Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-14-01829/USCOURTS-ca8-14-01829-0/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 

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United States Court of Appeals

For the Eighth Circuit

___________________________

No. 14-1829

___________________________

Jacqueline L. Conners, individually and on behalf of all others similarly situated;

Rachel Hobbs, individually and on behalf of all others similarly situated; Blaire

Larson, individually and on behalf of all others similarly situated; Maria

Campanelli, individually and on behalf of others similarly situated; Katey Tiller,

individually and on behalf of all others similarly situated; Sarina Ellis, individually

and on behalf of others similarly situated; Cecilie Washburn, individually and on

behalf of all others similarly situated; Whitney Koch, individually and on behalf of

all others similarly situated; Lacie Morgan, individually and on behalf of all others

similarly situated

lllllllllllllllllllll Plaintiffs - Appellees

v.

Gusano’s Chicago Style Pizzeria, doing business as Kennedy’s Pizzeria Inc.;

Catfish Pies Inc.; Crazy Pies Inc.; Fayetteville Pies Inc.; Gusano’s Chicago Style

Pizzeria of Bella Vista Inc.

lllllllllllllllllllll Defendants - Appellants

Hendrix Brands Inc.

lllllllllllllllllllll Defendant

Pizza Profits Inc.; Show Me Pies Inc.; Ben Bisenthal; Clearwater Social Club Inc.,

doing business as Gusano’s Chicago Style Pizzeria of Conway #1 Inc.; Three

Buddies Incorporated

lllllllllllllllllllll Defendants - Appellants

Appellate Case: 14-1829 Page: 1 Date Filed: 03/09/2015 Entry ID: 4251781 
Timothy Chappell

lllllllllllllllllllll Defendant

____________

Appeal from United States District Court 

for the Eastern District of Arkansas - Little Rock

____________

 Submitted: January 14, 2015

 Filed: March 9, 2015 

____________

Before RILEY, Chief Judge, BEAM and COLLOTON, Circuit Judges.

____________

RILEY, Chief Judge.

After Jacqueline Conners filed this Fair Labor Standards Act (FLSA) collective

action, see 29 U.S.C. § 216(b), against her former employer and a number of

associated entities (collectively, Gusano’s Pizza), several of these entities

implemented a new arbitration policy applicable to their current employees, which

required all employment-related disputes between the current employees and

Gusano’s Pizza to be resolved though individual arbitration. Citing public policy

reasons, the district court declared the arbitration policy unenforceable insofar as it

could prevent current employees of these restaurants from joining this collective

action. On interlocutory appeal, we conclude former employees like Conners lack

standing under Article III of the United States Constitution to challenge the arbitration

agreement, which applied only to current employees. We vacate the district court’s

order and remand the case to the district court.

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I. BACKGROUND

A. Facts

On January 2, 2014, Conners, a former server at a Gusano’s Pizza restaurant,

filed this collective action on behalf of herself and other current and former Gusano’s

Pizza restaurant servers, alleging the employees were subjected to illegal tip pooling

in violation of the FLSA. Several other former employees soon opted into the action.

A month later, the Gusano’s Pizza restaurants each implemented a new

arbitration policy in the form of an agreement1

 that purports to bind all current

employees who did not opt out of the arbitration agreement. At the top of the first

page of each arbitration agreement, the following text appears:

This Agreement to Arbitrate Disputes (called the “Agreement”) is a

contract between you and [employer name]. The Agreement sets out

your rights and the rights of [employer name] in connection with the

resolution of employment-related disputes. You have the right to ask

independent advisors of your choice, including lawyers, to explain this

Agreement to you if that is your choice, but you are not required to do

so.

The agreement goes on to explain its scope, the required procedures for invoking

arbitration, the effect the agreement will have on the employee’s ability to pursue

relief in court, the right of every employee to opt out of the agreement free of

retaliation, and how to opt out effectively. Along with the arbitration agreement, each

employee received an opt-out form and an explanatory memorandum from the

restaurant’s general manager. The memorandum is a two-page document, describing

the agreement’s fundamental terms in plain English. The memorandum specifically

explains that one effect of the agreement, should an employee not opt out, is to

prevent the employee from joining Conners in the present collective action.

