United States District Court, D. Colorado
ORDER GRANTING DEFENDANT'S MOTION TO COMPEL
ARBITRATION AND DIRECTING PLAINTIFF TO SHOW CAUSE WHY HE
CANNOT BEAR THE COSTS OF ARBITRATION
B. Shaffer United States Magistrate Judge.
matter comes before the court on a motion to dismiss or stay
this proceeding and compel arbitration (Doc. #9) filed on
September 15, 2016, by Defendant Encana Oil and Gas (USA)
("Defendant" or "Encana"). Plaintiff Erik
Daniels ("Plaintiff or "Mr. Daniels") filed a
response on October 6, 2016. Doc. #16. Defendant then filed a
reply on October 31, 2016. Doc. #19. At the court's
direction, both parties submitted additional briefing
addressing the Tenth Circuit decision in Belnap v. Iasis
Healthcare, 844 F.3d 1272 (10th Cir. 2017). Doc. #28;
Doc. #29. This case was assigned to the Magistrate Judge on
July 20, 2016. Doc. #2. Consent pursuant to 28 U.S.C. §
636(c) was obtained from all parties on September 26, 2016.
Doc. #12. The court has carefully considered the motion and
related briefing, the entire case file, and the applicable
case law. For the following reasons, Defendant's Motion
to Compel Arbitration is GRANTED and the case is STAYED
pending completion of arbitration between Plaintiff and
Defendant. In addition, Plaintiff is ordered to SHOW
CAUSE why he is unable to pay his share of arbitration
seeks to recover lost overtime wages under The Fair Labor
Standards Act ("FLSA"), 29 U.S.C. § 201, on
the basis that he was improperly classified as an independent
contractor so that Encana could avoid paying wages required
under the FLSA. See Doc. #1 at 2, 5. Plaintiff filed
his original Complaint in this action (Doc. #1) on July 20,
2016, and alleges the following relevant facts.
2007 to 2015 Plaintiff was paid by Defendant to haul water
and maintain its gas wells in Colorado. Doc. #1 at 2. His
primary duties included "checking tanks and pumping and
removing water from well sites and maintaining well sites
along routes." Id. As part of his agreement to
work for Encana, Plaintiff created a business entity which he
operated called Daniels Services, LLC. Id. at 4.
Plaintiff was classified as an independent contractor and was
required to sign an Independent Contractor Agreement
("ICA"). Id. at 2; see also Doc.
#16 at 2 (Plaintiffs Response to Motion to Dismiss). This ICA
Any dispute arising out of or related to this agreement
(including any amendments or extensions, ) or the breach or
termination thereof, shall be settled by arbitration in
accordance with the most current American Arbitration
Association Rules. The prevailing party shall be entitled to
recover its reasonable attorney's fees.
#9-1 at 10 (ICA attached to Defendant's Motion to
Dismiss). Plaintiff further alleges that during the
three years preceding his complaint he "regularly worked
in excess of forty hours in a workweek and normally worked 84
hours per week but was not paid overtime compensation."
Doc. #1 at 5. Plaintiff contends that he should have been
classified as an employee and that he is therefore entitled
to additional compensation for this overtime work, together
with reasonable attorneys' fees and costs as required by
the FLSA. Id. at 2-5.
filed its Motion to Dismiss or in the Alternative Compel
Arbitration on September 15, 2016. Doc. #9. Encana argues
that the ICA requires Plaintiff to submit his claims to
arbitration and that the court must therefore dismiss the
case, or stay the case until arbitration has concluded.
See Doc. #9 at 2, 5. Plaintiff filed his response on
October 6, 2016, arguing: (1) that the arbitration provision
requiring an award of fees to the prevailing party violates
the FLSA; (2) that the arbitration provision requiring
arbitration in accord with the AAA rules violates the FLSA;
(3) that the arbitration agreement has expired; (4) that his
claims do not relate to or arise out of the ICA; and (5)
collateral estoppel. Doc. #16 at 4-11. Defendant argues in
its reply that Plaintiffs first two arguments should be
resolved by the arbitrator, not the court, and that his last
three arguments have no merit. See Doc. #19 at 3-11.
Before Defendant's Motion could be resolved the Tenth
Circuit directly addressed the issue of arbitrability in
Belnap. In the wake of that decision, this court
asked the parties to address the applicability of the
Belnap decision to the facts in this case.
See Doc. #28; Doc. #29. Having received and reviewed
this briefing, the court now grants Defendant's Motion to
Should Arbitration be Compelled?
initial matter the court notes that Plaintiff "is not
opposed to arbitration in principle." See Doc.
#16 at 1. Mr. Daniels simply asserts that "the Court
should condition arbitration upon an order striking the
prevailing-party attorneys' fees provision and requiring
Encana to pay all the costs and expenses association with
arbitration." Id. at 11. Plaintiff relies
heavily on Dougherty v. Encana Oil & Gas (USA),
Inc., in which the district court found that
Encana's ICA was enforceable (with certain excisions) and
ordered arbitration. Daugherty v. Encana Oil & Gas
(USA), Inc., No. 10-CV-02272-WJM-KLM, 2011 WL 2791338 at
*13 (D. Colo. July 15, 2011). Mr. Daniels does not oppose
proceeding with arbitration, provided that the same
judicially-mandated reformation is applied in this
arguments that the arbitration agreement has expired, that
his claims do not arise out the agreement, and that the
agreement as a whole is unconscionable were unambiguously
rejected by the Daugherty court and fly in the face
of clearly established Supreme Court and Tenth Circuit law.
See, e.g., Riley Mfg. Co., Inc. v. Anchor Glass Container
Corp., 157 F.3d 775, 781 (10th Cir. 1998) ("When a
dispute arises under an expired contract that contained a
broad arbitration provision, courts must presume that the
parties intended to arbitrate their dispute. This is so even
if the facts of the dispute occurred after the contract
expired."); Daugherty, 2011 WL 2791338 at *7
("The overtime pay sought by Plaintiffs is an employee
benefit directly addressed by Section 4(A) of the
ICA."); id. at *9 ("Plaintiffs'
[unconscionability] argument has some validity and the Court
would likely have found that the arbitration agreement at
issue here unconscionable pursuant to the Davis analysis if
it were issuing this decision pre-Concepcion. But
the Court has to take the legal landscape as it lies and
cannot ignore the Supreme Court's clear message.
Plaintiffs are essentially arguing that the adhesive nature
of the contracts at issue here. . . makes the arbitration
agreement unconscionable. In Concepcion the Supreme
Court rejected [this] idea."). In light of Plaintiff s
reliance on Daugherty and his implied concession
that arbitration should proceed, the court will grant
Defendant's Motion to Compel Arbitration and stay the
case until arbitration has concluded.
Should the Entire Arbitration Agreement be Enforced?
Is the Provision Requiring Arbitration "in Accordance
With the Most Current American Arbitration ...