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LCC International, Inc. v. Torgerson

United States District Court, D. Kansas

January 25, 2018

LCC INTERNATIONAL, INC., n/k/a TECH MAHINDRA NETWORK SERVICES INTERNATIONAL, INC., Petitioner,
v.
RICHARD TORGERSON, individually and on behalf of all others similarly situated, Respondents.

          MEMORANDUM AND ORDER

          Daniel D. Crabtree United States District Judge

         On July 28, 2017, petitioner LCC International, Inc. (“LCC”)[1] filed a Petition to Vacate in the Eastern District of Virginia, seeking to vacate an arbitrator's Order denying LCC's Motion for Clause Construction Award. After the parties jointly stipulated to transfer LCC's Petition to the District of Kansas, the Eastern District of Virginia transferred the case to our court on September 1, 2017. Respondent Richard Torgerson (who is asserting Fair Labor Standards Act (“FLSA”) claims on behalf of himself and all other similarly situated in arbitration against LCC) opposes LCC's Petition to Vacate. Mr. Torgerson asks the court to deny LCC's Petition to Vacate and dismiss this action.

         After considering the parties' arguments, the court rejects LCC's assertion that the arbitrator exceeded his authority in his June 30, 2017 Order denying LCC's Motion for Clause Construction Award (Doc. 13-1). The court thus denies LCC's Petition to Vacate and dismisses this action.[2]

         I. Factual Background

         Mr. Torgerson worked for LCC as a Migration Analyst and Senior Migration Analyst at its office in Overland Park, Kansas. On February 3, 2016, Mr. Torgerson filed a lawsuit in the Western District of Missouri, on behalf of himself and others similarly situated, alleging that LCC had violated the FLSA by improperly classifying all LCC employees working in a Migration Analyst position as employees exempt from the FLSA's overtime requirements. Mr. Torgerson's suit seeks to recover unpaid overtime compensation under the FLSA on behalf of himself and other, similarly situated Migration Analysts.

         LCC filed a motion asking the Western District of Missouri to dismiss the case based on improper venue. The Western District of Missouri agreed that venue was improper but refused to dismiss the case. Instead, on July 11, 2016, the Western District of Missouri transferred the action to our court. See Torgerson v. LCC Int'l, Inc., No. 16-2495-DDC-TJJ (D. Kan. July 11, 2016), ECF 54.

         As a condition of his employment with LCC, Mr. Torgerson signed an Employee Agreement (“Agreement”). Among other things, Mr. Torgerson agreed in the Agreement to arbitrate certain disputes “in accordance with the then prevailing rules of the American Arbitration Association.” Doc. 1-2 at 5.

         Based on this Agreement, LCC filed a Motion to Dismiss or, in the Alternative, to Stay Proceedings and Compel Arbitration. See Torgerson v. LCC Int'l, Inc., No. 16-2495-DDC-TJJ (D. Kan. Apr. 4, 2016), ECF 28. On August 10, 2016, the court granted in part and denied in part defendants' Motion to Dismiss or, in the Alternative, to Stay Proceedings and Compel Arbitration. See Torgerson v. LCC Int'l, Inc., No. 16-2495-DDC-TJJ (D. Kan. Aug. 10, 2016), ECF 62. The court concluded that Mr. Torgerson had signed an employment agreement that requires him to arbitrate his FLSA claims. Id. at 5. The court thus granted defendants' request to stay the case and compelled the parties to proceed to arbitration. Id. at 6. Also, the court denied the portion of defendants' motion asking the court to decide whether the employment agreement permits collective arbitration because it determined that the arbitrator must decide that issue. Id. at 8. And, for the same reasons, the court declined to decide Mr. Torgerson's Motion for Conditional Certification of Class Claims Under § 216(b) of the FLSA without prejudice to their right to present this request to an arbitrator. Id.

         Mr. Torgerson moved for reconsideration of the court's Order compelling the parties to arbitration. The court denied that motion on January 3, 2017. See Torgerson v. LCC Int'l, Inc., No. 16-2495-DDC-TJJ (D. Kan. Jan. 3, 2017), ECF 69.

