GREGG COSTA, District Judge.
Defendant CMH Homes, Inc. seeks to enforce a number of contractual limitations
Mazurkiewicz began working for CMH as a manufactured homes seller in September 2010. Prior to beginning his employment, he completed and signed an employment application on August 18, 2010, and an employment agreement on August 27, 2010. The employment application provided that "by signing and submitting this employment application" Mazurkiewicz agreed that he was "waiving [his] right to participate as a member in a class-action lawsuit or proceeding and/or act as a representative of a class of similarly situated individuals in any lawsuit or proceeding against" CMH. Docket Entry No. 11-1 at 6. The employment agreement provided that, in exchange for a voluntary mediation process, Mazurkiewicz agreed "[t]o file any lawsuit no more than six months after the date of the employment action that is the subject of the lawsuit" and "[t]o not be a member of a class-action lawsuit against" CMH. Id. at 9.
At the end of July 2011, Mazurkiewicz was terminated. He promptly filed a charge of discrimination with the EEOC on August 18, 2011, alleging that he was discharged in violation of the ADA. The charge identified Mazurkiewicz's employer as Clayton Homes, Inc., CMH's parent company. In its statement of position in response to this charge, CMH clarified that it was his true employer. The EEOC issued Mazurkiewicz a right to sue letter about one year later, on August 21, 2012.
Mazurkiewicz then filed this lawsuit on November 16, 2012, asserting claims for violations of the ADA and FLSA, and pleading his FLSA claim as a putative collective action. The original complaint named only Clayton Homes as a defendant. On January 10, 2013, he amended his complaint to add CMH as a defendant, and amended again on May 20, 2013 to remove Clayton Homes.
CMH's motion seeks dismissal under Rule 12(b)(6) or, in the alternative, summary judgment under Rule 56. Because the parties' briefing relies on documents outside the pleadings, such as the employment agreements and the records from the EEOC proceeding, the Court will review the motion under the summary judgment standard. See Fed.R.Civ.P. 56(a) (stating that a court shall grant summary judgment "if the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law"). Although summary judgment typically occurs at a later stage in the case, the Court denies Mazurkiewicz's request for discovery on the issues presented because they are legal questions on
Before addressing the enforceability of the contractual limitations period and "class action" waiver, the Court must determine whether these provisions facially apply to the claims in this case. The contractual limitations period and one of the class waivers appear as part of the following "Mediation Agreement" in the "Employment Form":
Document Entry No. 11-1 at 9. Mazurkiewicz argues that because he did not elect to use the mediation program, the contractual "Statute of Limitations" and "Class Action Waiver" do not apply. While creative, this argument contradicts the plain language of the agreement, which provides that the employee makes the agreements in exchange for a "mediation benefit." Id. Nothing indicates that election of the mediation benefit is a condition to application of the employee's agreements to waive a jury, be subject to a six-month limitations period, and "not be a member of a class-action lawsuit." Id.
The Court has more concern about the applicability of the "Class Action Waiver" to Mazurkiewicz's FLSA claim that he seeks to bring "as a collective action under 216(b) of the FLSA on behalf of himself and others similarly situated." Docket Entry No. 21 at 1. Mazurkiewicz's status in this case is not as a "member of a class-action lawsuit." Docket Entry No. 11-1 at 9. An FLSA collective action is not termed a "class action" and has fundamental differences with a Rule 23 action that binds absent class members. See Genesis Healthcare Corp. v. Symczyk, ___ U.S. ___, 133 S.Ct. 1523, 1529, 185 L.Ed.2d 636 (2013) ("Rule 23 actions are fundamentally different from collective actions under the FLSA ...." (citation omitted)).
But the Court need not decide if the "Class Action Waiver" in this "Mediation Agreement" paragraph applies to an FLSA collective action, because the following broader language in the employment application applies to FLSA cases brought collectively: "I am waiving my right to ... act as a representative of a class of similarly situated individuals in any lawsuit or proceeding against the Company." Docket Entry No. 11-1 at 6; compare id., with Docket Entry No. 21 at 1 (purporting to bring this action "on behalf of himself and others similarly situated").
