United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 10-3310
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Mack Green; Robynne Barber; *
Michael Kennedy; Leon Gilmer; *
Michael A. Robertson; David Thomas; *
Eddie L. Oliver; Andre T. Shipp, *
and all others similarly situated, *
*
Appellants, * Appeal from the United States
* District Court for the
v. * District of Minnesota.
*
SuperShuttle International, Inc; *
SuperShuttle Franchise Corporation; *
SuperShuttle of Minnesota, Inc., *
*
Appellees. *
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Submitted: May 11, 2011
Filed: September 6, 2011
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Before WOLLMAN, BYE, and SHEPHERD, Circuit Judges.
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BYE, Circuit Judge.
Mack Green and other current or former shuttle bus drivers at the Minneapolis-
St. Paul International Airport (collectively Green) brought suit against SuperShuttle
International, Inc., SuperShuttle Franchise Corporation, and SuperShuttle of
Minnesota, Inc. (collectively SuperShuttle) in Minnesota state court alleging
violations of the Minnesota Fair Labor Standards Act (MFLSA) arising from
SuperShuttle's alleged misclassification of its drivers as franchisees rather than
employees. After SuperShuttle removed the action to federal court, the district court
granted SuperShuttle's motion to compel arbitration, held the drivers must submit their
claims to the arbitrator on an individual basis rather than as a class because of class
action waivers in their contracts, and dismissed the suit without prejudice.
Green appealed claiming the district court (1) erred in granting the motion to
compel arbitration because the drivers are exempt from arbitration as transportation
workers, (2) erred in enforcing the class action waiver clauses in the drivers' contracts
because they are unenforceable under Minnesota law, and (3) erred in dismissing the
federal action instead of staying it pending arbitration. We affirm in part and reverse
in part.
I
SuperShuttle owns a shared-ride shuttle service which operates at the airport.
SuperShuttle classified its shuttle bus drivers as franchisees and required them to sign
Unit Franchise Agreements (UFAs) specifying the rights and obligations of the
parties. Green, along with several other current and former shuttle bus drivers,
believed he should be characterized as an employee rather than a franchisee. Green
sued SuperShuttle in Minnesota state court alleging violations of the MFLSA. Green
sought to recover lost wages, employment benefits, and restitution of franchise fees.
SuperShuttle removed the action to federal court asserting jurisdiction under the
Class Action Fairness Act (CAFA), 28 U.S.C. § 1332(d)(2). Green moved to remand
the case to state court. The district court denied the motion to remand. Green
appealed and we summarily affirmed. See Green v. SuperShuttle Int'l, Inc., No. 10-
1564 (8th Cir. May 26, 2010). SuperShuttle then moved the district court to compel
Green to submit to arbitration, relying upon an arbitration clause in the UFAs. The
arbitration clause provided:
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[A]ny controversy arising out of this Agreement . . . shall be submitted
to the American Arbitration Association . . . for final and binding
arbitration in accordance with its commercial rules and procedures that
are in effect at the time the arbitration is filed. . .. Nothing in this
Agreement shall be construed as limiting or precluding either party from
bringing any action in any court of competent jurisdiction for injunctive
or other extraordinary relief.
Green argued he is exempt from arbitration under the Federal Arbitration Act
(FAA) because he is a transportation worker. See 9 U.S.C. § 1 (indicating the FAA
shall not apply "to contracts of employment of . . . any . . . class of workers engaged
in . . . interstate commerce"); see also Circuit City Stores, Inc. v. Adams, 532 U.S.
105, 115-19 (2001) (explaining the phrase "workers engaged in . . . interstate
commerce" refers to transportation workers and holding Section 1 "exempts from the
FAA . . . contracts of employment of transportation workers"). The district court
determined it did not need to decide whether Section 1 of the FAA exempted Green
from arbitration because his UFA assigned the threshold question of arbitrability to
the arbitrator. As a result, the district court granted SuperShuttle's motion to compel
arbitration, leaving to the arbitrator the question whether Green was exempt from
arbitration as a transportation worker.
The district court also determined the drivers were required to submit their
claims to the arbitrator individually rather than as a class. The district court relied
upon a class action waiver provision in the UFAs which provided: "Any arbitration,
suit, action or other legal proceeding shall be conducted and resolved on an individual
basis only and not on a class-wide, multiple plaintiff, consolidated, or similar basis."
The district court then dismissed the federal action without prejudice.
