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Curtis v. Contractor Management Services, LLC

United States District Court, D. Maine

November 20, 2018

ROBERT CURTIS and ROBERT LOWELL on behalf of themselves and all others similarly situated, Plaintiffs,


          Nancy Torresen United States Chief District Judge

         Plaintiffs Robert Curtis and Robert Lowell filed this putative class and collective action against Defendants 3RD Party Logistics ME, LLC (“3PL”) and Michael Williams (together the “3PL Defendants”) and Defendant Contractor Management Services, LLC (“CMS”) to assert federal and state wage and hour law violations and related state-law tort claims. Before me are CMS's renewed motion to compel arbitration (“CMS Motion”) (ECF No. 70) and the 3PL Defendants' motion to compel arbitration (“3PL Motion”). (ECF No. 71.) For the reasons that follow, I GRANT the Defendants' motions.


         On November 25, 2015, the Plaintiffs filed their initial Complaint in this action solely against CMS. On April 25, 2016, CMS moved to compel arbitration of the Plaintiffs' claims and for a stay of proceedings in this Court. At the time of CMS's motion, the First Circuit had yet to decide whether employee arbitration agreements containing class action waivers were enforceable in light of the National Labor Relations Act (“NLRA”), and the Circuits were split on that issue. On September 29, 2016, I denied CMS's motion to compel arbitration, joining those courts that had found that class action waivers like those in the CMS Agreement violated the NLRA and therefore were unenforceable under the savings clause of the Federal Arbitration Act (“FAA”). (ECF No. 42.)

         On October 17, 2016, CMS appealed my order on the motion to compel arbitration to the First Circuit. (ECF No. 45.) Shortly thereafter, on November 3, 2016, the Plaintiffs filed a First Amended Complaint (“FAC”) to add claims against the 3PL Defendants. (ECF No. 50.) On February 16, 2017, I stayed the action as against the 3PL Defendants until CMS's appeal was resolved. (ECF No. 63.)

         While CMS's appeal was pending, the United States Supreme Court decided Epic Systems Corp. v. Lewis, which held that class action waivers in employee arbitration agreements do not violate the NLRA and are enforceable under the FAA. 584 U.S. __, 138 S.Ct. 1612 (2018). On June 14, 2018, the First Circuit vacated my September 29, 2016, order in light of Epic Systems and remanded this action to me for further proceedings. (ECF No. 64.) On July 11, 2018, I directed CMS to resubmit its motion to compel arbitration. On August 10, 2018, CMS filed its renewed motion and the 3PL Defendants filed a motion to compel arbitration of the claims asserted against them in the FAC. CMS Mot.; 3PL Mot.


         Curtis and Lowell, both Maine residents, worked as delivery drivers for Scholarship Storage, Inc., which did business under the name Business as Usual (“BAU”), and subsequently for 3PL. CMS is an Arizona-based company that markets itself as the “leading full-service firm for companies utilizing Independent Contractors.” FAC ¶ 44. The Plaintiffs allege that CMS provided a number of services for BAU and later for 3PL, including drafting employment contracts, processing payroll checks, and “taking out deductions for equipment drivers were . . . required to lease or purchase” and for other expenses. See FAC ¶ 45. CMS also allegedly deducted a payroll processing fee from the Plaintiffs' BAU and 3PL paychecks. FAC ¶ 45. The Plaintiffs allege that CMS and 3PL improperly classified the Plaintiffs and their fellow drivers as independent contractors and, as a result, failed to adequately compensate the Plaintiffs for their hours worked and required the Plaintiffs to remit fees and to bear costs that they should not have been required to pay. FAC ¶ 1.

         CMS seeks to compel arbitration pursuant to a “System Resource Subscription” agreement entered into between CMS and each of the Plaintiffs (the “CMS Agreement”). CMS Ex. B (ECF No. 70-4); CMS Ex. C (ECF No. 70-5). CMS asserts that both Plaintiffs accessed CMS's online platform, ICMPower, opened the CMS Agreement, clicked through each page of it, and electronically signed the agreement. Stultz Decl. ¶¶ 5-8. (ECF No. 20-1).

         The 3PL Defendants have moved to compel arbitration under an “Independent Contractor Owner/Operator Agreement” purportedly signed by Defendant Williams on behalf of 3PL and by each of the Plaintiffs (the “3PL Agreement”). 3PL Ex. A (ECF No. 71-2); 3PL Ex. B (ECF No. 71-3). The Plaintiffs assert that they do not recall signing the 3PL Agreement. Opp'n to 3PL Mot. 4 (ECF No. 73). The 3PL Defendants assert that the Plaintiffs accessed, reviewed, and signed the 3PL Agreement using CMS's ICM Power online platform. Stultz Decl. ¶¶ 13-14 (ECF No. 75-1).

