FILED
United States Court of Appeals
Tenth Circuit
January 5, 2016
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
RHONDA NESBITT, individually,
and on behalf of all others similarly
situated,
Plaintiff-Appellee,
v. No. 14-1502
FCNH, INC.; VIRGINIA MASSAGE
THERAPY, INC.; MID-ATLANTIC
MASSAGE THERAPY, INC.;
STEINER EDUCATION GROUP,
INC.; STEINER LEISURE LTD.; SEG
CORT LLC, d/b/a “Steiner Education
Group”,
Defendants-Appellants.
-------------------
SECRETARY OF LABOR; EQUAL
EMPLOYMENT OPPORTUNITY
COMMISSION,
Amici Curiae.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. No. 1:14-CV-00990-RBJ)
Todd D. Wozniak, of Greenberg Traurig, LLP, Atlanta, Georgia (Jeffrey M. Lippa
of Greenberg Traurig, LLP, Denver, Colorado; and Scott D. Segal of Law Offices
of Scott D. Segal PA, Miami, Florida, with him on the briefs), for Defendants-
Appellants.
David H. Miller (Rachel Graves with him on the brief), of Sawaya & Miller Law
Firm, Denver, Colorado, for Plaintiff-Appellee.
Sarah J. Starrett, Office of the Solicitor, Washington, D.C. (P. David Lopez,
General Counsel, Washington, D.C.; Carolyn L. Wheeler, Acting Associate
General Counsel, Washington, D.C.; Lorraine C. Davis, Assistant General
Counsel, Washington, D.C.; Julie L. Gantz, U.S. Equal Employment Opportunity
Commission; Washington, D.C.; M. Patricia Smith, Solicitor of Labor,
Washington, D.C.; Jennifer S. Brand, Associate Solicitor, Washington, D.C.; Paul
L. Frieden, Counsel for Appellate Litigation, Washington, D.C.; Jesse Z.
Grauman, U.S. Department of Labor, Office of the Solicitor, Washington, D.C.,
on the briefs), for Amici Curiae.
Before BRISCOE, LUCERO and McHUGH, Circuit Judges.
BRISCOE, Circuit Judge.
Plaintiff Rhonda Nesbitt filed this action claiming that defendants FCNH,
Inc., Virginia Massage Therapy, Inc., Mid-Atlantic Massage Therapy, Inc.,
Steiner Education Group, Inc., Steiner Leisure Ltd., and SEG CORT LLC
(collectively Defendants) violated the Fair Labor Standards Act (FLSA), 29
U.S.C. §§ 201–219, and various Colorado wage and hour laws by requiring her
and other students at the massage therapy school in which she was enrolled to
provide massage therapy services to clients without pay. Defendants moved to
stay the proceedings and compel arbitration, citing a paragraph in Nesbitt’s
written enrollment agreement entitled “Arbitration Agreement.” The district
court denied Defendants’ motion. Defendants now appeal. Exercising
2
jurisdiction pursuant to 9 U.S.C. § 16(a)(1)(C), we affirm.
I
The parties
Defendants own and operate approximately thirty-one for-profit
occupational schools throughout the United States that provide education in
massage therapy and/or esthetics. Each school also provides personal services,
including massage therapy and esthetics, to the public for fees that are typically
lower than charged elsewhere in the community. Such services are performed by
students of the schools. Although the schools are paid by the public for the
services provided, the schools do not compensate their students for the labor
performed.
Plaintiff Nesbitt, a resident of Denver, Colorado, enrolled in one of
Defendants’ schools: the Denver School of Massage Therapy (the School). As a
student at the School, Nesbitt was required to provide massage therapy services to
the public without compensation.
The Arbitration Agreement
At the time of her enrollment, Nesbitt executed a written Enrollment
Agreement that outlined the terms and conditions of her enrollment in the School.
Included in the Enrollment Agreement, under a section entitled “STUDENT
ACKNOWLEDGMENTS,” was the following paragraph:
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Arbitration Agreement
You, the student, and Steiner Education Group (“SEG”) agree that
any dispute or claim between you and SEG (or any company
affiliated with SEG or any of its or SEG’s officers, directors,
employees or agents) arising out of or relating to (i) this Enrollment
Agreement, or the Student’s recruitment, enrollment or attendance at
SEG, (2) the education provided by SEG, (3) SEG’s billing, financial
aid, financing options, disbursement of funds or career service
assistance, (4) the enforceability, existence, scope or validity of this
Arbitration Agreement, or (5) any claim relating in any manner, to
any act or omission regarding Student’s relationship with SEG or
SEG’s employees, whether such dispute arises before, during or after
Student’s attendance at SEG, and whether the dispute is based on
contract, statute, tort, or otherwise, shall be resolved through binding
arbitration pursuant to this Section (the “Arbitration Agreement”).
