuade and coerce Plaintiffs from participating in this
litigation. Plaintiffs argue that the “in-person
solicitation that required Plaintiffs to watch a video
presentation regarding all the benefits of working for
Flowers, ” followed by an offer of $1000 or an
increased profit margin in exchange for waiver of FLSA
collective action rights constitutes improper conduct meant
to interfere with and discourage participation in these
lawsuits. Id. at 4.
Defendants' Motion to Dismiss and Compel
Federal Arbitration Act (“FAA”) requires a
district court to stay judicial proceedings where a written
agreement provides for the arbitration of the dispute that is
the subject of the litigation. 9 U.S.C. § 3. “The
preeminent concern of Congress in passing the Act was to
enforce private agreements into which parties had entered, a
concern which requires that [courts] rigorously enforce
agreements to arbitrate.” Mitsubishi Motors Corp.
v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625-26
(1985) (quoting Dean Witter Reynolds Inc. v. Byrd,
470 U.S. 213, 221 (1985)) (internal citations omitted). As
the Supreme Court emphasizes, “[n]ot only did Congress
require courts to respect and enforce agreements to
arbitrate; it also specifically directed them to respect and
enforce the parties' chosen arbitration
procedures.” Epic Sys. Corp. v. Lewis, 138
S.Ct. 1612, 1621 (2018). Under the FAA, arbitration
agreements are “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. Courts
may recognize only “generally applicable contract
defenses such as fraud, duress, or unconscionability, ”
but not defenses that apply only to arbitration. AT&T
Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011).
Arbitrability is a threshold question.
deciding a motion to compel arbitration under the FAA, courts
typically conduct a two-part inquiry. First, the court must
determine whether the parties agreed to arbitrate, and next
the court must determine whether the current dispute falls
within the scope of a valid agreement to arbitrate.
Edwards v. Doordash, Inc., 888 F.3d 738, 733 (5th
Cir. 2018) (citing Klein v. Nabors Drilling USA
L.P., 710 F.3d 234, 236 (5th Cir. 2013)). If the party
seeking arbitration asserts that there is a delegation
clause, the court performs the first step of the analysis to
determine if an agreement to arbitrate was formed, then
determines if it contains a valid delegation clause.
Doordash, 888 F.3d at 743-44.
court concludes that there is a valid agreement to arbitrate
with a delegation clause, and absent a challenge to the
delegation clause itself, the court should consider the
delegation clause to be valid and compel arbitration, unless
a federal statute or policy renders the claims
nonarbitrable. JP Morgan Chase & Co. v. Conegie ex
re. Lee, 492 F.3d 596, 598 (5th Cir. 2007). The party
seeking to invalidate an arbitration agreement bears the
burden of establishing its invalidity. Carter v.
Countrywide Credit Indus., Inc., 362, F.3d 294, 297 (5th
Cir. 2004). The court must resolve uncertainty concerning the
arbitrability of claims in favor of arbitration. Id.
aforementioned Plaintiffs have entered into two agreements
relating to arbitration of claims and disputes arising out of
their relationship with Defendants: (1) the Amendment to the
Distributor Agreement, signed December 2015 and (2) the
December 2015 Arbitration Agreement. The Arbitration
Agreement contains a delegation clause. Accordingly, the
Court will limit its analysis to determining whether the
parties entered into a valid arbitration agreement with a
valid delegation clause. Plaintiffs do not deny that they
signed the Arbitration Agreements. However, Plaintiffs raise
two arguments suggesting the Arbitration Agreements are
invalid under contract law: (1) the Arbitration Agreements
are illusory and (2) the Arbitration Agreements are
unconscionable. Docket no. 38 at 6-7, 12-16. Plaintiffs ...