Jonathan Gaffers v. Kelly Servs., Inc.
900 F.3d 293
6th Cir.2018Background
- Jonathan Gaffers, a former remote employee of Kelly Services, sued on behalf of himself and ~1,600 co-workers under the FLSA seeking unpaid wages and liquidated damages for time spent logging in/out and troubleshooting.
- About half of the putative collective’s members had signed arbitration agreements requiring individual arbitration as the “only forum” for employment claims; Gaffers had not signed.
- Kelly Services moved to compel individual arbitration under the Federal Arbitration Act (FAA).
- The district court denied the motion, concluding the NLRA or the FLSA made the arbitration agreements unenforceable; Kelly appealed.
- The Sixth Circuit reviewed de novo and addressed two questions: whether the NLRA or FLSA displaced the FAA’s enforcement of arbitration agreements, and whether the FAA’s savings clause (contract illegality) rendered these arbitration agreements unenforceable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the NLRA or FLSA displaces the FAA and makes arbitration agreements unenforceable | FLSA (and NLRA) grant a collective-action right that conflicts with individual-arbitration clauses, so the statutes displace the FAA | The FAA governs arbitration agreements unless a statute clearly and manifestly precludes arbitration; neither NLRA nor FLSA contain such a clear statement | NLRA argument foreclosed by Epic; FLSA does not clearly and manifestly displace the FAA, so no displacement — FAA governs |
| Whether the FAA savings clause (illegality defense) permits invalidating individual-arbitration clauses because they bar collective FLSA actions | The FLSA’s collective-action right makes one-on-one arbitration clauses illegal and therefore revocable under the FAA savings clause | The savings clause allows generally applicable contract defenses, but not defenses that single out arbitration or undermine arbitration’s fundamental attributes (individualized proceedings) | Court applies Epic: illegality argument targets arbitration’s fundamental attribute (individualized process) and cannot be used to rescind arbitration agreements; savings-clause defense rejected |
| Whether prior Sixth Circuit FLSA decisions (Killion, Boaz) prevent enforcement of arbitration clauses | Killion and Boaz support that FLSA waivers of collective action can be invalid | Kelly: those precedents do not control here (Killion addressed waivers absent arbitration; Boaz upheld waivers that include arbitration) | Sixth Circuit reads those cases as compatible with enforcing arbitration clauses and says Epic overrules any contrary inference |
| Remedy / disposition | Deny motion to compel arbitration (district court) | Compel individual arbitration | Reversed district court; remanded to compel arbitration consistent with opinion |
Key Cases Cited
- Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018) (FAA requires enforcement of individual arbitration agreements; NLRA/FLSA do not clearly and manifestly displace FAA; savings-clause defenses cannot target arbitration’s fundamental attributes)
- Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (statutory rights may be waived through arbitration where statute does not prohibit it)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (class-action waivers in arbitration agreements are permissible; arbitration’s key attributes include individualized proceedings)
- Killion v. KeHE Distributors, LLC, 761 F.3d 574 (6th Cir. 2014) (addressed FLSA waiver in separation agreements; noted different considerations when arbitration clauses are present)
- Boaz v. FedEx Customer Information Servs., Inc., 725 F.3d 603 (6th Cir. 2013) (upheld that FLSA waiver can be enforceable when it includes arbitration)