Waffle House Worker Must Convince Arbitrator Suit Fits in Court

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By Patrick Dorrian

A Waffle House worker must convince an arbitrator, rather than a federal judge, that a class action he filed against the breakfast restaurant chain before he was hired belongs in court, not arbitration, the U.S. Court of Appeals for the Eleventh Circuit ruled ( Jones v. Waffle House, Inc. , 2017 BL 274658, 11th Cir., No. 16-15574, 8/7/17 ).

The decision deals with the question of who decides the common issue of whether employment-related claims are subject to an arbitration agreement between a worker and an employer. The twist here is that William Jones filed his lawsuit against Waffle House Inc. before he was hired by one of the franchise’s stores in Kansas City, Mo., based on a previous denial of employment at a Florida Waffle House.

Jones filed the lawsuit in federal court in Florida in October 2015 on behalf of himself and a proposed class under the federal Fair Credit Reporting Act. He alleged that he and other job applicants were turned away for employment based on the results of background checks performed for Waffle House without being given a copy of the results or a chance to challenge them before being rejected.

But he continued to apply for work with Waffle House and later was hired by the Kansas City store in February 2016. When hired, he signed Waffle House’s arbitration agreement and didn’t mention anything about his lawsuit to Waffle House personnel in Missouri or anything about being hired to his lawyers, Judge Frank M. Hull said.

Waffle House eventually learned of Jones’ hire and, citing the arbitration agreement, asked the U.S. District Court for the Middle District of Florida to send his case to arbitration based on the agreement’s provision requiring Jones to arbitrate all “past, present, or future” employment-related claims. The district court denied the company’s motion. That was error, the Eleventh Circuit said.

Agreement Has ‘Delegation’ Provision

An arbitrator, not a court, is to decide whether Jones’ FCRA claims are subject to arbitration, under the arbitration agreement signed by Jones, Hull said. The agreement, Hull found, contains an express “delegation” provision reserving gateway issues such as the arbitrability of a claim to an arbitrator in the first instance.

When an arbitration agreement includes such a delegation provision, courts only have jurisdiction to review a challenge to that specific provision, the Eleventh Circuit said. In this case, Jones never specifically challenged the delegation provision in Waffle House’s agreement. Even if he had, his arguments would have failed, the appeals court ruled, remanding the case with instructions for the district court to grant the company’s motion to compel arbitration.

The delegation provision was written in clear, comprehensible language and Jones agreed to it voluntarily, the court said. Given that Jones didn’t disclose his lawsuit to the Kansas City Waffle House and didn’t tell his class-action lawyers about his new job, “Jones had the upper hand” and couldn’t show the sort of unequal bargaining power or other unfairness needed to undercut an arbitration clause, the court said.

Judges Stanley Marcus and Raymond C. Clevenger III joined the opinion.

Eggnatz Lopatin & Pascucci LLP and CounselOne represented Jones. Troutman Sanders LLP and Fisher Rushmer P.A. represented Waffle House.

To contact the reporter on this story: Patrick Dorrian in Washington at pdorrian@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Chris Opfer at copfer@bna.com

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