1

Although each restaurant adopted its own policy, the parties do not dispute that

the substance and format of each is identical.

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B. Procedure

Shortly after Gusano’s Pizza began introducing the new agreement to its current

employees, Conners and the other plaintiffs—who at that time were all former

employees, not subject to the agreement (collectively, former employees)—filed an

“emergency motion to prohibit improper communications with putative class

members,” in which the former employees asked the district court, among other

matters, to (1) “invalidat[e] the [arbitration] agreement as it applies to the claims in

this litigation,” (2) “prohibit[] the named defendants from communicating with

represented opt-in plaintiffs and putative class members regarding the subject matter

of this litigation,” and (3) “authoriz[e] Plaintiffs to issue a Court-approved corrective

notice at the named defendants’ expense.” Simultaneously, in another emergency

motion, the former employees also sought conditional class certification. The district

court denied both motions but avoided ruling definitively on the substance of the first

motion, scheduling a hearing “to determine whether there has been improper

communications with the putative class members and whether defendants’

communications with putative class members should be enjoined or curtailed.”

Throughout the hearing, the district court explained its primary concern with

this case is the “disincentive to plaintiffs’ lawyers in bringing these types of cases.”

The district court feared employers would “jump in real quick” “every time somebody

gets ready to get a class going” “and give [its employees] arbitration agreements and

cut the plaintiffs off at the knees.” “[A]s a policy concern,” the district court

questioned whether it “should engage in allowing disincentives to class actions” that

might make it infeasible to pursue legitimate claims with small payouts. Upon hearing

the evidence and arguments, the district court deferred its final conclusion, stating it

needed to reexamine the filings and law before reaching a decision. Several days

later, the district court granted the former employees’ “motion for a temporary

injunction . . . for the reasons stated during the . . . temporary injunction hearing and

to prevent a chilling effect on future collective actions under the [FLSA].” The

district court concluded its one-page written order by “enjoin[ing Gusano’s Pizza]

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from enforcing the arbitration agreement against any plaintiffs who choose to join this

action.”

Gusano’s Pizza timely filed this interlocutory appeal, asserting appellate

jurisdiction under 28 U.S.C. § 1292(a)(1).

II. DISCUSSION

A. Appellate Jurisdiction

Before all else, we must address our jurisdiction to decide this appeal. See

Kreditverein der Bank Austria Creditanstalt fur Niederösterreich und Bergenland v.

Nejezchleba, 477 F.3d 942, 945 (8th Cir. 2007). “[T]he courts of appeals shall have

jurisdiction of appeals from . . . [i]nterlocutory orders of the district courts of the

United States . . . granting . . . injunctions.” 28 U.S.C. § 1292(a)(1).

Although the district court understood the former employees’ motion as one for

a “temporary injunction,” held a “temporary injunction hearing,” and “enjoined

[Gusano’s Pizza] from enforcing the arbitration agreement,” the former employees

now contend the district court’s order was not truly an “injunction” within the

meaning of § 1292(a)(1). They instead propose that the district court “merely

exercised its discretion . . . to control the conduct and progress of this litigation”—an

act not immediately appealable. See, e.g., McLaughlin Gormley King Co. v. Terminix

Int’l Co., 105 F.3d 1192, 1194 (8th Cir. 1997) (concluding that despite the district

court’s label of “injunction,” the order at issue “look[ed] very much like a

nonappealable order controlling the conduct and progress of litigation before the

court”). The former employees are right to look beyond the district court’s label, see,

e.g., id., but here, the label appears well-chosen, and the substance of the court’s order

confirms § 1292(a)(1)’s applicability.