Arbitration shall be conducted in accordance with the Commercial
Rules of the American Arbitration Association applying federal law
to the fullest extent possible, and the substantive and procedural
provisions of the Federal Arbitration Act (9 U.S.C. §§1-16) shall
govern this Arbitration Agreement and any and all issues relating to
the enforcement of the Arbitration Agreement and the arbitrability of
claims between the parties. Judgment upon the award rendered by
the Arbitrator may be entered in any court having competent
jurisdiction. There shall be no right or authority for any claims
within the scope of this Arbitration Agreement to be arbitrated or
litigated on a class basis, or for the claims of more than one Student
to be arbitrated or litigated jointly or consolidated with any other
Student’s claims. Each party shall bear the expense of its own
counsel, experts, witnesses, and preparation and presentation of
proofs. THIS ARBITRATION AGREEMENT LIMITS CERTAIN
RIGHTS, INCLUDING THE RIGHT TO MAINTAIN A COURT
ACTION, THE RIGHT TO A JURY TRIAL, THE RIGHT TO
PARTICIPATE IN ANY FORM OF CLASS OR JOINT CLAIM,
THE RIGHT TO ENGAGE IN DISCOVERY (EXCEPT AS
PROVIDED IN THE APPLICABLE ARBITRATION RULES), AND
THE RIGHT TO CERTAIN REMEDIES AND FORMS OF RELIEF.
OTHER RIGHTS THAT YOU OR SEG WOULD HAVE IN COURT
ALSO MAY NOT BE AVAILABLE IN ARBITRATION. RIGHT
TO REJECT: I may reject this Arbitration Agreement by mailing a
signed rejection notice to: Attention: Steiner Education Group
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Corporate Office, Compliance Department, 2001 W Sample Road,
Ste. 318, Pompano Beach, FL 33064 within 30 days after the date I
sign this Enrollment Agreement. Any rejection notice must include
my name, address, telephone number.
Aplt. App. at 83.
The filing of this action
Nesbitt filed this purported class action against Defendants on April 7,
2014. The complaint alleged, in pertinent part, that Nesbitt and other students at
Defendants’ schools were effectively acting as employees of Defendants in
providing services to the public and, as such, were entitled under the FLSA and
the wage and hours laws of each state in which the schools operated to minimum
wages and/or overtime wages. The complaint also alleged that the arbitration
paragraph of the Enrollment Agreement signed by Nesbitt and other students
violated the National Labor Relations Act (NLRA), 29 U.S.C. § 151 et seq.
Defendants’ motion to compel arbitration
Defendants moved the district court to stay the proceedings and compel
Nesbitt to arbitrate her individual claims against Defendants. In support,
Defendants cited the arbitration paragraph of the Enrollment Agreement
(hereinafter Arbitration Agreement) that Nesbitt signed when she enrolled in the
School. Defendants also argued that allowing Nesbitt to proceed with her court
action would contravene the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1–16.
The district court denied Defendants’ motion. In doing so, the district court
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agreed with Defendants that the Arbitration Agreement “[wa]s not procedurally
unconscionable.” Aplt. App. at 146. The district court reasoned that “[w]hile the
contract was certainly one of adhesion, . . . Nesbitt was provided an opportunity
to read the provision before signing it; notice of a variety of waivers was included
in capitalized letters and in the same font size and typeface as the rest of the
enrollment form sections; and . . . Nesbitt was given the opportunity to opt out of
the provision if she so chose.” Id. “Furthermore,” the district court noted, “while
she may not have had an opportunity to become familiar with the document on the
date she signed it, she had thirty days to familiarize herself with its terms and opt
out after enrolling.” Id.
But the district court agreed with Nesbitt that two provisions of the
Arbitration Agreement—the provision requiring arbitration to be conducted in
accordance with the Commercial Rules of the American Arbitration Association
and the provision requiring each party to bear its own expenses—effectively
deprived her of her rights under the FLSA. More specifically, the district court
concluded that “the application of the Commercial Rules and their fee splitting
provisions, along with the condition that . . . Nesbitt bear [her own] costs . . . ,
would effectively preclude [her] from pursuing her claims.” Id. at 150–51. In
reaching this conclusion, the district court accepted Nesbitt’s estimate that “she
w[ould] likely incur between $2,320.50 and $12,487.50 in costs simply paying for
the arbitrator’s time,” id. at 148, and it noted her “affidavit establishing that she
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[could not] afford the costs of proceeding under the Commercial Rules,” id. at
149. The district court also concluded that requiring Nesbitt “to bear the costs of
her own counsel even should she prevail” violated public policy because it
amounted “to a prospective waiver of a statutory remedy while simultaneously
undermining the enforcement scheme erected by the FLSA.” Id. at 150.
