United States District Court, D. New Mexico
WILLIAM RAGER, individually and on Behalf of all other similarly situated, Plaintiff,
PECOS VALLEY PIZZA, INC., and BRIAN BAILEY Defendants.
MEMORANDUM OPINION AND ORDER GRANTING AND DENYING IN
PART DEFENDANTS' MOTION TO COMPEL ARBITRATION AND DISMISS
SUIT [DOC. 11]
MATTER comes before the Court on Defendants'
Motion to Compel Arbitration and Dismiss Suit. [Doc. 11,
filed August 20, 2018]. Upon reviewing the parties'
briefs and the applicable law, the motion is GRANTED
in part and DENIED in part.
William Rager filed suit in this Court against Defendant
Pecos Valley Pizza, Inc., and Defendant Brian Bailey for
violations of the Fair Labor Standards Act of 1938, U.S.C.
§§ 201, et seq., and the New Mexico Wage Law NMSA
1978, § 50-4-21. Plaintiff signed an Arbitration
Agreement with Defendant Pecos Valley Pizza, Inc. Pursuant to
that Arbitration Agreement, Defendants seek to compel
arbitration, to dismiss the present lawsuit, and an award of
Section 4 of the Federal Arbitration Act (“FAA”),
“[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. The FAA provides that a written agreement requiring
arbitration of controversies arising out of a contract
“evidencing a transaction involving commerce [. . .]
shall be 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. Section 2 of the FAA
creates a substantive rule applicable in state as well as
federal courts. Southland Corp. v. Keating, 465 U.S.
1, 16 (1984).
enacting the FAA, “Congress intended to foreclose state
legislative attempts to undercut the enforceability of
arbitration agreements.” Perry v. Thomas, 482
U.S. 483, 489 (1987) (citation and internal quotation marks
omitted). There is a clear federal policy of requiring
arbitration unless the agreement to arbitrate is not part of
a contract evidencing (1) interstate commerce or (2) is
revocable upon such grounds as exist at law or (3) in equity
for the revocation of any contract. See 9 U.S.C.
§ 2. Further, the Supreme Court has emphasized the
“fundamental principle that arbitration is a matter of
contract[.]” AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 339 (2011) (internal citation
and quotation marks omitted). “In line with these
principles, courts must place arbitration agreements on an
equal footing with other contracts, [. . .] and enforce them
according to their terms.” Id. (internal
citation and quotation marks omitted). To be enforceable, an
arbitration agreement must be validly formed pursuant to
state contract law. See Salazar v. Citadel Commc'ns
Corp., 2004-NMSC-013, ¶ 8, 135 N.M. 447 (“To
determine whether the agreement to arbitrate is valid, courts
look to general state contract law . . . .”).
“[T]he terms of the arbitration agreement are to be
interpreted by the rules of contract law” and that
“courts will apply the plain meaning of contract
language as written in interpreting terms of a
contract[.]” Christmas v. Cimarron Realty Co.,
1982-NMSC-079, ¶ 8, 98 N.M. 330, 648 P.2d 788, 790. It
is the party seeking judicial enforcement of an arbitration
agreement who bears the burden of persuasion. THI of New
Mexico at Hobbs Center, LLC v. Patton, Civ. No. 11-537
(LH/CG), 2012 WL 112216, *6 (D.N.M. Jan. 3, 2012) (citation
parties do not dispute that there is an enforceable
arbitration agreement, or that the matter should not proceed
to arbitration. Defendants submitted the instant motion
despite Plaintiff's statement that the motion would not
be opposed so long as the matter was stayed. Defendants want
the action dismissed as they argue that all the claims would
go to arbitration. [Doc. 18 at 3 (citing Alford v. Dean
Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir.
being satisfied that the issue involved in such suit or
proceeding is referable to arbitration under such an
agreement, shall on application of one of the parties stay
the trial of the action until such arbitration has been had
in accordance with the terms of the agreement[.]” 9
U.S.C. § 3. The Tenth Circuit holds that when one of the
parties petitions the Court to stay an action pending
compulsory arbitration, the mandatory language of Section 3
is binding, and it is error for the Court to dismiss the
action. See Adair Bus Sales, Inc. v. Blue Bird
Corp., 25 F.3d 953, 955 (10th Cir. 1994); cf. Armijo
v. Prudential Ins. of Am., 72 F.3d 793, 797 (10th Cir.
1995) (holding that when the party seeking to compel
arbitration requests the court for dismissal, and there is no
evidence in the record of any party requesting a stay, it is
not error for the district court to dismiss the case). In his
response, Plaintiff has made an unequivocal application to
the Court for a stay of proceedings until arbitration has
been resolved. Therefore, the proceedings will be stayed
until arbitration takes place in accordance with the terms of
the Arbitration Agreement.
Dismissal of Court Action Provision of Arbitration
determined that there is an enforceable arbitration agreement
because neither party disputes that one does not exist, the
Court next addresses Defendants' request for
attorneys' fees. Defendants pray this Court for an award
of attorneys' fees pursuant to the Dismissal of Court
Action provision of the Arbitration Agreement that prevents a
party from pursuing a covered claim in court. The provision
If either party pursues a covered claim against the other in
a court proceeding, the filing party agrees that the
responding party shall be entitled to a dismissal, stay
and/or injunctive relief regarding such action, and recovery
of all costs and attorneys' fees related to such court
action or proceeding.
[Doc. 11.1 at 5]. The Court will not award attorneys'
fees for the mere filing of this proceeding because
Defendants have not shouldered their burden and have not
demonstrated that the provision requiring the payment of
attorneys' fees for filing a court action applies for
this proceeding. Both parties seek to have the case
arbitrated, and therefore neither party is “pursuing a
claim” in court. Therefore, the Court determines that
the plain language of the Arbitration Agreement is clear, ...