The Supreme Court has explained § “1292(a)(1) . . . provide[s] appellate

jurisdiction over orders that grant or deny injunctions and orders that have the

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practical effect of granting or denying injunctions and have ‘serious, perhaps

irreparable, consequence.’” Gulfstream Aerospace Corp. v. Mayacamas Corp.,

485 U.S. 271, 287-88 (1988) (emphasis added) (quoting Carson v. Am. Brands, Inc.,

450 U.S. 79, 84 (1981)). Applying this rule, we have held an order denying a motion

to compel arbitration was immediately appealable under § 1292(a)(1), reasoning, 

“Orders denying arbitration do have an injunctive effect and have

serious, perhaps irreparable, consequence. The order is injunctive

because it enjoins proceedings in another tribunal. It has serious

consequences because of the irreparable harm that exists when

arbitration is denied ab initio. If a party must undergo the expense and

delay of trial before being able to appeal, the advantages of

arbitration—speed and economy—are lost forever.”

Nordin v. Nutri/System, Inc., 897 F.2d 339, 342 (8th Cir. 1990) (alteration omitted)

(quoting Kan. Gas & Elec. Co. v. Westinghouse Elec. Corp., 861 F.2d 420, 422 (4th

Cir. 1988)). The district court’s order here has the same “injunctive effect,” id.,

because it prevents Gusano’s Pizza from using its agreement with current employees

to relocate a dispute to an arbitral forum. Like Nordin, the district court’s order

“enjoining” the arbitration agreement’s enforcement as to current employees “can

only be effectively challenged on immediate appeal because the advantages of

arbitration will be forever lost if the appeal is delayed” until the entry of a final

judgment. Id.

We are not convinced by the former employees’ suggestion the district court’s

order, like that in McLaughlin, was simply “‘controlling the conduct and progress of

litigation before the court.’” (Quoting McLaughlin, 105 F.3d at 1194). McLaughlin

turned on a district court order “briefly freezing the parties’ dispute resolution

activities until it determine[d] arbitrability.” Id. That order, which “further[ed the

district court’s] expeditious determination of the arbitrability question” and spared the

parties the cost of a potentially futile arbitration, did not deny with finality the

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arbitration question as does the district court’s order in this case. Id. Unlike the

present situation, McLaughlin did not trigger the concerns expressed in Nordin.

Both the form and substance of the district court’s order establish it is

immediately appealable under § 1292(a)(1).

B. Standing

Our second, equally indispensable task is determining whether the former

employees had Article III standing to seek an injunction of the arbitration agreement,

see Park v. Forest Serv. of U.S., 205 F.3d 1034, 1036 (8th Cir. 2000), even though the

agreement covers only current employees. “In limiting the judicial power to ‘Cases’

and ‘Controversies,’ Article III of the Constitution restricts it to the traditional role of

Anglo-American courts, which is to redress or prevent actual or imminently

threatened injury to persons caused by private or official violation of law.” Summers

v. Earth Island Inst., 555 U.S. 488, 492 (2009). 

“The doctrine of standing . . . requires federal courts to satisfy themselves that

‘the plaintiff[s] ha[ve] alleged such a personal stake in the outcome of the controversy

as to warrant [their] invocation of federal-court jurisdiction.’” Id. at 493 (alterations

added) (quoting Warth v. Seldin, 422 U.S. 490, 498 (1975)). “To seek injunctive

relief, [the] plaintiff[s] must show that [they are] under threat of suffering ‘injury in

fact’ that is concrete and particularized; the threat must be actual and imminent, not

conjectural or hypothetical; it must be fairly traceable to the challenged action of the

defendant; and it must be likely that a favorable judicial decision will prevent or

redress the injury.” Id.

The former employees claim they “ha[ve] a legally cognizable interest in”

pursuing their FLSA claim in the form of a collective action, a mechanism that

permits employees with similar claims to pool their resources and ease the individual

burden of litigation. According to the former employees, their procedural “right to

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Appellate Case: 14-1829 Page: 7 Date Filed: 03/09/2015 Entry ID: 4251781 
bring a collective action was curtailed by Gusano’s [Pizza’s]” arbitration agreement,

causing them to “suffer[] a concrete and particularized injury”: that is, an increased

individual share of litigation expenses. It may be that this increased portion of

expenses is “concrete and particularized,” as the former employees assert, but they

forget that the threat of this injury also “must be actual and imminent, not conjectural

or hypothetical.” Id.; see also Davis v. FEC, 554 U.S. 724, 734 (2008) (“A party

facing prospective injury has standing to sue where the threatened injury is real,

immediate, and direct.”). 