Finally, the district court concluded that because the Arbitration Agreement
contained “no savings clause and . . . [wa]s unambiguous,” the two unenforceable
provisions could not “be stricken, rendering the entire Arbitration Agreement
unenforceable.” Id.
II
On appeal, Defendants challenge the district court’s denial of their motion
to stay the proceedings and compel arbitration. 1 “We review de novo . . . the
district court’s denial of a motion to compel arbitration.” Sanchez v. Nitro-Lift
Tech., 762 F.3d 1139, 1145 (10th Cir. 2014). “This review requires us to evaluate
whether the district court correctly found that no valid and enforceable agreement
1
The FAA “allows an interlocutory appeal from an order denying a motion
to compel arbitration under 9 U.S.C. § 4.” Int’l Bhd. of Elec. Workers, Local
#111 v. Pub. Serv. Co. of Colo., 773 F.3d 1100, 1104–05 (10th Cir. 2014); see
Holick v. Cellular Sales of N.Y., LLC, 802 F.3d 391, 394 n.5 (2d Cir. 2015)
(exercising jurisdiction pursuant to 9 U.S.C. § 16(a)(1)(C) over district court’s
order denying defendant’s motion to compel arbitration); 15B Charles Alan
Wright, Arthur R. Miller, and Edward H. Cooper, Federal Practice and Procedure
§ 3914.17, at 12 (2d ed. 1992) (“Appeal is expressly permitted [by § 16 of the
FAA] from orders that deny petitions or applications to order or compel
arbitration . . . .”).
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to arbitrate the parties’ dispute exists.” Riley Mfg. Co. v. Anchor Glass
Container Corp., 157 F.3d 775, 779 (10th Cir. 1998).
Section 2 of the FAA
It is undisputed that this case is governed by the FAA. Section 2 of the
FAA, described by the Supreme Court as the “primary substantive provision of
the Act,” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24
(1983), provides in pertinent part that
[a] written provision in any maritime transaction or a contract
evidencing a transaction involving commerce to settle by arbitration
a controversy thereafter arising out of such contract or transaction . .
. shall be valid, irrevocable, and enforceable, save upon such grounds
as exist at law or in equity for the revocation of any contract.
9 U.S.C. § 2. The Supreme Court “ha[s] described [§ 2] as reflecting both a
‘liberal federal policy favoring arbitration’ and the ‘fundamental principle that
arbitration is a matter of contract.’” AT&T Mobility LLC v. Concepcion, 563
U.S. 333, 339 (2011) (citations omitted) (first quoting Moses H. Cone, 460 U.S.
at 24, then quoting Rent–A–Center, West, Inc. v. Jackson, 561 U.S. 63, 67
(2010)). “In line with these principles, courts must place arbitration agreements
on an equal footing with other contracts, and enforce them according to their
terms.” Id. (citations omitted).
That said, “[t]he final phrase of § 2,” often referred to as the “saving
clause,” “permits agreements to arbitrate to be invalidated by ‘generally
applicable contract defenses, such as fraud, duress, or unconscionability,’ but not
8
by defenses that apply only to arbitration or that derive their meaning from the
fact that an agreement to arbitrate is at issue.” Id. (quoting Doctor’s Assocs., Inc.
v. Casarotto, 517 U.S. 681, 687 (1996)).
The effective vindication exception to the FAA
Federal courts have recognized what is referred to as “[t]he ‘effective
vindication’ exception” to the FAA. Am. Express Co. v. Italian Colors Rest., 133
S. Ct. 2304, 2310 (2013). This exception “originated as dictum in Mitsubishi
Motors [Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985)], where [the
Supreme Court] expressed a willingness to invalidate, on ‘public policy’ grounds,
arbitration agreements that ‘operat[e] . . . as a prospective waiver of a party’s
right to pursue statutory remedies.’” Id. (quoting Mitsubishi Motors, 473 U.S. at
637 n.19 (emphasis added in Am. Express)). The Supreme Court recently
acknowledged that this exception “would certainly cover a provision in an
arbitration agreement forbidding the assertion of certain statutory rights,” and
“would perhaps cover filing and administrative fees attached to arbitration that
are so high as to make access to the forum impracticable.” Id. at 2310–11.