Green filed a timely appeal. On appeal, Green contends the district court lacked
subject matter jurisdiction to compel arbitration because the FAA exempts
transportation workers from its provisions. Green also contends he could not waive
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his right to a class action under Minnesota law, and therefore the district court erred
by enforcing the class action waivers and directing him and the other drivers to submit
their claims to the arbitrator on an individual basis. Green also argues the district
court should have let the arbitrator decide whether the class action waivers were
enforceable. Finally, Green argues the district court erred when it dismissed the
federal action without prejudice rather than staying it pending the completion of the
arbitration.
II
We review the district court's order granting the motion to compel arbitration
de novo. PRM Energy Sys., Inc. v. Primenergy, L.L.C., 592 F.3d 830, 833 (8th Cir.
2010).
Green argues the district court lacked jurisdiction to compel arbitration because
the FAA exempts transportation workers. Application of the FAA's transportation
worker exemption is a threshold question of arbitrability in the dispute between Green
and SuperShuttle. Parties can agree to have arbitrators decide threshold questions of
arbitrability. See Rent-A-Center, West, Inc. v. Jackson, 130 S.Ct. 2772, 2777 (2010)
("We have recognized that parties can agree to arbitrate 'gateway' questions of
'arbitrability,' such as whether the parties have agreed to arbitrate or whether their
agreement covers a particular controversy.").
In this case, the UFAs specifically incorporated the Rules of the American
Arbitration Association (AAA). Those Rules provide that an arbitrator has the power
to determine his or her own jurisdiction over a controversy between the parties. By
incorporating the AAA Rules, the parties agreed to allow the arbitrator to determine
threshold questions of arbitrability. See Fallo v. High-Tech Inst., 559 F.3d 874, 878
(8th Cir. 2009). Green therefore agreed to have the arbitrator decide whether the
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FAA's transportation worker exemption applied, and thus the district court did not err
in granting the motion to compel arbitration.
Green also claims the district court erred when it enforced the class action
waivers in the UFAs and directed the drivers to submit their claims to the arbitrator
individually rather than as a class. He contends the class action waivers in the UFAs
are unenforceable under Minnesota law. In the alternative, he claims the district court
should have left to the arbitrator the question whether the class action waivers were
enforceable.
The Supreme Court recently held the FAA preempted a state-law-based
unconscionability challenge to a class action waiver provision in arbitration
agreements between AT&T and some of its cellular phone customers. AT&T
Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1753 (2011). Like the phone customers
in Concepcion who based their challenge to the enforceability of a class action waiver
provision based upon California law, Green and the other drivers make a Minnesota-
state-law-based challenge to the enforceability of the class action waivers in the
UFAs. Our reading of Concepcion convinces us the state-law-based challenge
involved here suffers from the same flaw as the state-law-based challenge in
Concepcion – it is preempted by the FAA. Consequently, Concepcion forecloses
Green's claim that the district court erred in concluding the class action waivers were
enforceable.
Finally, Green contends the district court should have stayed this action pending
completion of the arbitration, rather than dismissing it without prejudice. We have not
previously addressed which standard of review applies when a party challenges the
district court's dismissal of an action in favor of arbitration, as opposed to a stay of the
action. We conclude such a decision should be reviewed for an abuse of discretion.
See Bercovitch v. Baldwin Sch., Inc., 133 F.3d 141, 156 n.21 (1st Cir. 1998)
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(indicating a district court has discretion to dismiss, rather than stay, a case "when all
of the issues before the court are arbitrable").
The FAA generally requires a federal district court to stay an action pending an
arbitration, rather than to dismiss it. See 9 U.S.C. § 3 (stating district courts "shall . . .
stay the trial of the action until such arbitration has been had in accordance with the
terms of the agreement") (emphasis added). The district court relied upon a judicially-
created exception to the general rule which indicates district courts may, in their
discretion, dismiss an action rather than stay it where it is clear the entire controversy
between the parties will be resolved by arbitration. See Jann v. Interplastic Corp., 631
F. Supp. 2d 1161, 1167 (D. Minn. 2009) (collecting cases).
In this case, it is not clear all of the contested issues between the parties will be
resolved by arbitration. The arbitrator may very well determine the transportation
worker exemption applies. If such happens, Green and the other drivers may be
prejudiced by the dismissal of the district court action because the statute of
limitations may run and bar them from refiling complaints in state or federal court.
Under these circumstances, we believe the district court abused its discretion in
dismissing the action, rather than staying it pending completion of the arbitration.
III
We affirm the district court's grant of the motion to compel arbitration, as well
as its enforcement of the class action waivers. We reverse the order dismissing this
case without prejudice rather than staying it pending completion of arbitration, and
remand for further proceedings consistent with this opinion.
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SHEPHERD, Circuit Judge, concurring in part and concurring in the result.
