Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Alvarez v. Gryphon Holdco, LLC

United States District Court, W.D. Texas, San Antonio Division

September 18, 2019

JOSUE ALVAREZ, Individually and on Behalf of All Others Similarly Situated, GENNISE GARCIA, HERIBERTO LOPEZ, JR., DILLON SILVA, STEVEN R. SILVA, FELIPE PEREZ, and FRANCISCO PEREZ, Plaintiffs,
v.
GRYPHON HOLDCO, LLC, Defendant.

          REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

          ELIZABETH S. ("BETSY") CHESTNEY, UNITED STATES MAGISTRATE JUDGE

         To the Honorable United States District Judge Fred Biery:

         This Report and Recommendation concerns Defendant Gryphon Holdco, LLC’s (“Gryphon Holdco”), Motion to Dismiss and Compel Arbitration [#30]. Also before the Court is Plaintiff Josue Alvarez’s (“Alvarez”) Response to Gryphon Holdco’s Motion to Dismiss and Compel Arbitration [#31] and Gryphon Holdco’s Reply in Support of Its Motion to Dismiss and Compel Arbitration [#32]. The Honorable Fred Biery referred all pretrial proceedings in this case to the undersigned for disposition pursuant to Rule 72 of the Federal Rules of Civil Procedure and Rules CV-72 and 1(c) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas [#22]. The undersigned has authority to enter this Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). For the reasons set forth below, it is recommended that Gryphon’s Motion to Dismiss and Compel Arbitration be GRANTED IN PART. The District Court should compel the parties to arbitrate their claims on an individual basis; should sever and strike the damages limitation contained in the arbitration agreement; and should stay rather than dismiss this suit while the arbitration is pending.

         I. Factual and Procedural Background

         This case arises under the Fair Labor Standards Act of 1938 (“the FLSA”), as amended, 29 U.S.C. §§ 201–219 (2017). Alvarez, individually and on behalf of all others similarly situated, filed a complaint against Emergency Site Protection, LLC (“Site”), Gryphon Oilfield Solutions, LLC (“Gryphon Oilfield”), and Sanchez Oil & Gas Corporation (“Sanchez”) [#1], alleging wage-and-hour claims under the FLSA. To date, six opt-in plaintiffs have filed consents to join this action: Gennise Garcia, Heriberto Lopez, Jr., Dillon Silva, Steven R. Silva, Felipe Perez, and Francisco Perez [#8, #9, #10, #19].[1]

         Alvarez subsequently filed his First Amended Collective Action Complaint [#25], which is the live pleading in this case. Alvarez’s Amended Complaint removed Gryphon Oilfield as a defendant and added Gryphon Holdco. On May 2, 2019, Alvarez voluntarily dismissed his claims against Site [#28]. On May 23, 2019, Gryphon Holdco filed a motion to dismiss and to compel arbitration [#30]. That motion is ripe and the subject of this Report and Recommendation.[2]

         II. Analysis

         The Court should grant the motion to compel arbitration, compel the parties to arbitrate Plaintiffs’ claims on an individual basis, sever and strike the damages limitation contained in the arbitration clause, and stay rather than dismiss this case during the pendency of the arbitration.

         A. The parties agree that valid arbitration agreements govern this dispute.

         The parties do not dispute that this case involves contracts with valid arbitration provisions. The Fifth Circuit has established a two-step inquiry for determining whether the parties have agreed to arbitrate a claim. See Sherer v. Green Tree Servicing LLC, 548 F.3d 379, 381 (5th Cir. 2008). “The first is contract formation-whether the parties entered into any arbitration agreement at all. The second involves contract interpretation to determine whether this claim is covered by the arbitration agreement.” Kubala v. Supreme Prod. Servs., Inc., 830 F.3d 199, 201 (5th Cir. 2016) (emphasis in original). To resolve these issues, “courts generally . . . should apply ordinary state-law principles that govern the formation of contracts.” First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995).