In Shankle v. B-G Maint. Mgmt. of Colo., Inc., 163 F.3d 1230, 1233–35
(10th Cir. 1999), we applied the effective vindication exception to invalidate a
“mandatory arbitration agreement, which [wa]s entered into as a condition of
continued employment, and which require[d] [the] employee to pay a portion of
the arbitrator’s fees.” In doing so, we acknowledged the FAA’s “presumption in
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favor of enforcing agreements to arbitrate—even where those agreements cover
statutory claims.” Id. at 1234. But we concluded that this presumption falters “if
the terms of an arbitration agreement actually prevent an individual from
effectively vindicating his or her statutory rights.” Id. Consequently, we held,
“an arbitration agreement that prohibits use of the judicial forum as a means of
resolving statutory claims must also provide for an effective and accessible
alternative forum.” Id. We then noted that the arbitration agreement before us
required the plaintiff/employee to pay for half of the arbitrator’s fees, which
would have totaled between $1,875 and $5,000, and that the plaintiff/employee
“could not afford such a fee.” Id. We concluded that this “placed [the
plaintiff/employee] between the proverbial rock and a hard place—it prohibited
use of the judicial forum, where a litigant is not required to pay for a judge’s
services, and the prohibitive cost substantially limited use of the arbitral forum.”
Id. at 1235. Consequently, we affirmed the district court’s refusal to compel
arbitration of the plaintiff/employee’s claims.
Did Nesbitt fail to meet her burden on the effective vindication issue?
Defendants, citing the Supreme Court’s decision in Green Tree Fin. Corp.-
Alabama v. Randolph, 531 U.S. 79 (2000), argue that Nesbitt “failed to satisfy her
burden” of showing that “arbitration would be prohibitively expensive.” Aplt. Br.
at 18. Green Tree, which was issued slightly less than two years after our
decision in Shankle, addressed the question of whether an arbitration agreement
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was “unenforceable because it sa[id] nothing about the costs of arbitration, and
thus fail[ed] to provide [the plaintiff] protection from potentially substantial costs
of pursuing her federal statutory claims [under the Truth in Lending Act and the
Equal Credit Opportunity Act] in the arbitral forum.” 531 U.S. at 89. The Court
acknowledged that “[i]t may well be that the existence of large arbitration costs
could preclude a litigant . . . from effectively vindicating her federal statutory
rights in the arbitral forum.” Id. at 90. “But the record” before it, the Court
noted, did “not show that [the plaintiff] w[ould] bear such costs if she [went] to
arbitration.” Id. Indeed, the Court noted, “[t]he record reveal[ed] only the
arbitration agreement’s silence on the subject, and that fact alone,” the Court
stated, “[wa]s plainly insufficient to render it unenforceable.” Id. at 91. The
Court emphasized that the party “seek[ing] to invalidate an arbitration agreement
on the ground that arbitration would be prohibitively expensive . . . bears the
burden of showing the likelihood of incurring such costs.” Id. at 92. The Court
did not, however, reach the question of “[h]ow detailed the showing of prohibitive
expense must be before the party seeking arbitration must come forward with
contrary evidence.” Id.
Defendants argue that Nesbitt did not, as required by Green Tree, meet her
burden on the effective vindication issue for the simple reason that she “could
have opted out of the arbitration clause altogether and still enrolled in school.”
Aplt. Br. at 18. “Opting out,” they argue, “would have eliminated any dispute
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regarding the cost of arbitration.” Id.
We conclude, however, that this argument is at odds with the decision in
Green Tree. In Green Tree, the Court stated that, “[i]n determining whether
statutory claims may be arbitrated, we first ask whether the parties agreed to
submit their claims to arbitration, and then ask whether Congress has evinced an
intention to preclude a waiver of judicial remedies for the statutory rights at
issue.” 531 U.S. at 90. The Court then separately addressed the effective
vindication exception, suggesting that this exception stands apart from the issue
of whether the parties voluntarily agreed to submit their claims to arbitration. In
other words, we read Green Tree as implying that the effective vindication
exception can apply even in situations where both parties voluntarily agreed, at
the outset of their relationship, to arbitrate any claims that might arise between
them. Under this framework, the availability of an opt-out clause is thus relevant
only to the threshold question of “whether the parties agreed to submit their
claims to arbitration,” id., and does not impact the availability of the effective
vindication exception. Consequently, we reject the Defendants’ assertion that the
availability for Nesbitt to opt out of the Arbitration Agreement now prevents her
from invoking the effective vindication exception.
