Cruz v. Jimenez Construction LLC

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

CARLOS N. ANTUNEZ CRUZ, et al.,

Plaintiffs,

v. No. 20-1978 (EGS) JIMENEZ CONSTRUCTION LLC, et al.,

Defendants.

MEMORANDUM OPINION

Carlos N. Antunez Cruz (“Mr. Cruz”) and Ruth Nicolle Lopez

Villalta (“Ms. Villalta”) (collectively, “Plaintiffs”) bring

this action alleging violations of the Fair Labor Standards Act,

29 U.S.C. § 201 et seq. (“FLSA”); the District of Columbia

Minimum Wage Revision Act, D.C. Code § 32-1001 et seq.

(“DCMWRA”); and the District of Columbia Wage Payment and Wage

Collection Law, D.C. Code § 32-1301 et seq. (“DCWPWCL”). See

generally Compl., ECF No. 1. They have sued two groups of

defendants to recover unpaid wages and for damages: Jimenez

Construction LLC, Arian Jimenez (“Mr. Jiminez”), Dennise

Vasquez-Martinez (“Ms. Vasquez-Martinez “)(collectively, the

“Jimenez Defendants”); and Mid-Atlantic Military Family

Communities LLC and Mid-Atlantic San Diego LLC. See id.

1 Pending before the Court is the Jimenez Defendants’ Motion

for Summary Judgment to Dismiss Complaint and Compel

Arbitration, ECF No. 13. Upon careful consideration of the

motion, the opposition, and reply thereto, the applicable law,

the entire record herein, and for the reasons explained below,

the Court hereby GRANTS IN PART AND DENIES IN PART the Jimenez

Defendants’ Motion for Summary Judgment.

I. Background

A. Factual

Except where indicated, the following facts are undisputed.

Mr. Cruz and Ms. Villalta were employed by the Jimenez

Defendants from approximately May 1, 2017 until February 19,

2019. See Pls.’ Counter-Statement of Disputed Material Facts,

ECF No. 16-1 ¶¶ 2, 3. When they were hired, Plaintiffs were not

required to sign an employment agreement or contract. Defs.’

Response to Pls.’ Counter-Statement of Disputed Material Facts,

ECF No. 17-1 ¶ 6. In early January 2018, Defendant Ms. Vasquez-

Martinez gave each Plaintiff an “Employment Agreement” before

the workday started, told each of them to sign their respective

agreement, and to return them as soon as possible. Id. ¶¶ 7-8.

In the “Miscellaneous” Section, each Employment Agreement

contains the following choice-of-law provision and arbitration

clause:

2 The terms of this Agreement shall be governed exclusively by the laws of the State of Maryland (not including its conflict of law provision). Any dispute arising from this Agreement shall be resolved through mediation. If the dispute cannot be resolved through mediation, then the dispute will be resolved through binding arbitration conducted in accordance with the rules of the American Arbitrations [sic] Association.

Employment Agreement, ECF No. 13-4 at 4. The Employment

Agreement provides that it was made as of January 1, 2018. Id.

at 1.

The following is disputed. At the conclusion of the workday

on which they were given the Employment Agreements, Ms. Vasquez-

Martinez and Mr. Jimenez called Mr. Cruz and Ms. Villalta into a

meeting where the Jimenez Defendants told Plaintiffs “that if

they did not sign the agreements, then ‘there would be no more

work’ for them.” Defs.’ Response to Pls.’ Counter-Statement of

Disputed Material Facts, ECF No. 17-1 ¶ 9. Mr. Cruz and Ms.

Villalta “felt pressured to sign the agreement and were not

afforded an opportunity to speak to an attorney about what they

meant.” Id. “Because Plaintiffs believed they would be

terminated if they did not sign the Employment Agreements before

the start of the next work day, they signed them that evening

and returned them to the employer the next morning before

starting work.” Id. ¶ 10.

3 C. Procedural

On September 18, 2020, the Jimenez Defendants moved for

summary judgment. See generally Defs.’ Mot. Summ. J. Dismiss

Compl. & Compel Arbitration, ECF No. 13; Mem. P. & A. in Supp.

of Mot. Summ. J. Dismiss Compl. & Compel Arbitration (“Defs.’

MSJ”), ECF No. 13-1. Plaintiffs filed their opposition to the

motion, see Pls.’ Mem. in Opp’n to Jimenez Defs.’ Mot. Compel

Arbitration (“Opp’n”), ECF No. 16; and the Jimenez Defendants

filed a reply in response, see Reply to Opp’n to Mot. Summ. J.