The Court also rejects Mazurkiewicz's argument that the contractual provisions
It has long been recognized that "a provision in a contract may validly limit, between the parties, the time for bringing an action on such contract to a period less than that prescribed in the general statute of limitations, provided that the shorter period itself shall be a reasonable period." Order of United Commercial Travelers of Am. v. Wolfe, 331 U.S. 586, 608, 67 S.Ct. 1355, 91 L.Ed. 1687 (1947); see also Vincent v. Comerica Bank, No. H-05-2302, 2006 WL 1295494, at *4 (S.D.Tex. May 10, 2006) (enforcing a contractually shortened limitations period). But when these provisions effectively limit a plaintiff's substantive right to recovery or act as a complete bar to relief, they are not reasonable. See 14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 273, 129 S.Ct. 1456, 173 L.Ed.2d 398 (2009) ("[A] substantive waiver of federally protected civil rights will not be upheld...." (citations omitted)); see also Salisbury v. Art Van Furniture, 938 F.Supp. 435, 437-38 (W.D.Mich.1996) ("[T]he contractual limitation certainly effected a `practical abrogation' of the right to file an ADA claim and is, therefore, unreasonable...."). The Court now addresses whether the six-month limitations period effectively prevents Mazurkiewicz from bringing an ADA or FLSA suit or limits his potential recovery under those federal statutes.
With respect to the ADA claim, the contractual limitations period effectively bars Mazurkiewicz from bringing suit. Under the ADA administrative scheme, which mirrors that for Title VII, "an aggrieved party has 180 days (or roughly six months) after the alleged unlawful employment practice to file a charge, and the EEOC is given at least 180 days
CMH cites cases in which it contends courts have enforced contractual limitations periods of similar length. But not one of those cases applied a contractual limitations period to bar claims that require completion of the EEOC administrative process before a suit may be filed. Many involved only state law claims. See, e.g., Thomas v. Guardsmark, Inc., 381 F.3d 701, 707-08 (7th Cir.2004) (enforcing six-month contractual limitations period in a state-law retaliatory discharge suit); Vincent, 2006 WL 1295494, at *6 (applying six-month contractual limitations period in a defamation suit). Others involved claims under federal statutes that do not require administrative exhaustion. See Thurman v. DaimlerChrysler, Inc., 397 F.3d 352, 357-58 (6th Cir.2004) (affirming district court's dismissal based on six-month contractual limitations period where plaintiff asserted discrimination claims under state law and 42 U.S.C. § 1981, as well as various state tort claims); Taylor v. W. & S. Life Ins. Co., 966 F.2d 1188, 1193-94, 1206 (7th Cir.1992) (affirming district court's dismissal of section 1981, breach of contract, and wrongful discharge claims on contractual limitations grounds and affirming the district court's judgment in favor of the plaintiff on the merits of his Title VII claim); Badgett v. Fed. Express Corp., 378 F.Supp.2d 613, 626 (M.D.N.C.2005) (holding that "Plaintiff's emotional distress, § 1981, and FMLA
CMH specifically cites Badgett as a case that enforced a "six-month contractual limitations period contained in an employment agreement as to the plaintiff's claims of retaliation under Title VII." Docket Entry No. 11 at 10 (emphasis omitted). But Badgett enforced the six-month limitations period to bar a number of state and federal claims, except for the Title VII claim, which the court evaluated on the merits without any apparent defense argument that the contractual limitations applied. See Badgett, 378 F.Supp.2d at 626-32 (analyzing merits of Title VII claim under McDonnell Douglas framework). Finally, CMH cites Adevereaux v. Sports & Fitness Clubs of America, Inc., which did involve Title VII and ADEA claims. See Adevereaux, No. 3-03-CV-2824-L, 2004 WL 414896, at *1-2 (N.D.Tex. Feb. 17, 2004). Adevereaux misses the mark, however, because it involved an agreement to arbitrate employment discrimination claims within one year. Enforcement of that provision did not create the catch-22 that having to comply with both EEOC exhaustion and the six-month limitations period creates, because an EEOC filing is not a prerequisite to arbitration. See generally Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 28, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) ("We [] are unpersuaded
Although CMH's did not cite any cases applying a contractual limitations period to claims requiring EEOC exhaustion, this Court has found two such district court cases. The first, Steward v. DaimlerChrysler Corp., 533 F.Supp.2d 717 (E.D.Mich.2008), involved an atypical situation in which the plaintiff had received her right-to-sue notice within the six-month contractual limitations period. Id. at 722 (barring ADA suit based on failure to comply with contractual limitations period). In the second, Ray v. FedEx Corporate Services, Inc., 668 F.Supp.2d 1063 (W.D.Tenn.2009), the plaintiff did not raise and the court did not address the near impossibility of complying with both the contractual limitations period and the EEOC exhaustion requirement for the asserted ADEA claim.
