998 F.3d 393
9th Cir.2021Background
- The Department of Labor (Secretary) sued Larry Browne and related companies under the FLSA, alleging misclassification of delivery drivers as independent contractors and seeking backpay, liquidated damages, and injunctive relief on behalf of identified employees.
- Browne moved to compel arbitration based on arbitration agreements between him/entities and the delivery drivers; the district court denied the motion.
- Browne appealed the denial; Ninth Circuit reviews denial of a motion to compel arbitration de novo.
- Browne argued the Secretary must arbitrate monetary claims under 29 U.S.C. § 216(c) because recovered sums are paid "directly to the employee" and the drivers are intended beneficiaries/privity exists.
- The Secretary relied on EEOC v. Waffle House, arguing a government enforcement agency that controls litigation and seeks relief on behalf of others cannot be compelled to arbitrate private agreements to which it is not a party.
- The Ninth Circuit affirmed: the Secretary, as master of the enforcement action and not a party to the arbitration agreements, cannot be compelled to arbitrate—even for employee-specific monetary relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a private arbitration agreement binds the Secretary when it brings an FLSA enforcement action on behalf of employees | Secretary: cannot be compelled; Waffle House controls; Secretary is not party and controls the case | Browne: arbitration agreement with drivers requires Secretary to arbitrate monetary claims | Held: Secretary cannot be compelled to arbitrate; Waffle House controls |
| Whether Secretary is in privity with employees (so arbitration binds Secretary) | Secretary: not in privity; has independent public interest and control over litigation | Browne: Section 16(c) payments are for employees, implying privity and requirement to arbitrate | Held: No privity for this purpose; Secretary has independent interests and exclusive control of enforcement action |
Key Cases Cited
- EEOC v. Waffle House, Inc., 534 U.S. 279 (2002) (holding an enforcement agency cannot be compelled to arbitrate claims on behalf of employees when it controls the litigation)
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (FAA establishes a liberal federal policy favoring arbitration)
- Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018) (courts must enforce arbitration agreements according to their terms)
- Am. Express Co. v. Italian Colors Rest., 570 U.S. 228 (2013) (courts must rigorously enforce arbitration agreements' terms)
- Chao v. A-One Med. Servs., Inc., 346 F.3d 908 (9th Cir. 2003) (res judicata may bar Secretary from recovering employee-specific rights previously pursued by an employee)
- Donovan v. Univ. of Texas at El Paso, 643 F.2d 1201 (5th Cir. 1981) (Secretary may recover unpaid wages and liquidated damages under Section 16(c))
- Blair v. Rent-A-Center, Inc., 928 F.3d 819 (9th Cir. 2019) (standard of review for denial of motion to compel arbitration is de novo)