Dismiss Compl. & Compel Arbitration (“Reply”), ECF No. 17. The

motion is ripe and ready for the Court’s adjudication.

II. Legal Standard

The Court examines motions to compel arbitration using the

summary judgment standard of Federal Rule of Civil Procedure

56(c). See Aliron Int'l, Inc. v. Cherokee Nation Indus., Inc.,

531 F.3d 863, 865 (D.C. Cir. 2008). “How the parties style the

motion seeking arbitration is not determinative.” Booker v.

Robert Half Int'l, Inc., 315 F. Supp. 2d 94, 99 (D.D.C. 2004)

aff'd, 413 F.3d 77, 81 (D.C. Cir. 2005). Under Rule 56, summary

judgment is appropriate only if “there is no genuine dispute as

to any material fact and the movant is entitled to judgment as a

matter of law.” Fed. R. Civ. P. 56(a); see also Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). To that end,

“‘the party seeking . . . arbitration bears an initial burden of

4 demonstrating that an agreement to arbitrate was made. This

burden does not require the moving party to show initially that

the agreement would be enforceable, merely that one existed.’”

Sakyi v. Estee Lauder Cos., 308 F. Supp. 3d 366, 375 (D.D.C.

2018)(quoting Hines v. Overstock.com, Inc., 380 F. App’x 22, 24

(2d Cir. 2010)). “‘[T]he party resisting arbitration bears the

burden of proving that the claims at issue are unsuitable for

arbitration.’” Id. (quoting Green Tree Fin. Corp.-Ala. v.

Randolph, 531 U.S. 79, 91 (2000)). “The Court will compel

arbitration if the pleadings and the evidence show that ‘there

is no genuine issue as to any material fact and that the moving

party is entitled to judgment as a matter of law.’” Fox v.

Computer World Services Corp., F. Supp. 2d 90 (D.D.C. 2013)

(quoting Booker I, 315 F. Supp. 2d at 99) (quoting Fed. R. Civ.

P. 6(c).

III. Analysis

The Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq.,

“governs the enforcement of contractual arbitration provisions”

related to matters of interstate commerce. Aneke v. Am. Express

Travel Related Servs., Inc., 841 F. Supp. 2d 368, 373 (D.D.C.

2012). It provides that written agreements to arbitrate “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. The “saving clause” in this Section

5 “permits agreements to arbitrate to be invalidated by generally

applicable contract defenses, such as fraud, duress, or

unconscionability, but not by defenses that apply only to

arbitration or that derive their meaning from the fact that an

agreement to arbitrate is at issue.” AT&T Mobility LLC v.

Concepcion, 563 U.S. 333, 339 (2011)(citations and internal

quotations omitted).

The FAA reflects “a liberal federal policy favoring

arbitration . . . and the fundamental principle that arbitration

is a matter of contract.” Id. (citations and internal quotations

omitted). It “strongly favors the enforcement of agreements to

arbitrate as a means of securing prompt, economical and adequate

solution of controversies.” Rodriguez de Quijas v. Shearson/Am.

Express, Inc., 490 U.S. 477, 479–80 (1989)(citation and internal

quotation marks omitted). Therefore, “district courts shall

direct the parties to proceed to arbitration on issues as to

which an arbitration agreement has been signed.” Dean Witter

Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985)(citing 9 U.S.C.

§§ 3, 4).

In resolving a motion to compel arbitration, the Court

focuses only on whether the parties have agreed to arbitrate the

matters at issue. See Aliron Int'l, 531 F.3d at 865. The Court

therefore “may not weigh the merits of a grievance when

determining whether to compel arbitration.” Trans World

6 Airlines, Inc. v. Air Line Pilots Ass’n, 172 F.3d 921 (D.C. Cir.

1998) (Table) (per curiam).

“‘[A]rbitration is a matter of contract and a party cannot

be required to submit to arbitration any dispute which he has

not agreed so to submit.’” Dist. No. 1, Pac. Coast Dist., Marine

Engineers Beneficial Ass’n, AFL-CIO v. Liberty Mar. Corp., 933

F.3d 751, 762 (D.C. Cir. 2019)(quoting AT&T Techs., Inc. v.

Commc’ns Workers of Am., 475 U.S. 643, 648 (1986)). Accordingly,

upon a motion to compel arbitration, the court determines

whether the Agreement cover the specific disputes and whether a

valid agreement to arbitrate exists between the parties. See

Mould v. NJG Food Service Inc., 986 F. Supp. 2d 674, 677-678 (D.

Md. 2013) 1.

