Johnson v. EnSite USA, Inc.

Background

Richard Johnson sued EnSite USA, Inc., individually and on behalf of others similarly situated. He asserted one claim under the Fair Labor Standards Act and four claims under the New York Labor Law. Johnson alleged that EnSite employed him as a Welding Inspector from January 2017 through December 2019, paid him a set daily rate regardless of hours worked, failed to pay overtime for hours over 40 in a workweek, and failed to provide proper wage statements and notices or timely pay wages.

Johnson signed two agreements with EnSite titled “Arbitration Agreement and Class/Collective Action Waiver,” one dated July 12, 2019, and the other dated June 10, 2020. The agreements required covered employment-related claims—including claims under the Fair Labor Standards Act—to be decided in final and binding arbitration before a single American Arbitration Association arbitrator. They also stated that the agreements did not prevent Johnson from participating in lawsuits concerning covered claims that were already pending when he signed them.

Before filing this case, Johnson had opted into an earlier, substantially similar wage-and-hour lawsuit against EnSite in the Southern District of Texas. He withdrew his consent from that earlier lawsuit on May 17, 2021, and filed this action the same day.

Arguments and Analysis

EnSite moved to compel arbitration under the Federal Arbitration Act and the agreements. In the alternative, EnSite sought to transfer the case to the Southern District of Texas or dismiss it under the first-filed rule. Ensite also raised arguments concerning jurisdiction under the Class Action Fairness Act and the numerosity requirement for Johnson’s proposed New York-law claims. The court did not address those alternative arguments because it granted the motion to compel arbitration.

Johnson did not dispute that his Fair Labor Standards Act and New York Labor Law claims fell within the agreements’ scope. Instead, he argued that Ensite had waived arbitration by litigating the earlier related lawsuit and that the agreements were unenforceable because they were improper and misleading communications.

The court rejected the waiver argument. It concluded that the earlier lawsuit could not establish waiver in these circumstances because the agreements did not exist when that lawsuit began, and the agreements expressly allowed participation in already-pending lawsuits. The court treated May 17, 2021—the date Johnson filed this case—as the relevant starting point for the waiver analysis. Ensite moved to compel arbitration 70 days later, which the court found was an insubstantial delay. The court also found that little litigation had occurred in this case: Ensite had not filed an answer, the parties had not conducted discovery, and they had not briefed the merits of Johnson’s claims. The court further found that Johnson had not shown sufficient prejudice, particularly because he chose to withdraw from the earlier lawsuit and file this action.

The court also rejected Johnson’s argument that the agreements were improper or misleading communications to a potential participant in the earlier collective action. The court relied on the agreements’ plain language, which preserved his ability to participate in covered lawsuits that were already pending when he signed them.

Disposition

The court granted Ensite’s motion to compel arbitration. It stayed the action pending arbitration and directed the Clerk to terminate the pending motion and administratively close the case, without prejudice to either party moving by letter to reopen the case within 30 days after the arbitration proceedings conclude. The opinion did not decide the underlying wage claims or Ensite’s alternative transfer and dismissal requests.