United States District Court, S.D. Ohio, Western Division
REPORT AND RECOMMENDATION
L. LITKOVITZ UNITED STATES MAGISTRATE JUDGE
Mark Jefferis and putative Opt-In plaintiff Katie Reeder, on
behalf of themselves and similarly-situated individuals,
bring this action against defendants Hallrich Incorporated
("Hallrich") and A.E. Szambecki alleging claims
under the Fair Labor Standards Act (FLSA), 29 U.S.C. §
201 et seq.; the Ohio Constitution, Article II, Section 34a;
the Ohio Prompt Pay Act, Ohio Rev. Code § 4113.15; and
Ohio Rev. Code § 2307.60. Plaintiffs allege defendants
violated federal and state law by failing to adequately
reimburse the pizza delivery drivers they employed for
delivery-related expenses, thereby failing to pay the
legally-mandated minimum wage for all hours worked. This
matter is before the Court on defendants' motion to
dismiss plaintiffs' class and collective action for lack
of subject matter jurisdiction and to compel mediation and
arbitration (Doc. 11), plaintiffs' response in opposition
(Doc. 14), and defendants' reply memorandum (Doc.
Hallrich is a Pizza Hut International Franchisee that
operates in several states and employs or employed
plaintiffs. Defendant Szambecki is the Chief Executive
Officer of Hallrich.
are or were employed as pizza delivery drivers for
defendants' pizza franchise in Ohio. Plaintiffs were
required to maintain and pay for operable, safe, and legally
compliant automobiles to use in delivering defendants'
pizza and other food items. Plaintiffs alleged they were paid
minimum wage or slightly above minimum wage for the hours
they worked inside the restaurant. Plaintiffs allege they
were paid minimum wage minus a tip credit for the hours they
worked while completing deliveries, and they were not
reimbursed for their actual expenses or at the Internal
Revenue Service standard business mileage rate. Plaintiffs
allege that as a result of the automobile and other
job-related expenses they incurred as delivery drivers, they
were deprived of minimum wages guaranteed to them by the FLSA
and Ohio law. (Doc. 1, ¶¶ 51-78).
the hiring process at Hallrich, employees are required to
electronically sign a "Dispute Resolution Plan"
("the Plan"). The Plan states that "it is
intended to create an exclusive mechanism for the final
resolution of all Disputes falling within its terms."
(Doc. 11-2, Smith Aff., ¶ 12, Ex. 1 at 1, ¶ 1). The
Plan states that it applies to "any matter related to
the relationship between [Plaintiffs] and The Company,
" including any allegations of "wage
disputes over compensation, expense reimbursement, [or]
wages[.]" (Id. at ¶ 13, Ex. 1 at 2, ¶
4B4). The Plan outlines a two-step process that an aggrieved
party must complete in order to seek recovery for a claim
against Hallrich. First, the dispute must be submitted to
mediation within six months of the date of the incident
giving rise to the dispute. Second, if the dispute is not
resolved through mediation, the aggrieved party must initiate
arbitration proceedings within 14 days from the date the
mediation process has been concluded or within 45 days of the
date mediation was requested. Failure of a party to comply
with the time limits under the Plan bars relief to the
aggrieved party. (Id., Ex. 1 at 3-4, ¶¶
5-6). The Plan further provides in relevant part:
The Plan shall be the exclusive, final and binding method by
which Disputes are resolved. Any proceedings under The Plan
shall occur only on an individual basis and not as a class,
collective, representative, private attorney general or
consolidated action. Consequently, the commencement of
proceedings under this Plan shall be a condition precedent to
the initiation of any legal action by an Employee against The
Company and any such legal action shall be limited to those
actions available under [the FAA]. Except as provided herein,
the Parties shall have no right to litigate, whether on
behalf of or as part of any purported class, collective,
representative, private attorney general or consolidated
action (collectively referred to as "Class
Action"), any Dispute in any other forum.
Furthermore, no Party to this Plan may initiate a Class
Action in court or in arbitration in order to pursue any
Dispute that is subject to the proceedings under The Plan.