A. The Arbitration Clauses and Plaintiffs’ Claims

Plaintiffs contend that the arbitration clauses do not

encompass the claims raised in the complaint on two grounds: (1)

their claims do not fall within the scope of the arbitration

clauses because they are statutory claims that do not arise

under the Employment Agreements, see Opp’n, ECF No. 16 at 3-8;

and (2) even if the claims arise under the arbitration clauses,

the Agreements do not require them to arbitrate claims that

1 The Employment Agreements contain choice-of-law provisions specifying that Maryland law will govern the contracts. Employment Agreement, ECF No. 13-4 at 4. 7 accrued before the Agreements were effective, id. at 8-10. The

Jimenez Defendants counter that “[i]t is settled law that an

arbitration clause which covers disputes ‘arising from’ an

employment agreement does indeed include statutory wage claims,”

Reply MSJ, ECF No. 17 at 3; and that it is settled law that an

arbitration clause covers claims predating the existence of the

arbitration clause, id. at 4. For the reasons that follow, the

Court concludes that Plaintiffs’ claims fall within the scope of

the arbitration clauses, but that Plaintiffs are not required to

arbitrate claims that accrued before the Employment Agreements

were effective.

“The FAA creates a strong presumption in favor of enforcing

arbitration agreements . . . .” Stromberg, 448 F. Supp. 2d at

67. If an agreement to arbitrate is valid and enforceable, the

Court should resolve “‘any doubts concerning the scope of

arbitrable issues . . . in favor of arbitration.’” Wolff v.

Westwood Mgmt., LLC, 558 F.3d 517, 520 (D.C. Cir. 2009) (quoting

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,

24–25 (1983)). However, neither this principle of construction

nor the FAA’s generally liberal policy favoring arbitration may

“override the clear intent of the parties, or [be used to] reach

a result inconsistent with the plain text of the contract . . .

.” E.E.O.C. v. Waffle House, Inc., 534 U.S. 279, 294 (2002).

8 1. Plaintiffs’ Claims Arise Under the Arbitration Clauses

The arbitration clauses require the parties to arbitrate

“[a]ny dispute arising from this Agreement.” Employment

Agreement, ECF No. 13-4 at 4. Plaintiffs argue that the clauses

are “narrow and “cover[] only disputes ‘arising from the

[employment] agreement[s]’” because the text “omit[s] any

language evincing an intent to arbitrate statutory claims or to

expand the scope of the arbitration clause beyond disputes

‘arising from’ the Agreements.” Opp’n, ECF No. 16 at 3, 4

(quoting Employment Agreement, ECF No. 13-4 at 4). For support,

they point to Azima v. RAK Investment Authority, a case in which

the court examined a forum-selection clause requiring the

parties to litigate “any dispute or claim arising out of, or in

connection with, it or its subject matter or formation

(including, without limitation, any contractual or non-

contractual disputes, claims or obligations)” in England and

Wales. 926 F.3d 870, 873 (D.C. Cir. 2019). Plaintiffs point to

two key points in Azima: (1) “the broad language the parties

used . . . expanded [the] scope of the clause to disputes

related to the contract’s subject-matter or formation,’ not just

claims related to the contract itself”; and (2) dicta in the

case “suggest[s] that had the clause just covered disputes

‘arising out of’ the agreement, [the court] would have construed

9 it more narrowly.” Opp’n, ECF No. 16 at 4 (citing Azima, 926

F.3d at 878).

“[A]rising from this Agreement” is not the broadest

language the Parties might have used. However, contrary to the

Jimenez Defendants’ dismissal of this authority, see Reply, ECF

No. 17 at 3; the definitions of the contractual terms in Azima’s

forum-selection clause are relevant here. Indeed, the court

considered and cited precedent on arbitration clauses to

determine the plain meaning of the terms used in the forum-

selection clause at hand. See Azima, 926 F.3d at 878 (citing

Necchi S.p.A. v. Necchi Sewing Mach. Sales Corp., 348 F.2d 693,

696-97 (2d Cir. 1965)). However, Azima does not help Plaintiffs

because the court did not discuss the scope of a clause using

only “arising from” language. See id. at 876-80. It merely

commented that “arising out of” does not sweep as broadly as “in

connection with.” Id. at 878.

