Michael Southard v. Newcomb Oil Co., LLC
7f4th451
6th Cir.2021Background
- Michael Southard worked for Newcomb Oil (2017–2018) and sued in Kentucky state court in Nov. 2018 asserting an FLSA claim and multiple state-law wage-and-hour and related claims as a putative class action.
- Newcomb removed the action to federal court; six days later Southard amended to drop the lone federal (FLSA) claim, leaving only state-law claims.
- Newcomb relied on ADR provisions in Southard’s employment application and employee handbook and moved to dismiss or, alternatively, to stay the action pending individual arbitration under the Federal Arbitration Act (FAA).
- The district court found the challenged provisions created only a general agreement to use Alternative Dispute Resolution (and expressly referenced mediation), not a classic, binding arbitration agreement under the FAA, and denied Newcomb’s motion to stay/compel arbitration.
- The district court then remanded the remaining state-law claims to state court; Newcomb appealed both the denial of FAA relief and the remand.
- The Sixth Circuit affirmed: no FAA arbitration agreement existed, and the district court did not abuse its discretion in declining supplemental jurisdiction after federal claims were eliminated.
Issues
| Issue | Plaintiff's Argument (Southard) | Defendant's Argument (Newcomb) | Held |
|---|---|---|---|
| Whether the parties formed a "written agreement for arbitration" enforceable under the FAA | The ADR language in the application/handbook does not create an arbitration agreement—it is general ADR/mediation language, not classic binding arbitration | The handbook and application’s ADR provisions constitute an agreement to arbitrate and thus trigger FAA remedies | No FAA arbitration: provisions reference ADR/mediation generally and do not resemble classic, binding arbitration, so FAA relief unavailable |
| Whether the district court abused its discretion by remanding the state-law claims (supplemental jurisdiction) | Remand appropriate once the FLSA claim was dropped; federal court should not decide only state-law claims | District court should retain jurisdiction and decide the state-law claims | Affirmed remand: with the federal claim deleted, the district court permissibly declined supplemental jurisdiction and remanded the remaining state claims |
Key Cases Cited
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) (articulates the federal policy favoring arbitration)
- Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287 (2010) (the federal policy applies to arbitration scope, not to whether a contract to arbitrate exists)
- Evanston Ins. Co. v. Cogswell Props., LLC, 683 F.3d 684 (6th Cir. 2012) (framework for assessing whether an agreement resembles "classic arbitration")
- Fit Tech, Inc. v. Bally Total Fitness Holding Corp., 374 F.3d 1 (1st Cir. 2004) (identifies hallmarks of classic arbitration)
- Enochs v. Lampasas County, 641 F.3d 155 (5th Cir. 2011) (state-law claims predominate over non-existent federal claims)
- Moon v. Harrison Piping Supply, 465 F.3d 719 (6th Cir. 2006) (federal courts should not ordinarily decide state-law claims once federal claims are gone)