We must assess standing in view only of the facts that existed at the time the

former employees challenged the enforceability of the arbitration agreement. See

Steger v. Franco, Inc., 228 F.3d 889, 892 (8th Cir. 2000) (“Because standing is

determined as of the lawsuit’s commencement, we consider the facts as they existed

at that time.”); Park, 205 F.3d at 1037-38, 1040 (finding a lack of standing to seek

injunctive relief because the plaintiff could not satisfy her burden of showing a “real

and immediate threat” and deciding she could not “use evidence of what happened

after the commencement of the suit to make this showing”). At the time the crucial

motion was filed here, only former, and no current, employees had opted into this

collective action, and there was no evidence suggesting this circumstance would soon

change.

When asked at the evidentiary hearing how many current employees were

expected to join the lawsuit, Gusano’s Pizza’s counsel said he “ha[d] no idea,”

because despite the fact that “plaintiffs’ attorneys in this case ha[d] actively solicited

clients for months” at that point, “everyone . . . signed up so far [wa]s an exemployee.” Asked the same question, counsel for the former employees only could

provide a hopeful guess: “I think we will get a significant percentage, but I’m being

optimistic.” The former employees’ counsel explained his primary concern “is that

the process will be preserved” and asserted “the practical effect” of granting an

injunction is that employees “will get the Court-ordered notice if the Court asserts a

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Appellate Case: 14-1829 Page: 8 Date Filed: 03/09/2015 Entry ID: 4251781 
collective action, and employees will get to exercise their choice whether or not they

want to join into this case . . . employees will get the right to choose.” Yet we find no

indication that a current employee subject to the arbitration agreement was expected,

at the time of the motion, to join the lawsuit.

On this record, the former employees have not satisfied their burden of proving

a non-conjectural threat of harm. See Summers, 555 U.S. at 493 (explaining the

plaintiff “bears the burden of showing that he has standing for each type of relief

sought”). With no plaintiffs against whom the arbitration agreement could be

enforced, nor an indication that the agreement chilled the participation of any current

employees, one must resort to pure speculation to conclude the former employees’

portion of the litigation costs is any greater than it would have been absent the

agreement. This does not satisfy Article III.

The former employees also cannot step into the shoes of current employees who

are putative plaintiffs. The Supreme Court recently held that the sole plaintiff in an

FLSA collective action whose individual claim was mooted during the course of

litigation “ha[d] no personal interest in representing putative, unnamed claimants.” 

Genesis Healthcare Corp. v. Symczyk, 569 U.S. ___, ___, 133 S. Ct. 1523, 1532

(2013). The Supreme Court rejected the argument that the plaintiff held a personal

stake in the “case based on a statutorily created collective-action interest in

representing other similarly situated employees under [29 U.S.C.] § 216(b).” Id. at

___, 133 S. Ct. at 1530. The Supreme Court reasoned that in FLSA collective actions

“‘conditional certification’ does not produce a class with an independent legal status”

as it does in class actions under Federal Rule of Civil Procedure 23, nor does it “join

additional parties to the action.” Id. “The sole consequence of conditional

certification is the sending of court-approved written notice to employees, who in turn

become parties to a collective action only by filing written consent with the court.” 

Id. (citations omitted). For the same reason the plaintiff in Genesis Healthcare could

not overcome mootness based on the rights of “putative, unnamed claimants,” id. at

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___, 133 S. Ct. at 1532, the former employees cannot gain standing here by defending

the rights of current employees, not yet joined in the action.

III. CONCLUSION

Because the former employees lacked standing to challenge the current

employees’ arbitration agreement, the district court was without jurisdiction to enjoin

that agreement’s enforcement. We vacate the district court’s injunction order and

remand this case for further proceedings.

______________________________

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