Plaintiffs recognize that they need to address this Court’s

decision in Dowley v. Dewey Ballantine, LLP, No. CIV.A. 05-

622(EGS), 2006 WL 1102768 (D.D.C. Apr. 26, 2006). See Opp’n, ECF

No. 16 at 5-6. In Dowley, the plaintiffs sued and alleged

several statutory and common-law claims despite an agreement to

arbitrate any “controversy or claim arising out of this

Agreement.” Dowley, 2006 WL 1102768, at *1. In concluding that

all of the claims (including the statutory claims) were

10 arbitrable, the Court examined Supreme Court precedent and

concluded that the language “reaches all disputes having their

origin in the contract, whether or not they implicate

interpretation or performance of the contract per se,” id. at

*9; see also Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Inc., 473 U.S. 614, 624 n.13 (1985) (instructing that when an

arbitration agreement contains the dual phrases arising out of

or relating to, it is proper to interpret the agreement broadly

to cover matters that “touch” upon the contract to be

arbitrable).

Plaintiffs contend that Dowley is inapposite for three

reasons. First, they argue that “Dowley is inconsistent with

Azima to the extent it requires a broad construction of an

arbitration clause that is limited to disputes ‘arising from’ or

‘under’ an agreement absent any other language.” Opp’n, ECF No.

16 at 5. As explained supra, however, Azima does not stand for

the proposition that “arising from” requires a narrow

construction. Dowley is therefore not inconsistent with Azima in

interpreting “arising from” broadly.

Second, Plaintiffs argue that Dowley incorrectly applied

other mandatory precedent, which they contend “made clear that

‘arising under’ is only ‘somewhat broader’ than an arbitration

clause that covers ‘only specified types of disputes’ and

narrower than a clause requiring arbitration of ‘any grievance

11 affecting the mutual relations of the parties.’” Id. at 5

(quoting Nat’l. R.R. Passenger Corp. v. Boston & Maine Corp.,

850 F.2d 756, 762 (D.C. Cir. 1988)). The Court agrees that there

are broader arbitration clauses than the one at hand. Still, to

construe a clause broadly is not necessarily to construe it as

broadly as possible—and Dowley did not attempt the broadest

possible construction. See Dowley, 2006 WL 1102768, at *8

(concluding that the clause covers the claims in the case but

not deciding what other claims are and are not covered).

Third, Plaintiffs contend that Dowley is “distinguishable”

from this case because Dowley dealt with claims related to the

contract, Opp’n, ECF No. 16 at 6; whereas their “claims derive

entirely from three statutes (the FLSA, the DCMWRA and the

DCPCWL) and are completely independent of the Agreements’

existence,” id. The Court disagrees for the reasons explained

below.

Here, Plaintiffs’ claims for wages on or after January 1,

2018 2 arise from the Employment Agreements because they claim

that they are entitled to wages owed for work performed pursuant

to those Agreements. See Opp’n, ECF No. 16 at 6-7. Even though

they request wages not specified in the Agreements, the matter

2 The Court determines supra that Plaintiffs are not required to arbitrate claims that arose before the Agreements were effective on January 1, 2018. See Section III.A.2. 12 of what wages are owed “touch” upon the Agreements. Mitsubishi

Motors Corp., 473 U.S. at 624 n.13. This is because the

Employment Agreements include provisions on compensation,

including Plaintiffs’ base salary, overtime compensation, and

compensation for driving and for federal holidays. See

Employment Agreement, ECF No. 13-4 at 1-2. “An order to

arbitrate [a] particular grievance should not be denied unless

it may be said with positive assurance that the arbitration

clause is not susceptible of an interpretation that covers the

asserted dispute. Doubts should be resolved in favor of

coverage.” Air Line Pilots Ass’n v. Fed. Express Corp., 402 F.3d

1245, 1248 (D.C. Cir. 2005) (emphasis added). Plaintiffs have

not provided such “positive assurance” here. Accordingly, the

Court concludes that Plaintiffs’ claims arise under the

Employment Agreements.

2. Plaintiffs Are Not Required to Arbitrate Claims That Arose Before the Agreements Were Effective

Plaintiffs argue that the arbitration clauses in the

Employment Agreements do not encompass the wage claims that

predate them. Opp’n, ECF No. 16 at 8-9. For the reasons

explained below, the Court agrees.

“When deciding whether the parties agreed to arbitrate a

certain matter ..., courts generally ... should apply ordinary

state-law principles that govern the formation of contracts.”

13 Aliron Int'l, Inc., 531 F.3d at 865 (D.C. Cir. 20008) (quoting

First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995).

The Jimenez Defendants contend that it is “settled law that

an arbitration clause covers claims predating the existence of

the arbitration clause.” Reply, ECF No. 17 at 4. They are

mistaken. As explained below, courts determine whether or not an

arbitration clause applies to claims that predate the existence

of the clause on a case-by-case basis based on the language of

the clause and relevant facts.

