ENRIQUE COLLADO, Plаintiff-Appellee, JUAN GIRON, and others similarly situated, JOEL RUBIO, ANTONIO WOODSON, DANNY RHINEHART, et al., Plaintiffs, versus J. & G. TRANSPORT, INC., Defendant-Appellant, IVIS GUZMAN, individually, et al., Defendants.
No. 15-14635
United States Court of Appeals for the Eleventh Circuit
April 21, 2016
[PUBLISH] D.C. Docket No. 9:14-cv-80467-JG Non-Argument Calendar
(April 21, 2016)
Before ED CARNES, Chief Judge, WILLIAM PRYOR, and FAY, Circuit Judgеs.
PER CURIAM:
Enrique Collado filed a collective action lawsuit under the Fair Labor Standards Act alleging that J. & G. Transport, Inc. (J&G) failed to pay its truck drivers for overtime work.1 J&G waived its contractual right to compel arbitration by participating in the litigation, but when Collado amended his complaint to add state lаw claims for breach of contract and quantum meruit, J&G moved to compel arbitration as to those new claims. The district court denied the motion to compel arbitration, finding that the addition of those state law claims did not unexpectedly change the scope or theory of the litigation to an extent that would give J&G the authority to insist on arbitration of those new claims. This is J&G’s interlocutory appeal of that ruling. See
I.
In June 2014 Collado filed an amended complaint alleging that he had worked for J&G as a truck driver hauling garbage, debris, and mulch from
Immediately after the close of discovery and shortly before trial was scheduled to begin, Collado moved to file a second аmended complaint seeking to add state law claims for breach of contract and quantum meruit. He asserted that an addendum to the agreement provided that his compensation was to be 35% of the adjusted gross revenue recеived by J&G for loads that he accepted and completed, but that on the last day of discovery J&G had disclosed documents showing that he was actually paid less than that. And, he continued, it was not until after discovery ended that J&G explained, in response to an interrogatory, its position that the addendum did not apply to Collado because of the type of loads he was hauling.
J&G opposed the motion to amend the complaint, arguing that Collado should not be permitted to file a second amended complaint so close to trial
The district court granted Collado’s motion to file a sеcond amended complaint, finding that he could not have discovered the potential breach of contract claim until he learned how much money J&G earned per haul. After Collado filed his second amended complaint, J&G immеdiately moved to dismiss the new state law claims or, in the alternative, to compel arbitration of those claims. J&G conceded that it had waived arbitration of Collado’s FLSA claim but argued that the second amendment to his complaint rеvived its right to elect arbitration of the state law claims because those new claims unexpectedly broadened the scope of the case.
II.
We review de novo a district court’s denial of a motion to compel arbitration. Klay v. All Defendants, 389 F.3d 1191, 1200 (11th Cir. 2004). The law is that arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”
J&G concedes that it waived its right to compel arbitration with respect to Collado’s FLSA claim but contends that it has the right to compel arbitration of the
The parties rely on our Krinsk decision as the closest precedent on point, but that case is not quite the same as this one. In the Krinsk case, the plaintiff brought a class action lawsuit against the defendant, estimating that thе class would consist of hundreds of class members. Id. at 1197–98. The defendant waived the right to compel arbitration by engaging in the judicial process. Id. at 1198–99, 1202. The plaintiff later amended the complaint, asserting “revised, but mostly similar, claims,” and expanding the class dеfinition so that it included “thousands—if not tens of thousands” of potential class members. Id. at 1199. The defendant filed a motion to compel arbitration, which the district court denied. Id. at 1199–1200. We vacated that order, holding that the amended complaint revived thе defendant’s right to compel arbitration, which it had previously waived, because the defendant
This case is different from Krinsk because the amended complaint in that case “asserted revised, but mostly similar, claims.” Id. at 1199. It did not plead any new claims. The substantial change that motivated the Krinsk decision was, instead, the substantial increase in the size of the plaintiff class and the resulting increase in the size of the defendant’s potential liability. The defendant had waived the right to arbitrate the claims of hundreds of plaintiffs, but it had not waived the right to arbitrate the claims of thousands, if not tens of thousands, of plaintiffs. Id. at 1198–99, 1204.
The change wrought by the amendment in this case was not in the number of plaintiffs but in the type of claim asserted. The case began as one asserting a federal claim. Only after J&G had waived by litigation its right to arbitrate that claim did Collado file the amendment changing the case to one asserting both federal аnd state claims. Waiver of the right to arbitrate a federal claim does not extend to later asserted state claims. Some cases speak of revival of a waived right to arbitrate. See, e.g., Krinsk, 654 F.3d at 1202–03 (collecting cases). In these сircumstances, however, it is more accurate to say that there was never a waiver of the right to arbitrate the state claims in the first place.
The Seventh Circuit determined that even though “the complaint might eventually have been construed, within the loose strictures of notice pleading, as stating a claim for breach of contract,” it was reasonable for the defendant to assume that the complaint raised only non-arbitrable federal securities claims. Id. at 641–42. As a result, the defendant had not waived its right to compel arbitration of the state law claims — not even for the breach of contract claim alluded to, but not clearly stated, in the original complaint. Id.
J&G did argue, in response to Collado’s motion to file a second amended complaint, that his first amended complaint “reveal[ed] that a potential breach of contract action was an issue then known to Collado[ ].” From that Collado argues thаt J&G must also have known there was a state law claim lurking in the case. But knowing that a potential claim may lurk in the shadows of a case is not the same as litigating against a claim that has been brought out into the open in a pleading. A defendant is not required to litigate against potential but unasserted claims. By the same token, a defendant will not be held to have waived the right to insist that previously unasserted claims be arbitrated once they are asserted. Any other rule would put a dеfendant in an awkward if not absurd position. A defendant who was willing to litigate the claim pleaded against it would need to identify all of the possible claims that could have been but weren’t pleaded against it and file a motion insisting that those unplеaded claims be arbitrated. Otherwise,
We hold that J&G’s waiver through litigation of the right to arbitrate Collado’s FLSA claim does not extend to thе state law claims that were pleaded for the first time after J&G had litigated to the point of waiver the FLSA claim. See Morewitz v. W. of Eng. Ship Owners Mut. Prot. & Indem. Ass’n, 62 F.3d 1356, 1366 (11th Cir. 1995) (“Waiver occurs when a party seeking arbitration substantially participates in litigation to a point inconsistent with an intent to arbitrate and this participation results in prejudice to the opposing party.“); see also Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217, 1223 (11th Cir. 2000) (concluding that the defendant did not waive its right to arbitrate because its “demand for arbitration was made promptly after the lawsuit was filed“).
We VACATE the district court’s order denying J&G’s motion to compel arbitration of the state lаw claims and REMAND the case for further proceedings consistent with this opinion.