Howard v. Life Time Fitness, Inc.

Background

Maura Howard, a group fitness instructor at Life Time’s Bloomington, Minnesota location, brought an unjust-enrichment claim concerning unpaid work. She alleged that Life Time required instructors to spend 15 minutes before and after each class in the studio but paid them only for scheduled class time. Howard and another instructor initially brought the case as a proposed class action for group fitness instructors employed by Life Time.

Life Time had circulated an arbitration agreement to employees in June 2019. After removing Howard’s amended complaint to federal court, Life Time renewed its request to compel arbitration and dismiss the case.

Arbitration Agreement

The court treated the motion to compel arbitration as a motion for summary judgment because the parties presented materials outside the pleadings. Under the Federal Arbitration Act and Minnesota contract law, the court considered whether a valid arbitration agreement existed and whether Howard’s dispute fell within its scope.

Howard argued that no valid agreement existed because she did not receive or read it, the agreement was indefinite, and Life Time should be equitably estopped—prevented based on its conduct—from enforcing it.

The court concluded that Minnesota law presumes properly mailed material was received unless there is evidence to the contrary. Life Time presented evidence that it mailed Howard the agreement and also provided it through multiple electronic platforms. Howard did not deny receiving it or provide evidence that she did not receive it. The court therefore presumed that she received the agreement.

The court also concluded that Howard accepted the agreement by continuing her employment after receiving it. Her failure to read the agreement did not prevent contract formation because she did not assert fraud, mistake, or unconscionable terms as a defense to formation.

The court rejected Howard’s argument that the agreement was indefinite. It concluded that references to an “agreement” and an “arbitration provision” were not confusing enough to make the contract unenforceable. It also concluded that the agreement’s language about agreeing to its terms, the exceptions to its coverage, and opting out of the “benefits of arbitration” did not make the agreement unclear. The court noted that the opt-out provision referred to opting out of the arbitration provision as a whole and that Howard did not allege that any ambiguity prevented her from opting out.

The court also rejected equitable estoppel. Howard argued that Life Time’s practice of obtaining acknowledgments for some employee policies led her reasonably to rely on Life Time to request an acknowledgment of the arbitration agreement. The court found that this argument was not persuasive, noting that Howard had failed to acknowledge or sign some documents that did require signatures.

Scope of Arbitration

The court held that the arbitration agreement covered Howard’s dispute. The agreement included claims concerning compensation, and Howard’s unjust-enrichment claim was based on Life Time’s alleged failure to pay for required work. The court concluded that Howard had not shown that her claim fell outside the agreement’s scope.

Disposition

The court granted Life Time’s motion to compel arbitration. It also exercised its discretion to dismiss rather than stay the case while arbitration proceeded, concluding that the entire controversy would be resolved through arbitration. The order granted the defendants’ motion to dismiss and compel arbitration and dismissed the action without prejudice. Judge Wilhelmina M. Wright entered judgment accordingly.