On one hand, “[s]everal circuits have held that a broad

arbitration clause may encompass claims between the parties that

arise out of their ongoing relationship, even if those claims

predate the agreement to arbitrate and even if the claims are

not related to the subject matter of the agreement containing

the arbitration clause.” Nanosolutions LLC v. Prajza, 793 F.

Supp. 2d 46 (D.D.C. 2011)(citing Coenen v. R.W. Pressprich &

Co., 453 F.2d 1209, 1212 (2d Cir. 1972)(an agreement to

arbitrate “any controversy between ... members” included

conflicts that accrued before the members entered into the

agreement, even if they were unrelated to the agreement)). See

also Zink v. Merrill Lynch Pierce Fenner & Smith, 13 F.3d 330,

332 (10th Cir. 1993)(arbitration clause stating “any controversy

between [the parties] arising out of [plaintiff's] business or

this agreement” was “clearly broad enough to cover the dispute

14 at issue despite the fact that the dealings giving rise to the

dispute at issue occurred prior to the execution of the

agreement.”); Belke v. Merrill Lynch, Pierce, Fenner & Smith,

693 F.2d 1023, 1028 (11th Cir. 1982) abrogated on other grounds,

Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 105 S.Ct.

1238, 84 L.Ed.2d 158 (1985)(“By its own terms the contract

between the parties covers not only disputes arising out of the

agreement, but ... includes “any controversy between us arising

out of your business.” An arbitration clause covering disputes

arising out of the contract or business between the parties

evinces a clear intent to cover more than just those matters set

forth in the contract.”)(emphasis in original).

On the other hand, courts have refused to give retroactive

effect to narrow arbitration clauses. See, e.g., George

Washington University v. Scott, 711 A.2d 1257, 1259 (D.C. 1998)

(parties agreed to arbitrate “any claim ... under this

contract”); Security Watch Inc. v. Sentinel Systems, 176 F.3d

369, 372 (6th Cir. 1999) (arbitration required “in connection

with all disputes ... arising out of or relating to Products

furnished pursuant to this Agreement”); Peerless Importers, Inc.

v. Wine, Liquor & Distillery Workers Union Local 1, 903 F.2d

924, 927 (2d Cir.1990) (mandatory arbitration of all claims

“arising under this agreement and during its term”).

15 Here, the arbitration clauses require the parties to

arbitrate “[a]ny dispute arising from this Agreement.”

Employment Agreement, ECF No. 13-4 at 4. The clauses explicitly

restrict arbitration to disputes arising under the Agreement.

Therefore, the arbitration clauses are more analogous to the

arbitration clauses to which courts have not given retroactive

effect than those to which courts have given such effect.

Accordingly, the Court concludes that only Plaintiffs’ claims

that accrued on or after January 1, 2018 are arbitrable. 3

3 The Court need not address Plaintiffs’ remaining arguments. One argument–that the arbitration clause is unconscionable under Maryland law and unenforceable as to the pre-January 1, 2018 claims because the Jimenez Defendants provided no consideration for Plaintiffs’ promise to arbitrate those claims, see Opp’n, ECF No. 16 at 1—is unnecessary to reach because the Court has determined that the arbitration clause has no retroactive effect. The other argument—that the choice-of-law provision does not preclude Plaintiffs’ DCMWRA and the DCWPCL claims, see id. at 14-16—is not responsive to the Jimenez Defendants’ motion. Nor need the Court address the Jimenez Defendants’ argument that Plaintiffs’ state law defenses are preempted, Reply ECF No. 17 at 4-5; since the Court does not reach Plaintiffs’ unconscionability argument. Finally, in their reply briefing, the Jimenez Defendants claim that Plaintiffs “acknowledge[e] they meet the first of the two-prong test under the FAA to determine whether the dispute is arbitrable.”’ Id. 17 at 2. They are mistaken. Plaintiffs have conceded only that they signed Employment Agreements containing arbitration clauses, not that the arbitration clauses are valid and enforceable agreements. See Opp’n, ECF No. 16 at 10-14.

16 IV. Conclusion

For the foregoing reasons, the Court GRANTS IN PART AND

DENIES IN PART the Jimenez Defendants’ Motion for Summary

Judgment to Dismiss Complaint and Compel Arbitration, ECF No.

13. Plaintiffs’ claims against the Jimenez Defendants may

proceed before this Court insofar as they accrued before January

1, 2018. Plaintiffs’ claims that accrued on or after January 1,

2018 must be arbitrated and so are DISMISSED. An appropriate

Order accompanies this Memorandum Opinion.

SO ORDERED.

Signed: Emmet G. Sullivan United States District Judge April 21, 2023