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Daniels v. Encana Oil & Gas (USA) Inc.

United States District Court, D. Colorado

August 1, 2017

ENCANA OIL & GAS (USA) INC. Defendant.


          Craig B. Shaffer United States Magistrate Judge.

         This 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.[1] In addition, Plaintiff is ordered to SHOW CAUSE why he is unable to pay his share of arbitration costs.[2]


         Plaintiff 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.

         From 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 provides that

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.

         Doc. #9-1 at 10 (ICA attached to Defendant's Motion to Dismiss).[3] 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.

         Defendant 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 Compel Arbitration.


         A. Should Arbitration be Compelled?

         As an 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 case.[4]

         Plaintiffs 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.

         B. Should the Entire Arbitration Agreement be Enforced?

         1. Is the Provision Requiring Arbitration "in Accordance With the Most Current American Arbitration ...

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