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Creech v. JEM Pizza Group, LLC

United States District Court, D. South Carolina, Charleston Division

December 27, 2016

Trina Creech, individually and on behalf of similarly situated persons, Plaintiff,
v.
JEM Pizza Group, LLC, JEM Restaurant Group of Florida, Inc., and Does 1-25, Defendants.

          ORDER

          PATRICK MICHAEL DUFFY, UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Defendants' motion to dismiss (ECF No. 9); Defendants' motion to stay, to compel arbitration, and to strike Plaintiff's collective action allegations and jury trial demand (ECF No. 10); and Plaintiff's motion to dismiss (ECF No. 16). For the reasons set forth herein, Defendants' motion to dismiss is denied, while Defendants' motion to stay, to compel arbitration, and to strike Plaintiff's collective action allegations and jury trial demand is granted in part and mooted in part. Finally, Plaintiff's motion to dismiss is denied.

         BACKGROUND/PROCEDURAL HISTORY

         This action arises out of Trina Creech's employment with Defendant JEM Pizza Group, LLC (“JEM Pizza Group”).[1] Creech is a former pizza delivery driver who worked for several different Pizza Hut franchises. Her lawsuit involves Pizza Hut's driver-reimbursement program. Pizza Hut pays its delivery drivers minimum wage, along with a per-delivery reimbursement designed to cover additional costs to the drivers. That reimbursement allegedly fails to fully compensate drivers for the vehicle costs they incur, including gas, repairs, insurance, and depreciation. As a result of those costs, Creech alleges that her effective wage, and the wages of other similarly-situated delivery drivers, fell below minimum wage.

         Creech seeks to bring a collective action on behalf of herself and others similarly situated seeking relief for Defendants' alleged violations of the FLSA. The crux of the dispute in the instant motions is whether Creech must pursue her claim in arbitration and, if so, whether other drivers may arbitrate with her as a collective. Defendants filed their two motions on October 4, 2016, to which Plaintiff responded on October 18. Defendants filed a reply as to Defendants' motion to compel arbitration on October 28, to which Plaintiff filed a sur reply on November 9. Plaintiff filed her motion to dismiss on October 25, and Defendants responded on November 11. Finally, the Court held a hearing on these motions on December 19. Accordingly, these matters are now ripe for consideration.

         Arbitration Motions (ECF Nos. 10 & 16)

         LEGAL STANDARD

         Once a litigant moves to compel arbitration under the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq., the district court determines whether a matter should be resolved through arbitration depending on (1) whether a valid arbitration agreements exists and, if so, (2) whether the dispute falls within the scope of the arbitration agreement. AT&T Tech., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 651 (1986); see Hooters of Am. v. Phillips, 173 F.3d 933, 938 (4th Cir. 1999). The Supreme Court has consistently encouraged a “healthy regard for the federal policy favoring arbitration.” Levin v. Alms & Assocs., 634 F.3d 260, 266 (4th Cir. 2011) (internal quotation marks and citation omitted). “The heavy presumption of arbitrability requires that when the scope of the arbitration clause is open to question, a court must decide the question in favor of arbitration.” Id. (citation omitted).

         DISCUSSION

         Creech worked at various Pizza Hut locations from 2006 to October 2013, from September 2015 to December 2015, and in June 2016. On each of those occasions, she allegedly signed an arbitration agreement as part of her employment application. During the first time period, she physically signed a paper arbitration agreement. Creech does not dispute that she signed that agreement, which does not contain a collective-action restriction. For the 2015 employment period, Pizza Hut alleges Creech filled out an online employment application that did include an arbitration provision. Pizza Hut contends Creech electronically signed and acknowledged that she had read and agreed to the arbitration provision in the online application. Finally, Pizza Hut similarly alleges Creech electronically signed a third arbitration agreement in connection with her June 2016 employment application. These latter two arbitration agreements contain collective-action restrictions. Before deciding which agreement applies, the Court will first determine whether Pizza Hut has waived its right to arbitrate this dispute.

         I. Waiver

         Before filing suit in this Court, Creech initially filed a demand to arbitrate and a statement of claim with the American Arbitration Association (“AAA”). Creech states that she filed her demand using a standard form application that Pizza Hut franchisees have used for several years. The form Creech filed, which is undated, contains no prohibition of class or collective action arbitration, and it states that “Pizza Hut will pay the arbitrator's fees, and Pizza Hut will pay that portion of the arbitration filing fee in excess of the similar court filing fee had I gone to court.” (Pl.'s Mem. Opp'n Defs.' Mot., Ex. 5, Arbitration Agreement, ECF No. 13-5, at 2.) In connection with her demand to arbitrate, Creech served JEM Pizza Group with her arbitration demand and statement of claim.

         After Creech filed her demand and paid the AAA's application fee, the AAA sent a letter on May 19, 2016, requesting the balance of the $3, 250.00 filing fee. According to Creech, the letter was sent to JEM Pizza Group. Creech also contends that Pizza Hut was responsible for paying the balance of the filing fee based on the quoted language above. The $3, 250.00 filing fee was never paid and, on July 14, the AAA informed Creech that it was returning her application fee because the filing fee had not been paid. Finally, on August 5, the AAA administratively closed the arbitration case for failure to pay the filing fee.

         JEM Pizza Group received Creech's demand for arbitration and statement of claim, sent by Creech's counsel, at its corporate address in May 2016. However, neither JEM Pizza Group nor JEM Restaurant Group of Florida, Inc. (“JEM Florida”) received the AAA's letter requesting the balance of the $3, 250.00 filing fee. The AAA's letter is addressed to one of Creech's attorneys and to JEM Pizza Group. The letter provides a case number and states that the action is against both JEM Pizza Group and JEM Florida. While the address information for Creech's counsel is correct, the address for JEM Pizza Group is incorrect, as it lists the address for a ...


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