Against this scant authority in Title VII, ADA, or ADEA cases enforcing a contractual limitations period of six months or similar length, numerous district courts have found contractual limitations periods unenforceable when they do not allow sufficient time for the EEOC administrative process. See Mabry, 2005 WL 1167002, at *5 (citing cases and holding "that the six-month contractual limitations period in the Agreement is unreasonable and against public policy as applied to an ADA claim"). Unlike Steward and Ray, these courts addressed the difficulty of having to receive the EEOC right-to-sue letter and then file suit within six months. See Cole, 2012 WL 6047741, at *4 ("Enforcing the contractually agreed-upon limitations period would abrogate [the plaintiff's] rights under Title VII, leaving her without redress for her injuries. The six-months' limitations period is therefore unenforceable, unreasonable, and against public policy under federal law...." (citations omitted)); O'Phelan v. Fed. Express Corp., No. 03 C 00014, 2005 WL 2387647, at *4 (N.D.Ill. Sept. 27, 2005) (finding that "enforcement of a six month limitation on claims effectively prevents the plaintiff from having any mechanism for redress under Title VII due to the EEOC's administrative requirements" (citation omitted)); Mabry, 2005 WL 1167002, at *4 ("Title VII and ADA claims are governed by a Congressionally-designed administrative process, and Defendants may not thwart that administrative process by enforcement of the contractual limitations period."); Lewis v. Harper Hosp., 241 F.Supp.2d 769, 772 (E.D.Mich. 2002) ("Were this Court to uphold the six month limitation of action clause as to
Apparently recognizing the problem with a contractual limitations period that effectively bars plaintiffs from enforcing their federal antidiscrimination rights, CMH tries to come up with a procedural path in which Mazurkiewicz could have complied with both the EEOC administrative requirement and the six-month limitations period. He could have filed suit within six-months of his termination, CMH contends, and then asked the Court to stay his lawsuit until he received the right-to-sue letter from the EEOC. But while it remains unclear in the Fifth Circuit whether failure to exhaust administrative remedies deprives a court of subject-matter jurisdiction, see Lowe v. Am. Eurocopter, LLC, No. 1:10CV24-A-D, 2010 WL 5232523, at *1 n. 1 (N.D.Miss. Dec. 16, 2010) (noting the uncertainty and collecting cases), filing an EEOC charge and receiving a right-to-sue letter are unquestionably "conditions precedent for suit in federal court." Mabry, 2005 WL 1167002, at *5 (explaining that a plaintiff cannot sue until receipt of the right-to-sue letter, even though the Fourth Circuit does not treat EEOC exhaustion as an issue of subject-matter jurisdiction); see also Holloway v. Caldera, 226 F.3d 641, No. 99-31333, 2000 WL 1029005, at *4 (5th Cir.2000) (per curiam) (affirming district court's dismissal of plaintiff's Title VII claims for failure to exhaust administrative remedies). Accordingly, cases filed in the Fifth Circuit are subject to Rule 12 dismissal if the plaintiff has not completed the EEOC process. See, e.g., Williams v. KB Home, No. 3:12-CV-139, 2013 WL 1574166, at *1 n. 1 (noting that "failure to exhaust is a basis for dismissal under either Rule 12(b)(1) or Rule 12(b)(6)"). CMH's suggestion that Mazurkiewicz could have filed suit before receiving his right-to-sue letter would also circumvent the congressional enforcement scheme in which the EEOC is given first crack at resolving employment disputes prior to the filing of a lawsuit. See Mabry, 2005 WL 1167002, at *5 ("This administrative scheme was carefully crafted by Congress, and requiring a party to file suit before the EEOC has an opportunity to review a charge would undermine and contravene the Congressionally-created scheme." (citations omitted)).
