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LeBlanc v. Halliburton Co.

United States District Court, D. New Mexico

November 1, 2019

BRENT LeBLANC, Individually and on behalf of all others similarly situated, et al., Plaintiffs,
v.
HALLIBURTON COMPANY, Defendant.

          MEMORANDUM OPINION AND ORDER

         This matter comes before the Court upon Defendant's Motion to Compel Arbitration and Dismiss the Claims of 14 Opt-In Plaintiffs, and Defendant's Motion to Compel Arbitration and Dismiss the Claims of 16 Plaintiffs, both filed on July 31, 2019. (Docs. 103 and 104). Plaintiffs filed responses to the Motions to Compel Arbitration on August 21, 2019, and Defendant filed replies on September 9, 2019. (Docs. 105, 106, 107, and 108). Having considered the Motions to Compel Arbitration, the accompanying briefs, and the relevant law, the Court denies both Motions to Compel Arbitration.

         I. Background

         On July 10, 2017, Plaintiff Brent LeBlanc filed a Class and Collective Action Complaint in which he alleged Defendant failed to pay him and similarly situated workers overtime in violation of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201, et seq., and the New Mexico Minimum Wage Act (NMMWA), NMSA 1978, § 50-4-19, et seq. (Doc. 1). Defendant filed an Answer to the Complaint on August 28, 2017. (Doc. 10). On October 20, 2017, the Honorable Gregory J. Fouratt, the assigned Magistrate Judge, held a Rule 16 Scheduling Conference and set pretrial deadlines and a deadline for Plaintiff LeBlanc to file a motion for conditional certification of a collective action under the FLSA. (Doc. 21). On January 2, 2018, Plaintiff Keith Briggs filed a notice of consent to join this action. (Doc. 26). Also on January 2, 2018, Plaintiffs filed an opposed Motion to Certify a Collective Action. (Doc. 27). Defendant filed a response to the Motion to Certify on February 2, 2018, and Plaintiffs filed a reply on February 13, 2018. (Docs. 34 and 35).

         On August 21, 2018, the Court entered a Memorandum Opinion and Order granting the Motion to Certify a Collective Action and conditionally certifying a class of: “Directional drillers employed by, or working on behalf of, Halliburton Company as independent contractors any time between three years prior to the date of this Memorandum and Order of Conditional Certification, and the present.” (Doc. 51) at 5. Pursuant to the Court's Memorandum Opinion and Order, between October 26, 2018, and January 3, 2019, thirty-six additional individuals filed consents to join this action, bringing the total number of Plaintiffs to thirty-eight. (Docs. 60-64, 67, 69, 73, 77, 81, and 82).

         On March 11, 2019, Defendant sent Plaintiffs a meet-and-confer letter regarding Defendant's intention to compel arbitration for certain Plaintiffs. (Doc. 103) at 9; see also (Doc. 87) at 2 (March 15, 2019, Joint Status Report and Revised Joint Discovery Plan stating: “Defendant may file a motion to arbitrate claims of certain opt-in plaintiffs, but Defendant is currently waiting for a decision from Plaintiff regarding whether Plaintiff agrees to arbitrate those opt-ins' claims.”). On May 15, 2019, Plaintiffs filed a First Amended Class and Collective Action Complaint, adding five of the opt-in Plaintiffs as named Plaintiffs, and adding state law claims under Title 34 of the North Dakota Century Code (North Dakota Wage Laws) and the Pennsylvania Minimum Wage Act (PMWA). (Doc. 94). Defendant filed an Answer to the First Amended Complaint on June 14, 2019, in which it asserted arbitration as an affirmative defense. (Doc. 99) at 20.