I concur in the court’s opinion except for its holding that the abuse of discretion
standard applies to a district court’s decision to dismiss or stay an action “when all of
the issues before the court are arbitrable.” See Bercovitch v. Baldwin Sch., Inc., 133
F.3d 141, 156 n.21 (1st Cir. 1998). With respect to this issue, I agree with the court’s
conclusion that the district court should have stayed this case pending arbitration
under 9 U.S.C. § 3. However, I would have reached this conclusion regardless of
whether nonarbitrable issues were involved because I believe section 3 affords the
district court no discretion to dismiss a case even “where it is clear the entire
controversy between the parties will be resolved by arbitration.” Ante, at 6. In my
view, the plain language of section 3 and the purpose of the FAA require district
courts to stay an action pending arbitration upon a party’s application, and therefore
district courts should not be afforded discretion to dismiss the action.
“Generally, where the text of a statute is unambiguous, the statute should be
enforced as written, and only the most extraordinary showing of contrary intentions
in the legislative history will justify a departure from that language.” United States
v. Sabri, 326 F.3d 937, 943 (8th Cir. 2003) (internal citations and quotations omitted).
Section 3 directs the district court to enter an order staying the proceedings upon
application of a party: “the court . . . shall on application of one of the parties stay the
trial of the action.” 9 U.S.C. § 3. Nothing in the statute gives the court discretion to
dismiss the action when all of the issues in the case are arbitrable. Moreover, when
Congress uses the word “shall,” it “normally creates an obligation impervious to
judicial discretion.” See Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach,
523 U.S. 26, 35 (1998). Although this rule of statutory construction is not absolute,
Dubois v. Thomas, 820 F.2d 943, 948 (8th Cir. 1987), no language in section 3
indicates a contrary legislative intent.
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I recognize that the court adopts the approach of the majority of the circuits that
have spoken to this issue. See, e.g., Choice Hotels Int’l, Inc. v. BSR Tropicana
Resort, Inc., 252 F.3d 707, 709-10 (4th Cir. 2001); Bercovitch, 133 F.3d at 156 &
n.21; Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992);
Sparling v. Hoffman Constr. Co., 864 F.2d 635, 638 (9th Cir. 1988). In my view,
however, the Third Circuit has adopted the correct—albeit minority—approach in
declining to engage in a tortured interpretation of section 3, and thereby taking
Congress at its word. See Lloyd v. HOVENSA, LLC, 369 F.3d 263, 268-71 (3d Cir.
2004).
I also find convincing the analysis employed by the Third Circuit in support of
its plain language approach. In particular, the Third Circuit emphasizes that one of
the main purposes of the FAA is to enable a party entitled to arbitration “to proceed
with arbitration without the substantial delay arising from an appeal.” Lloyd, 369
F.3d at 271. The interpretation of section 3 used by the majority of the circuits
undermines this purpose because a dismissal of a case constitutes an immediately
appealable final order, whereas a party opposing arbitration may not immediately
appeal an order granting a stay. Compare 9 U.S.C. § 16(a)(3) with 9 U.S.C.
§ 16(b)(1). See also Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 86-87 &
n.2 (2000); Lloyd, 369 F.3d at 270. Thus, by creating an “exception to the mandatory
directive” of section 3 that the action be stayed, the majority of the circuits “confer a
right to an immediate appeal that would not otherwise exist” under section 16. Lloyd,
369 F.3d at 271. Because this may cause substantial delay in arbitration, the holding
of the majority of the circuits as well as the holding of the majority in this case fails
to comport with the FAA’s aim to “effectively promote and facilitate arbitration.” Id.
at 270.
Further, the rationale of the approach taken by the majority of the circuits, as
found in the Fifth Circuit’s Alford decision, is unpersuasive. The Alford court
interprets section 3 to provide that a stay is mandatory only in embedded
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proceedings—where the action involves a request for arbitration and other claims—as
opposed to independent proceedings—where a request for arbitration is the only issue.
Alford, 975 F.2d at 1164; see also Green Tree Fin. Corp.-Ala., 531 U.S. at 87
(explaining the difference between embedded and independent proceedings).
However, the court provides no statutory support for its conclusion that staying an
action serves no purpose in independent proceedings. See Alford, 975 F.2d at 1164.
To the contrary, the district court continues to perform significant functions under the
FAA even when all of the claims are arbitrable. See, e.g., 9 U.S.C. § 5 (requiring the
district court to resolve disputes over appointment of arbitrators); § 7 (allowing the
district court to compel attendance of witnesses in arbitration); §§ 9-11 (entitling
parties to obtain a judgment on an arbitration award or an order modifying or vacating
the award).
Accordingly, I would hold that section 3 required the district court to grant a
stay because SuperShuttle so moved.
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