Court Opinion

ID: 4159127
Source: CourtListenerOpinion
Date Created: 2017-04-10 17:00:17.304088+00
Date Added: 2024-06-11T12:17:05.799699
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                 ____________

                                       No. 16-2089
                                      ____________

                                   IRENE NOVOSAD;
                                    KATHY MORRIS

                                             v.

                  BROOMALL OPERATING COMPANY LP;
             SAVASENIORCARE ADMINISTRATIVE SERVICES LLC,
                                          Appellants
                            ____________

                     On Appeal from the United States District Court
                        for the Eastern District of Pennsylvania
                              (E.D. Pa. No. 2-15-cv-06252)
                       District Judge: Honorable Juan R. Sanchez
                                     ____________

                   Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
                                    April 6, 2017

             Before: CHAGARES, SCIRICA and FISHER, Circuit Judges.

                                  (Filed: April 10, 2017)
                                      ____________

                                        OPINION *
                                      ____________

FISHER, Circuit Judge.

       *
        This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
       Does an arbitration clause stating that it “covers only claims by individuals and

does not cover class or collective actions” nonetheless require that a putative class and

collective action for overtime pay be sent to arbitration? The District Court thought not.

We will affirm.

                                             I

       Plaintiffs are Irene Novosad and Kathy Morris. Their former employers, Broomall

Operating Co., LP and SavaSeniorCare, LLC, are the defendants. Plaintiffs filed this

putative class and collective action against defendants under the Fair Labor Standards Act

and analogous Pennsylvania wage and hour statutes. They allege that defendants failed

to pay proper overtime compensation. Defendants moved to compel arbitration, pointing

to an arbitration clause in an Employment Dispute Resolution Program book that

plaintiffs agreed to as a condition of employment. The clause makes arbitration “the only

means of resolving employment related disputes.” 1 At the same time, however, the

clause also states that it “covers only claims by individuals and does not cover class or

collective actions.” 2 The District Court read this latter sentence as unambiguously

carving out class and collective actions from mandatory arbitration and accordingly

denied defendants’ motion. This appeal followed.

                                             II

       1
           J.A. 49a.
       2
           Id.
                                             2
       The District Court had jurisdiction under 28 U.S.C. §§ 1331 and 1367(a). We

have jurisdiction under 9 U.S.C. § 16(a)(1)(B). “We exercise plenary review over

questions regarding the validity and enforceability of an agreement to arbitrate.” 3

                                              III

       We agree with the District Court that the arbitration clause’s plain language

excludes class and collective actions from mandatory arbitration. Defendants’ contrary

argument renders that provision of the clause superfluous. It makes little sense for the

clause to state that it “covers only claims by individuals and does not cover class or

collective actions” only to require arbitration of such suits. We recognize, of course, that

there is a strong federal policy favoring arbitration. But that policy has its limits, and

courts apply the presumption of arbitrability “only where a validly formed and

enforceable arbitration agreement is ambiguous about whether it covers the dispute at

hand.” 4 Here, the text of the arbitration clause controls. That clause, we hold,

unmistakably provides that plaintiffs’ class and collective actions need not be subject to

arbitration.

                                              IV

       For the forgoing reasons, we will affirm the District Court’s order.

       3
       Puleo v. Chase Bank USA, N.A., 605 F.3d 172, 177 (3d Cir. 2010) (en banc).
       4
       Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287, 301 (2010); see
CardioNet, Inc. v. Cigna Health Corp., 751 F.3d 165, 173 (3d Cir. 2014).
                                           3