Defendants also argue that Nesbitt failed to satisfy her burden on the
effective vindication issue because she did not “pursue the possibility of deferred
or reduced [arbitration] fees.” Aplt. Br. at 18. Indeed, Defendants argue, the
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American Arbitration Association’s Commercial Rules include “fee-waiving
capabilities for parties in financial need.” Id. at 26–27. As a result, they argue,
“there is no way to determine what costs she actually would have incurred in
arbitration.” Id. at 18.
The problem with this argument, as Nesbitt convincingly notes, is that
“being at the mercy” of the arbitrator’s “discretion” as to whether to defer or
reduce her share of the arbitration fees “is not the same as the protections of the
FLSA.” Aplee. Br. at 25. And, indeed, both this court and others have rejected
arguments similar to the one now made by Defendants. In Shankle, we rejected
the employer’s argument that the arbitration agreement at issue should be
enforced because of the possibility that “an arbitrator could ‘shift’ fees by
awarding them as costs if the employee [wa]s successful on the merits.” 163 F.3d
at 1234, n.4. In doing so, we stated that “it [wa]s unlikely that an employee in
[the plaintiff’s] position, faced with the mere possibility of being reimbursed for
arbitrator fees in the future, would risk advancing those fees in order to access the
arbitral forum.” Id. Likewise, the Sixth Circuit has rejected a similar argument,
noting that “[i]n many cases, if not most, employees considering the
consequences of bringing their claims in the arbitral forum will be inclined to err
on the side of caution, especially when the worst-case scenario would mean not
only losing on their substantive claims but also the imposition of the costs of the
arbitration.” Morrison v. Circuit City Stores, Inc., 317 F.3d 646, 665 (6th Cir.
13
2003).
Finally, Defendants argue that Nesbitt failed to satisfy her burden on the
effective vindication issue because she “presented no evidence regarding the cost
of prosecuting her class or collective action claims in federal court, which
information was necessary for the Court to perform the requisite analysis of
comparing arbitration and court costs.” Aplt. Br. at 18. We are under no
obligation to consider this argument, however, because Defendants failed to raise
it below. 2 See Martinez v. Angel Expl., LLC, 798 F.3d 968, 974 (10th Cir. 2015)
(“We generally do not consider theories raised for the first time on appeal . . . .”).
Thus, in sum, we reject Defendants’ assertion that Nesbitt failed to meet
her burden on the effective vindication issue.
2
Even if we were to consider the issue, there is no merit to it. As the
Sixth Circuit stated in Morrison, “[i]n many, if not most, cases, employees (and
former employees) bringing . . . claims” against their employer (or former
employer) “will be represented by attorneys on a contingency-fee basis,” and thus
“will face minimal costs in the judicial forum, as the attorney will cover most of
the fees of litigation and advance the expenses incurred in discovery.” 317 F.3d
at 664. That appears to be precisely the situation in this case. Moreover, the
Sixth Circuit emphasized that “[i]n the arbitral forum, the litigant faces an
additional expense—the arbitrator’s fee and costs—which are never incurred in
the judicial forum.” Id. Again, that is precisely the case here: in the arbitral
forum, Nesbitt would be responsible for half of the arbitrator’s fee and costs. In
the judicial forum, in contrast, she would incur no such expenses. Finally, as
Nesbitt notes in her appellate response brief, she “will bear no . . . litigation costs
if she prevails [in federal court] on her [FLSA] claim” because of the FLSA’s fee-
shifting provisions. Aplee. Br. at 32.
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Did the district court misinterpret the Arbitration Agreement?
Defendants next argue that the district court, in invoking the effective
vindication exception to the FAA, erred in interpreting the fee and cost provisions
of the Arbitration Agreement. In particular, Defendants argue that “the
Arbitration Agreement is silent as to a prescribed allocation of arbitration fees
and arbitrator costs” and that “the District Court should have interpreted [this]
silence in a manner that would have eliminated the potential for burdensome fees,
by requiring Defendants to bear those costs.” Aplt. Br. at 19.
