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The 7th Circuit Court of Appeals reversed a district court’s dismissal of a lawsuit brought by a steamboat bartender who alleged she and her coworkers were wrongly denied overtime pay by the American Queen Steamboat Operating Company.
In the case, Mary Rodgers-Rouzier alleged that she and her coworkers who entertained guests on steamboat cruises were denied overtime payment to which they were entitled under the Fair Labor Standards Act.
More than 100 of her coworkers filed consent forms to join her proposed collective action.
Meanwhile, their employer, American Queen Steamboat Operating Company, moved to dismiss the case for improper venue because Rodgers-Rouzier had agreed to arbitration.
The arbitration agreement and American Queen’s motion invoked the Federal Arbitration Act exclusively, and the Southern District Court of Indiana denied the motion on those terms.
American Queen then moved again to dismiss based on the arbitration agreement, this time invoking Indiana state law.
The district court granted this motion, over RodgersRouzier’s objections that American Queen had waived its argument and the court lacked authority to apply Indiana law in this context.
The court further determined that all the workers who had filed consent forms were not parties to the action.
The 7th Circuit reversed the decision.
Although it concluded that American Queen’s arguments are not waived and the court had authority to enforce the arbitration agreement under Indiana law just as an Indiana court would, the 7th Circuit stated that it believed that Indiana law would hold American Queen to its bargain that its arbitration agreement was governed by the Federal Arbitration Act.
“Rodgers-Rouzier’s case may therefore continue in federal court. We do not decide now whether it may do so as a collective action and leave that question for further litigation,” the opinion stated.
The 7th Circuit noted that, in response to Rodgers-Rouzier’s contention that arbitration could not be compelled because the waiver was unconscionable, the district court went beyond sending the question of the waiver’s validity to arbitration and instead rejected her argument’s premise, suggesting that the waiver was entirely lawful.
The circuit court stated that the FLSA has its own federal statute of limitations—two years, or three, if the violation is shown to be willful—and that federal law would preempt any state law to the contrary, if there were a conflict.
“The validity of this waiver has nothing to do with the question whether the court was compelling arbitration under the FAA or IUAA, as the district court thought, because again the FAA could at most govern the agreement to arbitrate itself, not every other provision that happens to be in the same contract,” the 7th Circuit ruled.
The 7th Circuit added that it did not mean to suggest that the statute-of-limitations waiver in section four of the agreement is necessarily equivalent to such a blatant run around of the minimum wage, nor to prejudge the enforceability of this waiver or the power to compel arbitration under a hypothetical agreement that contains a term that violates the FLSA.
“We have merely confirmed—as American Queen recognized at oral argument—that the district court’s decisions so far do not close the book on the legality of the waiver and thought it prudent to highlight some of the questions that will need to be explored, should that issue arise again,” the 7th Circuit opinion stated.
The case is Mary Rodgers-Rouzier v. American Queen Steamboat Operating Company, LLC and HMS Global Maritime LLC, 23-1812.
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