Moreover, no Party may join a Class Action or Participate as
a member of a Class Action instituted by someone else in
court or in arbitration in order to pursue any claims that
are subject to proceedings under The Plan. It is the
Parties' intent to the fullest extent permitted by law to
waive any and all rights to the application of Class Action
procedures or remedies with respect to all Disputes subject
to this Plan. It is also expressly agreed that any arbitrator
adjudicating Disputes under this Plan shall have no power or
authority to adjudicate Class Action claims or proceedings.
The waiver of Class Action Disputes and proceedings is an
essential and material term of the Plan.
(Id., Ex. 1 at 1-2, ¶ 3). The Plan also
includes a provision for amendments to the Plan:
1. This Plan may be amended by The Company at any time and
from time-to-time. However, no amendment shall apply to a
Dispute of which The Company had actual notice on the date of
2. No amendment will be effective:
a. Until notice of the amendment is sent to the AAA [American
Arbitration Association] and to those Employees described in
paragraph 2.E; or
b. As to a Dispute of which The Company had actual notice (by
notice of intent to arbitrate or otherwise) on the date of
(Id., Ex. 1 at 10-11, ¶ 8D). The Plan also
provides that it "may be terminated by The Company at
any time. However, such termination shall not be effective:
1. Until sixty (60) days after notice of such termination is
given to Employees; or 2. As to any Disputes which arose
prior to the date of such termination." (Id.,
at ¶ 8E). Plaintiffs signed the Plan during new employee
on boarding at the company. (Id., at ¶¶ 7,
The Parties' Arguments
move to compel mediation and arbitration in accordance with
the terms of the Plan. Defendants allege that plaintiffs'
claims arise from their respective employment with Hallrich,
and the Class and Collective Action Complaint alleges
workplace-related claims under the FLSA and Ohio law.
Defendants contend that because plaintiffs' claims are
covered by the Plan, the Court should compel mediation and
arbitration and dismiss this lawsuit.
oppose defendants' motion to compel mediation and
arbitration on three bases: (1) the Plan signed by plaintiffs
is an illusory promise, not a contract, and is unenforceable;
(2) the Plan attempts to illegally waive the relevant statute
of limitations; and (3) the Plan violates the Ohio
Constitution, Article II, Section 34a.
Federal Arbitration Act ("FAA") allows for a
"liberal federal policy favoring arbitration
agreements." Moses H. Cone Mem 7 Hosp. v.
Mercury Consir. Corp., 460 U.S. 1, 24 (1983) (citing 9
U.S.C. §2). See also Epic Sys. Corp. v. Lewis,
138 S.Ct. 1612, 1621 (2018). The goal of the FAA is to
"ensure that private agreements to arbitrate are
enforced according to their terms." Volt Info.
Scis., Inc. v. Bd. of Tr. of Leland Stanford, Jr. Univ.,
489 U.S. 468, 479 (1989). The Supreme Court has emphasized
that the FAA "requires courts 'rigorously' to
'enforce arbitration agreements according to their terms,
including terms that specify with whom the parties
choose to arbitrate their disputes and the rules
under which that arbitration will be conducted.'"
Epic Sys. Corp., 138 S.Ct. at 1621 (emphasis in
original) (quoting American Express Co. v. Italian Colors
Restaurant, 570 U.S. 228, 233 (2013)).
considering a motion to compel arbitration, courts should
"treat the facts as they would in ruling on a summary
judgment motion, construing all facts and reasonable
inferences that can be drawn therefrom in a light most
favorable to the nonmoving party." Great Am, Ins.
Co. v. Gemma Power Sys., LLC, No. 1:18-cv-213, 2018 WL
6003968, at *2 (S.D. Ohio Nov. 15, 2018) (quoting Raasch
v. NCR Corp.,254 F.Supp.2d 847, 851 (S.D. Ohio 2003)).
In order to defeat a motion to compel arbitration, the
nonmovant has the burden to "show a genuine [dispute] of
material fact as to the validity of the agreement to
arbitrate." Danl ...