The Court therefore agrees with the majority view of the lopsided split in the federal courts on this issue, and holds that a six-month limitations period is unenforceable against claims that require an EEOC right-to-sue letter. CMH's motion to dismiss the ADA claim on this basis is therefore denied.
The FLSA does not require administrative action prior to filing suit, so the contractual limitations period does not effectively bar an FLSA claim as it does an ADA claim. But limiting the time in which an FLSA plaintiff can sue to six months causes other problems beyond just shortening the period in which a suit must be filed: it substantially limits an FLSA plaintiff's damages and eliminates a key
The interplay between the FLSA limitations period and available remedies demonstrates why a contractual shortening of the limitations period curtails a plaintiff's potential recovery. The FLSA establishes a two-year statute of limitations for ordinary violations and a three-year period for willful violations. 29 U.S.C. § 255(a). "A cause of action accrues at each regular payday immediately following the work period during which the services were rendered for which the wage or overtime compensation is claimed." Halferty v. Pulse Drug Co., 821 F.2d 261, 271 (5th Cir.1987) (citation omitted); see also Hendrix v. City of Yazoo City, 744 F.Supp. 1412, 1415 (S.D.Miss.1989) ("[T]he failure of an employer to pay minimum wages or overtime... constitutes a continuing violation, such that a new cause of action accrues with each paycheck." (citations omitted)). Courts have consistently interpreted the FLSA to allow plaintiffs to recover damages for pay periods "as far back as the statute of limitations will reach." Pruiett v. West End Restaurants, LLC, No. 3:11-00747, 2011 WL 5520969, at *5 (M.D.Tenn. Nov. 14, 2011).
The substantive impact of the six-month contractual limitations period is evident from the effect the provision would likely have over an FLSA plaintiff who filed suit within the contractual six-month period. Assume Mazurkiewicz had filed his FLSA suit on January 1, 2012. His claim would have been timely under the contractual limitations period, but he would have been entitled only to damages for pay periods in June and July 2011, rather than a recovery for all pay periods back to January 2010 or 2009. Employment claims brought under other statutes do not often raise this problem, because the plaintiff is usually challenging a discrete adverse employment action, typically a termination. In those situations, so long as an employee complies with a shorter contractual limitations period, he will be entitled to full damages, as lost wages are a forward-looking calculation.
Based on this understanding of the effect a contractual shortening of the limitations period would have on FLSA recoveries,
The Court thus agrees with the majority view of federal district courts (and the unanimous view of those to have considered the damages issue) that a contractual limitations provision is not enforceable against FLSA claims. The six-month provision at issue in this case may drastically reduce an employee's available recovery, possibly by more than 80 percent.