         The parties also agree that Texas law governs the interpretation of the parties’ contract. In the absence of a valid delegation clause, it is for the courts, and not an arbitrator, to decide whether the parties have agreed to arbitrate. See Fleetwood Enterprises, Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th Cir. 2002). It is also undisputed that the Federal Arbitration Act (“the FAA”), 9 U.S.C. §§ 1–16 (2017), applies in this case. Under the FAA, arbitration agreements are to be enforced unless they are invalid under principles of state law that govern all contracts. 9 U.S.C. § 2; Iberia Credit Bureau, Inc. v. Cingular Wireless LLC, 379 F.3d 159, 166 (5th Cir. 2004).

         The record reflects that each of the Plaintiffs signed an independent-contractor agreement with Site, a subsidiary of Gryphon Holdco, or Emergency Sphinx Protection, LLC (“Sphinx”), Gryphon Holdco’s predecessor-in-interest. Each of these agreements contains a mandatory arbitration provision. The agreements with Site (“the Site Agreements”) contain the following arbitration clause:

Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be resolved by arbitration conducted by the Commercial Division of the American Arbitration Association and in accordance with the rules thereof, or in any other convenient forum agreed to in writing by the parties. The arbitrator shall be authorized to determine only those matters submitted to it . . . . Any arbitration award shall be final and binding . . . .

(Site Agreement[3] [#30-2] at § 19(b).) The agreements with Sphinx (“the Sphinx Agreements”) contain the following arbitration clause:

(a) Applicable Rules. Any controversy or dispute between Contractor and Company . . ., arising from or in any way related to the performance of Services, this Agreement or the termination thereof, . . . shall be resolved exclusively by final and binding arbitration administered by JAMS under its Employment Arbitration Rules & Procedures and the JAMS Policy on Employment Arbitration Minimum Standards of Procedural Fairness then applicable to the dispute. . . .
(b) All Disputes Must be Arbitrated. It is the intent of the Parties hereto that all disputes between the must be arbitrated, expressly including, but not limited to, . . . (iii) any claim for compensation or benefits, including any claim under the Fair Labor Standards Act, or any other federal or state statute or regulation related to payment of wages . . . .

(Sphinx Agreement[4] [#30-2] at § 14.)

         Plaintiffs concede that the parties have entered into valid arbitration agreements and that their claims are within the scope of those agreements. But Plaintiffs contend that several provisions in the independent contractor agreements are unconscionable and should, therefore, be “stricken and severed” before arbitration is compelled. (Pl.’s Resp. to Def. Gryphon Holdco, LLC’s, Mot. to Dismiss and Compel Arbitration [#31] at 1.) Gryphon Holdco argues that these are issues for the arbitrator.

         B. The only unconscionability argument the Court can consider is Plaintiffs’ challenge to the damages limitation contained in the arbitration agreement.

         Plaintiffs challenge four types of provisions in the Site and Sphinx Agreements as unconscionable: (1) the indemnification provisions, (2) the waiver of claims against company clients, (3) the waiver of claims against individual employees, and (4) the limitation on damages. The majority of these arguments are for the arbitrator, not this Court, to decide. The only contractual provision the Court should address prior to compelling arbitration is the limitation on damages.

         Like other contracts, arbitration agreements may be invalidated by “generally applicable contract defenses arising under state law, such as fraud, duress, or unconscionability.” Doctor’s Associates, Inc. v. Casarotto, 517 U.S. 681, 687 (1996). There are two types of challenges to the validity of a contract under the FAA: (1) a challenge to the validity of the agreement to arbitrate and (2) a challenge to the contract as a whole, “either on a ground that directly affects the entire agreement (e.g., the agreement was fraudulently induced), or on the ground that the illegality of one of the contract’s provisions renders the whole contract invalid.” Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 70 (2010) (quoting Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444 (2006)). The first type of challenge is relevant to a court’s determination of whether the arbitration agreement at issue is enforceable. Id. The latter is not. Because a written agreement to arbitrate is valid and enforceable ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.