Walsh v. Arizona Logistics, Inc., No. 20-15765 (9th Cir. 2021)
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The Department of Labor brought an enforcement action against Larry Browne and his companies, alleging that Browne and his entities violated the Fair Labor Standards Act's (FLSA) minimum wage, overtime, record-keeping, and antiretaliation requirements by misclassifying delivery drivers as independent contractors rather than employees. The district court denied Browne's motion to compel arbitration pursuant to EEOC v. Waffle House, Inc., 534 U.S. 279 (2002).
The Ninth Circuit concluded, in light of Waffle House, that a private arbitration agreement does not bind the Secretary of Labor when bringing a FLSA enforcement action that seeks relief on behalf of one party to the arbitration agreement against the other party to that agreement. In Waffle House, the Supreme Court ruled that the EEOC was not party to Waffle House's arbitration agreement, and it was not bound by the agreement because the FAA "does not require parties to arbitrate when they have not agreed to do so." The panel explained that this same reasoning dictates that the Secretary cannot be compelled to arbitrate this case. Here, as in Waffle House, the remedial statute at issue unambiguously authorizes the Secretary to obtain monetary relief on behalf of specific aggrieved employees. The panel explained that, like the EEOC in Waffle House, the Secretary is not party to the arbitration agreement between Browne and his entities and the delivery drivers. Therefore, the panel affirmed the district court's denial of the motion to compel arbitration.
Court Description: Arbitration. The panel affirmed the district court’s denial of an alleged employer’s motion to compel arbitration, arising from the Secretary of Labor’s Fair Labor Standards Act (“FLSA”) enforcement action that sought relief on behalf of one party to a private arbitration agreement. The panel held that although the Federal Arbitration Act favored arbitration agreements, the Supreme Court’s decision in EEOC v. Waffle House, Inc., 534 U.S. 279, 289 (2002) (holding that the FAA addresses enforceability only as to the parties to the arbitration agreement), dictated that the Secretary could not be compelled to arbitrate this case, even if the employees had agreed to arbitration. As in Waffle House, the remedial statute at issue here – Sections 16(c) & 17 of the FLSA – unambiguously authorized the Secretary to obtain monetary relief on behalf of specific aggrieved employees. There was nothing in either section suggesting that an arbitration agreement between the parties to the underlying employment relationship impacted the Secretary’s enforcement power. Also, there was no dispute WALSH V. BROWNE 3 that, like the EEOC in Waffle House, the Secretary was not a party to the arbitration agreement between the alleged employer and the employee delivery drivers.
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