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Cohn v. Ritz Transportation, Inc.

United States District Court, D. Nevada

April 17, 2014

FRANK COHN, Plaintiff,
v.
RITZ TRANSPORTATION, INC., et al., Defendants.

ORDER

JAMES C. MAHAN, District Judge.

Presently before the court are the report and recommendation of Magistrate Judge Koppe. (Doc. # 120). Plaintiffs filed objections to the report (doc. # 124), and defendants filed an opposition to those objections (doc. # 128).

In her report, Magistrate Judge Koppe found that an arbitration agreement signed by thirtythree of the plaintiffs in this matter is valid and enforceable. (Doc. # 120). Judge Koppe therefore recommended that the court dismiss the proceedings as to those thirty-three plaintiffs. Id. Plaintiffs objected, arguing that the arbitration agreement is not valid, and should not be enforced by the court. (Doc. # 124).

This court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate." 28 U.S.C. § 636(b)(1). Where a party timely objects to a magistrate judge's report and recommendation, then the court is required to "make a de novo determination of those portions of the [report and recommendation] to which objection is made." 28 U.S.C. § 636(b)(1). Where a party fails to object, however, the court is not required to conduct "any review at all... of any issue that is not the subject of an objection." Thomas v. Arn, 474 U.S. 140, 149 (1985).

The instant case involves claims arising under the Fair Labor Standards Act and Nevada state law. Defendant Ritz Transportation, Inc. was a shuttle transportation company operating in Las Vegas, Nevada. In June 2011, Ritz Transportation was purchased by AWG Charter Services, creating defendant AWG Ambassador, LLC. Defendants Alan Waxler and Raymond Chenoweth ("individual defendants") are former owners and managers of Ritz Transportation and AWG Ambassador ("corporate defendants"). Plaintiffs, sixty-six current and former employees of corporate defendants, claim that their compensation did not meet minimum and overtime wage requirements.

Thirty-three of the plaintiffs in this action signed an arbitration agreement stating

This Agreement is governed by the federal Arbitration Act, 9 U.S.C. Sec. 1 et seq., and evidences a transaction involving interstate commerce. This agreement applies to any dispute arising out of or related to your employment with AWG Ambassador, LLC, or one of its affiliates, subsidiaries or parent companies ("Company") or termination of employment and obligates both you and the Company to submit such matters to arbitration.... This Agreement is intended to apply to the resolution of past, present and future disputes that otherwise would be resolved in a court of law and requires that all such disputes be resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial, except as otherwise stated in this Agreement.
This Agreement applies, without limitation, to disputes regarding the employment relationship... Fair Labor Standards Act... and state statutes, if any, addressing the same or similar subject matters, and all other state statutory and common law claims....
You and the Company agree there will be no right or authority for any dispute to be brought, heard or arbitrated as a class or collective action, or as a class member in any purported class or collective proceeding ("Class Action Waiver"). Disputes regarding the validity and enforceability of the Class Action Waiver may be resolved only by a civil court of competent jurisdiction and not by an arbitrator. The Class Action Waiver, and any other provision of this Agreement, shall be severable in any case in which the dispute is filed as an individual action and severance is necessary to ensure that the individual action proceeds to arbitration.

(Doc. # 97-4) (emphasis in original).

Despite Magistrate Judge Koppe's finding that these provisions are enforceable, plaintiffs argue that (a) the arbitration agreement is both procedurally and substantively unconscionable, (b) employee-employer class-action waivers are per se invalid, (c) the provisions are not valid as to employees hired after the start of this litigation, (d) these provisions do not apply to claims against the individual defendants, and (e) defendants should be required to pay any arbitration fees in excess of the cost of a civil suit. (Doc. # 124). The court will address each of these arguments in turn.

(a) Unconscionability

In her report, Magistrate Judge Koppe found that the arbitration agreement was neither procedurally nor substantively unconscionable. (Doc. # 120 pp. 9-10). However, in their objections, plaintiffs assert that the arbitration agreement is invalid on both of these grounds. (Doc. # 124 pp. 8-12).

In terms of procedural unconscionability, plaintiffs claim that the arbitration agreement is invalid because it constitutes an impermissible contract of adhesion. The adhesion contract doctrine protects consumers from unfair contract terms presented on a "take it or leave it basis, without affording the consumer a realistic opportunity to bargain." Kindred v. Second Judicial Dist. Court ex rel. Cnty. of Washoe, 996 P.2d 903, 907 (Nev. 2000). However, the Nevada Supreme ...


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