Defendants, however, are wrong on this point. To be sure, the Arbitration
Agreement does not expressly mention arbitration fees and arbitrator costs. But it
does invoke the AAA’s Commercial Rules. And those Commercial Rules
expressly address the issue of such fees and costs. In particular, Rule 53, entitled
“Administrative Fees,” states:
As a non-profit organization, the AAA shall prescribe administrative
fees to compensate it for the cost of providing administrative
services. The fees in effect when the fee or charge is incurred shall
be applicable. The filing fee shall be advanced by the party or
parties making a claim or counterclaim, subject to final
apportionment by the arbitrator in the award. The AAA may, in the
event of extreme hardship on the part of any party, defer or reduce
the administrative fees.
AAA, Commercial Arbitration Rules, Rule 53 (2013). In turn, Rule 54, entitled
“Expenses,” provides:
The expenses of witnesses for either side shall be paid by the party
producing such witnesses. All other expenses of the arbitration,
15
including required travel and other expenses of the arbitrator, AAA
representatives, and any witness and the cost of any proof produced
at the direct request of the arbitrator, shall be borne equally by the
parties, unless they agree otherwise or unless the arbitrator in the
award assesses such expenses or any part thereof against any
specified party or parties.
AAA, Commercial Arbitration Rules, Rule 54 (2013). Thus, in sum, the
Arbitration Agreement is not, as the Defendants suggest, “silent” on the issue of
fees and costs, but rather effectively incorporates Rules 53 and 54.
Defendants also argue that “the District Court’s conclusory assertion that
the Arbitration Agreement precludes an arbitrator from awarding attorneys’ fees
at the conclusion of a successful FLSA claim is unsupportable.” Aplt. Br. at 19.
“At most,” they argue, “the Arbitration Agreement requires Plaintiff to initially
bear the expense of her own counsel.” Id. “But,” Defendants argue, “the
arbitration clause makes clear that an award of attorneys’ fees is nevertheless
available by both expressly requiring an arbitrator to apply federal law ‘to the
fullest extent possible’ and by incorporating the AAA Commercial Rules which
expressly allow post-award fee shifting.” Id.
The Arbitration Agreement provides, in pertinent part, that “[e]ach party
shall bear the expense of its own counsel . . . .” Aplt. App. at 83. Thus, without
question, Nesbitt would be required to bear, at least initially, her own attorneys’
fees. What is less clear is whether this express fee provision can be overridden
by other portions of the Arbitration Agreement. As Defendants note, the
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Arbitration Agreement states that “[a]rbitration shall be conducted in accordance
with the Commercial Rules of the American Arbitration Association applying
federal law to the fullest extent possible.” Id. Further, it is undisputed that the
FLSA, which presumably would be the “federal law” applied by the arbitrator,
requires a district court to award “a reasonable attorney’s fee . . . and costs of the
action” to a successful plaintiff. 29 U.S.C. § 216(b). As for the American
Arbitration Association’s Commercial Rules (which, as noted, are incorporated
into the Arbitration Agreement), they state that “[t]he award of the arbitrator(s)
may include . . . an award of attorneys’ fees if all parties have requested such an
award or it is authorized by law or their arbitration agreement.” AAA,
Commercial Arbitration Rules, Rule 47(d)(ii) (2013). Finally, the Arbitration
Agreement itself expressly states, in all-capital letters, that it limits “THE RIGHT
TO CERTAIN REMEDIES AND FORMS OF RELIEF” that would otherwise be
available in a court proceeding. Aplt. App. at 83.
Considering all of these provisions together, we are left to conclude that the
Arbitration Agreement is internally inconsistent and thus ambiguous regarding the
availability of a fee award for Nesbitt. On the one hand, the Arbitration
Agreement expressly states that each party shall bear its own fees and that
remedies and forms of relief available in court may be limited by the Agreement.
On the other hand, the Arbitration Agreement incorporates both the applicable
substantive law at issue, in this case the FLSA, and the AAA’s Commercial
17
Rules. As noted, these provisions would appear to authorize the arbitrator, should
Nesbitt prevail, to include fees in his or her award.
All of which leads us to the same conclusion we reached in Shankle: “it is
unlikely that an employee in [the plaintiff’s] position, faced with the mere
possibility of being reimbursed for arbitrator fees in the future, would risk
advancing those fees in order to access the arbitral forum.” 163 F.3d at 1234
n.4.
III
For the reasons outlined above, we AFFIRM the district court’s order
denying Defendants’ motion to stay the proceedings and compel arbitration. 3
3
In her appellate response brief, Nesbitt argues that the district court erred
in rejecting her argument that the Arbitration Agreement was unenforceable
because it was unconscionable. We find it unnecessary to reach this issue.
18