Although the Court concludes that the contractual limitations period does not bar Mazurkiewicz from pursuing ADA and FLSA claims for individual relief, the contractual waiver on his ability to serve as a representative party for others similarly
In enforcing an arbitration agreement, the Fifth Circuit rejected the argument that the "inability to proceed collectively deprives [plaintiffs] of substantive rights available under the FLSA." Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294, 298 (5th Cir.2004) (relying on Gilmer, 500 U.S. at 32, 111 S.Ct. 1647). And the Supreme Court and other courts have recently enforced arbitration clauses that expressly contain waivers on proceeding collectively (both in court and in the arbitral forum). See Am. Express Co. v. Italian Colors Rest., ___ U.S. ___, 133 S.Ct. 2304, 2310, 186 L.Ed.2d 417 (2013) (enforcing arbitration agreement's class action waiver in a federal antitrust suit against American Express brought by merchants who accepted the cards); Gilmer, 500 U.S. at 32, 111 S.Ct. 1647 (enforcing class action waiver in arbitration agreement to bar ADEA collective action, which incorporates the FLSA collective action statute); In re Online Travel Co., 953 F.Supp.2d 713, 721-22, 2013 WL 2948086, at *6 (N.D.Tex. June 14, 2013) (finding class action waiver contained in an arbitration provision enforceable). Though arbitration decisions implicate the Federal Arbitration Act's strong presumption in favor of arbitration, see, e.g., Gilmer, 500 U.S. at 26, 111 S.Ct. 1647, it otherwise makes little sense that an arbitration agreement could take the more drastic step of entirely waiving a federal court forum, including the right to proceed collectively, but an employment contract could not waive the right to proceed collectively in court while preserving the right to bring suit on an individual claim. Cf. Killion v. KeHE Distribs., 885 F.Supp.2d 874, 882-83 (N.D.Ohio 2012) (holding that a collective action waiver contained in a "Separation and Release Agreement" was enforceable in an FLSA action and noting that "[t]he enforceability of a collective waiver does not change outside the arbitration context" because "arbitration agreements are scrutinized under contract theories and are on `equal footing' with contracts" (citations omitted)). Because the standard for enforcing contractual limitations on the ability to sue turns largely on whether the contract deprives an employee of his ability to enforce statutory rights, see infra p. 686 (discussing the general rules for enforcing contractual limitations), Carter's holding that the right to proceed collectively in an FLSA action does not implicate substantive rights is also dispositive on the enforceability of a collective action waiver divorced from an arbitration agreement. See Carter, 362 F.3d at 298. The Court will therefore enforce the contractual limitation on Mazurkiewicz serving in a representative capacity "on behalf of himself and others similarly situated," Docket Entry No. 21 at 1, and dismiss the collective action allegations.
There is a remaining issue for the individual ADA claim that the Court held survives CMH's attempt to enforce the contractual limitations period. CMH argues that even if its contractual limitation period is not enforceable, the statutory
Federal Rule of Civil Procedure 15(c)(1)(C) governs. The rule provides that an amendment relates back when
Fed.R.Civ.P. 15(c)(1)(C). The Supreme Court recently explained that "relation back under Rule 15(c)(1)(C) depends on what the [new] party knew or should have known, not on the amending party's knowledge or its timeliness in seeking to amend the pleading." Krupski v. Costa Crociere S. p. A., 560 U.S. 538, 130 S.Ct. 2485, 2490, 177 L.Ed.2d 48 (2010).
For claims that require an EEOC investigation prior to filing suit, a defendant's participation in the administrative process may constitute the requisite Rule 15(c)(1)(C) knowledge. See Barkins v. Int'l Inns, Inc., 825 F.2d 905 (5th Cir. 1987). Barkins was a Title VII case in which the two plaintiffs incorrectly sued Holiday Inns, Inc. in a timely complaint. Id. at 906. After the 90-day period to file suit had expired, plaintiffs amended to add the correct defendant, International Inns, Inc. Id. The Fifth Circuit held that this amendment related back, relying on case law holding that a late-added defendant received sufficient notice of suit when it "participated in the EEOC hearings leading up to the suit." Id. at 907 (citation omitted). The Barkins court also noted that "International Inns was aware of the suit against Holiday Inns through the shared counsel" and that "International Inns point[ed] to no prejudice from [the plaintiffs'] mistake." Id.; see also Krupski, 130 S.Ct. at 2497-98 (finding relation back when proper and improper defendant were related corporate entities with similar names, proper defendant knew name similarity was confusing for customers, and the complaint "made clear" that the plaintiff intended to sue the proper defendant but for the mistake concerning the proper party's identity).
Barkins allows relation back in this case. CMH participated in the EEOC investigation process, see Docket Entry Nos. 11-3 at 2-4; 19-3 at 18, (letters to
For the foregoing reasons, CMH's motion to dismiss, or in the alternative motion for summary judgment (Docket Entry No. 11) is