         The CMS Agreement and the 3PL Agreement contain nearly-identical arbitration provisions (the “Arbitration Provisions”) in which the parties agree to resolve certain disputes through arbitration, including “disputes arising out of or related to [the Plaintiffs'] relationship with” CMS or 3PL and, more specifically:

without limitation, . . . claims regarding any city, county, state or federal wage-hour law, . . . compensation, meal or rest periods, expense reimbursement, uniform maintenance, training, termination . . . and claims arising under the . . . Fair Labor Standards Act . . . and state statutes, if any, addressing the same or similar subject matters, and all other similar federal and state statutory and common law claims (excluding workers' compensation, state disability insurance and unemployment insurance claims).

CMS Agreement 4 ¶ i; 3PL Agreement 13 ¶ A(i).

         The Arbitration Provisions set out the procedures for arbitration, including a requirement that “[e]xcept as may be permitted or required by law, as determined by the Arbitrator, neither a party nor an Arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of the parties, ” CMS Agreement 6 ¶ E; 3PL Agreement 15 ¶ F, and the following fee and cost provision:

ATTORNEYS' FEES AND ARBITRATION COSTS: Each party will pay the fees for its own attorneys, subject to any remedies to which that party may later be entitled under applicable law. Costs incidental to the arbitration, including the cost of the Arbitrator and the meeting site (“Arbitration Costs”) will be borne by [the parties] equally, unless otherwise required by applicable law, as determined by the Arbitrator, and any dispute regarding a party's obligation to pay Arbitration Costs will be determined by the Arbitrator. In the event I contend that, as a matter of law, I am not responsible for payment of any arbitration Costs, I will have no obligation to pay any portion of the contested Arbitration Costs until, and only if, the Arbitrator determines that I am responsible for such costs. If necessary for arbitration of the dispute, [CMS/3PL] agrees to cover the amount of the Arbitration Costs contested by me until such time as the Arbitrator determines payment responsibility. If the Arbitrator determines that I am responsible for any amount of the Arbitration Costs already paid by [CMS/3PL], then I will remit payment of that amount to [CMS/3PL] within 30 days of the Arbitrator's determination.

CMS Agreement 5-6 ¶ D; see 3PL Agreement 14 ¶ E.

         The Arbitration Provisions each include a paragraph headed “THIRTY-DAY OPT-OUT PERIOD” that states:

If I do not want to be subject to this Arbitration Provision, I may opt out of this Arbitration Provision by notifying [CMS/3PL] 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 [CMS/3PL's address]. 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 [agreement]. . . . Should I not opt out of this Arbitration Provision within the 30-day period, [CMS/3PL] and I will be bound by the terms of this Arbitration Provision.

CMS Agreement 6 ¶ G; see 3PL Agreement 15 ¶ H. The Arbitration Provisions also contain severability clauses, which state that “[i]n the event that any portion of this Arbitration Provision is deemed unenforceable, the remainder of this arbitration provision will be enforceable.” CMS Agreement 6 ¶ H; 3PL Agreement 15 ¶ I.

         The only relevant difference between the arbitration provisions in the CMS Agreement and in the 3PL Agreement is their choice of forum. The CMS Agreement states that the “location of the arbitration proceeding must be in Maricopa County, Arizona, unless the parties to the arbitration agree in writing otherwise.” CMS Agreement 5 ¶ A. In contrast, the 3PL Agreement provides that the “location of the arbitration proceeding may be no more than 45 miles from the geographic area where [Curtis and/or Lowell] performed delivery services arranged by [3PL], unless each party to the arbitration agrees in writing otherwise.” 3PL Agreement 14 ¶ B.


         The FAA provides that “[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court . . . for an order directing that such arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. § 4. It also provides for the stay of suits already in federal court pending arbitration. Id. § 3.

         Federal courts will grant a motion to dismiss or stay a case and compel arbitration pursuant to the FAA when “(i) there exists a written agreement to arbitrate, (ii) the dispute falls within the scope of that arbitration agreement, and (iii) the party seeking an arbitral forum has not waived its right to arbitration.” Combined Energies v. CCI, Inc., 514 F.3d 168, 171 (1st Cir. ...

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