         Thereafter, on July 10, 2019, the assigned Magistrate Judge entered an Order staying discovery and setting a deadline for Defendant to file a motion to compel arbitration. (Doc. 102). On July 31, 2019, Defendant filed its two Motions to Compel Arbitration. (Docs. 103 and 104). In the first Motion to Compel Arbitration, Defendant contends fourteen Plaintiffs signed contracts with Defendant agreeing to arbitrate their claims and waiving their right to participate in a collective action. (Doc. 103) at 8-9. In the second Motion to Compel Arbitration, Defendant contends sixteen Plaintiffs signed binding employment agreements with a third-party service provider (Upstream Directional Consultants) agreeing to arbitrate their claims with Defendant and waiving their right to participate in a collective action. (Doc. 104) at 9-10.

         II. Legal Standard

         Under the Federal Arbitration Act (FAA), written agreements to submit to arbitration are “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. While courts routinely recognize that arbitration agreements are to be enforced, the rule is not without exception. The Tenth Circuit has recognized that waiver by conduct in litigation is grounds to deny enforcement of an arbitration agreement. See Reid Burton Constr., Inc. v. Carpenters Dist. Council of S. Colo., 535 F.2d 598, 604 (10th Cir. 1976) (“It is entirely appropriate in some instances for a district court to retain … jurisdiction of an arbitrable dispute where, because of conduct before the court, it may be deemed that a party is prevented on the basis of some equitable principle from asserting a right to arbitration.”).

         III. Discussion

         In both Motions to Compel Arbitration, Defendant asserts thirty of the thirty-eight Plaintiffs signed agreements to arbitrate their claims with Defendant and waived their right to participate in a collective action. (Doc. 103) at 10; (Doc. 104) at 11-12. Based on where Plaintiffs signed the agreements, Defendant states Texas law governs 28 agreements, Pennsylvania law governs Plaintiff Tong Xiong's agreement, and Minnesota law governs Plaintiff Robert Walsh's agreement. (Doc. 103) at 12-13; (Doc. 104) at 14-15. Defendant argues any question of arbitrability, including waiver of the right to enforce the arbitration agreements, is a question for the arbitrator, not the Court. (Doc. 103) at 11-15; (Doc. 104) at 13-16. However, if the Court determines that it should decide arbitrability, Defendant contends the arbitration agreements are valid and encompass Plaintiffs' claims, and Defendant has not waived its right to arbitration. (Doc. 103) at 15-20; (Doc. 104) at 16-24. Defendant asks the Court to dismiss Plaintiffs' claims with prejudice because they agreed to arbitrate their claims and waived their right to participate in a collective or class action. (Doc. 103) at 21-22; (Doc. 104) at 24-25.

         In response to both Motions to Compel Arbitration, Plaintiffs argue Defendant waived its right to arbitrate by undertaking actions inconsistent with that right. (Doc. 105) at 8-10; (Doc. 106) at 2-4. Plaintiffs further contend fourteen of the agreements are unenforceable because Defendant solicited the agreements after this lawsuit was underway. (Doc. 105) at 4-7. Plaintiff Brooks Hondl also argues his arbitration agreement is invalid because Defendant has only provided the signature page without the remainder of the agreement. Id. at 11.

         In its replies, Defendant maintains that it promptly sought to enforce arbitration as soon as it received all of the agreements. (Doc. 107) at 4-6; (Doc. 108) at 2-4. Defendant also argues the agreements are enforceable because they were executed as part of Defendant's ordinary course of business before Plaintiffs were notified of the collective action and filed their consents to join the action. (Doc. 107) at 2-3. Additionally, Defendant contends it has sufficiently established the existence of Plaintiff Hondl's arbitration agreement. Id. at 6.

         A. Question of Arbitrability for Court to Decide, Federal Law Applies

         As a threshold matter, Defendant argues the issues of whether the arbitration agreements are enforceable and whether Defendant waived its right to enforce them are for the arbitrator to decide, not the Court. (Doc. 103) at 13-15; (Doc. 104) at 15-16. Defendant bases this assertion on clauses in the agreements designating the arbitrator as the decision-maker regarding arbitrability, and on the agreements' incorporation of the rules of the American Arbitration Association which provide that arbitrability is a question for the arbitrator. Id. Additionally, Defendant states arbitrability is a ...


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