         On January 17, 2017, Mr. Torgerson submitted a Demand for Arbitration to the American Arbitration Association (“AAA”). Mr. Torgerson's demand sought to assert a collective action on behalf of himself and others similarly situated. On June 30, 2017, the arbitrator issued an Order on Threshold Matters and on Respondent's Motion for Clause Construction Award. Doc. 13-1. In this Order, the arbitrator determined that the arbitration provisions in Mr. Torgerson's Agreement were valid and enforceable and that Mr. Torgerson's FLSA claims fall within the scope of the Agreement's arbitration provisions. Id. at 7-8. The arbitrator also concluded that the Agreement's Forum Selection Clause was valid and enforceable, requiring arbitration to take place in Arlington, Virginia. Id. at 10. Finally, the arbitrator concluded that the Agreement authorizes Mr. Torgerson to proceed on a collective basis. Id. at 11-13. Thus, the arbitrator dismissed LCC's Motion for a Final Clause Construction Award dismissing the collective action allegations. Id. at 13. The arbitrator described his order as a “non-final decision” that “does not pertain to class action.” Id. He also determined that the AAA rules do not require “a stay of these proceedings to permit a party to seek judicial review of this Order, since this Order is not a final class arbitration determination.” Id. (first citing AAA Supplementary Rule for Class Actions 5(d); then citing Jock v. Sterling Jewelers Inc., 188 F.Supp.3d 320, 327 (S.D.N.Y. 2016)).

         In response to the arbitrator's decision, LCC filed a Petition to Vacate the Arbitrator's Final Clause Construction Award in the Eastern District of Virginia.[3] Doc. 1. After the parties entered a Joint Stipulation to transfer LCC's Petition to the District of Kansas, the Eastern District of Virginia transferred the action to our court.[4] Doc. 11. Mr. Torgerson then filed a Memorandum in Opposition to LCC's Petition to Vacate. Doc. 13. And LCC filed a Reply. Doc. 15. The court considers the parties' competing arguments for and against vacating the arbitrator's award, below.

         II. Legal Standard

         The Federal Arbitration Act (“FAA”) provides that courts may vacate an arbitrator's decision but “only in very unusual circumstances.” Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 568 (2013) (quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 942 (1995)). “That limited judicial review . . . ‘maintain[s] arbitration's essential virtue of resolving disputes straightaway.'” Id. (quoting Hall Street Assocs., LLC v. Mattel, Inc., 552 U.S. 576, 588 (2008)). Because “[i]f parties could take ‘full-bore legal and evidentiary appeals, ' arbitration would become ‘merely a prelude to a more cumbersome and time-consuming judicial review process.'” Id. (quoting Hall Street Assocs., 552 U.S. at 588). And, “by agreeing to arbitrate, a party ‘trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration.'” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 31 (1991) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)).

         Consistent with this governing standard, our Circuit has explained that “[j]udicial review of arbitration panel decisions is extremely limited[.]” Dominion Video Satellite, Inc. v. Echostar Satellite, LLC, 430 F.3d 1269, 1275 (10th Cir. 2005). The Circuit even has described it as “‘among the narrowest known to law.'” Id. (quoting Bowen v. Amoco Pipeline Co., 254 F.3d 925, 932 (10th Cir. 2001)). The court must “afford maximum deference to the arbitrator's decision” because “[a]ny less deference would risk improperly substituting a judicial determination for the arbitrator's decision that the parties bargained for.” THI of N.M. at Vida Encantada, LLC v. Lovato, 864 F.3d 1080, 1083, 1084 (10th Cir. 2017) (citations, internal quotation marks, and internal alternations omitted).

         Section 10 of the FAA permits a federal district court to vacate an arbitration award in only four circumstances:

(1) where the award was procured by corruption, fraud, or undue means;
(2) where there was evident partiality or corruption in the arbitrators, or either of them;
(3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or
(4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.

9 U.S.C. § 10. Outside the four reasons enumerated in § 10, the Tenth Circuit also has recognized a “handful of judicially created reasons that a district court may rely on to vacate an arbitration award, ” including violation of public policy, manifest disregard of the law, and denial of a fundamentally fair hearing. Sheldon v. Vermonty, 269 F.3d 1202, 1206 (10th Cir. 2001); seealso THI of N.M., 864 F.3d at 1084 (recognizing that “[t]o supplement these statutory grounds, [the Tenth Circuit has] recognized a judicially created exception to the rule that even an erroneous interpretation or application ...


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