Carlos Reyna v. International Bank of Commerce
2016 U.S. App. LEXIS 18016
| 5th Cir. | 2016Background
- Reyna sued IBC under the FLSA alleging IBC underpaid overtime while he worked as a bank teller (July 2012–Aug 2013) and sought to proceed as an FLSA collective action.
- IBC moved to dismiss or, alternatively, to compel arbitration under its Open Door Policy, which requires a four-step grievance process and binds employees to final, binding arbitration for covered claims.
- The Policy explicitly covers FLSA wage/overtime claims, contains a clause allowing class actions only by agreement of all parties, and includes a delegation clause giving the arbitrator exclusive authority to decide arbitrability and similar gateway issues.
- The district court denied IBC’s motion to compel arbitration, reasoning arbitrability should be deferred until after conditional certification of the collective.
- IBC appealed interlocutorily under the FAA; this Court reviewed only whether the district court erred in denying the motion to compel arbitration.
- The Fifth Circuit reversed, holding the district court must decide arbitrability at the threshold and that the Policy’s delegation clause delegates arbitrability questions to the arbitrator.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a court should defer arbitrability until after conditional certification of an FLSA collective | Reyna: courts routinely address conditional certification before arbitration issues; arbitrability can await the second-stage merits | IBC: when defendant moves to compel arbitration of the named plaintiff’s claims, arbitrability is a threshold issue that must be decided first | Court: Arbitrability is a threshold issue; district court erred to defer it until after conditional certification |
| Whether the parties entered a valid arbitration agreement covering Reyna’s FLSA claim | Reyna: did not dispute the agreement’s existence in district court | IBC: Reyna signed the Policy which covers FLSA wage claims | Court: A valid arbitration agreement exists between Reyna and IBC |
| Whether a delegation clause in the Policy is valid and who decides arbitrability | Reyna: (argued waiver/other points but waived on appeal) | IBC: Policy contains a delegation clause that assigns arbitrability to the arbitrator | Court: The delegation clause is valid; arbitrability questions are for the arbitrator, not the court |
| Effect of arbitrator’s authority on district court proceedings (e.g., grievance exhaustion, collective scope) | Reyna: district court should address collective-suit procedures and conditional certification before arbitration | IBC: arbitrator must determine arbitrability and related threshold issues (including applicability and scope) | Court: Because of valid delegation clause, disputes over arbitrability (including scope/exhaustion) must be referred to arbitration; district court’s denial is reversed |
Key Cases Cited
- Auto Parts Mfg. Miss., Inc. v. King Constr. of Hous., L.L.C., 782 F.3d 186 (5th Cir. 2015) (court must address arbitration threshold question upon motion to compel)
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (parties may delegate arbitrability to arbitrator)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA reflects strong national policy favoring arbitration)
- Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294 (5th Cir. 2004) (FLSA claims can be compelled to arbitration; presumption favoring arbitration)
- Acevedo v. Allsup’s Convenience Stores, Inc., 600 F.3d 516 (5th Cir. 2010) (describing two-stage FLSA collective-certification procedure)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (arbitration agreements generally enforceable; gateway validity questions can be for arbitrator)
- Hoffman-La Roche Inc. v. Sperling, 493 U.S. 165 (1989) (court-authorized notice procedure for FLSA collective actions)