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Curtis v. Contract Management Services

United States District Court, D. Maine

September 29, 2016

ROBERT CURTIS, et al., Plaintiffs,
v.
CONTRACT MANAGEMENT SERVICES, Defendant.

          ORDER ON DEFENDANT'S MOTION TO COMPEL ARBITRATION

          Nancy Torresen, United States Chief District Judge

         Before the Court is the Defendant's motion to compel arbitration. (ECF No. 20). For the reasons stated below, the motion is DENIED.

         BACKGROUND

         The Plaintiffs in this matter are Robert Curtis and Robert Lowell. Both worked as delivery drivers for an entity called Scholarship Storage, Inc., d/b/a Business as Usual (“BAU”). Defendant Contractor Management Services, LLC (“CMS”) is an Arizona company that markets itself as the “leading full-service firm for companies utilizing Independent Contractors.” Compl. ¶¶ 9, 14 (ECF No. 1). The Complaint alleges that:

BAU was a CMS client . . . . CMS developed the contracts that BAU used to describe Plaintiffs and other drivers as independent contractors. CMS processed all of BAU's payroll checks, taking out deductions for equipment drivers were required to lease or purchase, prescription “insurance” premiums . . ., and fees . . . as payment to CMS for processing each payroll check.

Compl. ¶ 15.

         The Plaintiffs have settled a separate class action and collective action asserting violations of the Fair Labor Standards Act and Maine wage and hour laws against BAU. Curtis v. Business As Usual, No. 2:14-cv-303-NT, 2016 WL 3072247 (D. Me. May 31, 2016). In this action, the Plaintiffs allege that CMS aided and abetted BAU, was a joint employer with BAU, or engaged in a joint enterprise with BAU, and that CMS is liable for:

• overtime violations of the Fair Labor Standards Act, 29 U.S.C. § 216(b) (Count I);
• unpaid wages under the Maine Employment Practices Act, 26 M.R.S.A. § 629 (Count II);
• overtime violations under the Maine Minimum Wage and Overtime Law, 26 M.R.S.A. § 661 et seq. (Count III);
• violation of the Maine Employment Practices Act, 26 M.R.S.A. § 629 (Count IV);
• unjust enrichment/restitution (Count V); and
• conversion for making deductions for insurance, leased equipment and check processing (Count VI).

         The Defendant has moved to compel arbitration pursuant to a “System Resource Subscription” agreement (“SRS Agreement”) entered into between CMS and each of the Plaintiffs. The SRS Agreements for the named Plaintiffs were submitted with the Defendant's motion to compel arbitration. SRS Agreement (ECF Nos. 20-3 and 20-4). The Defendant asserts that each of the named Plaintiffs accessed CMS's online platform, opened the SRS Agreement, clicked through each page of it and electronically signed the agreement. Aff of Greg Stultz ¶¶ 5-8. (ECF No. 20-1).

         Each SRS Agreement contains an identical arbitration provision that provides:

If a dispute arises out of or relates to my relationship with CMS, this Subscription, or a breach hereof, and if the dispute cannot be settled through negotiation, I agree to resolve the dispute through binding arbitration only as described in this section (hereafter “the Arbitration Provision”).[1]

SRS Agreement 4. The Arbitration Provision also includes a provision entitled “CLASS ACTION WAIVER” that states:

Both CMS and end user agree to bring any dispute in arbitration on an individual basis only, and not on a class, collective, or private attorney general representative basis. There will be no right or authority for any dispute to be brought, heard or arbitrated as a class, collective, representative or private attorney general action, or as a member in any purported class, collective, representative or private attorney general action, including without limitation pending but not certified class actions (“Class Action Waiver”). Disputes regarding the validity and enforceability of the Class Action Waiver may be resolved only by a civil court of competent jurisdiction and not by an arbitrator. In any case in which (1) the dispute is filed as a class, collective, representative or private attorney general action and (2) a civil court of competent jurisdiction finds all or part of the Class Action Waiver unenforceable, the class, collective, representative and/or private attorney general action to that extent must be litigated in a civil court of competent jurisdiction, but the portion of the Class Action waiver that is enforceable shall be enforced in arbitration.

SRS Agreement 5, section C. In addition to these and other sections, the Arbitration Provision contains a “THIRTY-DAY OPT-OUT PERIOD” provision that provides:

If I do not want to be subject to this Arbitration Provision, I may opt out of this Arbitration Provision by notifying CMS in writing of my desire to opt out of this Arbitration Provision, which writing must be dated, signed and submitted by U.S. Mail or hand delivery to Contractor Management Services, LLC, Attn. Risk Management, 9197 W Thunderbird Rd. Peoria, AZ 85381. In order to be effective, the writing must clearly indicate my intent to opt out of this Arbitration Provision and the envelope containing the signed writing must be post-marked within 30 days of the date I sign this Subscription. My writing opting out of this Arbitration Provision will be filed with a copy of this Subscription and maintained by CMS. Should I not opt out of this Arbitration Provision within the 30-day period, CMS and I will be bound by the terms of this Arbitration Provision.

SRS Agreement 6, section G. The SRS Agreement further provides that “[i]n the event that any portion of this Arbitration Provision is deemed unenforceable, the remainder of this Arbitration Provision will ...


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